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Home My WebLink AboutExhibit 5BMO Draft 46 9/27/07 PRELIMINARY OFFICIAL STATEMENT DATED , 2007 NEW ISSUE -- BOOK ENTRY ONLY Ratings: Standard and Poor's: " " Insured „ „ Underlying Moody's: " " Insured " „ Underlying Fitch: " " Insured " " Underlying (See "Ratings" herein) In the opinion of Squire, Sanders& Dempsey L.L.P., Bond Counsel, under existing taw (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2007 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minirnum tax imposed on individuals and corporations, and (ii) the Series 2007 Bonds and the income thereon are exempt from taxation under the taws 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. Interest on the Series 2007 Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see "TAX MATTERS" herein. $80,000,000* CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION BONDS, SERIES 2007 (Street and Sidewalk Improvement Program) Dated: Date of Delivery Due: January 1, as shown on inside cover The $80,000,000* City of Miami, Florida Special Obligation Bonds, Series 2007 (Street and Sidewalk Improvement Program) (the "Series 2007 Bonds") are being issued by the City of Miami, Florida (the "City") pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. adopted on October 2007 (the "Resolution"). The Series 2007 Bonds are being issued for the purpose of (i) financing the cost of acquisition, construction and improvements to certain roadways and streetscapes, (ii) [funding a deposit to the Reserve Fund in respect of the Series 2007 Bonds,l [paying the premium at a debt service reserve surety policy and (iii) paying the costs of issuance of the Series 2007 Bonds, including a premium in respect of any municipal bond insurance policy. This cover page contains certain information for quick reference only. It is not, and is not intended to be, a summary of the issue. Investors must read the entire Official Statement to obtain information needed for the making of an informed investment decision. The Series 2007 Bonds are being issued by the City as fully registered bonds, which initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases will be made in book -entry form only through Participants (defined herein) in denominations of $5,000 and integral multiples thereof. Purchasers of the Series 2007 Bonds (the "Beneficial Owners") will not receive physical delivery of certificates. Transfers of ownership interests in the Series 2007 Bonds will be effected by the DTC book -entry system as described herein. As long as Cede & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such registered *Preliminary, subject to change. owner which will in turn remit such payments to the Participants (as defined herein) for subsequent disbursement to the Beneficial Owners. Interest on the Series 2007 Bonds is payable semi-annually on each January 1 and July 1, commencing January 1, 2008. Principal of, premium, if any, and interest on the Series 2007 Bonds will be payable by Commerce Bank, National Association, Jacksonville, Florida, as Paying Agent and Bond Registrar. Certain maturities of the Series 2007 Bonds are subject to optional redemption prior to their respective maturities and mandatory redemption, as described herein under "DESCRII71 ION OF THE SERIES 2007 BONDS —Optional Redemption and —Mandatory Redemption." [Insert Logo] See the inside cover page for maturities, principal amounts, interest rates, yields, prices and CUSIP numbers. 'The Series 2007 Bonds are offered when, as, and if issued and received by the Underwriters, subject to the opinion on certain legal matters relating to their issuance by Squire, Sanders & Dempsey L.L.P., Miami, Florida, Bond Counsel. 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 Underwriters by Broad and Cassel, Orlando, Florida, First Southwest Company, Aventura, Florida is serving as Financial Advisor to the City. It is expected that the Series 2007 Bonds in definitive form wiI1 be available for delivery to the Underwriters in New York, New York at the facilities of DTC on or about , 2007, JPMorgan UBS INVESTMENT BANK LaSalle Financial Services, Inc. Raymond James & Associates, Inc. SunTrust Capital Markets, Inc. Dated: , 2007 SERIES 2007 BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND INITIAL CUSIP NUMBERS Maturity Principal ranuary I) Amount SERIAL BONDS Interest Rate Initial CUSII' Yield Price Number % Term Bond Due January 1, 20 Yield % Initial Cusip Number % Term Bond Due January 1, 20_ Yield % Initial Cusip Number No dealer, broker, salesman or other person has been authorized by the City or the Underwriters to give any information or to make any representations in connection with the Series 2007 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 2007 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, the Insurer, DTC and other sources that are believed to be reliable. The Underwriters listed on the cover page hereof have reviewed the information in this Official Statement in accordance with and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expressions of opinion stated herein are subject to change, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the matters described herein since the date hereof. IN CONNECTION WITH THIS OFFERING OF THE SERIES 2007 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH SERIES 2007 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 2007 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 2007 Bonds, or (iii) the tax exempt status of the interest on the Series 2007 Bonds. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. NO REGISTRATION STATEMENT RELATING TO THE SERIES 2007 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2007 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS OFFICIAL STATEMENT SHALL NOT CONSTITUTE A CONTRACT BETWEEN THE CITY OR THE UNDERWRITERS AND ANY ONE OR MORE HOLDERS OF THE SERIES 2007 BONDS. THE CITY OF MIAMI, FLORIDA 3500 Pan American Drive Miami, Florida 33233 MAYOR Manuel A. Diaz CITY COMMISSIONERS Angel Gonzalez, Chairman Joe M, Sanchez, Vice Chairman Tomas P. Regalado Michelle Spence -Jones Marc D. Sarnoff CITY MANAGER Pedro G. Hernandez CITY CLERK Priscilla A. Thompson CITY ATTORNEY Jorge L. Fernandez, Esq. CHIEF FINANCIAL OFFICER Larry Spring FINANCE DIRECTOR Diana M. Gomez BOND COUNSEL Squire, Sanders & Dempsey L.L.P. Miami, Florida DISCLOSURE COUNSEL Bryant Miller Olive P.A. Miami, Horida FINANCIAL ADVISOR First Southwest Company Aventura, Florida TABLE OF CONTENTS Contents Page INTRODUCTION 1 PURPOSE OF THE ISSUE 2 THE SERIES 2007 PROJECT 2 ESTIMATED SOURCES AND USES OF FUNDS 7 DEBT SERVICE SCHEDULE 8 DESCRIPTION OF THE SERIES 2007 BONDS 9 General 9 Book -Entry Only System 9 Optional Redemption 11 Mandatory Redemption 12 Notice and Effect of Redemption 12 Registration, Transfer and Exchange 13 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost 14 MUNICIPAL BOND INSURANCE 14 SECURITY FOR THE SERIES 2007 BONDS 15 General 15 Limited Obligations 15 Establishment of Funds and Accounts 15 Application of Pledged Funds 15 Reserve Account 18 Issuance of Additional Bonds 19 Refunding Bonds 20 Covenant as to Designated Revenues 21 LOCAL OPTION GAS TAXES 21 General 21 Collection and Distribution 22 First Levy 22 Second Levy 24 Eligibility 26 Historical and Projected Gasoline Sales in the County 27 TRANSPORTATION SURTAX 28 General 28 Levy of Transit System Surtax 28 Collection and Funds 28 PARKING SURCHARGE 29 General 29 Levy of Parking Surcharge 29 Collection 30 Historical Designated Revenues 31 LEGISLATIVE PROPOSALS 32 THE CITY OF MIAMI 33 Background 33 City Government 33 Adoption of Investment Policy and Debt Management Policy 34 Capital Improvement Plan 35 Fiscal and Accounting Procedures 35 Indebtedness of the City 36 LEGAL MATTERS 37 LITIGATION 37 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS 38 TAX MAIIERS 38 General 38 [Original Issue Discount and Original Issue Premium 40 RATINGS 40 FINANCIAL ADVISOR 41 AUDITED FINANCIAL STATEMENTS 41 UNDERWRITING 41 CONTINGENT FEES 41 ENFORCEABILITY OF REMEDIES 42 CONTINUING DISCLOSURE 42 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT 42 FORWARD -LOOKING STATEMENTS 43 MISCELLANEOUS 43 AUTHORIZATION OF OFFICIAL STATEMENT 43 APPENDICES APPENDIX A: APPENDIX B: APPENDIX C: APPENDIX D: APPENDIX E: APPENDIX F: GENERAL INFORMATION REGARDING THE CITY OF MIAMI THE BOND RESOLUTION GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2006 FORM OF BOND COUNSEL OPINION SPECIMEN MUNICIPAL BOND INSURANCE POLICY FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT ii OFFICIAL STATEMENT relating to $80,000,000* CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION BONDS, SERIES 2007 (Street and Sidewalk Improvement Program) 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 Special Obligation Bonds, Series 2007 (Street and Sidewalk Improvement Program) (the "Series 2007 Bonds"), in connection with the sale of the Series 2007 Bonds. The City is situated at the mouth of the Miami River on the western shores of Biscayne Bay. It is the county seat of Miami -Dade County, Florida. The City comprises 34.3 square miles of land and 19,5 square miles of water. The City's diversified economic base is comprised of light manufacturing, trade, commerce, wholesale, and retail trade and tourism. For more information about the City, see "APPENDIX A — GENERAL INFORMATION REGARDING THE CITY OF MIAMI." The Series 2007 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. adopted on October , 2007 (the "Resolution"). The Series 2007 Bonds are being issued to (i) finance the cost of acquisition, construction and improvements to certain roadways and streetscapes (the "Series 2007 Project"), (ii) [fund a deposit to the Reserve Fund in respect of the Series 2007 Bonds,/ [pay the premium on a debt service reserve surety policy] and (iii) pay the costs of issuance of the Series 2007 Bonds, including a premium in respect of any municipal bond insurance policy. See "PURPOSE OF THE ISSUE" and "THE SERIES 2007 PROJECT" herein. Payment of the principal of, premium, if any, and interest, on the Series 2007 Bonds shall be secured by a lien upon and a pledge of (i) the proceeds of the Local Option Gas Taxes, (ii) eighty percent (80%) of the City's portion of the Transportation Surtax, (iii) twenty percent (20%) of the City's Parking Surcharge, all as defined herein (collectively, the "Designated Revenues"). The Series 2007 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 or to make an appropriation for their payment except from the Designated Revenues to the extent provided in the Resolution, 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, redemption premium, if any, and interest of the Series 2007 Bonds, See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2007 BONDS" herein. "Preliminary, subject to change. Payment of the principal and interest on the Series 2007 Bonds will be guaranteed by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 2007 Bonds by (the "Insurer"), The summaries of and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, statute, report or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Resolution, unless the context would clearly indicate otherwise. A copy of the Resolution is attached hereto as "APPENDIX C -THE BOND RESOLUTION." All documents of the City referred to herein may be obtained from the City's, Finance Director, 444 S.W. 2nd Avenue, 6"' Floor, Miami, Florida 33130, Telephone (305) 416-1324. PURPOSE OF THE ISSUE The Series 2007 Bonds are being issued by the City, pursuant to the Constitution and laws of the State of .Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law and pursuant to Resolution No, adopted by the City on October , 2007 (the "Resolution"). The Series 2007 Bonds are being issued for the purpose of (i) financing the cost of the Series 2007 Project, (ii) [funding a deposit to the Reserve Fund in respect of the Series 2007 Bonds,] [paying the premium at a debt service reserve surety policy] and (iii) pay the costs of issuance of the Series 2007 Bonds, including a premium in respect of any municipal bond insurance policy. THE SERIES 2007 PROJECT The Series 2007 Project consists of acquisition, construction and improvements to certain roadways and streetscapes, including but not limited to: District 1 • In the area generally bounded by N.W. 27th Ave, N.W. 23rd St., N.W. 20th Ave., and N.W. North River Dr., including the area bounded by N.W. 30th Pl., N.W. 14th St., N.W. 22nd Ave., and N.W. 7th St. and any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by N.W. 23rd Ave, N.W. 31st St., N.W. 24th Ave, and N.W. 35th St.; N.W. 34th Ave. from 14th to 17th St. N.W. 18th Terr. from 31st to 32nd St., N.W. 43rd Ave., N.W. 43rd Ct., N.W. 43rd PI, from N.W. 5th to NW 7th St. and any additional streets as required -project components include: the design and construction of right-of-way enhancements including resurfacing of asphalt pavement, swale restoration, sidewalk repairs, landscaping, striping, and drainage as needed. 2 • In the area generally bounded by N.W. 27th Ave., N.W. 38th St, N.W. 22nd Ave., and N.W. 28th St., including an area bounded by N.W. 18th Ave., N.W. 20th St., N.W.14th Ave., and N.W. North River Dr. and any additional streets as required — project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by N.W. 20th St., N.W. 7th Ave., SR 836, and N.W. 17th Ave. — project components include: the design and construction of roadway resurfacing, sidewalk replacement, ADA ramps, curbs, gutters, drainage improvements, and landscaping. • In the area generally bounded by N.W. 22nd Ave., N.W. 38th St., N.W. 17th Ave., and N.W. 28th St., including an area bounded by N.W. 22nd Ave, N.W. 20th St., N.W.17th Ave. and N.W. North River Dr. Additional streets as required — project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. District 2 • In the area generally bounded by N.W. 1st Ave., N.E. 20th St., Biscayne Bay, Miami River — project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area east of Biscayne Blvd. on N.E. 83rd Rd., 85th St., and 86th St. --- project components include: the design and construction of roadway to include milting and resurfacing, swale restorations, new sidewalks, landscaping and roadway stripping. • In an area generally bounded by N.E. 6th Ct., N.E. 8th Ave., N.E. 76th St., N.E. 10th Ave., Litter River and N.E. 72nd Terr. — project components include: the construction of roadway improvements, including construction of storm drainage, storm water pump station, water quality structure, roadway milling and resurfacing, sidewalk replacement, construction of curbs, gutters, ADA ramps, and swale restoration. • In the area generally bounded by N.E. 69th St., N.E. 72nd St., Biscayne Blvd. and Biscayne Way — project components include: the construction of roadway improvements, including construction of storm drainage, storm water pump station, water quality structure, roadway milling and resurfacing, sidewalk replacement, construction of curbs, gutters, ADA ramps, and swale restoration. • In the area generally bounded by N.W. 2nd Ave., N.W. — N.E. 34th St., N.E. 39th St., and Biscayne Bay, including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by N.W. 2nd Ave., N.W. —N.E. 34th St., N.W. —N.E. 24th St., and Biscayne Bay, including any additional streets as required — project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. 3 • In the area generally bounded by S.W. 39th Ave., S.W. 26th St., S.W. 27th Ave., and S. Dixie Hwy., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area known as Marcos Island - project components include: drainage improvements. District 3 • In the area generally bounded by S.W. 22nd Ave., SR 836, the Miami River, W. Flagler St., S.W. 12th Ave., and N.W. 7th St., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by N.W. - S.W. 27th Ave., N.W. 7th St., S.W. 12th Ave., S.W. 8th St., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by S.W. 27th Ave., S.W. 8th St., S.W. 22nd Ave., and S.W. 9th St., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by S.W. 17th Ave., SW 18th St., S.W. 12th Ave., and S. Dixie Hwy., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by S.W. 17th Ave., S.W. 8th St., S.W. 12th Ave., and S.W. 18th St., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by S.W. 17th Ave., W. Flagler St., S.W. 1st Ct., S.W. lst Ave., I-95, and S.W. 8th St., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area known as Shenandoah / Roads including any additional adjacent areas as required - project components include: drainage remediation. District 4 • In the area generally bounded by S.W. 16th St., S.W. 27th Ave., S.W. 22nd St., and S.W. 32nd Ave. - project components include: the design and construction of a positive storm sewer system, road improvements such as damaged sidewalk replacement, damaged curb and/or gutter replacement, ADA compliant ramp construction, re -sod of swales, milling and resurfacing. 4 • In the area generally bounded by S.W. 37th Ave., S.W. 16th St., S.W. 24th Ave., and S.W. 22nd St., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by S.W. 27th Ave., S.W. 22nd St., S.W. 17th Ave. and S. Dixie Hwy., including any additional streets as required - project components include: the design and construction of roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • In the area generally bounded by S.W. 47th Ave., S.W 57th Ave., W. Flagler St., and S.W. 8th St. - project components include: the construction of a storm sewer system, road improvements, such as damaged sidewalk replacement, damaged curb and / or gutter replacement, ADA compliant ramp construction, re -sod of swales, milling and resurfacing. • In the area known as Shenandoah various intersections - project components include: the construction of traffic circles, including related drainage improvements, curbs, gutters, milling and resurfacing, landscaping, and pavement markings. • In the area known as Flagami various intersections - project components include: the construction of traffic circles, including related drainage improvements, curbs, gutters, milling and resurfacing, landscaping, and pavement markings. • In the area know as Shenandoah / Flagami - project components include: drainage remediation. District 5 In the area generally bounded by N.W. 17th Ave. and N.W. 19th Ave., from N.W. 45th St. to N.W. 57th St., including N.W. 18th Ave. from N.W. 43rd St. to N.W. 57th St., but not including N.W. 46th St. and N.W. 54th St. - project components include: the construction of roadway improvement, including milling and resurfacing, sidewalk repairs, upgrading swale areas to provide parking, turf block, curbs, gutters, storm drainage improvements, pavement markings. • In the area generally bounded by N.W. 2nd Ave., N.W. 40th St., N. Miami Ave., and N.W. 46th St. - project components include: the construction of roadway improvements, including milling and resurfacing, sidewalk repairs, street widening, curbs, gutters, pavement marking, landscaping, and storm drainage as needed. • N.E. 38th St. from N. Miami Ave. to N.E. 2nd Ave. - project components include: the construction of roadway improvements, including reconfiguring existing roadway section, milling and resurfacing, landscaping, lighting, and associated drainage improvements. • In the area generally bounded by N.E. 2nd Ave., N.E. 72nd St., Florida East Coast Rail line, and N.E. 62nd St. -- project components include: the design and construction of a variety of streetscape related improvements, such as entrance gateways, lighting, directional signs, landscaping, milling and resurfacing, and drainage modifications as needed. 5 • In the area generally bounded by N. Miami Ave., N.E. 48th St., N.E. 2nd Ave„ N,E, 44th St. - project components include: the construction of roadway improvements, such as milling and resurfacing, road reconstruction, curbs, sidewalks, medians, storm drainage, and pavement markings. North River Dr. from N.W. 7th St. to N.W. 11th P1. - project components include: the construction of roadway improvements, such as roadway reconstruction, sidewalks, associated drainage, landscaping, and streetlighting. Multi -District • Citywide - project components include: Miscellaneous sidewalk replacements and construction of ADA improvements. • In the area generally bounded by W. Flagler St., S.W. 8th St., S.W. 67th Ave., and S.W. 62nd Ave. - project components include: the construction of a storm sewer system, road improvements, such as damaged sidewalk replacement, damaged curb and/or gutter replacement, ADA compliant ramp construction, re -sod of swales, milling & resurfacing. In an area generally bounded by N.W. 7th St., W. Flagler St., N.W. 57th Ave., and N.W. 52nd Ave. - project components include: the construction of a storm sewer system, road improvements, such as damaged sidewalk replacement, damaged curb and/or gutter replacement, ADA compliant ramp construction, re -sod of swales, milling & resurfacing. • In the area known as Silver Bluff, which includes various intersections within District 2 and District 4 - project components include: the construction of traffic circles, including related drainage improvements, curbs, gutters, milling & resurfacing, landscaping, and pavement markings. • S.W. 32nd Ave. from U.S. 1 to S.W. 22nd St, (also known as Coral Way) - project components include: the construction of roadway improvements, including resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping. • Or if such project components cannot be constructed as provided above, such other roadway and sidewalk improvements, as may be determined by the City, including but not limited to resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalk replacement, lighting improvements, landscaping, signage, and striping, in the areas described above or in any other areas as may be determined by the City. 6 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 2007 Bonds: SOURCES: Principal Amount of Series 2007 Bonds [Plus Net Original Issue Premium] [Less Net Original Issue Discount] TOTAL. SOURCES USES: Deposit to Construction Fund Costs of Issuance) TOTAL USES S Includes municipal bond insurance premium and underwriting discount, financial advisory and legal fees and expenses, and miscellaneous costs of issuance. 7 DEBT SERVICE SCHEDULE The following table sets forth the aggregate debt service requirements for the Series 2007 Bonds. Fiscal Year Ending September 30th Principal Interest Total Debt Service 8 DESCRIPTION OF THE SERIES 2007 BONDS General The Series 2007 Bonds shall be issued as fully registered, book -entry only bonds in the denomination of $5,000 each or any integral multiple thereof, through the book -entry only system maintained by The Depository Trust Company, New York, New York. The Series 2007 Bonds shall be numbered consecutively from one (1) upward preceded by the letter "R" prefixed to the number. The principal of and redemption premium, if any, on the Series 2007 Bonds shall be payable upon presentation and surrender at the principal office of Commerce Bank, National Association, Jacksonville, Florida (the "Paying Agent"). Interest on the Series 2007 Bonds is payable semi-annually on January 1 and July 1 of each year, commencing January 1, 2008. Interest shall be paid by check and mailed to the owners in whose names Series 2007 Bonds are registered on the close of business on the 15th day (whether or not a business day) of the month preceding each interest payment date (the "Record Date"); provided, however, that the Holder of Series 2007 Bonds in an aggregate principal amount of at least $1,000,000 shall be entitled to have interest paid by wire transfer as provided in the Resolution. Interest on the Series 2007 Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. 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 NEVFI-IER 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 2007 Bonds. The Series 2007 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 2007 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 9 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 2007 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2007 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2007 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 2007 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2007 Bonds, except in the event that use of the book -entry system for the Series 2007 Bonds is discontinued. To facilitate subsequent transfers, all Series 2007 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 DEC. The deposit of Series 2007 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 2007 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2007 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Series 2007 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 2007 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 2007 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 2007 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of OTC. 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 10 records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Series 2007 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 2007 Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2007 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 2007 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 2007 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2007 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL, OR INTEREST, OR ANY PREMIUM ON THE SERIES 2007 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2007 BONDS FOR REDEMPTION. Optional Redemption (The Series 2007 Bonds maturing on and after January 1, 20 , are subject to redemption at the option of the City on or after January 1, 20� , in whole or in part at any time, in such manner as shall be determined by the Bond Registrar, at a redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption without premium.] 11 Mandatory Redemption The Series 2007 Bonds maturing on January 1, 20 are subject to mandatory sinking fund redemption prior to maturity, in part by lot, on January 1, 20 in the following years and in the following amounts, from and to the extent of Amortization Requirements and whether sufficient moneys are then on deposit in the Principal and Interest Account for such Series 2007 Bonds, at a redemption price of par, plus accrued interest to the respective dates of redemption: Year Amortization Requirement 20 20 *Maturity Notice and Effect of Redemption At least thirty (30) days, but not more than sixty (60) days, before the redemption date of any Series 2007 Bonds, whether such redemption be in whole or in part, the City shall cause a notice of any such redemption signed by the City to be mailed, first class postage prepaid, to all Holders owning Series 2007 Bonds to be redeemed in whole or in part and to any Fiduciaries, but any defect in such notice or the failure so to mail any such notice to any Holder owning any Series 2007 Bonds shall not affect the validity of the proceedings for the redemption of any other Series 2007 Bonds. Each such notice shall set forth the name of the Series 2007 Bonds or portions thereof to be redeemed, the date fixed for redemption, the redemption price to be paid, and if less than all the Series 2007 Bonds shall be called for redemption, the maturities of the Series 2007 Bonds to be redeemed, the CUSIP numbers, the name and address (including contact person and phone number) of the Fiduciary to which Series 2007 Bonds called for redemption are to be delivered and, if less than all of the Series 2007 Bonds of any one maturity then Outstanding shall be called for redemption, the distinctive numbers and letters, if any, of such Series 2007 Bonds to be redeemed and, in the case of Series 2007 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. If any Series 2007 Bond is to be redeemed in part only, the notice of redemption shall also state that on or after the redemption date, upon surrender of such Series 2007 Bond, a new Series 2007 Band in principal amount equal to the unredeemed portion of such Series 2007 Bond and of the same maturity and bearing the same interest rate will be issued. Any notice as provided herein shall be conclusively presumed to have been duly given, whether or not the owner of the Series 2007 Bond receives such notice. In addition to the foregoing notice, the City shall cause further notice to be given as set forth below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed: (i) Each further notice of redemption shall be sent at least 35 days before the redemption date by registered or certified mail or overnight delivery service to one or more registered securities depositaries then in the business of holding substantial amounts of obligations of types comparable to the Bonds and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds (such as Financial Information, Inc.'s Financial Daily Called Bond 12 Service, Kenny Information Service's Called Bond Service, Moody's Municipal and Government Called Bond Service and Standard & Poor's Called Bond Record). (ii) Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. In the case of an optional redemption, any notice of redemption may state that (1) it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Bond Registrar, Paying Agent or a Fiduciary acting as escrow agent no later than the redemption date or (2) the City retains the right to rescind such notice on or prior to the scheduled redemption date (in either case, a "Conditional Redemption"), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in this subsection. On the date fixed for redemption, notice having been mailed in the manner and under the conditions hereinabove stated, provided that such notice of redemption has not been rescinded as permitted above, the Series 2007 Bonds or portions thereof called for redemption shall be due and payable at the redemption price provided therefor, plus accrued interest to such date. Registration, Transfer and Exchange So long as the Series 2007 Bonds are registered in the name of DTC or its nominee, the following paragraphs relating to transfer and exchange of Series 2007 Bonds do not apply to the Series 2007 Bonds. The Bond Registrar shall keep books for the registration, exchange and registration of transfer of Series 2007 Bonds as provided in the Resolution. The Bond Registrar shall evidence acceptance of the duties, obligations and responsibilities of Bond Registrar by execution of the certificate of authentication on the Series 2007 Bonds. The transfer of any Series 2007 Bond may be registered only upon the books kept for the registration of transfer of Series 2007 Bonds upon surrender of such Series 2007 Bond to the Bond Registrar, together with an assignment duly executed by the Holder or such Holder's attorney or legal representative in such form as shall be satisfactory to the Bond Registrar. Upon any such exchange or registration of transfer, the City shall execute and the Bond Registrar shall authenticate and deliver in exchange for such Series 2007 Bond a new registered Series 2007 Bond or Series 2007 Bonds, registered in the name of the transferee, of any denomination or denominations authorized by the Resolution, in the aggregate principal amount equal to the principal amount of such Series 2007 Bond surrendered, of the same maturity and bearing interest at the same rate. All Series 2007 Bonds surrendered in any such exchange or registration of transfer shall forthwith be cancelled by the Bond Registrar. No service charge shall be made for any registration of transfer or exchange of Series 2007 Bonds, but the City and the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Series 2007 Bonds. The Bond Registrar shall not be required (i) to register the transfer of or to exchange Series 2007 Bonds during a period beginning at the opening of business fifteen (15) days before the day of mailing of a notice of redemption of Series 2007 Bonds and ending at the close of business on the day 13 of such mailing or (ii) to register the transfer of or to exchange any Series 2007 Bond so selected for redemption in whole or in part. The City, any Paying Agent and the Bond Registrar, and any other agent of the City, may treat the person in whose name any Series 2007 Bond is registered on the books of the City kept by the Bond Registrar as the Holder of such Series 2007 Bond for the purpose of receiving payment of principal of and redemption premium, if any, and interest on such Series 2007 Bond, and for all other purposes whatsoever, whether such Series 2007 I3ond be overdue, and, to the extent permitted by law, neither the City, any Paying Agent, the Bond Registrar nor any such agent shall be affected by any notice to the contrary. Replacement of Bonds Mutilated, Destroyed, Stolen or Lost In case any Series 2007 Bond secured hereby shall become mutilated or be destroyed, stolen or lost, the City shall cause to be executed, and the Bond Registrar shall authenticate and deliver, a new Series 2007 Bond of like date and tenor in exchange and substitution for such mutilated Series 2007 Bond or in lieu of and in substitution for such Series 2007 Bond destroyed, stolen or lost, and the Holder shall pay the reasonable expenses and charges of the City and the Bond Registrar in connection therewith and, in case of a Series 2007 Bond destroyed, stolen or lost, the Holder shall file with the Bond Registrar evidence satisfactory to it and to the City that such Series 2007 Bond was destroyed, stolen or lost, and of such Holder's ownership thereof, and shall furnish the City and the Bond Registrar indemnity satisfactory to them. 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. The Insurer does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Policy and the Insurer set forth herein. Additionally, the Insurer makes no representation regarding the Series 2007 Bonds or the advisability of investing in the Series 2007 Bonds. ITo Come] 14 SECURITY FOR THE SERIES 2007 BONDS General The principal of, redemption premium if any, and interest on the Series 2007 Bonds will be payable from and secured solely by a lien upon and a pledge of (i) the proceeds of the Local Option Gas Taxes, (ii) eighty percent (80%) of the City's portion of the Transportation Surtax, (iii) twenty percent (20%) of the City's Parking Surcharge, (iv) such additional revenues designated by a Series Resolution as Designated Revenues under the Resolution, and (v) all investment income realized by reason of the investment of moneys on deposit or credited to the Debt Service Fund created by the Resolution, whether such investment income is deposited or credited to the Designated Revenues Fund or remains in the Account in the Debt Service Fund where earned (collectively, the "Designated Revenues"). The individual, Designated Revenues are described herein under "LOCAL OPTION GAS TAXES", TRANSPORTATION SURTAX" and "PARKING SURCHARGE". Limited Obligations The Series 2007 Bonds shall not be deemed to constitute a pledge of the faith and credit of the State or of any political subdivision thereof, including the City. Neither the faith and credit of the State nor the faith and credit of the City are pledged to the payment of the principal of or redemption premium, if any, or interest on the Series 2007 Bonds, and the issuance of the Series 2007 Bonds shall not directly or indirectly or contingently obligate the State or the City to levy any taxes whatever therefor or to make any appropriation for their payment except from the Designated Revenues to the extent provided for under the Resolution. Establishment of Funds and Accounts The Resolution establishes several funds and accounts, including the "City of Miami Special Obligation Bonds Debt Service Fund" (the "Debt Service Fund") and two accounts therein designated the "Principal and Interest Account" (the "Principal and Interest Account") and the "Expense Account" (the "Expense Account"), and the "City of Miami Special Obligation Bonds Reserve Fund" (the "Reserve Fund"), all of which funds and accounts shall be held in trust by the Paying Agent. There is also created and designated the "City of Miami Special Obligation Bonds Rebate Fund" (the "Rebate Fund"), which fund shall be held in trust by the City. There may also be established in the Reserve Fund additional separate Series Subaccounts with respect to and securing separate Series of Bonds. The Resolution also establishes the "City of Miami Special Obligation Bonds Designated Revenues Fund" (the "Designated Revenues Fund"). The City has also established, pursuant to the Resolution, a Construction Fund, and will establish within the Construction Fund a separate account for the Series 2007 Project designated as the "Series 2007 Project Account" to be used for the purpose of paying the costs of the Series 2007 Project. Moneys in these funds and accounts, until applied in accordance with the provisions of the Resolution, shall be subject to a lien and charge in favor of the Holders of the Series 2007 Bonds and the Insurer. Application of Pledged Funds The Resolution requires the City to deposit all revenues generated from the Local Option Gas Taxes, Transportation Surtax and the Parking Surcharge, as the same are collected, to the credit of the City's general or special fund in which such revenues are received and thereafter promptly transfer the Designated Revenues to the Designated Revenues Fund. The City shall then transfer Designated Revenues from such 15 Designated Revenues Fund to the Rebate Fund, the Principal and Interest Account, the Reserve Fund and the accounts established within said Fund and the Expense Account and apply the same to the payment of required arbitrage rebate payments, the interest on and the principal of the Bonds, Hedge Obligations, if any, the required deposits, if any, to the Reserve Fund and the fees and expenses payable from the Expense Account, all in accordance with the provisions of the Resolution. On or before the Business Day preceding any date on which arbitrage rebate payments under the Code are required to be made, the Finance Director shall withdraw moneys from the Designated Revenues Fund and deposit to the credit of the Rebate Fund such amounts as directed by the City to make such arbitrage rebate payments under the Resolution, Upon receipt, the Finance Director shall deposit any Hedge Receipts to the credit of the Principal and Interest Account. On or before the twenty-fifth (25th) day of each month, commencing in the month in which the Series 2007 Bonds are issued, the Finance Director shall withdraw from the Designated Revenues Fund an amount equal to the amount then held for the credit of the Designated Revenues Fund or such lesser amount as shall be required to fund the deposit requirements set forth in clauses (a), (b), (c) and (d) below, and apply the moneys so withdrawn to make the following payments and deposits in the following order: (a) Deposit to the credit of the Principal and Interest Account an amount equal to one - sixth (1/6th) of the interest becoming due on the Bonds on the next semiannual Interest Payment Date; provided, however, that the amount so deposited on account of interest in each month after the delivery of the Bonds of any Series up to and including the month immediately preceding the first Interest Payment Date thereafter of the Bonds of such Series shall be that amount that when multiplied by the number of such deposits will be equal to the amount of interest payable on such Bonds on such first Interest Payment Date less the amount of any accrued interest paid on such Bonds and deposited to the credit of the Principal and Interest Account; (b) Deposit to the credit of the Principal and Interest Account an amount equal to the sum of (i) one -twelfth (1/12th) of the principal of Serial Bonds that will mature and become due on the next annual maturity date and (ii) one -twelfth (1/12th) of the Amortization Requirements that will become due and payable within the next Fiscal Year, such deposits to commence in such month or to be adjusted in such amounts as will ensure that on the dates such principal or Amortization Requirements are due and payable sufficient moneys will be on deposit in the Principal and Interest Account. Notwithstanding the foregoing provisions, moneys shall not be required to be deposited to the credit of the Principal and Interest Account (A) pursuant to clause (a) above if the amount then to the credit thereof is equal to the interest becoming due and payable on the Bonds on the next Interest Payment Date and (B) pursuant to clause (b) above if the amount then to the credit thereof is equal to the sum of (i) the principal of Serial Bonds maturing on the next maturity date and (ii) the Amortization Requirement for such Fiscal Year on account of the Term Bonds Outstanding, If the period between .Interest Payment Dates is other than six (6) months or the period between principal payment dates is other than twelve (12) months, then such monthly deposits shall be increased or decreased, as appropriate, in sufficient amounts to provide the required interest amount coming due on the next Interest Payment Date or the principal 16 amount maturing or Amortization Requirement due on the next principal payment date or redemption date, as applicable. Provided, further that such amounts to be deposited shall be adjusted to provide for any Hedge Obligations then due to a Hedge Counterparty (excluding any Hedge Termination Payment). (c) Deposit to the credit of the Reserve Fund (or each Account within the Reserve Fund to the extent that a Reserve Account has been established within the Reserve Fund for a particular Series of Bonds), without priority of one Account over another, if any, beginning with respect to each Series of Bonds for which a Series Reserve Fund Requirement has been established on the twenty-fifth (25th) day of the month in which such Series of Bonds are delivered to the purchasers thereof, such sums as shall be at least sufficient to pay an amount equal to one -twelfth (1/12th) of the difference between the amount, if any, on deposit in the Reserve Fund or Account therein (including any Reserve Fund Insurance Policy or Reserve Fund Letter of Credit) on the date of issuance of the Series of Bonds and the increase in the amount required to be held therein due to such Series Reserve Fund Requirement, if any, for such Series of Bonds, and, provided, further, that no payments shall be required to be made into the Reserve Fund or any Account whenever and as long as the amount deposited therein (including any Reserve Fund Insurance Policy or Reserve Fund Letter of Credit) shall be equal to all of the Series Reserve Fund Requirements for all Series of Bonds to which such Reserve Fund or Account therein relates. Notwithstanding the foregoing provisions, in lieu of or in substitution for the required deposits, if any, hereunder (including existing deposits) into the Reserve Fund or any Account therein, the City may cause to be deposited into the Reserve Fund or any Account therein, for any Series of Bonds, a Reserve Fund Insurance Policy or a Reserve Fund Letter of Credit for the benefit of the holders of the Bonds of such Series in an amount equal to the difference between the applicable Series Reserve Fund Requirement and the sums to remain on deposit in the Reserve Fund or any Account therein, after the deposit of such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, if any, which Reserve Fund Insurance Policy or Reserve Fund Letter of Credit shall be payable or available to be drawn upon, as the case may be (upon the giving of notice as required thereunder), on any Interest Payment Date on which a deficiency exists with respect to the applicable Series of Bonds which cannot be cured by all moneys in any Fund or Account, including the applicable Account, if any, in the Reserve Fund under the Resolution, held pursuant to the Resolution and available for such purpose. If a disbursement is made under a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, the City shall be obligated to either reinstate the maximum limits of such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit within twelve (12) months following such disbursement or to deposit into the Reserve Fund or applicable Account therein, as provided in the next paragraph, funds in the amount of the disbursements made under such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, or a combination of such alternatives. In the event that any moneys shall be withdrawn from the Reserve Fund or any Account therein for payments into the Principal and Interest Account, such withdrawals shall be subsequently restored in the manner described in the first paragraph of this clause (c) from the Designated Revenues available after all required payments have been made into the Principal and Interest Account, including any deficiencies for prior payments, unless restored by the reinstatement of the maximum limits of a Reserve Fund Insurance Policy or 17 Reserve Fund Letter of Credit (without priority of one Account over another Account, if any). In the event that a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit shall be drawn upon, the principal portion of the related payment obligations to the issuer of such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit shall be paid, after all required payments have been made to the Principal and Interest Account, including any deficiencies for prior payments, in accordance with the terms of any agreement between the City and such issuer, on a parity and on a pro-rata basis with all other obligations payable under this clause (c) to other issuers of any Reserve Fund Letter of Credit or Reserve Fund Insurance Policy and cash funding requirements to the different Accounts established for each Series of Bonds but prior to making any cash deposit to the Account to which such insurance policy or Letter of Credit relates, if any, provided that such Insurance Policy or Letter of Credit is reinstated in the amount of such payment concurrently with the receipt of such payment by the issuer thereof. (d) Any balance remaining after satisfying the requirements of clauses (a), (b) and (c) above shall be deposited to the credit of the Expense Account in an amount sufficient to pay (i) the fees, interest and other amounts owing any issuer of a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, (ii) any fees and expenses of Fiduciaries or Hedge Counterparties coming due in such month and any other administrative fees and expenses coming due in such month with respect to Bonds, (iii) any costs of issuance of a Series of Bonds that remain to be paid, and (iv) any Hedge Termination Payment that is due. (e) Any such balance remaining in the Designated Revenues Fund after making the withdrawals and satisfying the requirements mentioned in clauses (a), (b), (c) and (d) above shall be deposited to pay principal and interest on Subordinated Indebtedness in the manner provided in the resolution authorizing such Subordinated Indebtedness. If the moneys withdrawn for deposits to the above funds and accounts and for making the other required payments as above set forth shall not be sufficient to make such deposits and payments, the requirements in each month thereafter for each of the above deposits and payments for which the required monthly deposit or payment has not been made shall be cumulative and the amount of any deficiency in any such monthly deposit or payment shall be added to the amount otherwise required to be deposited in each month thereafter until such time as such deficiency shall have been made up. The balance, if any, remaining to the credit of the Designated Revenue Fund after making the withdrawals and satisfying the requirements mentioned in clauses (a), (b), (c), (d) and (e) above in any Fiscal Year shall be withdrawn and deposited to the general or special revenue fund in the same percentage in which such Designated Revenues were originally deposited to the Designated Revenues Fund. Reserve Account Pursuant to the Resolution, the City has created and established the Reserve Fund, and has established a Series Reserve Fund Requirement for the Series 2007 Bonds. The City is permitted to establish additional subaccounts securing separate Series of Bonds designated to be secured thereby. [Upon issuance of the Series 2007 Bonds, the City will fund the Series Reserve Fund Requirement in an amount equal to $ by purchasing and crediting to the Reserve Fund a debt service reserve surety policy from See "BOND INSURANCE" herein.] 18 Issuance of Additional Bonds The Resolution provides that one or more Series of Additional Bonds of the City may be issued under and secured by the Resolution, on a parity as to the pledge of the Designated Revenues with the Series 2007 Bonds, subject to the conditions hereinafter provided, from time to time for the purpose of paying all or any part of the cost of any capital improvements for roadway or transportation purposes not inconsistent with the authorized use of the Designated Revenues. Before such Additional Bonds shall be delivered by the Bond Registrar, there shall be filed with the City Manager the following: (b) a copy, certified by the City Clerk, of the Series Resolution for such Series of Additional Bonds; (c) if applicable, a copy, certified by the City Clerk, of the resolution adopted by the City awarding such Additional Bonds, or the Bond Purchase Contract specifying the interest rate or rates for such Additional Bonds, or if such Additional Bonds are Variable Rate Bonds, the initial interest rate and the manner of determining the interest rates on such Additional Bonds in the future and directing the delivery of such Additional I3onds to or upon the order of the purchasers therein named upon payment of the purchase price therein set forth (provided that such matters may be set forth in the Series Resolution); (d) a certificate of the Finance Director demonstrating that the percentage derived by dividing the amount of the Designated Revenues received by the City during any twelve (12) consecutive months in the eighteen (18) months next preceding the date of delivery of the Additional Bonds then requested to be delivered, by the Maximum Principal and Interest Requirements, including the Principal and Interest Requirements with respect to the Additional Bonds then to be delivered, for any future Fiscal Year is not less than one hundred thirty-five per centum (135%); (e) an opinion of Bond Counsel to the effect that (i) the Series Resolution referred to in clause (a) above has been duly adopted by the City, (ii) the issuance of such Additional Bonds has been duly and validly authorized, (iii) the Designated Revenues have been lawfully pledged, to the extent described in the Resolution, for the payment of the Additional Bonds, (iv) such Additional Bonds constitute special obligations of the City payable in accordance with the provisions of the Resolution and (v) the interest on such Additional Bonds is excluded from gross income for federal income tax purposes (to the extent such Bonds are being issued as tax-exempt Bonds); (f) an opinion of the City Attorney to the effect that the issuance of such Additional Bonds has been duly authorized and that all conditions precedent to the delivery of such Additional Bonds have been fulfilled; and (g) a certificate of the Finance Director to the effect that no event of default and no event which with the passage of time, the giving of notice or both would become an event of default, has occurred within the twelve (12) consecutive calendar months prior to the date of such certificate and is continuing. 19 Refunding Bonds One or more Series of Refunding Bonds of the City may be issued from time to time under and secured by the Resolution, subject to the conditions hereinafter provided in this Section, for the purpose of providing funds for refunding all or any Bonds of any one or more Series of Bonds then Outstanding, including the payment of any redemption premium thereon and interest that will accrue on such Bonds to the redemption date or stated maturity date or dates, funding any funds and accounts under the Resolution and paying any expenses in connection with such refunding and for any related lawful purpose. Except as to any Credit Facility or Insurance Policy and as to any difference in the maturities thereof or the rate or rates of interest or the provisions for redemption and except for such differences, if any, respecting the use of moneys in the various funds and accounts created in the Resolution, such Series of Refunding Bonds shall be on a parity with and shall be entitled to the same benefit and security of the Resolution as all other Bonds theretofore or thereafter issued under the Resolution. Prior to or simultaneously with the authentication and delivery of such Refunding Bonds by the Bond Registrar to or upon the order of the purchasers thereof or the designated representative, there shall be filed with the City Manager the following documents and opinions: (h) a copy, certified by the City Clerk, of the Series Resolution adopted by the City, approving the sale of such Refunding Bonds; (i) an opinion of Bond Counsel to the effect that (i) the Series Resolution referred to in clause (a) above has been duly adopted by the City, (ii) the issuance of such Refunding Bonds has been duly and validly authorized, (iii) the Designated Revenues have been lawfully pledged, to the extent described in this Resolution, for the payment of the Refunding Bonds, (iv) such Refunding Bonds constitute special obligations of the City payable in accordance with the provisions of the Resolution and (v) the interest on such Refunding Bonds is excluded from gross income for federal income tax purposes (to the extent such Bonds are being issued as tax-exempt Bonds); (j) an opinion of the City Attorney to the effect that the issuance of such Refunding Bonds has been duly authorized and that all conditions precedent to the delivery of such Refunding Bonds have been fulfilled; and (k) any additional documents or opinions as Bond Counsel, the initial purchasers of such Refunding Bonds or their counsel or any Credit Bank or Insurer or its counsel may reasonably require. The Bond Registrar, however, shall not deliver such Refunding Bonds unless the City Manager has also received: i. if the Bonds to be refunded do not mature or are not being redeemed on the date of delivery of the Refunding Bonds, a written verification report of an Accountant; and 2. (A) a Certificate of the Finance Director showing that the aggregate Principal and Interest Requirements on account of all Bonds Outstanding (after the issuance of such Refunding Bonds and after the redemption or provision for payment of the Bonds to be refunded) following the Fiscal Year in which such Refunding Bonds are to be delivered shall not exceed the aggregate Principal and Interest Requirements on account of all the Bonds Outstanding (including the Bonds to be refunded) immediately prior to the issuance of such Refunding Bonds following the Fiscal Year in which such Refunding Bonds are to be delivered; (B) the 20 net present value of the aggregate Principal and Interest Requirements on account of all Bonds Outstanding (after the issuance of such Refunding Bonds and after the redemption or provision for payment of the Bonds to be refunded) following the Fiscal Year in which such Refunding Bonds are to be delivered is less than the net present value of the aggregate Principal and Interest Requirements on account of all Bonds Outstanding (including the Bonds to be refunded) immediately prior to the issuance of such Refunding Bonds following the Fiscal Year in which such Refunding Bonds are to be delivered; or (C) assuming the Bonds to be refunded are not then Outstanding, a certificate of the Finance Director demonstrating that the percentage derived by dividing the amount of the Designated Revenues received by the City during any twelve (12) consecutive months in the eighteen (18) months next preceding the date of delivery of the Refunding Bonds then requested to be delivered, by the Maximum Principal and Interest Requirements on all Outstanding Bonds, including the Principal and Interest Requirements with respect to the Refunding Bonds then to be delivered (but not including the Bonds to be refunded), for any future Fiscal Year is not less than one hundred thirty-five per centum (135%); provided, however, that for purposes of the calculation required by this subclause (C) in connection with the issuance of Refunding Bonds pursuant to a forward refunding or forward delivery or other such similar arrangements, the "date of delivery" of the Refunding Bonds shall be deemed to be the date on which the contract or agreement providing for such forward refunding, forward delivery or other similar arrangement is executed and delivered (instead of the actual future date of delivery of the Refunding Bonds). Covenant as to Designated Revenues The City covenants that while any of the Bonds issued under the provisions of the Resolution shall be Outstanding it will not take any action or fail to take any action which might result in a suspension or termination of the receipt of the Designated Revenues and it will take all appropriate action to keep and maintain the Designated Revenues at the highest possible level and that, subject to covenants with Credit Banks and Insurers, it will not create or permit to be created any charge or lien on the proceeds of the Designated Revenues ranking equally with or prior to the charge or lien on such proceeds of the Bonds issued under the provisions of the Resolution. LOCAL OPTION GAS TAXES General As a portion of the Designated Revenues, the City is pledging the Local Option Gas Taxes to the Series 2007 Bonds. The Local Option Gas Taxes is defined in the Resolution to mean collectively, (i) the City's portion of a tax imposed by Ordinance No. 93-63 enacted by Miami -Dade County (the "County") on June 15, 1993, as may be amended, pursuant to Section 336.025(1)(a), Florida Statues, as amended and distributed pursuant to an Interlocal Agreement dated as of May 20, 1993 among the County, the City and the other municipalities located in the County (the "Gas Tax Interlocal"); and (ii) the City's portion of a tax imposed by Ordinance No. 93-91 enacted by the County on September 20, 1993, as amended by Ordinance No. 96-101 enacted on June 20,1996, as may be amended, pursuant to Section 336.025(1)(b), Florida Statues, as amended and distributed pursuant to Section 336.025(4), Florida Statutes, as amended, and distributed pursuant to an Interlocal Agreement dated as of July 27, 1993 (the "Second Gas Tax Interlocal"). Each county in the State is authorized to levy a tax, of between one cent and eleven cents per net 21 gallon on motor fuel sold in such county in the form of two separate levies. The first levy is a tax of one to six cents per gallon on motor fuel and diesel fuel and may be authorized in a county by an ordinance enacted by a majority vote of the governing body of a county or by referendum. The County levies all six cents of the first levy which levy was approved by Ordinance No. 88-49, as amended and supplemented by Ordinance No. 93-63, as amended by Ordinance No. 97-156 (the "First Levy"). See "LOCAL OPTION GAS TAXES —First Levy" below. All of Florida's sixty-seven counties levy this portion of the Local Option Fuel Tax with sixty- five of the counties levying at the maximum rate of six cents. The second levy is a tax of one to five cents per gallon on motor fuel and may be authorized in a county by an ordinance enacted by a majority vote of the governing body of a county or by referendum. The County levies three cents of the second levy which levy was approved by Ordinance No. 93-91, as amended by Ordinance No. 96-101 (the "Second Levy"). See "LOCAL OPTION GAS TAXES — Second Levy" below. Collection and Distribution The Florida Department of Revenue ("FDOR") collects the Local Option Fuel Tax in each county and deposits the proceeds into the State's Local Option Fuel Tax Trust Fund. The Local Option Fuel 'fax Trust Fund is subject to a 7% charge imposed by the State, representing a share of the cost of general government of the State. This charge is deducted from the Local Option Fuel Tax Trust Fund and is deposited in the General Revenue Fund of the State. FDOR is authorized to deduct certain administrative costs incurred in collecting, administering, enforcing and distributing the proceeds of such tax to the counties in an amount not to exceed 2% of total collections from the Local Option Fuel Tax Trust Fund. The net proceeds collected from the Local Option Fuel Tax are distributed by FDOR to each eligible county and the eligible municipalities therein according to a distribution formula determined at the local level by interlocal agreement between the county and the municipalities within the county's boundaries representing a majority of the population of the incorporated area within the county. If no interlocal agreement is established, then the distribution is based on the relative transportation expenditures of the county and the municipalities therein for the preceding 5 years. After the initial levy, the distribution is recalculated every 10 years. Upon any newly incorporated municipality becoming eligible to receive the Local Option Fuel Tax, the distribution shall be equal to (i) the County's per lane mile expenditure in the previous year times the lane miles within the jurisdiction of the municipality, in which the County's share shall be reduced proportionally, or (ii) determined by the local act incorporating the municipality. However, such distribution shall not materially or adversely affect the rights of holders of outstanding bonds which are backed by taxes authorized pursuant to Section 336.025(1), Florida Statutes, and the amounts distributed to the County and each municipality shall not be reduced below the amount necessary for the payment of principal and interest and reserves for principal and interest as required under the covenants of any bond resolution outstanding on the date of the redistribution. First Levy The County has entered into the Gas Tax Interlocal to provide for the distribution of the proceeds of the First Levy in accordance with a formula. Under the formula provided in the Gas Tax Interlocal, 74% of such proceeds are allocated based on the ratio of the population of each eligible incorporated municipality to the total population of all eligible incorporated municipalities in the County. The remaining 26% of such proceeds is allocated based on the ratio of total centerline miles of roadway maintained by each eligible incorporated municipality compared to the total centerline miles maintained by all eligible incorporated 22 municipalities in the County. During the term of the Gas Tax Interlocal, the County's share of the annual proceeds of the First Levy cannot be reduced below 80% of the original 74% share, regardless of future incorporation. Pursuant to the Gas Tax Interlocal and Ordinance No. 88-49, as amended and supplemented, the First Levy is set to expire on August 31, 2023. There are 35 incorporated municipalities in the County. Pursuant to the formula provided in the current Gas Tax Interlocal, the fiscal year 2005-2006 proceeds were distributed as follows: Percentage Share of Proceeds of Recipient First Levy Aventura 0.5100000% Bat Harbour 0.0550000 Bay Harbor Island 0,1080000 Biscayne Park 0.0950000 Coral Gables 1.3050000 Cutler Bay 0.7670000 Doral 0.6780000 El Portal 0.0700000 Florida City 0.2280000 Golden Beach 0.0420000 Hialeah 5.0020000 Hialeah Gardens 0.4370000 Homestead 0.9330000 Indian Creek 0.0060000 Key Biscayne 0.2390000 Medley 0.0970000 Miami 8.0170000 Miami Beach 1.9420000 Miami Gardens 2.5750000 Miami Lakes 0.5800000 Miami Shores 0.3070000 Miami Springs 0.4370000 North Bay 0.1230000 North Miami Beach 1.3250000 North Miami 0.9410000 Opa Locka 0.3420000 Palmetto Bay 0.6920000 Pinecrest 0.5750000 South Miami 0.2830000 Sunny Isle Beach 0.2990000 Surfside 0.1220000 Sweetwater 0.2890000 Virginia Gardens 0.0540000 West Miami 0.1270000 23 Use of Revenue. Generally, county and municipal governments may only use monies received from the First Levy for transportation expenditures, defined as: (a) public transportation operation and maintenance; (b) roadway and right-of-way maintenance and equipment and structures used primarily for the storage and maintenance of such equipment; (c) roadway and right-of-way drainage; (d) street lighting; (e) traffic signs, traffic engineering, signalization and pavement markings; (f) bridge maintenance and operation; and (g) debt service and current expenditures for transportation capital projects in the foregoing program areas including the construction and reconstruction of roads and sidewalks. Second Levy The County has entered into the Second Gas Tax Interlocal to provide for the distribution of the proceeds of the Second Levy in accordance with a formula. Under the formula provided in the Second Gas Fax Interlocal, 75% of such proceeds are allocated based on the ratio of the population of each eligible incorporated municipality to the total population of all eligible incorporated municipalities in the County. The remaining 25% of such proceeds is allocated based on the ratio of total centerline miles of roadway maintained by each eligible incorporated municipality compared to the total centerline miles maintained by all eligible incorporated municipalities in the County. Pursuant to the Second Gas Tax Interlocal and Ordinance No. 93-91, as amended and supplemented, the Second Levy is set to expire on August 31, [Remainder of page intentionally left blank] 24 There are 35 incorporated municipalities in the County. Pursuant to the formula provided in the Second Gas Tax Interlocal, the fiscal year 2005-2006 proceeds were distributed as follows: Percentage Share of Proceeds of Recipient Second Levy Aventura 0.4880000% Bal Harbour 0.0480000 Bay Harbor Island 0.0950000 Biscayne Park 0.0830000 Coral Gables 1.1460000 Cutler Bay 0.6740000 Doral 0.5960000 El Portal 0.0620000 Florida City 0.2000000 Golden Beach 0.0370000 Hialeah 4.3940000 Hialeah Gardens 0.3830000 Homestead 0.8200000 Indian Creek 0.0050000 Key liscayne 0.2100000 Medley 0.0850000 Miami 7.0420000 Miami Beach 1.7060000 Miami Gardens 2.2620000 Miami Lakes 0.5090000 Miami Shores 0.2690000 Miami Springs 0.3830000 North Bay 0.1080000 North Miami Beach 1.1640000 North Miami 0.8270000 Opa Locka 0.3010000 Palmetto Bay 0.6070000 Pinecrest 0.5050000 South Miami 0.2490000 Sunny Isle Beach 0.2620000 Surfside 0.1070000 Sweetwater 0.2540000 Virginia Gardens 0.0480000 West Miami 0.1110000 Use of Revenue. Generally, county and municipal governments may use monies received from the Second Levy only for transportation expenditures needed to meet the requirements of the capital improvements element of an adopted comprehensive plan or for expenditures needed to meet immediate local transportation problems and for other transportation -related expenditures that are critical for building comprehensive roadway networks by local governments. Expenditures shall not include routine maintenance of roads. 25 Eligibility In order to be eligible to receive a distribution of funds from the Local Option Fuel Tax Trust Fund, each county or municipality must have: (i) reported its finances for its most recently completed fiscal year to the Department of Financial Services pursuant to Section 218.32, Florida Statutes; (ii) made provisions for annual postaudits of financial accounts in accordance with provisions of law; (iii) levied, as shown on its most recent financial report, ad valorem taxes, exclusive of taxes levied for debt service or other special millages authorized by the voters, to produce the revenue equivalent to a millage rate of 3 mills on the dollar based upon 1973 taxable values or, in order to produce revenue equivalent to that which would otherwise be produced by such 3 mill ad valorem tax, to have received certain revenues from a county (in the case of a municipality), an occupational license tax, utility tax, or levied ad valorem tax, or any combination of those four sources; (iv) certified that persons in its employ as law enforcement officers meet certain qualifications for employment, and receive certain compensation; (v) certified that persons in its employ as firefighters meet certain employment qualifications are eligible for certain compensation; (vi) certified that each dependent special district that is budgeted separately from the general budget of such county or municipality has met the provisions for annual postaudit of its financial accounts in accordance with law; and (vii) certified to FDOR that it has complied with certain procedures regarding the establishment of the ad valorem tax millage of the county or municipality as required by law. Any funds otherwise undistributed because of ineligibility of a county or municipality shall be distributed to the eligible governments within the applicable county in proportion to other monies distributed pursuant to Section 336.025, Florida Statutes. The City represents that it has continuously been in compliance with the statutory eligibility requirements for the Local Option Fuel Tax in the past and that it has covenanted in the Resolution to do so in the future. 26 Historical and Projected Gasoline Sales in the County The volume of motor and special fuel sold in the County is set forth below for the State fiscal years indicated: MIAMI-DADE COUNTY, FLORIDA NUMBER OF TAXABLE GALLONS SOLD State Fiscal Year Ended June 30. Gasoline & Gasohol Special Fuel 'Total Gallons 2002 947,110,816 125,715,835 1, 072, 826, 651 2003 971,169,274 129,398,205 1,100, 567,479 2004 999,068,325 143,208,456 1,142,276,781 2005 1,024,996,120 144,840,059 1,169,856,179 2006 1,020,652,912 182,791,886 1,203,444,778 Source: Florida Department of Revenue. The amount of Local Option Fuel Tax received by the City from the County is dependent upon numerous factors, including the amount of motor fuel and diesel fuel sold in the State and the County and the population of the County relative to the population of the State. Furthermore, incorporation of additional municipalities within the County and the relative population size of the County and municipalities within the County could affect the amount of Local Option Fuel Tax Revenues distributable to the County and to each municipality. The amount of Local Option Fuel Tax Revenues received by the City from the County may be adversely impacted by changes in the supply or demand for or the price of motor fuel, special fuel or diesel fuel. Most of the factors that affect the amount of Local Option Fuel Tax Revenues distributable to the City are beyond the control of the County and the City. The following table sets forth the amount of historical Local Option Gas Taxes revenues received by the City for the fiscal years ended September 30, 2003 through 2006. CITY OF MIAMI, FLORIDA LOCAL OPTION GAS TAXES Local Percentage Fiscal Year Option Gas Taxes Increase Ended September 30 Received (Decrease) 2003 $7,530,388 2004 7,041,490 (6.49%) 2005 7,275,062 3.31. 2006 7,310,849 .49 Source: City of Miami, Florida Finance Dept. 27 TRANSPORTATION SURTAX General As a portion of the Designated Revenues, the City is pledging eighty percent (80%) of the Transportation Surtax to the Series 2007 Bonds. The Transportation Surtax is defined in the Resolution to mean the City's portion of the Charter County Transit System Surtax approved by the electorate of the County on November 5, 2002, pursuant to Section 212.055(1), Florida Statutes and Ordinance No. 02-116 enacted by the County on July 9, 2002 (the "Transit System Surtax") and distributed to the City pursuant to an Interlocal Agreement between the County and the City approved pursuant to Resolution No. 03- 651 adopted on June 12, 2002 (the "Transit Interlocal"). Subject to the limitations and exemptions set forth in Chapter 212 of the Florida Statutes, the State imposes a tax on certain sales, use, services, rentals, admissions and other transactions occurring in the State, including, but not limited to, the rental of living quarters or sleeping or housekeeping accommodations for a period of six months or less, items or articles of tangible personal property sold at retail, the rental or lease of real property for purposes other than, among other things, agricultural uses or dwelling units, and the lease or rental of tangible personal property. Pursuant to Section 212.055(1) of the Florida Statutes, the County is authorized to impose the Transit System Surtax on all transactions occurring in the County that are subject to the State tax imposed on the above -referenced sales, use, services, rentals, admissions and other transactions. Levy of Transit System Surtax Pursuant to Section 212.055(1), Florida Statutes, the State authorized the County to levy a discretionary sales surtax of up to 1% to be used for the purposes of, among other things, planning, developing, constructing, operating and maintaining roads, bridges, bus systems and fixed guideway systems. The County elected to levy a one half of one percent discretionary sales tax, subject to the approval of the County's electorate at the time that Ordinance No. 02-116 of the County (the "Transit System Surtax Ordinance") was enacted. The Transit System Surtax was approved by a majority of the County's electorate at a special election held on November 5, 2002. The County has imposed the Transit System Surtax on all transactions occurring in the County that are subject to the State tax imposed on sales, use, services, rentals, admissions, and other transactions pursuant to Chapter 212, Florida Statutes. Collection and Funds The Florida Department of Revenue (the "Department") administers, collects and enforces the Transit System Surtax. The proceeds of the Transit System Surtax are transferred by the Department into a separate account established for the County in the Discretionary Sales Surtax Clearing Trust Fund. The Department distributes the proceeds of the Transit System Surtax less the cost of administration (the "Net Transit System Surtax Proceeds") to the County each month. Pursuant to the Transit System Surtax Ordinance, the Net Transit System Surtax Proceeds are deposited into a special fund set aside from other County funds in the custody of the Finance Director of the County (the "Transit System Sales Surtax Trust Fund"). Twenty percent of the Net Transit System Surtax Proceeds (the "Cities' Distribution") are distributed annually by the County to each city existing within the County as of November 5, 2002 (including the City of Miami), so long as each such city (i) continues to provide the same level of general fund support for transportation in subsequent fiscal years that is in each such city's fiscal year 2001-2002 budget; (ii) uses the Net Transit System Surtax Proceeds to supplement rather 28 than replace each such city's general fund support for transportation; and (iii) applies 20% of any Net Transit System Surtax Proceeds received from the County to transit uses in the nature of circulator buses, bus shelters, bus pullout bays or other transit -related infrastructure (or, alternatively, contracts with the County for the County to apply such Net Transit System Surtax Proceeds to a County project that enhances traffic mobility within the city and immediately adjacent areas). The City is pledging 80% of the Transit System Surtax received from the County to the Series 2007 Bonds and therefore the other 20% remains available for transit uses as provided above. The following table sets forth the amount of historical Transportation Surtax revenues received by the City for the fiscal years ended September 30, 2003 through 2006. CITY OF MIAMI, FLORIDA HISTORICAL COLLECTION OF TRANSPORTATION SURTAX Percentage Fiscal Year 80% of Transportation Increase Ended September 30 Surtax Received (Decrease) 2003 $3,676,015 2004 8,262,776 124.00% 2005 8,693,384 5.21 2006 10,005,773 15.07 Source: City of Miami, Florida Finance Dept. PARKING SURCHARGE General As a portion of the Designated Revenues, the City is pledging twenty percent (20%) of the Parking Surcharge revenues to the Series 2007 Bonds. The Parking Surcharge is defined in the Resolution to mean a 15% parking surcharge to be charged at public parking facilities within the City approved by the electorate of the City on November 4, 2003, imposed pursuant to Section 166.271, Florida Statutes and pursuant to Ordinance No. 04-00466 enacted by the City Commission on July 22, 2004. Levy of Parking Surcharge Pursuant to Section 166.271, Florida Statutes, the State authorized the City to impose and collect, subject to referendum approval by voters in the City, a discretionary per vehicle surcharge of up to fifteen percent (15%) of the amount charged for the sale, lease, or rental of space at parking facilities within the City which are open for use to the general public and which are not airports, seaports, county administration buildings, or other county projects. The Parking Surcharge was approved at an election on November 4, 2003. Notwithstanding the foregoing, pursuant to Section 218.503(6)(a), the City was authorized to impose a discretionary per -vehicle surcharge of up to twenty percent (20%) on the gross revenues of the sale, lease or rental or space at parking facilities within the City which are open for use to the general public. This provision only applied during the period of time in which the City was declared to be in a state of financial 29 emergency and such provision expired on June 30, 2006. The 20% surcharge was collected by the City from Fiscal Years 2000-2004. Not more than forty percent (40%) and not less than twenty percent (20%) of the Parking Surcharge proceeds shall be used to improve transportation, including, but not limited to, street, sidewalk, roadway, landscape, transit and streetscape beautification improvements and shall be used in downtown or urban core areas. Collection The Parking Surcharge amounts due shall be collected by the operator of a parking facility at the time of, and in addition to, collection of any other amounts for the parking of a motor vehicle in a parking facility, whether charge is made on an hourly, daily, weekly, monthly, yearly, event, validation programs, valet or any other basis. All operators shall be required to maintain a valid operational license. The occupational license of an operator shall be revoked upon the failure to remit the surcharge amounts for three consecutive months. No operator shall be permitted to operate the parking facility until all arrears are paid. No later than the twentieth (20th) day of each calendar month, the operator of every parking facility shall remit to the City the funds collected pursuant to the Parking Surcharge, net of refunds, for the preceding calendar month. The operator shall keep records of such funds collected. Whenever any operator fails to keep records from which the Parking Surcharge may be accurately computed, the City may make use of a factor developed by surveying other operators of a similar type parking facility, or otherwise compute the amount of Parking Surcharge due, and this computation shall be prima facie correct. Whenever any operator fails to collect or remit to the City the Parking Surcharge imposed within the time limit therefor, the City shall assess the operator the amount of Parking Surcharge due as determined by the City, plus interest at the rate of one percent (1%) per month or any fraction thereof, and a penalty of ten percent (10%) of the Parking Surcharge due on uncollected or unremitted amounts. The operator of a Parking Facility who: (1) fails, neglects or refuses to collect the Parking Surcharge; or (2) fails, neglects or refuses to remit the Parking Surcharge; or (3) fails, neglects or refuses to keep accurate records; or (4) submits any incomplete, false or fraudulent return; or (5) refuses to permit the City to examine books, records and papers relating to the Parking Surcharge; or (6) fails to fully comply with any or all rules or regulations promulgated by the City, or to keep complete and proper records as required, shall be subject to the following penalties for each offense: (i) have his or her occupational license revoked; and/or (ii) have a lien placed upon the parking facility for the sums owed plus interest pursuant to law; and/or(iii) be guilty of a misdemeanor and/or fined not more than $500, or imprisoned not more than (6) months, or both; (iv) be subject to an administrative fine in th.e amount of $500.00; (v) be required to comply with stricter reporting requirements. 30 The following table sets forth the amount of historical Parking Surcharge revenues collected by the City for the fiscal years ended September 30, 2002 through 2006. CITY OF MIAMI, FLORIDA HISTORICAL COLLECTION OF PARKING SURCHARGE Percentage Fiscal Year Parking Surcharge increase Ended September 30 Revenues Received() (Decrease) 2002 $ 2,515,407 2003 2,727,832 8.44% 2004 2,906,686 6.55 2005 2,297,904 (20.94) 2006 2,563,318 11.55 Source City of Miami, Florida Finance Dept. f>> The Parking Surcharge was collected at 20°70 from Fiscal Years 2002-2004 and collected at 15% from Fiscal Year 2005 - current. Historical Designated Revenues HISTORICAL DESIGNATED REVENUE COVERAGE OF PROPOSED SERIES 2007 DEBT SERVICE Fiscal Year Ended September 30th 80% of Total Proposed Annual Pro Forma Local Option Transportation Parking Designated Maximum Debt Debt Service Year Gas Taxes Surtax Surcharge Revenues Service Coverage 2002 -- -- $2,515,407 $2,515,407 2003 $7,530,388 $3,676,015 2,727,832 13,934,235 2004 7,041,490 8,262,776 2,906,686 18,210,952 2005 7,275,062 8,693,384 2,297,904 18,266,350 2006 7,310,849 10,005,773 2,563,318 19,879,940 31 LEGISLATIVE PROPOSALS In the November 7, 2006 general election, the voters of the State approved Amendments 6 and 7 to the State Constitution, which provide for an increase in the homestead (ad valorem tax) exemption to $50,000 from $25,000 for certain low-income seniors effective January 1, 2007 and provide a discount from the amount of ad valorem taxes for certain permanently disable veterans effective December 7, 2006, respectively. The extent to which these amendments may affect the ad valorem tax collections of the City in future years is not currently known. The Florida Legislature completed its special session on June 14, 2007. During this session the legislature passed legislation which would reduce ad valorem taxes that may be levied by local governments, other than school district, in Fiscal Year 2007-08 to below the level of taxes levied in Fiscal Year 2006-07. The legislation limits the growth of ad valorem tax levies in future years (except those levied by school districts) to the growth in a jurisdiction's population as measured by new construction and the statewide growth in per capita personal income. However, local government governing bodies may increase ad valorem tax levies by extraordinary votes or by referenda. Any county or municipality that levies in excess of the amount permitted under the legislation will forfeit participation in the half -cent sales tax revenue sharing program. The legislation also implements the several constitutional amendments, contingent on the constitutional amendments being approved by the voters. Such proposed amendments include: (i) a new homestead exemption equal to 75% of the first $200,000 in value and 1.5% of the next $300,000 with a minimum homestead exemption of $50,000, except that the minimum for low income seniors would be $100,000; (ii) assessment methods for affordable housing real property; (iii) a "grandfather" clause that will allow persons with a homestead as of January 1, 2008, whose benefits are larger under the current homestead exemption and "Save Our Homes" provisions than under the new homestead exemption to continue to receive the Save Our Homes benefits; and (iv) a $25,000 property tax exemption for tangible personal property. On September 24, 2007, the Florida Second Judicial Circuit Court adjudged the ballot summary for the proposed Constitutional amendments misleading and inaccurate and prohibited its placement on the ballot for the January 29, 2008 special election. The State appealed such order on September 26, 2007. Florida Governor Crist has reportedly stated that he plans to work with the Legislature to draft a revised proposal while the appeal is pending. The Legislature could address the issue during its special session scheduled for October 3, 2007 through October 12, 2007 that was called to amend the State's budget, but members of the Legislature are reportedly split on whether to take any action in such regard. As of September 27, 2007, new legislation related to the ballot summary had not been filed. It is impossible to predict at this time whether the appeal will be successful or whether the Florida Legislature may adopt additional legislation related to the ballot summary for the scheduled January 29, 2008 special election or for a different date, it is impossible to predict whether certain of the amendments will be approved by voters and what effect, if any, such legislation and approval will have on the City's finances. Operational Impact. Each County and municipality in the State is now required statutorily to reduce its operational budget between 3% and 9%, depending on formulas proffered by the legislation, from Fiscal Year 2007 levels. The City fell under the 3% budget reduction category. Due to the positive budgetary impacts of new construction within the City, the City balanced its Fiscal Year 2008 budget through expenditure reductions. 32 THE CITY OF MIAMI Background Now 111 years old, the City is part of the nation's eleventh largest metropolitan area. Incorporated in 1896, the City is the only municipality conceived and founded by a woman - Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity with more than 362,470 residents (as of the 2000 Census), 58.2% of them foreign born. In physical size, the City is not large, encompassing only 34.3 square miles. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. For additional information concerning the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI," City Government Since 1997, the City has been governed by a form of government known as the "Mayor -Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. 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 Marc D. Sarnoff 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 3,954 employees and administers a budget of more than $508 million. Prior to his current position, he served as Deputy County Manager of Miami -Dade County and was charged with the oversight of the Departments of Aviation, Police, Corrections, Juvenile Services, Fire Rescue, Emergency Management, Homeland Security and the Office of the Medical Examiner. He also served as liaison to the Ethics Commission, Clerk of Courts, International Trade Consortium and the planning committee for the Super Bowl. He holds a Bachelors of Science Degree in Civil Engineering from the University of Miami and is a registered Professional Engineer in the State of Florida. The City's Chief Financial Officer is Larry Spring. His primary responsibilities include the oversight of the budget development process as well as developing and maintaining the performance indicator systems whereby department performance can be monitored and provide for budget accountability. He was appointed the interim Chief Financial Officer in July 2006 and appointed the Chief Financial Officer in February 2007. He served as Assistant City Manager for Strategic Planning, Budgeting and Performance from February 2003 to February 2007. Prior to that, Mr. Spring spent the bulk of his career in the commercial banking industry primarily in the areas of accounting and treasury management. His last position prior to 33 joining the City was as Vice President and Controller of TOTALBANK in Miami. He holds a Bachelor of Science degree in Accounting from the A.B. Freeman School of Business at Tulane University and is a member of the Government Finance Officers Association. The City's Finance Director is Diana M. Gomez. She reports to the Chief Financial Officer, She is responsible for managing and investing public funds, accounts payable, general ledger, grants monitoring, payroll, treasury management and preparation of routine accounting reports as well as the City's annual financial statement. Ms. Gomez was appointed as the Finance Director on February 11, 2006. Ms. Gomez has been Assistant Director of Finance/Comptroller since her employment with the City on August 27, 2001. Prior to joining the City, Ms. Gomez was a Supervising Senior Auditor/C.P.A. for five years with KPMG LLP, one of the "big four" accounting firms. Ms. Gomez received a Bachelor of Arts in Psychology from Rutgers College, N.J., and a Masters in Business Administration in Professional Accounting from the University of Baltimore, MD. She is a Certified Public Accountant. Adoption of Investment Policy and Debt Management Policy The City adopted a detailed written investment policy on May 10, 2001, that applies to all cash and investments held or controlled by the City and identified as "general operating funds" of the City with the exception of the City's Pension Funds, Deferred Compensation (Sc Section 401(a) Plans, and such funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. Additionally, any future revenues, which have statutory investment requirements conflicting with the City's Investment Policy and funds held by state agencies (e.g. Department of Revenue), are not subject to the provisions of the policy. The primary objective of the investment program is the safety of the principal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a minimum, whether they are from securities defaults or erosion of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. The portfolios are required to be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Return on investment is of least importance compared to the safety and liquidity objectives described in the policy. In accordance with the City's Administrative Policies, the responsibility for providing oversight and direction in regard to the management of the investment program resides with the City's Finance Director. The Finance Director has established written procedures for the operation of the investment portfolio and a system of internal accounting and administrative controls. The City's investment policy may be modified from time to time by the City Commission. Subject to the exceptions in the City's investment policy, the City may invest in the following types of securities: (a) The Florida Local Government Surplus Funds Trust Fund, (b) United States Government Securities, (c) United States Government Agencies, (d) Federal Instrumentalities, (e) Interest Bearing Time Deposit or Savings Accounts, (f) Repurchase Agreements, (g) Commercial Paper, (h) Corporate Notes, (i) Bankers' Acceptances, (j) State and/or Local Government Taxable and/or Tax -Exempt Debt, (k) Registered Investment Companies (Money Market Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the City may invest in investment products that include the use of derivatives. As of September 30, 2006, approximately 85.1% of the City's investment portfolio was invested in United States Treasury Obligation and obligations of agencies of the United States Government. Approximately 14.9% of the City's investment portfolio was invested in commercial paper. All are rated in 34 the highest rating category for each of the rating agencies. The City adopted a Debt Management Policy on July 21, 1998 to provide guidance governing the issuance, management, continuing evaluation of and reporting on all debt obligations issued by the City and to provide for the preparation and implementation necessary to assure compliance and conformity with the policy. It is the responsibility of the City's finance committee to review and make recommendations regarding the issuance of debt obligations and the management of outstanding debt. The finance committee has approved the Series 2007 Bonds and their negotiated sale to the Underwriters. The following policies concerning the issuance and management of debt were established in the Debt Management Policy: (a) the City will not issue debt obligations or use debt proceeds to finance current operations; (b) the City will utilize debt obligations only for acquisition, construction or remodeling of capital improvement projects that cannot be funded from current revenue sources or in such cases wherein it is more equitable to the users of the projects to finance the project over its useful life; and (c) the City will measure the impact of debt service requirements of outstanding and proposed debt obligations on single year, five, ten and twenty year periods. Capital Improvement Plan The City's fiscal year 2008-2012 five year Capital Improvement Ilan (the "Capital Plan"), covering the period from October 1, 2007 through September 30, 2012, earmarked funding estimated at $800.5 million for 490 projects throughout the City. Streets and sidewalks projects account for the largest portion of the total Capital Plan funding at $256.2 million or 32%. Parks and recreation projects are the second largest, accounting for $162.0 million, or 20.2"/%, and public facilities projects are the third largest accounting for $86.1 million, or 10.8%, of the total Capital Ilan. Bonds issued by the City represent the largest share of funding for the Capital Plan, accounting for 45.5% of the total. Capital project revenues (impact fees, storm water utilities, optional gas tax, etc.) account for 30.5%, funding derived from Miami -Dade County accounts for 14.9% and the remaining 9.1% of funding is from federal, State and other private donations. Fiscal and Accounting Procedures The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity in accordance with generally accepted accounting principles, as defined by the Governmental Accounting Standards Board ("GASB"). The operation of each fund is accounted for in a separate, self -balancing set of accounts which comprise its assets and other debits, liabilities, fund equities and other credits, revenues and expenditures. Individual funds that have similar characteristics are combined into fund types. For the past 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 C herein. 35 Indebtedness of the City Pursuant to the Debt Management Policy, the City's debt issuance is subject to the following constraints: (i) the Net Debt Per Capita and the Net Debt to Taxable Assessed Value percentages, which shall be determined by the finance committee by bench marking the City to current industry standards, and (ii) the maximum maturity shall be the earlier of (a) the estimated useful life of the capital improvements being financed or (b) thirty years or (c) in the event debt was issued to refinance outstanding debt obligations the final maturity of the debt obligations being refinanced, unless a longer term is recommended by the finance commi ttee. Pension Fund. The City's employees participate in two separate, single employer defined benefit contributory pension plans under the administration and management of separate Boards of Trustees: The City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIPO") and the City of Miami General Employees and Sanitation Employees' Retirement Trust ("GESE"). The plans cover substantially all City employees who contribute a percentage of their base salary or wage on a bi-weekly basis. The City's elected officials participate in a single employer defined benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all elected officials with 7 or more years of elected service. City employees are required to contribute 10% of their salary to GESE and no more than 7% to FIPO. The EORT is a non-contributory plan. Contributions from employees for FIPO and GESE are recorded in the period the City makes payroll deductions from participants. The City is annually required to contribute such amounts as necessary on an actuarial basis to provide FIPO and GESE with assets sufficient to meet the benefits to be paid. The ordinance covering the FIPO (the "Pension Ordinance") provides for actuarial methodology for evaluating assets to be a moving market value averaged over three years. The result cannot be greater than 100 percent of market value or less than 80 percent of market value. The Pension Ordinance also provides for the FIFO Board of Trustees' actuary to use the actuarial assumptions adopted the FIPO Board. Currently, the City and the FIPO are in discussions regarding the amount needed for contribution. However, if the City's actuary and the FIPO's actuary cannot agree, together they may appoint a third independent actuary. The third actuary is required to submit a funding recommendation to the FIPO Board and the City Commission. The City Commission is then required to fund the amount recommended by either the FIPO's actuary or the City's actuary, whichever recommendation is closer to the recommendation of the third actuary. The City's net pension obligation for each of the FIPO, the GESE and the EORT is $0. The annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2004, 2005 and 2006. 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, 2006 was $3,583,015 and the annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2004, 2005 and 2006. 36 Accrued Compensated Absences. Under terms of Civil Service regulations, labor contracts and administrative policy, City employees are granted vacation and sick leave in varying amounts. Additionally, certain overtime hours can be accrued and carried forward as earned time off. Unused vacation and sick time is payable upon separation from service, subject to various limitations depending upon the employee's seniority and civil service classification. The amount accrued as of September 30, 2006 is $70,759,099 of which $4,405,699 is the current portion. Every three years the maximum number of hours which can be carried forward is renegotiated with FIPO and GESE. Other Postemployment Benefits. In accordance with Section 112.0801, the City provides medical coverage and life benefits to its retirees. Although not required by law, the City pays a portion of such cost of participation for its retirees. As with all governmental entities providing similar plans, the City will be required to comply with the Governmental Accounting Standard's Board Statement No. 45 --- Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions ("GASB 45") no later than its fiscal year ending September 30, 2008. The City has historically accounted for its other post employment benefit ("OPEB") contributions on a pay as you go basis. GASB 45 applies accounting methodology similar to that used for pension liabilities to OPEB and attempts to more fully reveal the costs of employment by requiring governmental units to include future OPEB costs in their financial statements. While GASB 45 requires recognition and disclosure of the unfunded OPEB liability, there is no requirement that the liability of such plan be funded. The City has not yet retained an actuary to review its O.PEB liabilities. While the City does not know at this time what its OPEB liabilities will be in connection with GASB 45 compliance in the future, it has budgeted $5,000,000 in its Fiscal Year 2007-2008 Budget for this liability. The City does not know what amount will be required to be budgeted in future years. LEGAL MATTERS Certain legal matters incident to the validity of the Series 2007 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 E — FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2007 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. Florida. Certain legal matters will be passed upon for the Underwriters by Broad and Cassel, Orlando, LITIGATION There is no pending or, to the knowledge of the City, any threatened litigation against the City of any nature whatsoever which in any way questions or affects the validity of the Series 2007 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. 37 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. A class action suit was filed to challenge the City's Fire Rescue Assessment (the "Assessment"). The plaintiffs contend that the Assessment is an unconstitutional tax on real property and, further, that it is not properly apportioned. In 2002, a challenge to the City of North Lauderdale, Florida's fire rescue assessment resulted in the Supreme Court concluding that the same was unconstitutional to the extent it charged for emergency medical services. Since the date of the decision of the Supreme Court, the City amended the Assessment to comply with the judgment of the Supreme Court in the North Lauderdale case. In 2004, the City thought it approved a class -wide settlement of this class action suit in the amount of $7 million, however, subsequently, the City has learned that the class was never certified and the settlement was paid to only 5 individuals. In subsequent proceedings, the settlement was set aside and the City recouped funds previously paid. All funds previously paid were placed into an interest bearing trust account pending resolution of the class action suit. Subsequently, the plaintiffs filed a Second Amended Complaint seeking a refund and apportionment for fiscal years 1997-1998 through 2005-2006. The potential exposure for this action is $12-15 million. Additional funds which may be needed to settle the suit have been reserved in the amount of $12 million. A suit was filed against the City seeking promotions with back pay and emoluments retroactive to 1994 for 98 individuals. The trial judge severed the action to address only the liability. A judgment in a prior action with a different group of plaintiffs was entered against the City. The potential exposure for this action is estimated at $10 million. The City has reserved $10 million as of September 30, 2006 for this action. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Rule 69W-400.003, Rules of Government Securities, promulgated by the Office of Financial Regulation of the Financial Services Commission, under Section 517.051(1), Florida Statutes ("Rule 69W- 400.003"), requires the City to disclose each and every default as to the payment of principal and interest with respect to obligations issued by the City after December 31, 1975. Rule 69W-400.003 further provides, however, that if the City in good faith believes that such disclosures would not be considered material by a reasonable investor, such disclosures may be omitted. The City has not defaulted on the payment of principal or interest with respect to obligations issued by the City after December 31, 1975. TAX MATTERS General In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law: (i) interest on the Series 2007 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) the Series 2007 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 38 consequences regarding the Series 2007 Bonds. The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the City to be contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Series 2007 Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of those certifications and representations or the continuing compliance with the City's covenants. The opinion of Bond counsel is based on current legal authority and covers certain matter not directly addressed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Series 2007 Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service ("IRS") or any court. Bond Counsel expresses no opinion about (i) the effect of future changes in the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations. Noncompliance with these requirements by the City may cause the loss of such structured result in interest on the Series 2007 Bonds, being included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2007 Bonds. The City has covenanted to take the actions required of it for the interest on the Series 2007 Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Series 2007 Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or other matters coming to Bond Counsel's attention, may adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2007 bonds or the market prices of the Series 2007 Bonds. Under Code provisions applicable only to certain corporations, a portion of the excess of adjusted current earnings (which includes interest on all tax-exempt obligations, including the Series 2007 Bonds) over other alternative minimum taxable income may be subject to a corporate alternative minimum tax. In addition, interest on the Series 2007 Bands may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States and to a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax- exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other tax items of the owner of the Series 2007 Bonds. Bond Counsel will express no opinion regarding those consequences. Purchasers of the Series 2007 Bonds at other than their original issuance at the respective prices indicated on the cover of this Official Statement should consult their own tax advisers regarding other tax considerations such as the consequences of market discount. 39 [Original Issue Discount and Original Issue Premium Certain of the Series 2007 Bonds ("Discount Bonds") as indicated on the inside cover of this Official Statement were offered and sold to the public at an original issue discount ("OID"). OID is the excess of the stated redemption price at maturity (the principal amount) over the "issue price" of a Discount Bond. The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Bond purchased in the initial offering at the price for such Discount Bond stated on the inside cover of this Official Statement (i) is interest excludable from the owner's gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Series 2007 Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Bond. The amount of OID that accrues each year to a corporate owner of Discount Bonds is taken into account in computing the corporation's liability for federal alternative minimum tax. A purchaser of a Discount Bond at its issue price in the initial public offering who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of that Discount Bond. Certain of the Series 2007 Bonds ("Premium Bonds") as indicated on the inside cover of this Official Statement were offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner's tax basis in the Premium Bond is reduced by the amount of bond premium that accrues during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond at its issue price in the initial public offering who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond. Owners of Discount and Premium Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID or bond premium properly accruable in any period with respect to the Discount or Premium Bonds and as to other federal tax consequences and the treatment of OID and bond premium for purposes of state and local taxes on, or based on, income.] RATINGS Moody's Investor's Service ("Moody's"), Fitch Ratings ("Fitch") and Standard & Poor's Ratings Services ("S&P") have assigned their municipal bond ratings of " " " and " ," respectively, to the Series 2007 Bonds with the understanding that upon delivery of the Series 2007 Bonds, the municipal 40 bond insurance policy will be issued by the Insurer. In addition, Moody's, Fitch and S&P have assigned underlying ratings of " " " " and " respectively, without giving any regard to such municipal bond insurance policy. The ratings reflect only the views of said rating agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no assurance that such ratings will continue for any given period of time or that they will not be lowered or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward change in or withdrawal of any of such ratings, may have an adverse effect on the market price of the Series 2007 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 2007 Bonds. The Financial Advisor did not participate in the underwriting o.f the Series 2007 Bonds. AUDITED FINANCIAL STATEMENTS The General Purpose Audited Financial Statements of the City for the fiscal year ending September 30, 2006 (the "Audited Financial Statements"), and report thereon of Rachlin Cohen & Holtz LLP (the "Independent Certified Public Accountant") are attached hereto as "APPENDIX D — GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMI3ER 30, 2006." Such statements speak only as of September 30, 2006. The Audited Financial Statements have been included as a public document and the Independent Certified Public Accountant has not consented to the inclusion of such Audited Financial Statements in this Official Statement nor have they participated in the preparation of the Official Statement. UNDERWRITING The Series 2007 Bonds are being purchased by the underwriters shown on the cover of the Official Statement (collectively, the "Underwriters") at an aggregate purchase price of $ (the par amount of the Series 2007 Bonds, [plus net original issue premium] of $ , less Underwriters' discount of . The Underwriters' obligations are subject to certain conditions precedent described in the Bond Purchase Contract entered into between the City and the Underwriters, and they will be obligated to purchase all of the Series 2007 Bonds if any Series 2007 Bonds are purchased. The Series 2007 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2007 Bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriters. CONTINGENT FEES The City has retained Bond Counsel, Financial Advisor and Disclosure Counsel with respect to the authorization, sale, execution and delivery of the Series 2007 Bonds. Payment of the fees of such professionals and an underwriting discount to the Underwriters are each contingent upon the issuance of the Series 2007 Bonds. 41 ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2007 Bonds upon an event of default under the Resolution and the Policy are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the federal bankruptcy code, the remedies specified by the Indenture, the Series 2007 Bonds and the Policy may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2007 Bonds, including Bond Counsel's approving opinion, will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. CONTINUING DISCLOSURE The City will covenant for the benefit of the Series 2007 Bondholders to provide certain financial information and operating data relating to the City and the Series 2007 Bonds in each year, and to provide notices of the occurrence of certain enumerated material events. The City has agreed to file annual financial information and operating data and its audited financial statements with each nationally recognized municipal securities information repository then approved by the Securities and Exchange Commission (the "NRMSIRs"), as well as any state information depository that is established in the State (the "SID"). Currently, there are no such SIDS. The City has agreed to file notices of certain enumerated material events, when and if they occur, with the NRMSIRs or the Municipal Securities Rulemaking Board, and with the SIDS, if any. The obligation undertaken is an obligation to provide only limited information at limited times and may not include all information necessary to value the Series 2007 Bonds. The specific nature of the financial information, operating data, and of the type of events which trigger a disclosure obligation, and other details of the undertaking are described in "APPENDIX F - FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT" attached hereto. The Disclosure Dissemination Agent Agreement shall be executed by the City prior to the issuance of the Series 2007 Bonds. These covenants have been made in order to assist the Underwriters in complying with the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "Rule"). With respect to the Series 2007 Bonds, no party other than the City is obligated to provide, nor is expected to provide, any continuing disclosure information with respect to the Rule. The City has never failed to comply with any prior agreements to provide continuing disclosure information pursuant to the Rule. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The references, excerpts, and summaries of all documents, statutes, and information concerning the City and certain reports and statistical data referred to herein do not purport to be complete, comprehensive and definitive and each such summary and reference is qualified in its entirety by reference to each such document for full and complete statements of all matters of fact relating to the Series 2007 Bonds, the security for the payment of the Series 2007 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 42 entirety together with all foregoing statements. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the City from the date hereof. FORWARD -LOOKING STATEMENTS This Official Statement contains certain "forward -looking statements" concerning the City's operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the City. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions are meant to identify these forward -looking statements. Actual results may differ materially from those expressed or implied by these forward -looking statements. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the owners of the Series 2007 Bonds. AUTHORIZATION OF OFFICIAL STATEMENT The execution and delivery of this Official Statement has been duly authorized and approved by the City. At the time of delivery of the Series 2007 Bonds, the City will furnish a certificate to the effect that nothing has come to their attention which would lead it to believe that the Official Statement (other than information herein related to the insurer, the Municipal Bond Insurance Policy, DTC, the book -entry only system of registration and the information contained under the caption "TAX MA PIERS" as to which no opinion shall be expressed), as of its date and as of the date of delivery of the Series 2007 Bonds, contain an untrue statement of a material fact or omits to state a material fact which should be included therein for the purposes for which the Official Statement is intended to be used, or which is necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. THE CITY OF MIAMI, FLORIDA By: City Manager 43 APPENDIX A GENERAL INFORMATION REGARDING THE CITY AND THE COUNTY General Now 111 years old, the City of Miami, Florida (the "City") is part of the nation's eleventh largest metropolitan area. Incorporated in 1896, the City is the only major municipality conceived and founded by a woman, Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity with more than 362,470 residents (as of the 2000 Census), 58.2% of them foreign born. In physical size the City is not large, encompassing only 34.3 square miles. The City is situated at the mouth of the Miami River on the western shore of Biscayne Bay, the main port entry in Florida. The City is the southernmost major city and seaport in the continental United States. The nearest foreign territory is the Bahamian Island of Bimini, 50 miles from the City's coast. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. Population City of Percent Miami -Dade Percent State of Percent Year Miami Change County Change Florida Change 1960 291,688 935,047 4,951,560 1970 331,553 13.6 1,267,792 35.6% 6,791,418 37.2% 1980 346,865 4.6 1,625,509 28.2 9,746,961 43.5 1990 358,648 3.4 1,937,194 19.2 12, 938, 071 32.7 2000 362,470 1.0 2,253,362 16.3 15,982,378 23.5 Source: University of Florida, Florida Statistical Abstract 2005, U.S. Census Bureau Government Since 1997, the City has been governed by a form of government known as the "Mayor -City Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. City elections are held in November every two years on a non -partisan basis, Candidates for Mayor must run as such and not for the Commission in general. At each election, two or three members of the Commission are elected for four-year terms. Thus, the terms are staggered so that there are always at least two experienced members of the Commission. The City Manager serves as the administrative head of the municipal government, charged with the responsibility of managing the City's financial operations and organizing and directing the administrative infrastructure. The City Manager also retains full authority in the appointment and supervision of department directors, preparation of the City's annual budget and initiation of the investigative procedures. A-1 In addition, the City Manager takes appropriate action on all administrative matters. Climate Miami's climate is sub -tropical -marine, characterized by long summers with abundant rain fall and mild, dry winters. The average temperature in the summer is 81.4 degrees Fahrenheit and 69.1 degrees Fahrenheit in the winter, with an average annual temperature of 75.4 degrees. Parks and Recreation Outdoor recreational activities like golf, tennis, running, bicycling, rollerblading, boating and fishing can be enjoyed year-round. Altogether, Miami -Dade County has over 300 parks and recreational areas totaling over one million acres, including Everglades and Biscayne National Parks. Eighteen public golf courses and 504 public tennis courts are available throughout the county. Miami -Dade County's area's 22 public beaches comprise 1,400 acres, which are freely accessible and are enjoyed year round by residents and tourists. Athletics for spectator sports fans are held at the City -owned Orange Bowl Stadium, the Miami Convention Center and the Miami Arena. Dolphin Stadium, which is used by the Miami Dolphins and the Florida Marlins, is located in North Central Dade County. Sports competition includes professional and college football, basketball, baseball and championship boat races. Other athletic events include amateur football, basketball, soccer, baseball, motorcycle speedway racing and rowing events. Education Miami -Dade County's public school system is the fourth largest in the United States. The countywide school district offers a wide variety of programs to meet the needs of its 365,784 students. For example, Miami-Dade's magnet schools provide intensive levels of instruction in subjects like science and technology, foreign languages, health care, architecture, the performing arts and marine sciences. Other public school programs serve students with different academic, physical or emotional needs, including gifted, advanced and remedial courses. Miami -Dade County is also noted for its high quality private schools, which include Gulliver Academy, Miami Country Day School and Ransom Everglades, as well as numerous schools affiliated with religious organizations. Overall, 80% of graduating seniors, accounting for over 282,000 students, continue their education in a post -secondary institution. Miami -Dade County is also home to Miami -Dade Community College, the largest comprehensive community college in the United States. Florida International University has two convenient and highly rated academic programs. The University of Miami, a private undergraduate and graduate institution, includes diversified research facilities and exceptional schools of law, music, medicine, and marine sciences. Barry University, St, Thomas University, and Florida Memorial College offer degrees in a variety of subjects. A-2 Medical Miami -Dade County has the largest concentration of medical facilities in Florida, with 32 hospitals and more than 32,000 licensed health care professionals. Nursing homes, adult congregate living facilities and home health care services also serve the region. The University of Miami Jackson Memorial Medical Center, the second-largest public hospital in the nation, forms the hub of the region's medical centers, which includes world-renowned specialized facilities like Bascom Palmer Eye Institute, the Mailman Center for Child Development and the Sylvester Comprehensive Cancer Center. Miami -Dade County has an extensive network of community hospitals, such as Mount Sinai Medical Center, Cedars Medical Center, Baptist Hospital, Mercy Hospital and Miami Children's Hospital. Nine area hospitals have formed the Miami Medical Alliance, a cooperative effort to serve patients from Latin America and the Caribbean. Transportation Miami -Dade County has a comprehensive transportation network designed to meet the needs of residents, travelers and area businesses. The county's internal transportation system includes Metrorail, a 22.1 mile above -ground system linking Kendall, South Miami, Coral Gables, Brickell Avenue, Downtown Miami, the Medical Center, Northwest Dade and Hialeah. Metromover, a 4.4 mile automated loop, carries passengers around downtown Miami, Brickell Avenue and the Ornni shopping center areas. Miami -Dade County's Metrobus covers 38 million miles per year and over 100 passenger trips annually. The County also provides para-transit services to qualified riders in the amount of 1.4 million passenger trips annually. Cargo rail service is available from both the airport and seaport, and Amtrak has a passenger station in the City. Tri-Rail, a 72-mile train system, links West Palm Beach, Boca Raton, Fort Lauderdale, Hollywood and Miami International Airport. Miami International Airport, Miami international Airport is one of the busiest airports in the world for both passengers and cargo traffic. It ranks sixteenth in the nation and twenty eighth in the world in passenger traffic through the airport. The airport ranks fourth in the nation and eleventh in the world in tonnage of domestic and international cargo movement. In 2006 over 32 million air travelers were serviced by Miami International Airport, and approximately 1.95 million tons of cargo was handled. More than 90 airlines serve Miami International Airport, flying passengers non-stop to more than 100 destinations on four continents. Port of Miami. The Port of Miami, known as the "cruise capital of the world," is operated by the Seaport Department of the Miami -Dade County. In 2006, 3,600,000 passengers sailed from the Port aboard one of the 8 cruise companies who operate out of Miami. The Port of Miami is also a hub for Caribbean and Latin American commerce. These countries account for over half of the 9.47 million tons cargo transferred in the port in 2005. The Port of Miami is also reaching out to the global community where trade with Asian countries accounted for almost 23% of the total cargo handled at the Port. The Port is also important to the U.S. economy, contributing in excess of $16 billion annually, which should increase after the completion of the Port's five year, $346 million capital improvement program. A-3 Economy The economic base of the City has diversified in recent years, shifting from reliance on the tourism industry to a combination of motion picture production, manufacturing, services industries and international trade. The area's advantages in terms of climate, geography, low taxes and skilled labor have combined to make the Miami area a prime relocation area for major manufacturing firms and international corporate headquarters. The following major companies have their Latin American headquarters located in the City: ABN AMRO Bank AT&T Latin America Caterpillar Clorox Latin America Exxon Mobil Inter -America IBM Corporation Olympus Latin America Stanley Latin America Terra Networks USA Source: Beacon Council Acer Latin America Black & Decker Latin America Group Chevron -Texaco Eastman Chemical Latin America Federal Express Corporation Johnson & Johnson Oracle Latin America Tech Data The Gap American Express Canon Latin America Cisco Systems Ericsson Hewlett Packard Co. Latin America Komatsu Latin America Sony Broadcast Export Corporation Telefonica USA United Parcel Service Distribution of Major Employment Classifications for Miami -Dade County, Florida Occupational Title Construction Manufacturing Mining and Natural Resources Transportation, Warehousing, and Utilities Wholesale Trade Retail Trade Information Finance Activities Professional and Business Education and Health Services Leisure and Hospitality Other Services Government Total Employed Source: Miami -Dade County Annual Report to Bondholders A-4 Percentage Employees of Totals 43,400 4.1 49,600 4.7 400 0 61,300 5.9 75,100 7.2 115,800 11.1 28,400 2.7 69,900 6.7 163,400 15.6 137,700 13.2 101,700 9.7 45,400 4.3 154r400 14.8 1,046,500 100.0% Labor Force and Employment Statistics City of Miami, Florida Civilian Unemployment Florida Period Employment Labor Force Rate Unemployment Rate 2002 142,555 156,153 8.7% 5.7% 2003 144,075 156,283 7.8 5.3 2004 146,734 158,039 7.2 4.7 2005 150,038 157,380 4.7 3.8 Source: Bureau of Labor Public Employers: Major Employers for Miami -Dade County Name Number of Employees Miami -Dade County Public Schools 50,000 Miami -Dade County 32,000 U.S. Federal Government 20,400 Florida State Government 17,000 Jackson Health System 10,500 Miami -Dade College 6,500 City of Miami 3,954 Florida International University 3,500 Miami Veteran Affairs Medical Center 2,400 City of Miami Beach 1,839 City of Hialeah 1,800 U.S. Coast Guard 1,224 U.S. Southern Command 1,200 City of Coral Gables 1,059 City of North Miami Beach 761 Source: City of Miami Comprehensive Annual Financial Report, September 2006 Private Employers: Name Baptist Health Systems of South Florida University of Miami American Airlines United Parcel Service Bell South Winn Dixie Stores Precision Response Corporation Publix Super Markets Florida Power & Light Company Macv s of Florida Royal Caribbean International Mount Sinai Medical Center Carnival Cruise Lines Source: The Beacon Council Fiscal Year 2005-2006 2004-2005 2003-2004 New Commercial Building Permits 11 10 352 Number of Employees 10,683 9,367 9,000 5,000 4,800 4,616 4,196 4,000 3,665 3,368 3,300 3,000 3,000 Name American Sales & Management Miami Children's Hospital Wachovia Bank, N.A. Mercy Hospital Cordis (a Johnson & Johnson Company) Miami Herald Publishing Co. Assurant Group Cedars Medical Center Burger King Corporation MasTec Beckman Coulter Corp. Bank of America Boston Scientific Record of Building Permits, 2003 through 2006 City of Miami., Florida Estimated Cost $21,020,425 $15,881,915 $337,574,182 Source: City of Miami, Florida Building Department Other Commercial Building Permits 116 101 1,713 New Residential Building Permits 146 256 4,347 Estimated Cost $23,395,497 $41,468,365 $584,487,135 Number of Employees 2,800 2,571 2,500 2,433 2,200 2,000 2,000 2,000 1,907 1,800 1,800 1,700 1,500 Other Residential Building Permits 246 257 3,908 Year 2002 2003 2004 2005 2006 Per Capita Personal Income Source: Florida Research and Economic Database (1) Data is for Metropolitan Statistical Area Millage Rates Miami0) (dollars1 Florida (dollarsl $27,074 $29,709 27,670 30,341 29,076 32,577 N/A 34,099 N/A N/A The City has reduced its millage rate each year beginning with Fiscal Year 2000. The following table shows millage rates for the City for fiscal years ending September 30, 1998 through September 30, 2008. The City of Miami, Florida Property Tax Rates General Fiscal Year Tax Roll Year Operations Debt Service Total City 1998 1997 9.59950 1.92000 11.51950 1999 1998 10.00000 1.79000 11.79000 2000 1999 9.50000 1.40000 10.90000 2001 2000 8.99500 1.28000 10.27500 2002 2001 8.99500 1.21800 10.21300 2003 2002 8.85000 1.21800 10.06800 2004 2003 8.76250 1.08000 9.84250 2005 2004 8.71625 0.95000 9.66625 2006 2005 8.49950 0.76500 9.26450 2007 2006 8.37450 0.62100 8.99550 2008 2007 7.29990 0.57760 7.87750 Source: City of Miami Comprehensive Annual Financial Report FY 2006 and Miami -Dade County Property Appraiser's Office. Note: Ali millage rates are based on $1 for every $1,000 of assessed value. A-7 Assessed Valuations The following table shows the assessed valuations for the City for fiscal years ending September 30, 1998 through September 30, 2007. Fiscal Year Ended Sept. 30, 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 The City of Miami, Florida Net Assessed Value And Estimated Actual Value Of Taxable Property Last Ten Fiscal Years Real Property Residential Property $5,476,130,675 3,796,864,025 6,000,474,083 6,612,151, 524 7,679,048,886 8,789,474,779 10,364,157, 774 11,404,465,779 14,581,899,932 16,950,453,823 Commercial Property $5,564,886,455 5,835,981,002 6,113,340, 757 6,730,517,606 7,380,571,799 8,369,950,851 9,870,433,741 13,896,738,380 17, 785,200, 671 20,253,375,181 Personal Property $1,334,992,653 1,480,211,283 1,657,551,519 1,770,392,311 1,878,266,085 1,711,697,688 1,695,110,542 1,676,173,129 1,722,943,295 1,844,607,813 Net Assessed Value $12,376,009,783 13,113,056,310 13,771,366,359 15,113,061,441 16,937,886,770 18, 871,123,318 21,929, 702,057 26,977,377,288 34,090,043,898 39,048,436,817 Total City Tax Millage 11.79 10.90 10.28 10.21 10.07 9.84 9.67 9.26 8.99 7.88 Estimated Actual Value $17,901,918,921 18,857,553,034 20,061,032,742 22,035,829,555 24,759,964,620 27,717,908,682 32,133,104,422 39,120,899,711 48,924,943,246 N/A Source: Miami -Dade County Property Appraiser's Office Note: Property in the City is reassessed each year. State law requires the Property Appraiser to appraise property at 100% of market value. The Florida Constitution was amended, effective January I, 1995, to limit annual increases in assessed value of property with homestead exemption to 3 percent per year or the amount of the Consumer Price Index, whichever is lower. The increase is not automatic since no assessed value shall exceed market value. Tax rates are per $1,000 of assessed value. Tax Collection It is the Miami -Dade County Tax Coliector's duty on or before June 1 of each year to advertise and sell tax certificates on real property delinquencies extending from the previous April 1. The tax certificates must not be less than the amount of the taxes plus interest from April 1 to the date of sale, together with the cost of advertising and expense of sale. Delinquent real property taxes bear interest at the rate of 18% per year from April 1 until a certificate is sold at auction, at which time the interest rate is as bid by the buyer of the certificate not to exceed 18%. Delinquent taxes may be redeemed prior to sale of the tax certificates upon payment of all costs, delinquent taxes, and interest. The minimum interest for delinquent taxes paid prior to the sale of a certificate is 3%. A tax certificate may be redeemed by paying the Miami -Dade County Tax Collector the face value of the certificate, interest, costs, charges and omitted taxes, if any, plus a redemption fee of $5. The redeemer must pay the interest rate due on the certificate or 5% of the face amount of the certificate, whichever amount is greater, unless the certificate was bid at no interest. A-8 Florida law provides a different method for the collection of delinquent tangible personal property taxes, which includes the possible seizure and sale of the tangible personal property. Tax Deeds After two years from April 1 of the year of issuance of the tax certificate and before seven years of the date of issuance, a private holder of any unredeemed tax certificate may apply for a tax deed to the property. Miami -Dade County, for tax certificates that it has acquired, also has a two-year minimum wait period for purchase of a tax deed, beginning April 1 of the year of issuance of the certificate. Such procedures are governed by State law applicable to all Florida counties. The request for a tax deed is referred to the Clerk of the Circuit Court of Miami -Dade County who will hold an auction after the proposed sale of the tax deed has been advertised for four consecutive weeks in a newspaper as prescribed by law. The following table shows tax levies and tax collections in the City for the last ten fiscal years. Fiscal Year Ended September 30, 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Total Tax Levied for Fiscal Year $128,661,000 132,850,000 134,743,241 145,913,155 143,932,314 141,425,410 152,339,301 167,490,551 186,253,134 208,091,814 242,077,783 The City of Miami, Florida Property Tax Levies And Collections Collected Within the Fiscal Year of the Levy Percent Amount of Levy $120,519,000 128,783,000 127,911,000 143,515,000 136,028,063 134,535,715 146,185,141 157,339,038 183,845,937 199,072,981 234,361,909 93.67% 96.94 94.93 98.36 95.17 95.13 95.96 93.94 98.71 95.67 96.81 Collections in Subsequent Years $7,777,558 3,479,776 6,330,294 1,405,841 6,174,244 5,959,373 4,079,641 7,735,274 1,640,252 2,379,977 Total Collections to Date Amount $128,296,558 132,262,776 134,241,294 144,920,841 142,202,307 140,495,088 150,264,782 165,074,312 185,486,189 201,452,958 234,361, 909 Source: City of Miami, Finance Department and Miami -Dade County Tax Collector's Office A-9 Percent of Levy 99.72% 99.56 99.63 99.32 99.49 99.34 98.64 98.56 99.59 96.81 96.81 As of 2006, the City's ten largest ad valorem taxpayers, the nature of their activities, the assessed values of their properties (in thousands of dollars), and their relative percentage of total assessed property values in the City follows: Ten Largest Tax Assessments 2006 Assessed Values Taxpayer SRI Miami Ventures, LP Teachers Ins, & Annuity Association of America Florida Power & Light Prudential Insurance Co. 1111 Brickell Office LLC Terremark Park Place Biscayne Tower Group Swire Properties Cedars Healthcare Group Total Nature of Activity Real Estate Investments Real Estate Investments Utility Real Estate Investments Real Estate Investments Real Estate Investments Office Building Office Building Real Estate Investments Healthcare Source: City of Miami Comprehensive Annual Financial Report, September 2006 Budget Assessed Value $287,500,000 262,400,000 256,476,419 167,000,000 128,800,000 125,390, 640 113,983,435 100,600,000 88,695,772 83,689,876 $1,614,536,142 Percent of Total Assessed 1.07% 0.97 0.95 0.62 0.48 0.46 0.42 0.37 0.33 0.31 5.98% The City's Fiscal Year 2007 Budget was adopted on September 26, 2006. As shown on the chart below, the Fiscal Year 2007 Budget is approximately $508,136,185, an increase of 3.22% ($16.3 million) from the Fiscal Year 2006 Budget. Such variance can be attributable to the Public Safety budget which comprises 36.57% of the Fiscal Year 2007 Budget being increased by $3.4 million to add 45 new police and fire -rescue positions; the Risk Management budget being decreased by $17.8 million and the Group Benefits budget being increased by $19.4 million due to the re -categorization of benefits and the Pension fund budget being increased by $5.4 million to fund the increase in the previous year's actuarially calculated required contribution. Additionally, an additional $3 million was budgeted in Other Revenue due to a higher than expected increase in miscellaneous revenues, a $1.2 million increase in the Charges for Services budget due to an increase in parking surcharge collections and a $1.5 million increase in Licenses and Permits budget due to higher than anticipated collections in special use permits and energy conservation permits. Further, the millage rate decreased from 8.4995 mills in Fiscal Year 2006 to 8.3745 mills in Fiscal Year 2007. The City is in the process of adopting the Fiscal Year 2008 Budget. Such budget process requires two public hearings, the first of which was held on September 11, 2007 and the second hearing is scheduled for September 27, 2007 at which time a final Fiscal Year 2008 Budget will be adopted. See chart below for the A-10 proposed Fiscal Year 2008 Budget. [Such proposed budget could be amended and the final adopted budget may differ.] The proposed Fiscal Year 2008 Budget is approximately $523,713,803, an increase of 3.07% from the Fiscal Year 2007 Budget. Such variance can be attributable to an increase in Fines and Forfeitures of 13.34% due to projected increase to Metro Court Fines and Forfeitures, Code Enforcement Penalty and Ticketing Fines; an increase in Licenses and Permits of 11.58%; an increase in Other Revenues (Inflows) of 19.32% due to an increase in the use of General Fund Balance over the prior fiscal year period for the payment of the Fire Fee settlement and an increase in Miscellaneous Revenue based on historical collection rates. The City is proposing to reduce it Operating Expenses and Capital Outlay expenses. The Transfers (Out) will increase by 29% due to city-wide vehicle replacements and an OPEB contribution. Additionally, the millage rate decreased from 8.3745 mills in Fiscal Year 2007 to 7.8775 mills in Fiscal Year 2008, due to the recent legislative changes. [Remainder of page intentionally left blank] A-11 2007 Appropriated Budget and 2008 Proposed Budget The chart below shows the City's Fiscal Year 2007 Budget versus the Fiscal Year 2006 Budget and the proposed Fiscal Year 2008 Budget. FY 2008 FY 2007 FY 2006 FY 2006 Proposed Adopted Adopted Increase Revised Budget* Budget Budget (Decrease) Budget Revenues Property Taxes $261,026,148 $255,377,267 $213,896,609 $41,480,658 $213,896,609 Franchise Fees and Other Taxes 37,005,000 36,060,759 34,358,226 1,702,533 34,858,226 Interest 8,115,000 8,101,000 7,571,000 530,000 7,571,000 (Transfers) 39,492,737 36,737,086 51,628,734 (14,891,648) 53,939,513 Fines and Forfeitures 5,208,555 4,595,500 4,475,500 120,000 4,475,500 Intergovernmental Revenues 41,151,996 40,721,218 39,354,366 1,366,852 38,054,366 Licenses and Permits 29,658,555 26,581,392 23,536,650 3,044,742 25,186,650 Other Revenues (Inflows) 19,205,100 16,095,147 32,935,925 (16,840,778) 36,717,426 Charges for Services 82,850,712 83,866,817 84,007,650 (140,833) 84,037,484 Total Revenues (Inflows) $523,713,$03 $i.4136,1.86 $49L264,W $16,371,526 $49$,,7,36 Z74 Expenditures General Government $45,570,476 45,899,786 44,783,939 1,115,847 45,086,448 Planning & Development 11,771,871 11,134,289 10,692,132 442,157 11,150,865 Public Works 56,820,488 58,123,410 34,778,232 3,345,178 55,638,232 Public Safety 207,445,872 185,831,680 176,281,734 9,549,946 176,570,927 Public Facilities 7,478,665 7,443,216 7,659,326 (216,110) 7,756,402 Parks & Recreation 21,732,908 20,048,319 17,519,645 2,528,674 18,419,645 Risk Management 52,420,609 33,768,550 51,551,812 (17,783,262) 34,263,573 Organizational Support -Group Benefits 26,736,867 7,321,813 19,415,054 24,610,052 Pension 65,945,032 85,066,764 79,644,316 5,422,448 79,644,316 Non -Departmental 24,666,475 12,247,386 13,754,1.92 (1,506,806) 9,400,339 (Transfers) 29,861,407 21,835,919 27,777,519 (5,941.,6001 36,195,975 Total Expenditures (Outflows) $523,713.8Q3 $508,136,186 $491.764,$60 $ 71.,52 $4.9_$175& 774 * Not yet adopted A-12 Direct Debt The City has met certain of its financial needs through debt financing. The table which follows is a schedule of the outstanding debt of the City as of September 30, 2006, including that which is payable from sources other than ad valorem taxes. Amount Outstanding DESCRIPTION Issued Balance General/Limited Ad Valorem Obligations: General Obligation Refunding Bonds, Series 1992 $ 70,100,000 $ 11,015,000 Homeland Defense/Neighborhood CIP, Series 2002A 153,186,406 150,651,932 General Obligation Refunding Bonds, Series 2002A 32,510,000 28,170,000 General Obligations Bonds, Other Issues 23,190,000 1,565,000 General Obligation Refunding Bonds, Series 2003 18,680,000 9,765,000 General Obligation Refunding Bonds, Series 2003B 4,180,000 4,140,000 SS301,846,416 $205,306,,932 Special Obligation and Revenue Bonds and Loans: Special Revenue Refunding Bonds, Series 1987 Community Entitlement Revenue Bonds, Series 1990 Special Obligation Non -Ad Valorem, Series 1995 Special Obligation Non -Ad Valorem Revenue, Series 1995 Special Revenue Refunding Bonds, Series 2002A Special Revenue Refunding Bonds, Series 2002B Special Revenue Refunding Bonds, Series 2002C $ 65,271,325 $ 8,901,060 11,500,000 2,335,000 22,000,000 2,365,000 72,000,000 61,815,000 27,895,000 27,895,000 13,170,000 3,495,000 28,390,000 25,325,000 $240,226,325 $132,131,061 Loans: Sunshine State Governmental Financing Commission Loans $27,630,900 $10,751,700 Sunshine State Governmental Financing SEOPW - Section 108 HUD Loan 5,100,000 3,800,000 Wynwood - Section 108 HUD Loan 5,500,000 3,260,000 Wagner Square — Section 108 HUD Loan 1,000 1,000 Sunshine State Governmental Financing Commission - Secondary Loan 3,500,000 1,695,000 Gran Central Corporation Loan 1,708,864 1,708,864 Total Loans $43,44074 $21,216,564 Source: City of Miami Finance Department Total Debt 85,513 495 S358,654,556 A-13 [The following sets forth the aggregate debt service requirements for the City's outstanding general obligation debt as of September 30, 2006.] Fiscal Year Ended September 30 Principal Interest Total Debt Service 2007 $ 6,540,000.00 $ 2,595,180.02 $ 9,135,180.02 2008 5,840,000.00 2,297,690.02 8,137,690.02 2009 5,415,000.00 2,007,236.60 7,422,236.60 2010 5,550,000.00 1,761,675.63 7,311,675.63 2011 5,875,000.00 1,525,557.50 7,400,557.50 2012 5,980,000.00 1,251,587.53 7,231,587.53 2013 5,675,000.00 965,018.78 6,640,018.78 2014 6,105,000.00 685,943.76 6,790,943.76 2015 6,275,000.00 407,281.26 6,682,281.26 2016 685,000.00 70,000.00 755,000.00 2017 715,000.00 35,750.00 750,750.00 2018 0.00 300.00 300.00 Total $54,655,000.00 $1f603,221,1Q $ 8.258.221,1.0 A-14 APPENDIX B THE BOND RESOLUTION B-i APPENDIX C GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2006 C-1 APPENDIX D FORM OF BOND COUNSEL OPINION D-1 APPENDIX E SPECIMEN MUNICIPAL BOND INSURANCE POLICY E-1 APPENDIX F FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT F-1 I EXHIBIT F CONTINUING DISCLOSURE AGREEMENT Exhibit F the form of the final agreement will be provided and executed upon issuance of the Series 2007 Bonds and will be on file with the City Clerk's Office 4 1 44 F-1