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Exhibit 3
EXHIBIT C PRELIMINARY OFFICIAL STATEMENT tiPA 7 fS 7�J 13e RgeVi bE'D btPP i gZ-sc -rakt, PRELIMINARY OFFICIAL STATEMENT DATED 2008 NEW ISSUE - BOOK ENTRY ONLY BMO Draft #] 8/08/08 Insured Ratings: Standard and Poor's: " " Moody's: "_" (See "Ratings" herein) In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law, interest on the Series 2008 Bonds is not excluded from gross income for federal income tax purposes and the Series 2008 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. For a more complete discussion of the tax aspects, see "TAX MATTERS" herein. THE CITY OF MIAMI, FLORIDA NON -AD VALOREM REFUNDING REVENUE BONDS TAXABLE PENSION SERIES 2008 Dated: Date of Delivery Due: December 1, as shown on the inside cover The Non -Ad Valorem Refunding Revenue Bonds, Taxable Pension Series 2008 (the "Series 2008 Bonds") are being issued by The City of Miami, Florida (the "City") pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Florida Statutes, Chapter 159, Part VII, Florida Statutes the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. adopted on September 11, 2008, Resolution No. 95-564 adopted on July 13, 1995, and Resolution No. R-04- 0697 adopted on October 28, 2004 (collectively, the "Resolution"), the Master Trust Indenture, dated as of December 1, 1995 (the "Master Indenture") between the City and U.S. Bank National Association (successor to First Union National Bank of Florida), as Trustee, as supplemented by the Series 2008 Indenture dated as of September 1, 2008 (the "Series 2008 Indenture") between the City and the Trustee (the Master Indenture and the Series 2008 Indenture are referred to herein as the "Indenture"). The Series 2008 Bonds are being issued for the purpose of (i) redeeming of all the $30,615,000 Non -Ad Valorem Variable Rate Refunding Revenue Bonds Taxable Pension Series 2006 the Series 2006 Bonds"); (ii) paying a Swap Termination Payment; and (iii) paying the costs of issuance of the Series 2008 Bonds. This cover page contains certain information for quick reference only. It is not intended to be a summary of the issue. Investors must read the entire Official Statement to obtain information needed for the making of an informed investment decision. The Series 2008 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 or any integral multiple thereof. Purchasers of the Series 2008 Bonds (the "Beneficial Owners") will not receive physical delivery of certificates. Transfers of ownership interests in the Series 2006 Bonds will be effected by the DTC book -entry system as described herein. As long as Cede & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such registered owner which will in turn remit such payments to the Participants (as defined herein) for subsequent disbursement to the Beneficial Owners. Payment of the principal of, premium, if any, and interest on the Series 2008 Bonds shall be secured by a lien upon and pledge of certain moneys of the City which are to be deposited in the funds and accounts created pursuant to the Master Indenture. The City has covenanted to budget and appropriate its legally available Non -Ad Valorem Funds in an amount sufficient to meet its funding obligations and deposit into a fund for use in accordance with such appropriation (the "Covenant Revenues"). The Series 2008 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, premium, if any, and interest -of the Series 2008 Bonds. All capitalized undefined terms have the meaning ascribed herein. The Series 2008 Bonds are offered when, as, and if issued and received by the Underwriter, 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 Julie O. Bru, 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 , First Southwest Company, Miami Lakes, Florida is serving as Financial Advisor to the City. It is expected that the Series 2008 Bonds in definitive form will be available for delivery to the Underwriter in New York, New York at the facilities of DTC on or about September 2008. JP MORGAN MERILL LYNCH Dated: , 2008 *Preliminary, subject to change. SERIES 2008 BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELD AND INTIAL CUSIP NUMBERS Maturity Principal Initial CUSIP (December i). Amount Interest Rate Yield Price Number THE CITY OF MIAMI, FLORIDA MAYOR Manuel A. Diaz CITY COMMISSIONERS Joe M. Sanchez, Chairman Michelle Spence -Jones, Vice Chair Angel Gonzalez Tomas P. Regalado Marc D. Sarnoff CITY MANAGER Pedro G. Hernandez CHIEF FINANCIAL OFFICER Larry Spring FINANCE DIRECTOR Diana M. Gomez CITY ATTORNEY Julie O. Bru, Esq. BOND COUNSEL Squire, Sanders & Dempsey L.L.P. Miami, Florida DISCLOSURE COUNSEL Bryant Miller Olive P.A. Miami, Florida FINANCIAL ADVISOR First Southwest Company Miami Lakes, Florida No dealer, broker, salesman or other person has been authorized by the City or the Underwriters to give any information or to make any representations in connection with the Series 2008 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 2008 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 Preliminary 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 Preliminary 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 2008 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH SERIES 2008 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 2008 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 2008 Bonds, or (iii) the tax exempt status of the interest on the Series 2008 Bonds.] NO REGISTRATION STATEMENT RELATING TO THE SERIES 2008 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 2008 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. TABLE Or CONTENTS Contents Page INTRODUCTION 1 PURPOSE OF THE ISSUE 2 PLAN OF REFUNDING 2 ESTIMATED SOURCES AND USES OF FUNDS 3 DESCRIPTION OF THE SERIES 2008 BONDS 4 General 4 Optional Redemption 5 Mandatory Sinking Fund Redemption 5 Defeasance 6 Book -Entry Only System 6 Registration, Transfer and Exchange 9 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost 10 MUNICIPAL BOND INSURANCE 10 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS 10 Description of Non -Ad Valorem Revenues 13 Special Investment Considerations 20 Creation of Funds and Accounts 20 Additional Bonds Payable from Covenant Revenues 21 Additional Debt Payable from Non -Ad Valorem Funds 21 Claims 22 Pledge of Non -Ad Valorem Funds 22 Pledge of Designated Revenues 22 SWAP TRANSACTION 23 PROPERTY TAX REFORM 23 DEBT SERVICE SCHEDULE 26 THE CITY OF MIAMI 27 Background 27 City Government 27 Adoption of Investment Policy and Debt Management Policy 28 Capital Improvement Plan 29 Fiscal and Accounting Procedures 29 General Fund 30 Indebtedness of the City 32 LEGAL MATTERS 33 LITIGATION 33 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS 34 TAX MATTERS 34 RATINGS 35 FINANCIAL ADVISOR 35 AUDITED FINANCIAL STATEMENTS 35 CONTINUING DISCLOSURE 35 UNDERWRITING 36 i CONTINGENT FEES 36 ENFORCEABILITY OF REMEDIES 36 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT 37 FORWARD -LOOKING STATEMENTS 37 MISCELLANEOUS 37 AUTHORIZATION OF OFFICIAL STATEMENT 37 APPENDICES APPENDIX A: APPENDIX B: APPENDIX C: APPENDIX D: [APPENDIX E: APPENDIX F: GENERAL INFORMATION REGARDING THE CITY OF MIAMI MASTER INDENTURE AND FORM OF SERIES 2008 INDENTURE GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007 FORM OF BOND COUNSEL OPINION SPECIMEN MUNICIPAL BOND INSURANCE POLICY] FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT ii OFFICIAL STATEMENT relating to THE CITY OF MIAMI, FLORIDA NON -AD VALOREM REFUNDING REVENUE BONDS TAXABLE PENSION SERIES 2008 INTRODUCTION The purpose of this Official Statement, including the cover page and appendices, is to set forth information concerning The City of Miami, Florida (the "City") and The City of Miami, Florida Non -Ad Valorem Refunding Revenue Bonds, Taxable Pension Series 2008 (the "Series 2008 Bonds"), in connection with the sale of the Series 2008 Bonds. The City is situated at the mouth of the Miami River on the western shores of Biscayne Bay. It is the county seat of Miami -Dade County, Florida. The City comprises 34.3 square miles of land and 19.5 square miles of water. The City's diversified economic base is comprised of light manufacturing, trade, commerce, wholesale, and retail trade and tourism. For more information about the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI" herein. The Series 2008 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including Chapter 166, and Chapter 159, Part VII, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to [Resolution No. adopted on September 11, 2008], Resolution No. 95-564 adopted on July 13,1995 and Resolution No. R-04-0697 adopted on October 28, 2004 authorizing issuance of an aggregate principal amount of Non -Ad Valorem Refunding Revenue Bonds, Taxable Pension Series 2008, in an amount not to exceed $ to refund the outstanding City of Miami Non - Ad Valorem Variable Rate Refunding Revenue Bonds, Taxable Pension Series 2006 (the "Series 2006 Bonds"), (collectively, the "Resolution"), the Master Trust Indenture, dated as of December 1, 1995 (the "Master Indenture") between the City and U.S. Bank National Association (successor to First Union National Bank of Florida), as Trustee, as supplemented by the Series 2008 Indenture dated as of September 1, 2008 (the "Series 2008 Indenture") between the City and the Trustee. The Master Indenture and the Series 2008 Indenture are refered to herein as the "Indenture". The Series 2008 Bonds are being issued for the purpose of refunding and redeeming all of the City's outstanding Series 2006 Bonds, to pay the Swap Termination Payment and to pay the costs of issuance of the Series 2008 Bonds. See "PURPOSE OF THE ISSUE" herein. Payment of the principal of, premium, if any, and interest on the Series 2008 Bonds shall be secured by a pledge of the Covenant Revenues (as defined in the Master Indenture). The Series 2008 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, premium, if any, and interest of the Series 2008 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS" herein. *Preliminary, subject to change. The Series 2008 Bonds are being issued as Additional Bonds payable on a parity with the City's outstanding Non -Ad Valorem Revenue Bonds, Taxable Pension Series 1995. [Payment of the principal of and interest on the Series 2008 Bonds will be guaranteed by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 2008 Bonds by (the "Insurer").] The summaries of and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, statute, report or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the, Indenture, unless the context would clearly indicate otherwise. A copy of the Master Indenture and Form of the Series 2008 Indenture is attached hereto as "APPENDIX B - MASTER INDENTURE AND FORM OF SERIES 2008 INDENTURE" herein. All documents of the City referred to herein may be obtained from Diana M. Gomez, CPA, Finance Director, 444 S.W. 2nd Avenue, 6th Floor, Miami, Florida 33130, Telephone (305) 416-1324. PURPOSE OF THE ISSUE The Series 2008 Bonds are being issued for the purpose of (i) refunding the $30,615,000 Non -Ad Valorem Variable rate Refunding Revenue Bonds, Taxable Pension Series 2006, as described below; (ii) paying the Swap Termination Payment; and (iii) paying certain costs and expenses incurred in connection with the issuance of the Series 2008 Bonds. PLAN OF REFUNDING The Series 2008 Bonds are being issued to refund and redeem $ aggregate principal amount of the Series 2006 Bonds maturing on December 1, 2025 (the "Refunded Bonds"). Concurrently with delivery of the Series 2008 Bonds, a portion of the proceeds of the Series 2008 Bonds shall be used to redeem the Refunded Bonds and the Refunded Bonds will be deemed paid and discharged for purposes of the Master Indenture and the supplemental indenture authorizing the Series 2006 Bonds. 2 ESTIMATED SOURCES AND USES OF FUNDS The table that follows summarizes the estimated sources and uses of funds to be derived from the sale of the Series 2008 Bonds: SOURCES: Principal Amount of Series 2008 Bonds $ TOTAL SOURCES USES: Deposit to Redemption Account $ Deposit to Swap Account Deposit to Costs of Issuance Account (1) [Municipal Bond Insurance Premium] Underwriter's Discount TOTAL USES (» Includes financial advisory and legal fees and expenses, and miscellaneous costs of issuance. [Remainder of page intentionally left blank.] 3 DESCRIPTION OF THE SERIES 2008 BONDS General The Series 2008 Bonds will be issued as fully registered bonds without coupons in denominations of of $5,000 or any integral multiples thereof. The Series 2008 Bonds shall be numbered consecutively from one (1) upward preceded by the letter "R" prefixed to the number. Interest on the Series 2008 Bonds will be payable semi-annually on June 1 and December 1 of each year, commencing December 1, 2008. The Series 2008 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC. Payment of the principal of and interest on the Series 2008 Bonds will be made directly to DTC or its nominee, Cede & Co., by the Trustee. [Remainder of page intentionally left blank.] 4 Optional Redemption The Series 2008 Bonds maturing prior to December 1, 20 , are not subject to redemption prior to their respective dates of maturity. The Series 2008 Bonds maturing on and after December 1, 20, may be redeemed at the option of the City from any moneys legally available for such purpose, either in whole or in part at any time, in any order of maturities selected by the City (and by lot within a maturity), at the redemption price equal to 100% of the principal amount of Series 2008 Bonds to be redeemed, plus accrued interest in the redemption date. Mandatory Sinking Fund Redemption The Series 2008 Bonds maturing on December 1, shall be subject to mandatory sinking fund redemption by the City on each December 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Year Amortization Requirement Year Amortization Requirement *Maturity However, the principal amount of the Series 2008 Bonds required to be redeemed on each such sinking fund redemption date shall be reduced by the principal amount of the Series 2008 Bonds specified by City at least 45 days prior to the redemption date that have been either (i) purchased by or on behalf of the City and delivered to the Trustee for cancellation, or (ii) redeemed other than through the operation of the provisions of this paragraph (b), and that have not been previously made the basis for a reduction of the principal amount of the Series 2008 Bonds to be redeemed on a sinking fund redemption date. Notice of Redemption. The Trustee shall mail by first class mail, postage prepaid, to the registered owners of all Series 2008 Bonds to be redeemed, at the address shown on the registration books, notice of redemption at least 30 days nor more than 60 days prior to the redemption date. Each notice of redemption of the Series 2008 Bonds will identify the Series 2008 Bonds or portions thereof to be redeemed and will state, among other things, the redemption price, the redemption date, the place or places where the redemption price is payable and that on the redemption date such Series 2008 Bonds called for redemption (except with respect to a conditional notice, which is conditioned upon receipt of the redemption price) will cease to bear interest. The failure of a Holder to receive notice by mailing or any defect in that notice regarding any Series 2008 Bond will not affect the validity of the proceedings for the redemption of the Series 2008 Bonds. 5 Defeasance Any Series 2008 Bond or any item, portion or installment of the Debt Service thereon (such Bond or portion, item or installment of Debt Service being referred as an "Obligation") shall be deemed to have been paid, defeased and discharged within the meaning of the Indenture, if: (i) the Trustee, Paying Agent or an escrow agent (or any combination thereof) shall have received, in trust for and committed irrevocably thereto, sufficient cash; or (ii) the Trustee, Paying Agent or an escrow agent (or any combination thereof) shall have received, in trust for and committed irrevocably to the payment of such Obligation (or for the reimbursement of amount to be used to pay the same which are to be advanced or drawn under any Credit Facility to pay such Obligation when due) non -callable Defeasance Obligations which are shown by refunding schedules prepared by a Financial Advisor or registered broker- dealer (which schedules are verified as being mathematically correct by a verification report of an Independent Accountant), to be of such maturities, to have interest payment dates, and to bear interest at such rates or yield, which will be sufficient; together with any uninvested cash to which reference is made in subparagraph (i) above, without further investment or reinvestment (except that investment or reinvestment in Defeasance Obligations at a yield of zero shall be permitted for purpose of determining sufficiency) of any such cash or any cash derived from the principal of or the interest earnings on such Defeasance Obligations (which earnings are to be held likewise in trust and so committed, except as provided herein; for the payment of such Obligation, at its scheduled payment, maturity date or redemption, as the case may be, and which Defeasance Obligations are not available to satisfy any other claim, including any claim of the Trustee, Paying Agent or escrow agent or of any Person claiming through such Trustee, Paying Agent or escrow agent or to whom the Trustee, Paying Agent or escrow agent may be obligated, including in the event of insolvency of such Trustee, Paying Agent or Escrow Agent or proceedings arising out of such insolvency. If any such Series 2008 Bond is to be redeemed prior to the maturity thereof, notice of that redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of that notice. Book -Entry Only System THE FOLLOWING INFORMATION CONCERNING DTC AND DTC'S BOOK -ENTRY ONLY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT NEITHER THE CITY NOR THE UNDERWRITER TAKE ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Series 2008 Bonds. The Series 2008 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 2008 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. 6 DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Series 2008 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2008 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2008 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 2008 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 2008 Bonds, except in the event that use of the book -entry system for the Series 2008 Bonds is discontinued. To facilitate subsequent transfers, all Series 2008 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2008 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 2008 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2008 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as maybe in effect from time to time. 7 Redemption notices shall be sent to DTC. If less than all of the Series 2008 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2008 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2008 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 2008 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Series 2008 Bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of 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 2008 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 2008 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 2008 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 2008 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, CEDE Sr CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2008 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL, OR INTEREST, OR ANY PREMIUM ON THE SERIES 2008 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2008 BONDS FOR REDEMPTION. 8 Registration, Transfer and Exchange So long as the Series 2008 Bonds are registered in the name of DTC or its nominee, the following paragraph relating to transfer and exchange of Bonds do not apply to the Series 2008 Bonds. So long as there are any Series 2008 Bonds issued under the Series 2008 Indenture which have not been paid in full, the Trustee will cause books for the registration and transfer of Series 2008 Bonds (the "Register"), as provided in the Master Indenture, to be maintained and kept at the designated office of the Registrar. Except as provided below, at the option of the Holder, Series 2008 Bonds shall be transferable by the Holder in person or by his attorney duly authorized in writing only upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar (which shall set forth the name, address and Social Security Number or other federal income tax identification number of the transferee) duly executed by the Holder or his duly authorized attorney. Upon the transfer of any such Series 2008 Bond, the City shall issue in the name of the transferee a new Series 2008 Bond or Series 2008 Bonds of the same series, subseries, tenor and maturity in Authorized Denominations and in an aggregate principal amount of the Series 2008 Bonds being transferred. At the option of the Holder thereof and upon surrender hereof at the designated office of the Registrar with a written instrument of exchange satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney, Series 2008 Bonds may be exchanged for a like principal amount of Series 2008 Bonds of the same series, subseries, tenor and maturity of any other Authorized Denominations. In all cases in which Series 2008 Bonds are exchanged or transferred hereunder, the City shall execute, and the Registrar or other Authenticating Agent shall authenticate and deliver, Series 2008 Bonds in accordance with the provisions of the Master Indenture. There shall be no charge for any such exchange or transfer, but the City or the Registrar may require payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. All Series 2008 Bonds issued upon any exchange or transfer shall be the valid obligations of the City and shall evidence the same debt and shall be entitled to the same benefits under the Indenture as the Series 2008 Bonds surrendered upon exchange or transfer. Neither the City nor the Registrar as the case may be, shall be required to make any exchange or transfer of a Series 2008 Bond during a period beginning at the opening of business fifteen (15) days before the day of the mailing of a notice of redemption of Series 2008 Bonds and ending at the close of business on the day of the mailing or to transfer or exchange any Series 2008 Bonds selected for redemption, in whole or in part, following the mailing. 9 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost If any Series 2008 Bond is mutilated, lost, wrongfully taken, improperly canceled or destroyed, in the absence of written notice to the City or the Registrar that the lost, wrongfully taken or destroyed Series 2008 Bond has been acquired by a holder in due course, the City shall execute, and the Registrar shall authenticate and deliver, a new Series 2008 Bond of like date, maturity and Authorized Denomination, as applicable, as the Series 2008 Bond mutilated, lost, wrongfully taken, improperly canceled or destroyed; provided, that (i) in the case of any mutilated or improperly canceled Series 2008 Bond, such Series 2008 Bond shall be surrendered first to the Registrar; and (ii) in the case of any lost, wrongfully taken or destroyed Series 2008 Bond, there shall be furnished first to the City, the Trustee and the Registrar, evidence of the loss, wrongful taking or destruction satisfactory to the City, the Trustee and the Registrar, together with indemnification satisfactory to each of them and to the Authorized Official. If any lost, wrongfully taken or destroyed Series 2008 Bond shall have matured or has been called for redemption, instead of issuing a new Series 2008 Bond, the Paying Agent shall pay that Series 2008 Bond, without surrender thereof, upon the furnishing of satisfactory evidence and indemnification, as in the case of issuance of a new Series 2008 Bond. The City, the Trustee and the Registrar may charge the Holder of a mutilated, lost, wrongfully taken or destroyed Series 2008 Bond their reasonable fees and expenses in connection with theft actions pursuant to the Master Indenture, except for improper cancellation by the Registrar. MUNICIPAL BOND INSURANCE [Optional] SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS The payment of the Debt Service on the Series 2008 Bonds and Other Bond Service Charges shall be secured by Covenant Revenues and the moneys and any Eligible Investments on deposit in the Funds and Accounts established in the Master Indenture and any investment income thereon (collectively, the "Additional Security"). "Covenant Revenues" are defined in the Master Indenture to mean the legally available Non -Ad Valorem Funds which have been budgeted and appropriated pursuant to Section 2.04 of the Master Indenture and disbursed or deposited in a Fund for use in accordance with such appropriation. "Non -Ad Valorem Funds" are defined in the Master Indenture to mean all revenues of the City derived from any source other than ad valorem taxation on real or tangible personal property, which are legally available to make payments required in the Indenture, but only after provision has been made by the City for the payment of the cost of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated. The City has covenanted in the Master Indenture that so long as any Bonds are outstanding, it will appropriate in its annual budget, by budget amendment if necessary, from Non -Ad Valorem Funds lawfully available in each such Fiscal Year amounts which, together with any other funds held in trust by the City and to be deposited in trust for such purpose under the Indenture and which are legally available for the uses described below, will be sufficient to permit the City to pay when due or required the following amounts: 10 First, there shall be deposited to the Current Debt Service Fund the amounts which are necessary to pay any past due Debt Service, arty past due Payment Obligations owed to Credit Facility Providers and any Past Due Hedge Payments plus such additional amounts as may be necessary to cause the Current Debt Service Fund to be funded at the then required level of funding (deposits to the Current Debt Service Fund shall be made not less often than monthly) in accordance with the Series Indentures under which the Bonds Outstanding from time to time are issued; the amount to be deposited to the Current Debt Service Fund shall be increased to the extent necessary to provide for and pay any Hedge Payments the City expects to make and may be decreased by any Hedge Receipts the City expects to receive (which Hedge Receipts shall be deposited in the Current Debt Service Fund upon receipt); Second, the amounts needed to pay when due all Payment Obligations to Reserve Facility Providers and to make deposits in any Reserve Funds that are necessary to cause the same to be at the levels of funding required by the Series Indentures under which the Bonds Outstanding from time to time have been issued (there is no Reserve Requirement for the Series 2008 Bonds); Third, the amounts needed to pay when due any Administrative Charges or to make deposits in any Administrative Charges Funds that are necessary to cause the same to be at the levels of funding required by the Series Indentures under which the Bonds Outstanding from time to time have been issued; Fourth, the amount needed to pay when due any Rebate and to make deposits in any Rebate Funds that are necessary to cause the same to be at the levels of funding required by the Series Indentures under which any Tax -Exempt Bonds Outstanding from time to time have been issued; Fifth, the amounts needed to make deposits to any other Special Funds which are necessary to cause such other Special Funds to be at the levels of funding required by the Series Indentures under which the Bonds Outstanding from time to time have been issued and to pay when due any other amounts required by the Series Indentures to be paid; and Sixth, the amounts needed to pay when due any Hedge Termination Payments. The covenant on the part of the City to budget and appropriate such amounts of Non -Ad Valorem Funds is cumulative to the extent not paid and will continue until all such Non -Ad Valorem Funds or other legally available funds in amounts sufficient to make all such required payments will have been budgeted, appropriated and actually paid. Notwithstanding the foregoing, the City does not covenant to maintain any services or programs, now provided or maintained by the City, which generate Non -Ad Valorem Funds. The covenant to budget and appropriate does not create any lien upon or pledge of Non -Ad Valorem Funds (except for Covenant Revenues which have been deposited in a Fund), nor does it preclude the City from pledging in the future any of its Non -Ad Valorem Funds, nor does it require the City to levy and collect any particular Non -Ad Valorem Funds, nor does it give the Holders of the Series 2008 Bonds, the Trustee, any other Fiduciary, any Credit Facility Provider, any Reserve Facility Provider, any Hedge Facility Provider or any other Person a prior claim on the Non -Ad Valorem Funds, as opposed to claims of general creditors of the City. Such covenant to budget and appropriate Non -Ad Valorem Funds is subject in all respects to the payment of obligations secured by a pledge of such Non -Ad Valorem Funds heretofore or hereafter entered into. However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated in the Master Indenture shall have the effect of imposing on the City a positive duty to 11 budget and appropriate, by amendment if necessary, amounts sufficient to meet its obligations under the Indenture; subject, however, in all respects to the restrictions of Section 166.241, Florida Statutes, as amended (or any successor provision), which provides, in part, that "the governing body of each municipality shall adopt a budget each fiscal year. The amount available from taxation or other sources including amounts carried over from prior fiscal years, must equal the total appropriations for expenditures and reserves. It is unlawful for any officer of a municipal government to expend or contract for expenditures in any fiscal year except in pursuance of budgeted appropriations." Such covenant is, however, cumulative and shall carry over from year to year. THE SERIES 2008 BONDS AND THE DEBT SERVICE THEREON AND OTHER BOND SERVICE CHARGES RELATING THERETO ARE NOT GENERAL OBLIGATIONS OF THE CITY, BUT ARE LIMITED AND SPECIAL OBLIGATIONS OF THE CITY WHICH WILL BE PAYABLE SOLELY FROM AND ARE SECURED SOLELY BY THE TRUST ESTATE AND THE ADDITIONAL SECURITY. EXCEPT FOR THE TRUST ESTATE AND ADDITIONAL SECURITY, THE SERIES 2008 BONDS, THE DEBT SERVICE THEREON AND OTHER BOND SERVICE CHARGES RELATING THERETO ARE NOT SECURED BY A PLEDGE OF OR LIEN UPON ANY PROPERTY OWNED BY THE CITY OR SITUATED IN THE CITY OR ANY AD VALOREM TAXES OF THE CITY. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, MIAMI-DADE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY OR INTEREST ON THE SERIES 2008 BONDS OR FOR THE PAYMENT OF ANY OTHER AMOUNTS PAYABLE UNDER THE MASTER INDENTURE, THE SERIES 2008 INDENTURE OR UNDER ANY AGREEMENT RELATING TO THE SERIES 2008 BONDS. NO HOLDER OF ANY SERIES 2008 BOND, NO LIQUIDITY FACILITY PROVIDER, CREDIT FACILITY PROVIDER NOR HEDGE FACILITY PROVIDER SHALL, ON ACCOUNT OF THE SERIES 2008 BONDS OR ANY AGREEMENT ENTERED INTO BY THE CITY IN CONNECTION THEREWITH, HAVE THE RIGHT TO COMPEL THE AD VALOREM TAXING POWER OF THE CITY, MIAMI-DADE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF OR TAXATION OF ANY REAL OR PERSONAL PROPERTY THEREIN TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY OR INTEREST ON THE SERIES 2008 BONDS OR THE PAYMENT OF ANY OTHER AMOUNTS PAYABLE UNDER THE MASTER INDENTURE, SERIES 2008 INDENTURE OR UNDER ANY AGREEMENT RELATING TO THE SERIES 2008 BONDS. Enforcement of the City's obligation to budget and appropriate legally available Non -Ad Valorem Funds shall be through appropriate judicial proceedings. The City has issued and may issue other bonds or debt obligations secured by a similar covenant. See "- Schedule of Principal and Interest for Non -Ad Valorem Revenue Bonds and Loans" below. In addition, various contracts of the City which do not constitute debt may be secured in a similar manner. The City has not covenanted to maintain any programs or other activities which generate Non -Ad Valorem Funds. Furthermore, the obligation of the City to budget and appropriate Non -Ad Valorem Funds is subject to a variety of factors, including the payment of essential governmental services of the City and the obligation of the City to have a balanced budget. For a description of additional limitations see "Special Investment Considerations" herein. 12 Description of Non -Ad Valorem Revenues The following describes the sources of the City's Non -Ad Valorem Revenues: Franchise Fees Franchise fees are levied annually on utility companies by the City in return for granting a privilege sanctioning a monopoly or permitting the use of public property. Such fees are currently levied against Florida Power and Light Co. and Southern Bell. Public Service Tax The Public Services Tax is imposed, levied and collected by the City pursuant to Section 166.231, Florida Statutes, and other applicable provisions of law, on the purchase of electricity, fuel oil, metered or bottled gas (natural liquefied petroleum gas or manufactured), water service, and other services on which a tax may be imposed by law. Florida law authorizes any municipality in the State of Florida to levy a public service tax on the purchase within such municipality of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, manufactured gas either metered or bottled, water service and fuel oil as well as any services competitive with those specifically enumerated. This tax may not exceed 10% of the payments received by the sellers of such services from purchasers (except in the case of fuel oil, for which the maximum tax is four cents per gallon). The purchase of natural gas or fuel oil by a public or private utility either for resale or for use as fuel in the generation of electricity, or the purchase of fuel oil or kerosene for use as an aircraft engine fuel or propellant or for use in internal combustion engines, is exempt from the levy of such tax. Pursuant to the Constitution of the State of Florida, Florida Statutes and a resolution of the City, the City levies a Public Services Tax, within the incorporated area of the City at the rate of 10% on sales of all services for which it is allowed to tax, except telecommunications service, and with the restriction that the tax on fuel oil cannot exceed 4 cents per gallon. Florida law provides that a municipality may exempt from the public service tax the first 500 kilowatts of electricity per month purchased for residential use. The City has not adopted such an exemption but it does exempt purchases by the United States Government, the State of Florida, Miami -Dade County, the City and its agencies, boards, commissions and authorities from the levy of such tax. In addition, the City exempts purchases used exclusively for church purposes by any State of Florida recognized church. The Public Services Tax must be collected by the seller from purchasers at the time of sale and remitted to the City. Such tax will appear on a periodic bill rendered to consumers for electricity, metered and bottled gas, water service and fuel oil. A failure by a consumer to pay that portion of the bill attributable to the public service tax may result in a suspension of the service involved in the same fashion as the failure to pay that portion of the bill attributable to the particular utility service. Local Communications Services Tax The Communications Services Tax Simplification Act, enacted by Chapter 2000-260, Laws of Florida, as amended by Chapter 2001-140, Laws of Florida, and now codified in part as Chapter 202, Florida Statutes 13 (the "Communications Services Tax Act") established, effective October 1, 2001, a communications services tax on the sale of communications services as defined in Section 202.11, Florida Statutes, and as of the same date repealed Section 166.231(9), Florida Statutes, which previously granted municipalities the authority to levy a utility services tax on the purchase of telecommunication services. Florida Statute Section 202.19 provides that counties and municipalities may levy a discretionary communications services tax (the "local communications services tax") on communications services, the revenues from which may be pledged for the repayment of current or future bonded indebtedness. The City set the rates for its local communications services tax pursuant to a resolution adopted on June 14, 2001. Communication services are defined as the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals, including cable services, to a point, or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for such transmission or conveyance. The term does not include: (a) Information services. (b) Installation or maintenance of wiring or equipment on a customer's premises. (c) The sale or rental of tangible personal property. (d) The sale of advertising, including, but not limited to, directory advertising. (e) Bad check charges. (f) Late payment charges. (g) Billing and collection services. (h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line services. Any sale of communications services charged to a service address in the City is subject to the City's local communications services tax at a rate of 15.62%J. The Communications Services Tax Act further provides that, to the extent that a provider of communications services is required to pay a tax, charge, or other fee under any franchise agreement or ordinance with respect to the services or revenues that are also subject to the tax, such provider is entitled to a credit against the amount of such tax payable to the State in the amount of such tax, charge, or fee with respect to such service or revenues. The proceeds of said local communication services tax less the Florida Department of Revenue's cost of administration is deposited in the local communication services tax clearing trust fund and distributed monthly to the appropriate jurisdictions. Intergovernmental This category includes federal, state and other local units grants, and revenues shared by the state and other Local units. The largest component is the half -cent sales tax. The State of Florida (the "State") levies and collects a sales tax on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and dealer allowances. In 1982, the Florida legislature created the Local Government Half -Cent Sales Tax Program (the "Local Government Half -Cent Sales Tax Program") which distributes a portion of the sales tax revenue and money from the State's General Revenue Fund to counties and municipalities that meet strict eligibility requirements. In 1982, when the Local Government Half -Cent Sales Tax Program was created, the 14 general rate of sales tax in the State was increased from 4% to 5%, and one-half of the fifth cent was devoted to the Local Government Half -Cent Sales Tax Program, thus giving rise to the name "Half -Cent Sales Tax." Although the amount of sales tax revenue deposited into the Local Government Half -Cent Sales Tax Program is no longer one-half of the fifth cent of every dollar of the sales price of an item subject to sales tax, the name "Half -Cent Sales Tax" has continued to be utilized. Section 212.20, Florida Statutes, provides for the distribution of sales tax revenues collected by the State and further provides for the distribution of a portion of sales tax revenues to the Local Government Half -Cent Sales Tax Clearing Trust Fund (the "Trust Fund"), after providing for transfers to the General Fund and the Ecosystem Management and Restoration Trust Fund. The entire sales tax remitted to the State by each sales tax dealer located within a particular county (the "Local Government Half -Cent Sales Tax Revenues") was deposited in the Trust Fund and earmarked for distribution to the governing body of such county and each participating municipality within that county pursuant to a distribution formula. As of July 1, 2004, the percentage of Local Government Half -Cent Sales Tax Revenues deposited in the Trust Fund was effectively reduced to 8.805%. The general rate of sales tax in the State is currently 6.00%. After taking into account the distributions to the General Fund (historically 5% of taxes collected) and the Ecosystem Management and Restoration Trust Fund (.2% of the taxes collected), effective July 1, 2004, for every dollar of taxable sales price of an item, approximately 0.501 cents is deposited into the Trust Fund. The Local Government Half -Cent Sales Tax Revenues are distributed from the Trust Fund on a monthly basis to participating units of local government in accordance with Part VI, Chapter 218, Florida Statutes (the "Sales Tax Act"). Florida law also allows counties to impose a sales surtax of up to 1% to fund infrastructure improvements upon approval by a vote of the electors. As of October 1, 2001, the Trust Fund began receiving a portion of certain taxes imposed by the State on the sales of communication services (the "CST Revenues") pursuant to Chapter 202, Florida Statutes. Accordingly, moneys distributed from the Trust Fund now consist of funds derived from both general sales tax proceeds and CST Revenues required to be deposited into the Trust Fund. The Local Government Half -Cent Sales Tax collected within a county and distributed to local government units is distributed among the county and the municipalities therein in accordance with the following formula: County Share (percentage of total Half -Cent = Sales Tax receipts) Municipality Share (percentage of total Half -Cent= Sales Tax receipts) unincorporated + 2/3 incorporated area population area population total county + 2/3 incorporated population area population municipality population total county + 2/3 incorporated population area population 15 For purposes of the foregoing formula, "population" is based upon the latest official State estimate of population certified prior to the beginning of the local government fiscal year. Should any unincorporated area of Miami -Dade County become incorporated as a municipality, the share of the Local Government Half - Cent Sales Tax received by Miami -Dade County and the City would be reduced. The Local Government Half -Cent Sales Tax is distributed from the Trust Fund on a monthly basis to participating units of local government. The Half -Cent Sales Tax Act permits the City to pledge its share of the Local Government Half -Cent Sales Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Local Government Half -Cent Sales Tax, the counties and municipalities must comply with certain requirements set forth in the Half -Cent Sales Tax Act. These requirements include those concerning the reporting and auditing of its finances, the levyingof ad valorem taxes or receipt of other revenue sources, and certifying certain requirements pertaining to the employment and compensation of law enforcement officers, the employment of fire fighters, the auditing of certain dependent special districts, and the method of fixing millage rates for the levying of ad valorem taxes. Although the Half -Cent Sales Tax Act, does not impose any limitation upon the number of years during which the City can receive distribution of the Local Government Half -Cent Sales Tax from the Trust Fund, there may be future amendments to the Half -Cent Sales Tax. To be eligible to participate in the Trust Fund in future years, the City must comply with certain eligibility and reporting requirements of Chapter 218, Part VI, Florida Statutes, otherwise, the City will not be entitled to any Trust Fund distributions for twelve (12) months following a "determination of noncompliance" by the State Department or Revenue. Licenses and Permits These are revenues derived from the issuance of local licenses and permits, including professional and occupational licenses required for the privilege of engaging in certain trades, occupations and other activities. Charges for Services Charges for various services provided by the City to residents, property owners, and grants received from other governments, including the following: • General Government: all money resulting from charges for current services; i.e., photographs, reports and ordinances. • Public Safety: fees for police services, fire protection services and emergency services. • Physical Environment: charges indude cemetery fees. • Building and Zoning Inspections: fees for inspections such as plumbing, electrical, elevator and mechanical inspections. • Marina Fees: all fees associated with operations of the various City marinas. • Recreational and Special Events: fees for parks and recreation activities and events. 16 • Other: fees for services not specifically mentioned above, i.e., engineering services, public hearing fees. Other Revenue and Financing Sources • This category includes a variety of revenues and transfers from other funds, including: • Interest earnings on invested funds. • Fines and forfeitures imposed by local courts. [Remainder of page intentionally left blank.] 17 The following table represents the City's determination of legally available non -ad valorem revenues for the Fiscal Years Ending September 30, 2003 through September 30, 2007. THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM FUNDS YEAR ENDED SEPTEMBER 30th Revenues: Franchise and Utility Taxes Licenses and Permits: Business Licenses and Permits Construction Permits 2003 2004 2005 2006 2007 $31,556,3870) $34,988,629 $35,918,724 $41,342,214 $42,257,282 $ 6,925,360 $ 6,975,040 $ 7,817,841 $ 7,078,534 $7,064,358 14,544,613 16,036,648 19,576,5862) 21,390,059 25,766,010 $21,469,973 $23,011,688 $27,394,427 $28,468,593 $32,830,368 Intergovernmental: State and Revenue Sharing $ 9,217,247 $10,418,123 $13,002,038 $13,044,234 $13,073,886 Half -Cent Sales Tax 21,213,998 21,819,892 22,802,208 25,800,341 25,505,412 Fine and Forfeitures 5,049,412 4,732,357 4,980,002 5,175,457 5,283,695 Other 13,640,279 17,022,799(0) 13,986.248 3,341,711 15,517,110 Total Intergovernmental $49,120,936 $53,993,171 $54,770,496 $47,361,743 $59,380,103 Charges for Services: Engineering Servicesm $45,392,136 $46,495,695 $50,264,889 $44,917,693 $46,587,956 Public Safety 11,366,612 9,947,278 10,429,442 11,025,330 22,952,364 Recreation 581,244 572,253 451,451 662,557 3,488,492 Other 28,842,835 30575,808 30,833,674 35,375,016 4,145,343 Total Charges for Services $86,182,827 $87,591,034 $91,979,456 $91,980,596 $77,174,155 Interest Income $7,280,372 $5,438,411 $4,404,529 $11,144,320 $16,248,307 Other $3,688,147 $5,828,412 $3,949,489 $16,643,409 $4,950,826 Component Units Operating: Transfers In Transfers In from other Funds Total Sources of Legally Available don -Ad Valorem Funds .ce: City of Miami Finance Department $ 1,708,642 $47,691,802 $ 1,982,616 $ 1,887,466 $ 2,000,000 $61,411,040 $47,417,878 $41,596,608 $50,097,226 $248,699,086 $260,251,789 $261,901,195 $289,038,101 $294,252,081 rior to 2003, the City recorded storm water utility revenues and optional gas tax in the Special Revenue Fund. Us increase was due to growth in the City and in new development. is increase is due to amounts reclassified from "Other" to "Engineering". is increase was due to hurricane grants from FEMA. 18 The following table represents current debt service on obligations payable from legally available non -ad valorem revenues as of September 30, 2007, excluding the Series 2008 Bonds. CITY OF MIAMT, FLORIDA SCHEDULE OF PRINCIPAL & INTEREST FOR NON -AD VALOREM REVENUE BONDS AND LOANS Fiscal Year Total Outstanding Non -Ad Valorem Debt Principal Source: City of Miami Finance Department Interest Total As described herein, the obligation and the ability of the City to budget and appropriate non -ad valorem revenues is subject to a variety of factors, including the obligation of the City to provide essential governmental services and the obligation of the City to have a balanced budget. 19 Non -Ad Valorem Funds Available to Pay Debt Service Debt Service (I)(2) 200% Debt Service Coverage0) THE CITY OF MIAMI, FLORIDA HISTORICAL ANTI -DILUTION TEST YEAR ENDED SEPTEMBER 30th 2003 2004 2005 2006 $250,581,519 $ 21,807,281 $ 43,614,562 5.75x $260,251,789 $ 21,725,438 $ 43,450,876 5.99x $261,901,194 $ 21,046,555 $ 42,093,110 6.22x $289,038,101 $ 21,583,712 $ 42,631,100 6.78x )}) Debt Service is based on the maximum estimated annual loan payments on the Sunshine Loans during the remaining fiscal years until the date of maturity of such loans and maximum annual debt service on bonds or other debt obligations payable from Non -Ad Valorem revenues outstanding as of September 30th. (2) Variable Interest Rate Debton the Sunshine Loans is calculated at 15% which is the maximum rate pursuant to the covenants of loan agreements securing the debt of Sunshine State Governmental Financing Commission. (3) Coverage is based on 200% Debt Service. Special Investment Considerations 2007 $294,252,080 $ 25,142,742 $ 50,285,484 5.85X As described above, the City's covenant to budget and appropriate Non -Ad Valorem Funds does not constitute a lien, either legal or equitable, on any of the City's revenues. The amount of such revenues available to make payments on the Series 2008 Bonds may be effectively limited by the requirement for a balanced budget, funding requirements for essential governmental services of the City, and the inability of the City to expend revenues not appropriated or in excess of funds actually available after the use of such funds to satisfy obligations having an express lien or pledge on such funds. All of these factors may limit the availability of Non -Ad Valorem Funds available to pay a portion of the debt service on the Series 2008 Bonds. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Furthermore, the City is not restricted in its ability (1) to pledge such revenues for other purposes or to issue additional debt specifically secured by such revenues or by a covenant similar to that securing the Series 2008 Bonds or (2) to reduce or discontinue services that generate Non -Ad Valorem Funds. All of these factors may limit the availability of Non -Ad Valorem Funds available to pay a portion of the Debt Service on the Series 2008 Bonds and Other Bond Service Charges. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Creation of Funds and Accounts Current Debt Service Fund. The Master Indenture creates the Current Debt Service Fund and provides that the moneys and Eligible Investments therein shall be used solely and exdusively for the payment of Debt Service as it becomes due on each Interest Payment Date, at stated maturity, by redemption or pursuant to any Amortization Requirements, provided, that moneys therein shall also be used to pay Payment Obligations payable to Credit Facility Providers with respect to amounts advanced under Credit Facilities (but not with respect to amounts advanced under Reserve Facilities) and to make Hedge Payments (but not 20 Hedge Termination Payments). The Current Debt Service Fund is pledged for such purposes. The City will withdraw from the Current Debt Service Fund moneys which are available therein for the purpose of paying, and which are sufficient to pay, the aforesaid amounts as they become due and payable (whether on each Interest Payment Date, at stated maturity, by redemption, acceleration or otherwise). The City covenants that it will' so notify the Trustee and the Paying Agent at least five (5) days before any Principal or Interest Payment Date, if the amounts in the Current Debt Service Fund are not sufficient to pay the Debt Service coming due on such date, the amount of such shortfall and whether such shortfall will necessitate a draw or advance of funds under any Credit Facility (which shall be identified) or any Reserve Facility (which shall be identified), or both. Proceeds Ft nd. The Series 2008 Indenture creates the Proceeds Fund for the purpose of securing and assuring the proper expenditure of the proceeds of the Series 2008 Bonds and creates therein a Cost of Issuance Account, a Redemption Account and a Swap Account to which, respectively, the City will deposit amounts sufficient to pay the costs of issuance of the Series 2008 Bonds and to pay at redemption the principal of and interest on the Refunded Bonds and pay the Swap Termination payments. The City anticipates, that the moneys deposited in the Proceeds Funds will be expended simultaneously with the issuance of the Series 2008 Bonds and will not be available at any time to pay Debt Service. Additional Bonds Payable from Covenant Revenues Additional Bonds payable from Covenant Revenues and investment income thereon in the Current Debt Service Fund may only be issued if the City is then able to issue additional debt payable from Non -Ad Valorem Funds, as described below. Additional Debt Payable from Non -Ad Valorem Funds The City will not issue additional obligations (Additional Bonds and additional Parity Debt) payable from the Non -Ad Valorem Funds of the City, or any portion thereof, or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge on its legally available Non -Ad Valorem Funds, in each case, having priority to or being on a parity with the City's obligation to budget and appropriate legally available Non -Ad Valorem Funds for the payment of the Series 2008 Bonds, except to the extent permitted and upon the terms and conditions specified in the Master Indenture. The City will not issue any Additional Bonds under the Master Indenture on a parity with the Series 2008 Bonds or any Parity Debt or any additional Priority Debt unless the City shall have complied with the conditions set forth below. (1) There shall have been obtained and filed with the Trustee a letter of an independent certified public accountant evidencing that the total amount of legally available Non -Ad Valorem Funds received by the City for the most recent Fiscal Year for which audited financial statements are available were: (a) at least 2.00 times the Maximum Annual Debt Service on all Bonds issued under the Master Indenture, all Parity Debt and all Priority Debt (collectively "Included Debt") which will be outstanding immediately after the issuance of the Included Debt proposed to be issued, and (b) evidencing that any other financial tests required for the issuance of Included Debt contained in any ordinance, resolution, instrument or agreement of the City will be met; in connection with clause (b) above, such letter may rely on a written opinion of the City Attorney which sets forth in the body thereof or in attachments thereto, such financial tests. 21 (2) The Trustee will have received a certificate of the Finance Director certifying that: (A) the City is not in default in the performance of any of the covenants and obligations assumed by it under the Master Indenture or under any ordinance, resolution or other enabling instrument of the City pursuant to which outstanding Included Debt has been issued, and (B) all payments required to have been made into the Funds and Accounts provided by the Master Indenture, any Series Indenture or by such other ordinance, resolution or enabling instrument shall have been made in full to the extent required. (3) The City Attorney will have delivered to the Trustee a written opinion to the effect that the issuance of such additional Included Debt has been duly authorized and that all conditions precedent to the delivery of such additional Included Debt have been fulfilled. Claims The Series 2008 Bonds, all Additional Bonds issued pursuant to the Master Indenture and any other Parity Debt payable from legally available Non -Ad Valorem Funds, regardless of the time or times of their issuance shall have an equal claim for payment therefrom equally without preference of the Series 2008 Bonds or any Additional Bonds over any other Parity Debt, except to the extent that Non -Ad Valorem Funds have been pledged to the payment of any Additional Bonds or other indebtedness of the City; provided, however, that any Parity Debt not issued as Bonds under the Master Indenture will not be secured by or have any lien on the Covenant Revenues, the Current Debt Service Fund or any Special Fund or any money or investments held therein and, provided further, that if a Special Fund or an Account or subaccount therein is established for a particular purpose the moneys and investments therein and investment income thereon shall be applied only as provided in the Series Indenture that created such Special Fund. Pledge of Non -Ad Valorem Funds No specific source of Designated Revenues or Non -Ad Valorem Funds are pledged to the payment of the Series 2008 Bonds. Certain sources of Non -Ad Valorem Funds are pledged for the payment of other indebtedness of the City as shown herein. Future issues of Bonds and future issues of other indebtedness of the City may be secured by a pledge of Non -Ad Valorem Funds as described below. Pledge of Designated Revenues If the conditions set forth below are met, the Series Indenture under which particular Bonds are issued may pledge to the payment of any or all of such particular Bonds all, or any portion, of any one or more of the Designated Revenues: All Bonds which are designated in the Series Indenture under which they are issued as being secured by a pledge of any source of Designated Revenues or portion thereof shall, together with any other Bonds and Parity Debt secured by such source of Designated Revenues be equally and ratably secured by the pledge of such Pledged Revenues. Any pledge of any one or more Designated Revenues to the payment of any Bonds shall be subject and subordinate to any previously issued and outstanding Priority Debt and any Priority Debt thereafter issued which is secured by a pledge of or lien upon such source of Designated Revenues. None of the Designated Revenues or any other source or sources of Non -Ad Valorem Funds shall be 22 pledged to secure the payment of any particular Bonds or Included Debt unless such pledge is necessary (and only to the extent such pledge thereof is necessary) to obtain an investment grade rating for such particular Bonds from one or more of IS & P, Moody's or Fitch], which ever shall actually rate such Bonds. In the event any such Designated Revenues are pledged to secure any particular Bonds, the necessity for such pledge (and for the extent of such pledge) shall be established by either (i) a letter, rating commitment or certificate of such Rating Agency, a copy of which shall be delivered to Bond Counsel which is serving in connection with the issuance of such particular Bonds or Included Debt (a copy of which will be included in the transcript of proceedings for such particular issue of Bonds or Insured Debt) prior to or contemporaneously with the issuance of such particular Bonds or Included Debt, stating that such pledge is a condition to the issuance of such rating or (ii) if the particular issue of Bonds or Included Debt is to be rated on the basis of a Credit Facility and has no independent rating, the necessity for such pledge shall be established by a letter, commitment or certificate of Provider of such Credit Facility, a copy of which shall be delivered to the Bond Counsel which is serving in connections with the issuance of such particular issue of Bonds or Included Debt, stating that such pledge is a condition to the issuance of such Credit Facility. SWAP TRANSACTION On November 15, 2004, the City entered into a swaption with Morgan Stanley Capital Services, Inc. ("Morgan Stanley") as a means to lock in the rate associated with refunding of the Refunded Bonds. The City sold to Morgan Stanley the right to enter into an interest rate swap agreement in exchange for annual payments from December 1, 2005 through December 1, 2025. Morgan Stanley has exercised its option, so that the swap became effective on December 1, 2006. Under the swap, the City paid a fixed rate of 6.43% and receive a floating rate based on the one -month Libor. The City has exercised its right to optionally terminate the swaption. A termination payment in the aggregate amount of $ will be paid by the City to Morgan Stanley from the proceeds of the Series 2008 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. PROPERTY TAX REFORM During a special legislative session that ended on June 14, 2007, the Florida Legislature adopted Chapter 2007-321, Laws of Florida, ("Chapter 2007-321"), a property tax plan, which appears to have a significant impact on the amount and rate of ad valorem taxes levied by local governments. Among other things, Chapter 2007-321 statutorily requires each county, municipality, and special district to roll back their millage rates for fiscal year 2007-2008 to a level that, with certain adjustments and exceptions, will generate the same level of ad valorem tax revenue as in fiscal year 2006-2007. Depending upon the relative growth of each local government's own ad valorem tax revenues from 2001 to 2006, such rolled back millage rates will be determined after first reducing fiscal year 2006-2007 ad valorem tax revenues by zero to nine percent. The City falls under the (_%) ad valorem tax revenue reduction category. As a result, the City's millage rate was reduced from 7.8775 mills in fiscal year 2006-07 to mills in fiscal year 2007-08. Chapter 2007-321 also limits how much the aggregate amount of ad valorem tax revenues may increase in future fiscal years (except those levied by school districts) based upon the growth in a jurisdiction's population, as measured by new construction, and the statewide growth in per capita personal income. Notwithstanding the foregoing, the governing body of a county, municipality, or special district may levy a millage rate in excess of the then applicable rolled back millage rate upon a supermajority or unanimous vote of such governing body depending on the level of the proposed increase. Several local governments have elected to levy a millage rate in excess of their rolled back millage rate for fiscal year 2008. The rolled back millage rate may also be exceeded based on an affirmative vote of the voters in such 23 jurisdiction. Furthermore, Chapter 2007-321 provides that in the event a county or municipality fails to comply with certain requirements of the legislation, such county or municipality will forfeit its distribution of the half -cent sales tax state revenue sharing for the 12-months following the determination of non- compliance. It is estimated that Chapter 2007-321, will reduce property taxes statewide by approximately $15.6 billion over five years. In addition, on October 29, 2007, the Florida Legislature adopted a tax reform package that includes Senate Joint Resolution 2D, Senate Bil14D (an implementing bill) and Senate Bill 6D (a special election bill). Joint Resolution 2D set forth several constitutional amendments which required approval by Florida voters. On January 29, 2008, the constitutional amendments proposed by Joint Resolution 2D were approved, with the affirmative vote of 64% of the voters. Such approval enacted the following ad valorem tax reforms: (1) an additional homestead exemption of $25,000 applied to the assessed value of homestead property above $50,000; (2) a cap of 10 percent on yearly assessment increases on non -homestead residential and commercial property; (3) portability of the Save Our Homes three percent cap on homestead residential property, up to $500,000, when relocating to a new home in the state; and (4) a $25,000 exemption from the tangible personal property tax (the "Personal Property Tax Exemption"). The 10 percent cap will affect assessments beginning on January 1, 2009. All other reforms took effect retroactive to January 1, 2008. While the constitutional amendments passed on January 29, 2008 will not impact the City's fiscal year 2007-08 budget, they will have an impact on the approach the City will take to formulate a budget for fiscal year 2008-09 and beyond. [The impact of Save Our Homes portability, as well as previously mentioned exemptions, can only be accurately estimated when the Miami -Dade County Property Appraiser releases next year's tax roll data in July, 2008.1 Although, no further action is required on the part of the Florida Legislature to implement these amendments, a lawsuit challenging the constitutionality of at least part of the amendments was filed prior to the referendum approval by the voters. In Bruner v. Hartsfield, filed in the Circuit Court in and for Leon County, Florida in November 2007, new Florida homestead owners (having paidadvalorem taxes for the past four years) filed a class action lawsuit challenging the constitutionality of the Save Our Homes assessment cap and the portability provision in Joint Resolution 2D. The lawsuit charges that Save Our Homesconstitutes an unlawful residency requirement for tax benefits on substantially similar property, in violation of the Florida Constitution's Equal Protection provisions and the Privileges and Immunities Clause of the Fourteenth Amendment to the United States Constitution. The lawsuit argues that the portability provision simply extends the unconstitutionality of the tax shelters granted to long-term homeowners by Save Our Homes. The lawsuit requests a declaration of the unconstitutionality of both provisions and injunctive action preventing continued application of those provisions. Several motions have been filed, including motions to dismiss, motions to strike, motions for judgment on the pleadings, motions for summary judgment and motion for class certification. [The court held a hearing on the filed motions on May 29, 2008. However, the Court has yet to rule on any of the motions. It is impossible at this time to predict whether this challenge will be successful in preventing all or a portion of the Joint Resolution 2D from being implemented or whether Save Our Homes may be declared unconstitutional.] On October 18, 2007, the same Circuit Court in and for Leon County, Florida, in Lanning v. Pilcher, a case filed by out-of-state residents challenging the constitutionality of the Save Our Homes assessment cap, rejected the plaintiffs arguments that the Save Our Homes assessment cap violates either the Commerce Clause or the Privileges and Immunities Clause of the United States. Constitution or the Equal Protection Clause of either the United States or Florida Constitutions and dismissed the plaintiffs' allegations with prejudice. The Lanning court noted that its decision was limited to the plaintiffs' complaints regarding the 24 Save Our Homes assessment cap. Lanning v. Filcher is currently on appeal. One or more similar lawsuits have been filed against other defendants in the State of Florida. The allegations and relief requested by the plaintiffs in each of these cases are very similar, except that the portability provision was not challenged in Lanning v. Filcher, since that case was filed prior to the approval of Joint Resolution 2D, which implemented portability. As noted above, this Court rejected such arguments in Lanning v. Pilcher with similarly situated plaintiffs. At the present time, it is impossible to predict the likelihood of the plaintiffs' success in any of these lawsuits or, if successful, the impact of these lawsuits on the City's finances. • In addition to the legislative activity described above, the constitutionally mandated Florida Taxation and Budget Reform Commission (required to be convened every 20 years) (the "Commission") completed its meetings on April 25, 2008. The Commission passed seven constitutional amendments (the "Commission Amendments") to -be placed on the November 4, 2008 General Election ballot. Such amendments, if approved by Florida voters, would, among other things: (a) allow the Legislature, by general law, to exempt from the assessed value of residential homes, the value of improvements made to protect property from wind damage and installation of new renewable energy source devices; (b) cause specified working waterfront properties to be assessed based on current use rather than highest and best use; (c) provide a property tax exemption for (i) real property that is perpetually used for conservation, and (ii) land not perpetually encumbered, which would require the Legislature to provide for the classification and assessment of land use for conservation purposes solely on the basis of character or use; (d) authorize a local option sales tax to supplement funding for public community colleges, which would require approval by local referendum and would sunset after five years; (e) provide a five percent annual assessment cap on non -homestead property and eliminate the required local effort portion of property taxes by 2010, which is estimated to be approximately $9 billion statewide, and require the Legislature to replace this portion by either (i) eliminating sales tax exemptions, (ii) increasing state sales tax up to one cent, or (iii) imposing spending reductions or other taxes; and (f) require that at least 65 percent of school funding received by school districts be spent on classroom instruction, rather than administration. Approval of the .proposed Commission Amendment described in clause (f) of this paragraph would also serve to reverse a legal precedent of Florida law by allowing private school alternatives to public school programs to be financed with public funds without creating an entitlement. At this point, it is impossible to determine: (a) whether one or more of the proposed Commission Amendments will be approved by Florida voters on November 4, 2008; (b) the viability and sufficiency of the proposed funding alternatives, especially with respect to the proposed Commission Amendment described in paragraph (e) of the preceding paragraph; and (c) what fiscal impact, if any, the proposed Commission Amendments, Chapter 20007-321, and joint Resolution 2D will have on the City. The City's general fund property tax revenues increased from $246,474,585 for fiscal year 2005-06 to $294,899,503 for fiscal year 2006-07; reflecting an increase of $48.42 million (or 19.65%). The increase was due to a 22.45% increase in the net assessed value of taxable property. The City has decreased the overall millage rate for the last seven years to the current rate of 7.8775. [Remainder of page intentionally left blank.] 25 DEBT SERVICE SCHEDULE The following table sets forth the debt service for each fiscal year for the Series 2008 Bonds and the Outstanding Non -Ad Valorem Debt, all as of the date of delivery of the Series 2008 Bonds. Series 2008 Bonds" Outstanding Non -Ad Total Debt Fiscal Year Principal Interest Total Valorem Debt Service 26 THE CITY OF MIAMI Background Now 112 years old, the City is part of the nation's seventh largest metropolitan area. Incorporated in 1896, the City is the only municipality conceived and founded by a woman - Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity of approximately 386,882 residents, 58.2% of them foreign born. In physical size, the City is not large, encompassing only 34.3 square miles. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. For additional information concerning the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI." City Government Since 1997, the City has been governed by a form of government known as the "Mayor -Commissioner plan." 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 Date Term Expires Joe M. Sanchez, Chairman November 2009 Michelle Spence -Jones, Vice Chair November 2009 Angel Gonzalez November 2011 Tomas P. Regalado November 2011 Marc D. Sarnoff November 2011 The City Manager, Pedro G. Hernandez, is a full-time employee and is the chief administrative officer of the City. The City Manager is responsible for directing the administrative and operational aspects of the City in compliance with the policies set by the 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 77 appointed the interim Chief Financial Officer in July 2006 and appointed the Chief Financial Officer in February 2007. He served as Assistant City Manager for Strategic Planning, Budgeting and Performance from February 2003 to February 2007. Prior to that, Mr. Spring spent the bulk of his career in the commercial banking industry primarily in the areas of accounting and treasury management. His last position prior to joining the City was as Vice President and Controller of TOTALBANK in Miami. He holds a Bachelor of Science degree in Accounting from the A.B. Freeman School of Business at Tulane University and is a member of the Government Finance Officers Association. The City's Finance Director is Diana M. Gomez. She reports to the Chief Financial Officer. She is responsible for managing and investing public funds, accounts payable, general ledger, grants monitoring, payroll, treasury management and preparation of routine accounting reports as well as the City's annual financial statement. Ms. Gomez was appointed as the Finance Director on February 11, 2006. Ms. Gomez has been Assistant Director of Finance/Comptroller since her employment with the City on August 27, 2001. Prior to joining the City, Ms. Gomez was a Supervising Senior Auditor/C.P.A. for five years with KPMG LLP, one of the "big four" accounting firms. Ms. Gomez received a Bachelor of Arts in Psychology from Rutgers College, N.J., and a Masters in Business Administration in Professional Accounting from the University of Baltimore, MD. She is a Certified Public Accountant. Adoption of Investment Policy and Debt Management Policy The City adopted a detailed written investment policy on May 10, 2001, that applies to all cash and investments held or controlled by the City and identified as "general operating funds" of the City with the exception of the City's Pension Funds, Deferred Compensation & Section 401(a) Plans, and such funds related 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) Intergovemmental 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 T 'asury Obligation and obligations of agencies of the United States Government. Approximately 14.9% of the City's investment portfolio was invested in commercial paper. All are rated in the highest rating category for each of the rating agencies. The City adopted a Debt Management Policy on July 21, 1998 to provide guidance governing the issuance, management, continuing evaluation of and reporting on all debt obligations issued by the City and to provide for the preparation and implementation necessary to assure compliance and conformity with the policy. It is the responsibility of the City's finance committee to review and make recommendations regarding the issuance of debt obligations and the management of outstanding debt. The finance committee has approved the Series 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 2006-2017 five year Capital Improvement Plan (the "Capital Plan"), covering the period from October 1, 2007 through September 30, 2012, earmarked funding estimated at $800.5 million for 490 projects throughout the City. Streets and sidewalks projects account for the largest portion of the total Capital Plan funding at $256.2 million or 32%. Parks and recreation projects are the second largest, accounting for $162.1 million, or 20.2%, and public facilities projects are the third largest accounting for $108.3 million, or 13.5%, of the total Capital Plan. Bonds issued by the City represent the largest share of funding for the Capital Plan, accounting for 45.5% of the total. Capital project revenues (impact fees, storm water utilities, optional gas tax, etc.) account for 30.5%, funding derived from Miami -Dade County accounts for 14.9% and the remaining 9.1% of funding is from federal, State and other private donations. Fiscal and Accounting Procedures The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity in accordance with generally accepted accounting principles, as defined by the Governmental Accounting Standards Board ("GASB"). The operation of each fund is accounted for in a separate, self -balancing set of accounts which comprise its assets and other debits, liabilities, fund equities and other credits, revenues and expenditures. Individual funds that have similar characteristics are combined into fund types. For the past 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. General Fund The General Fund is the general operating fund of the City. It accounts for all financial resources except for those required to be accounted for in another fund. The largest source of revenue in this fund is generated from ad valorem taxation. Operations will be removed from the General Fund only when they can be operated as true enterprise operations. [Remainder of page intentionally left blank.] The following chart shows information regarding the General Fund over the five year period ending September 30, 2007. Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for the General Fund Revenues Property Taxes Franchise Fees/Other Taxes Licenses and permits Fines and forfeitures Intergovernmental Charges for services Interest Other Total Revenues Expenditures General government Planning & development Community development Community redevelopment areas Public works Public safety Public facilities Parks and recreation Risk management Pensions") Organizational support") Non -departmental") Debt Service: Principal Interest and Other Charges Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other financing sources and {uses): Operating transfers in Operating transfers out Refunding Bonds Issued Payments to Refunded Bond Escrow Agent Bonds Issued Loan Capital Leases Sale of Capital Assets Total other financing sources, net Net Change in Fund Balances Debt Service as Percentageof Non -Capital Expenditure Fiscal Year Ended September 30th 2003 2004 M.L5 2006 2007 $139,604,223 $159,391,679 $178,979,987 $214,329,257 $258,756,957 31,556,387 34,988,629 35,918,724 41,342,214 42,257,282 21,469,973 23,011,688 27,394,427 28,468,593 32,830,368 5,049,412 4,732,357 4,980,002 5,175,457 5,283,695 44,071,524 49,260,814 49,790,494 53,266,529 54,096,408 86,182,827 87,591,034 91,979,456 91,980,596 78,676,199 7,280,372 5,438,411 4,404,529 11,144,320 16,248,307 3,688,147 5,828,412 3,949,489 5,563,166 3,4,18,782 $338,902,865 $370,243,024 $397,397,108 $451,270,132 $491,597,998 70,335,134 8,483,782 50,591,533 198,541,341 5,173,926 12,594,690 64,208,736 10,722,800 56,926,608 243,181,936 5,911,254 14,763,846 36,419,744 9,136,666 48,251,766 181,871,226 6,597,590 14,621,171 29,162,254 73,862,309 23,917,033 12,926,933 38,809,265 9,440,759 50,573,908 187,938,096 7,355,457 15,111,916 25,546,486 78,864,757 25,161,646 13,204,324 47,015,325 10,814,727 56,376,608 235,497,950 7,419,797 20,201,873 18,115,929 70,708,285 35,122,459 28,490,230 $345,720,406 $395,715,180 $436,766,692 $452,006,614 $529,763,183 (6,817,541) (25,472,156) (39,369,584) (736,482) 51,282,877 (44,130,853) 49,400,444 (32,142,211) 3,204,349 43,484,074 <23,862,197) 52,097,226 (42,209,286) (38,165,185) 61,411,040 (49,052,224) 7,152,024 $ 334,483 20,462,582 ${5,009,574) 19,621,877 $ (19,747,707) 9,887,940 $9,151,458 12,358,816 $25,806,369) Source: The City of Miami, Florida (1) The City, in the 2005 fiscal year, revised the reporting for these functions in the governmental funds. Previously, these amounts were included in other functions. Indebtedness of the City Pursuant to the Debt Management Policy, the City's debt issuance is subject to the following constraints: (i) the Net Debt Per Capita and the Net Debt to Taxable Assessed Value percentages, which shall be determined by the finance committee by bench marking the City to current industry standards, and (ii) the maximum maturity shall be the earlier of (a) the estimated useful life of the capital improvements being financed or (b) thirty years or (c) in the event debt was issued to refinance outstanding debt obligations the final maturity of the debt obligations being refinanced, unless a longer term is recommended by the finance committee. Pension Fund. The City's employees participate in two separate, single employer defined benefit contributory pension plans under the administration and management of separate Boards of Trustees: The City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIPO") and the City of Miami General Employees and Sanitation Employees' Retirement Trust ("GESE"). The plans cover substantially all City employees who contribute a percentage of their base salary or wage on a bi-weekly basis. The City's elected officials participate in a single employer defined benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all elected officials with 7 or more years of elected service. City employees are required to contribute 10% of their salary to GESE and no more than 7% to FIPO. The EORT is a non-contributory plan. Contributions from employees for FIPO and GESE are recorded in the period the City makes payroll deductions from participants. The City is annually required to contribute such amounts as necessary on an actuarial basis to provide FIPO and GESE with assets sufficient to meet the benefits to be paid. The ordinance covering the FIPO (the "Pension Ordinance") provides for actuarial methodology for evaluating assets to be a moving market value averaged over three years. The result cannot be greater than 100 percent of market value or Less than 80 percent of market value. The Pension Ordinance also provides for the FIPO Board of Trustees' actuary to use the actuarial assumptions adopted the FIPO Board. Currently, the City and the FIPO are in discussions regarding the amount needed for contribution. However, if the City's actuary and the FIPO's actuary cannot agree, together they may appoint a third independent actuary. The third actuary is required to submit a funding recommendation to the FIPO Board and the City Commission. The City Commission is then required to fund the amount recommended by either the FIPO's actuary or the City's actuary, whichever recommendation is closer to the recommendation of the third actuary. The City's net pension obligation for each of the FIPO, the GESE and the EORT is $0. The annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2005, 2006 and 2007. 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, 2007 was $3,877,208 and the annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2005, 2006 and 2007. 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, 2007 is $ of which $ is the current portion. Every three years the maximum number of hours which can be carried forward is renegotiated with FIFO 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 retained an actuary to review its OPEB liabilities. While the City does not know at this time what its OPEB liabilities will be in connection with GASB 45 compliance in the future, its liability fofrthe year ended was $5,165,918. 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 2008 Bonds are subject to the approval of Squire, Sanders & Dempsey L.L.P., Bond Counsel, Miami, Florida whose approving opinion in the form attached hereto as "APPENDIX D - FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2008 Bonds at the time of their delivery. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by Bryant Miller Olive P.A., Miami, Florida, Disclosure Counsel to the City. Certain legal matters will be passed upon for the Underwriters by LITIGATION [To be Updated] There is no pending or, to the knowledge of the City, any threatened litigation against the City of any nature whatsoever which in any way questions or affects the validity of the Series 2008 Bonds, or arty 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, except as described below. Former City Commissioner Johnny Winton has filed a suit alleging that City Commissioner Marc D. Sarnoff, District 2 has no legal right to the seat because Mr. Winton was not convicted of any felony charges, although Gov. Crist removed Mr. Winton from office after an arrest last year. Mr. Winton's unexpired term will end November 2007. Commissioner Sarnoff was re-elected on November 6, 2007 for a term expiring November 2011. 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 suit was filed against the City seeking promotions with back pay and emoluments retroactive to 1994 for potentially 157 individuals. The trial judge severed the action to address only the liability. The liability portion was tried earlier this year and the exam was found deficient. The parties are in discovery as to damages. 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 approximately $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 interest on the Series 2008 Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Series 2008 Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Bond Counsel will express no opinion as to any other tax consequences regarding the Series 2008 Bonds. NO ATTEMPT HAS BEEN MADE TO COMPLY WITH CERTAIN REQUIREMENTS RELATING TO THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OF INTEREST ON THE SERIES 2008 BONDS. NO OPINION IS RENDERED WITH RESPECT TO THE EXCLUSION OF INTEREST ON THE SERIES 2008 BONDS FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OR AS TO ANY FEDERAL TAX CONSEQUENCES OF OWNERSHIP OF THE SERIES 2008 BONDS. EACH PURCHASER SHOULD CONSULT ITS OWN TAX ADVISOR TO DETERMINE THE FEDERAL TAX CONSEQUENCES OF OWNING THE SERIES 2008 BONDS. RATINGS [Moody's Investor's Service and Standard & Poor's Ratings Service have assigned underlying ratings of "" and "_", respectively, to the Series 2008 Bonds. The ratings reflect only the views of said rating agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no assurance that such ratings will continue for any given period of time or that they will not be lowered or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward change in or withdrawal of any of such ratings, may have an adverse affect on the market price of the Series 2008 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 2008 Bonds. The Financial Advisor did not participate in the underwriting of the Series 2008 Bonds. AUDITED FINANCIAL STATEMENTS The Comprehensive Annual Financial Report of the City for the fiscal year ended September 30, 2007 (the "Audited Financial Statements"), and report thereon of the City are attached hereto as "APPENDIX C - COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007" as a part of this Official Statement have been audited by McGladrey & Pullen, LLP independent certified public accountants, as set forth in their report dated July 22, 2008, whose report is also appended hereto as part of said APPENDIX C. McGladrey & Pullen LLP has not participated in the preparation or review of this Official Statement. The Audited Financial Statements are attached hereto as a matter of public record. Such statements speak only as of September 30, 2007. CONTINUING DISCLOSURE The City will covenant for the benefit of the Series 2008 Bondholders to provide certain financial information and operating data relating to the City and the Series 2008 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 2008 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 2008 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 2008 Bonds, no party other than the City is obligated to provide, nor is expected to provide, any continuing disclosure information with respect to the Rule. The City has undertaken certain continuing disclosure obligations in prior continuing disclosure certificates in connection with its outstanding debt and its outstanding Parking System Revenue Bonds, Series 1998 (the "Parking System Bonds") to provide certain financial and operating information and notices to each Nationally Recognized Municipal Securities Information Repository ("NRMSIR"), the State Repository, if and when one is established, and others. In 2003, the City's annual report for certain outstanding obligations was filed a few days past the required filing date, and in the years 2001 through 2004, the City did not timely file certain information relating to its Parking System Bonds. Upon recognizing the omission of certain information related to the Parking System Bonds, the City promptly filed all required information, together with a notice of late filing, with each NRMSIR. The City has determined that its non-compliance was the result of inadvertence and not due to any conscious disregard for its duties and responsibilities. { As of the date hereof, the City is in compliance with all of its continuing disclosure obligations, in all material respects, and has implemented procedures to assure future compliance with all of its continuing disclosure obligations.] UNDERWRITING The Series 2008 Bonds are being purchased by J.P. Morgan Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriters") at an aggregate purchase price of $ (the par amount of the Series 2008 Bonds, less Underwriter's discount of $ ). The Underwriters' obligations are subject to certain conditions precedent described in the Bond Purchase Agreement entered into between the City and the Underwriters, and they will be obligated to purchase all of the Series 2008 Bonds if any Series 2008 Bonds are purchased. The Series 2008 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2008 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 2008 Bonds. Payment of the fees of such professionals and an underwriting discount to the Underwriters are each contingent upon the issuance of the Series 2008 Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2008 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 2008 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 2008 Bonds, including Bond Counsel's approving opinion, will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The references, excerpts, and summaries of all documents, statutes, and information concerning the City and certain reports and statistical data referred to herein do not purport to be complete, comprehensive and definitive and each such summary and reference is qualified in its entirety by reference to each such document for full and complete statements of all matters of fact relating to the Series 2008 Bonds, the security for the payment of the Series 2008 Bonds and the rights and obligations of the owners thereof and to each such statute, report or instrument. The appendices attached hereto are integral parts of this Official Statement and must be read in their entirety together with all foregoing statements. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the City from the date hereof. FORWARD -LOOKING STATEMENTS This Official Statement contains certain "forward -looking statements" concerning the City's operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the City. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions are meant to identify these forward -looking statements. Actual results may differ materially from those expressed or implied by these forward -looking statements. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the owners of the Series 2008 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 2008 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 37 information herein related to the Insurer, the Policy, DTC, the book -entry only system of registration and the information contained under the caption "TAX MATTERS" as to which no opinion shall be expressed), as of its date and as of the date of delivery of the Series 2008 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: /s/ City Manager APPENDIX A GENERAL INFORMATION REGARDING THE CITY OF MIAMI l 0 13 C` rOJR TEA t irx "Dcc-c_t l it itfr tij APPENDIX A GENERAL INFORMATION REGARDING THE CITY OF MIAMI General Now 1122 years old, the City of Miami, Florida (the "City") is part of the nation's elelh seventh 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 386,88241-7 residents, 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 Year City of Miami Percent Chanee Miami -Dade County Percent Change State of Florida Percent Chanee 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 2006 386,44-afil 6.716 2,376,519102,208 sS 17,789,86118,089,888 4-47313.2 Source: University of Florida, Florida Statistical Abstract 200¢5, US Census Bureau, Miami -Dade County, Annual Report to Bondholders Government Since 1997, the City has been governed by a form of government known as the "Mayor -City Commissioner plan." There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. 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. 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 miles of public beaches comprise 1,400 acres, which are freely accessible and are enjoyed year round by residents and tourists. Athletics for spectator sports fans are held at the Miami Convention Center and the Miami Arena. Dolphin Stadium, which is used by the Miami Dolphins and the Florida Marlins, is located in North Central Dade County. The city and county are considering plans to construct anew stadium in ordr to retainthe_Florida Marlins baseball franchise. 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 I countywide school district offers a wide variety of programs to meet the needs of its 39864,000-plus 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 232,000 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. 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 22.4 mile above -ground system linking Kendall, South Miami, Coral Gables, Brickell Avenue, Downtown Miami, the Medical Center, Northwest Dade and Hialeah. Metromover, a 4.4 mile automated loop, carries passengers around downtown Miami, Brickell Avenue and the Omni shopping center areas. Miami -Dade County's Metrobus covers 38 million miles per year and over 100000(?) passenger trips annually. The County's also provides para-transit services to qualified riders in the amount of 1.4 million passenger trips annually. ay ten -Cargo rail service is available from both the airport and seaport, and Amtrak has a passenger station in the City. Tri-Rail, a 67-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 2995-2007 over 33(4 million air travelers were serviced by Miami International Airport, and approximately 4,962.10 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 2007b, 3,05,2013.787,000 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 9.177,83 million tons cargo transferred in the port in 20075. The Port of Miami is also reaching out to the global community where trade with Asian countries accounted for almost 2395 of the total cargo handled at the Port. The Port's 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. 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: The Gap, Inc. Caterpillar Americas Co. Lucent Technologies Federal Express Corporation Ericsson, Inc. Barclays Bank PLC ABN AMR() Bank Terra Networks USA Oracle Latin America Sony Broadcast Export Corporation IBM Corporation Cisco Systems Olympus America Canon Latin America AT&T Latin America ExxonMobil Inter -America Acer Latin America Olympus Latin America Black & Decker Latin America Group Komatsu Latin America Clorox Latin America Hewlett Packard Co. Latin America Tech Data American Express Eastman Chemical Latin America Chevron -Texaco Stanley Latin America Telefonica International USA, Inc. Johnson & Johnson Source: Beacon Council Distribution of Major Employment Classifications for City of Miami, Florida Occupational Title Employee Percentage of Totals Construction 4374004,400 4:4, Manufacturing 49:60046,900 434_4 Mining and Natural Resources 400 0 Transportation, Warehousing, and Utilities 6440060,900 35.7 Wholesale Trade 78749076,400 747_2 Retail Trade 443,800126,000 44411 99 Information 2&40021,600 2,72,Q Finance Activities 69u90076.400 647.2 Professional and Business 163400154,800 48:614.6 Education and Health Services 4377700145,200 1-3 21 7 Leisure. and Hospitality 1047700100,200 9-29_4 Other Services 434_0 Government 953409155.800 44 814.7 Total Employed 4446.5001.061 300 1QQ,.Q Source: Miami -Dade County Annual Report to Bondholders series 102007, General Information on Miami -Dade County Labor Force and Employment Statistics Greater Miami Metropolitan Area Period Employment Civilian LaborForcg Unemployment ate Florida Unemnjovment Rate 20022005 112,555I.084.009 1,139.2901 °��3 8 7Vb4.7% 5.7%3.9% 20063 111,0751,121.491 1,167.795156,283 78jQ &33i.4 20074 146,7311.121.122 1.186,460438,039 7.2a,$ 4724_,D 200$8 450,0381,142,461 1573801.209.054 435 5 3785,5 Source: Bureau of Labor Tune 2008 -1 Formatted: Underline Formatted: Underline Public Employers: Major Employers Name Number of Employees Miami -Dade County Public Schools 50,000 Miami -Dade County 320,000 U.S. Federal Government 20,4300 Florida State Government 4-5730017,000 Jackson Health System 10,45310.500 Miami -Dade College 574006,500 City of Miami 3,95'11,034 Florida International University 3,5003132 Miami Veteran Affairs Medical Center 2,4002.300 City of Miami Beach 475391,979 City of Hialeah 478001 POO U.S. Coast Guard 1,9211 220 U.S. Southern Command 1,200 City of Coral Gables 4;959 City of North Miami Beach 764 738 Source: City of Miami Comprehensive Annual Financial Report, September 20075 [Remainder of this page intentionally left blank.] Private Employers: Name Publix Super Markets Baptist Health Systems of South Florida University of Miami American Airlines Precision Response CorporationUnited Parcel Service Bell South Winn Dixie Stores Florida Power & Light Company Carnival Cruise Lines Macy's of Florida Mount Sinai Medical Center a Miami Children's Hospital Mercy Hospital MountSinai M_a,__l .__. Wachovia Bank, N.A.Carnhvl Cruise Lind Cordis (a iohnson & Iohnson Company Royal Caribbean Internationallespital Assurant Group`Veel `__.:a Bank N " Miami Herald Publishing CO.Mercy-Hospital Bank of America United Parcel Servic . Beckman Coulter Corp.Assurant Group Cedars Medical Center MasTe Federal ExpressMesTee Boston Scientific8cckman Coulter Coip. B_._._ Source: The Beacon Council Number of Employees 11.000 10,68:410,826 9,36710,170 9,000 6.00057000 478005,500 4,6164,833 90 3,5004 000 3,3683 665 33 264^ 368 2.6003730 22 412370A8 2,22937000 2,1002 800 22 0002,574 1,80027500 1 7002,133 11 7002 200 1,62727000 1,61027000 270001,410 1 20047907 11 20047800 1,10047800 47700 1,5M Formatted Table J International Banking Miami -Dade County is established as major international financial and banking center. Out of the 12 Edge Act Banks in the United States, 6 are located in Miami -Dade County. These include: Bancafe International, Banco Santander International, Bank of Boston International, Citibank International, HSBC Private Bank International, and American Express Bank International and they account for $6.1 Billion on deposit. The Federal Reserve Edge Act Amendment adopted in 1979, permits banks to open international banking subsidiaries outside their home state. The Federal Reserve System has also established a branch office in Miami -Dade County to assist the Atlanta office with financial transactions in the South Florida area. In total, the FDIC has found that the Fort Lauderdale -Miami -Miami Beach area as 118 financial intuitions with 1,494 office and over 138 billion in deposits. Per Capita Personal Income Year Miamit'i(dollars) Florida (dollars) 20024- 26,41027 074 29,2 ,829,709 20822003 26,99527,670 29,51930,128 28822004 27,59:129,076 30,09831,469 2005 Source: University of Florida, Florida Statistical Abstract 200¢5 m Data is for Metropolitan Statistical Area Ad Valorem Assessments As of 20075, 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: THE CITY OF MIAMI, FLORIDA TEN LARGEST TAX ASSESSMENTS 20075 ASSESSED VALUES Taxpayer Nature of Assessed Value Percent Activity SRI Miami Ventures, LP Real Estate $2787800,000287,500,000 1.270.87% Teachers Ins. & Annuity Association of America Labor 254,000 000262,400.000 1460.79% Florida Power & Light Utility 229,721,716256,746.419 47093,78% Prudential Insurance Co.Crescent Miami 452,600,000163.000,000 0.7842% Center 1111 Brickell Office LLC Real Estate "�000128,800,000 0.5-32% TerrentarkMiami Herald Publishi LCo. Publishing 114,874121121,636,670 0.5-2% City National Bank of FloridaBisea}ne Banking 96,00591998,000,000 0.29%84.1-`tt Tower Croup - - -t Formatted: Justified Trustees of L&BSwife-h-r erties 92,:005,91988,252,812 0.28%8 05-N, Blue Capital US EastBlue Capital-U.S. 91,200,00035,000,000 2.284%0. Cedars Healthcare Group Health 7-?689,48489,35L175 0.3827% All Others t s 93.18°v Total $1,495,438,1331,588,611,335 440:004.81% Source: City of Miami Comprehensive Annual Financial Report, September 20076 Formatted: Tab stops: 0.22", Left + 0.55", Centered DIRECT DEBT The City has met certain of its financial needs through debt financing. The table which follov✓s is a schedule of the outstanding debt of the City as of September 30, 20076, including that which is payable from sources other than ad valorem taxes. DESCRIPTION General Obligations: General Obligation Refunding Bonds, Series 1992 Homeland Defense/Neighborhood CIP, Series 2002A General Obligation Refunding Bonds, Series 2002A General Obligations Bonds, Other Issues General Obligation Refunding Bonds, Series 2003 General Obligation Refunding Bonds, Series 2003B General Obligation Refunding Bonds, Series 2007A General Obligation Refunding Bonds, 2007B 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 1195 Special Revenue Refunding Bonds, Series 2002A Special Revenue Refunding Bonds, Series 2002E Special Revenue Refunding Bonds, Series 2002C Non Ad Valorem Variable Rate Refunding Bonds Series 2,)06 Sunshine State Governmental Financing o,nsLoans5 Sunshine State Governmental Financing SEOPW - Section 108 HLID Loancu- ,e—e Co_m:s,.ion -a-. Wynwood - Section 108 HUD LoanCunshinc State j�l1PW Se 108 HU D o pF�����C,pirtOSIICG G...-... Sunshine State GovernmentaLFinancing Commission - Secondary Loan Gran Central Corporation LoanSunthinc State Amount Issued $70,100,003 153,186,406 32,510,000 23,190,000 18,680,000 `4,180,000 103,060.000 50,900A00 Outstanding Balance $14 01c 000Q ^ 15 ,_�,5-1793244,514.409 28,170,00027,490.000 9991.255,000 9,765,0006,450,000 471.40,0004,120d1Q0_ .. 203,060,tx2;J - 50,000,td00` Ac�An�,iS4906406 $200 1-2245689,469+� 65,271,325 8,901,0617.504.708 11,500,000 27338002.180.000 22,000,000 2,363,0001,820,000 72,000,000 27,895,000 13,170,000 ,28,390,000 30.619,000 27,630,900 5,100,0000;909 5,500,,000 3.500,0004 99g 1,708,8643-890;809 610 0030,875.000 27,895,000 3,495,0001.495.000 25,325,00023,585,0Q0_ 30.6I5,000 1 31,,4b . 9.214.300 Formatted: No underline Formatted: No underline Formatted: Justified Formatted: Right Formatted: Underline Formatted: Right Formatted: Left Formatted Tade Formatted: No underline • - - - -t Formatted Table 3,500,00010,7 00 233.1.01.2078007000 3j260M60 1 450,0004 999 1.708;86447695,009 Formatted: Indent: Fsst line: 0" Parrot Jungle 6 112.000 5,312,000 Total Special Obligation Bonds, Revenue Bonds and . - - - Loans $320,393,0891,708,861 $150,089,872 �r744 $775,299,495 Total DebtTotal Loan, Formatted Table $1.3A111L7M $395 779 281$�y§rFormatted: Left Total -Debt $585,513,495 $358,651,i57- - Formatted: Justified Source: City of Miami Finance Department Comprehensive Annual Financial Report 2007 OVERLAPPING DEBT The table set forth below summarizes the general obligation debt of the Miami -Dade County and the School Board of Miami -Dade County as of September 30, 20075. While the City believes the amount of debt of the School Board of Miami -Dade County and Miami -Dade County set forth below to be accurate, it should be understood that this amount was derived from source materials which were not complied and are not subject to verification by the City. Accordingly, no assurance can be given as to the absolute accuracy of these amounts. Percentage Amount Net Applicable to Applicable to Debt the City of the City of Government Unit Outstanding Miamim Miami Debt Repaid with Property Taxes: Miami -Dade County S500,362,075172,236.000 19.00% $ 95,068,79189,724,840 Miami -Dade County School 983,577,014475 919.000 19.00% 486:879;63890.424,610 Board Subtotal, Overlapping Debt 281,918,432180.149,450 City of Miami, Florida Direct 77.$ 24245,689,409 Debt Total Direct and Overlapping ccn own noon25 '38 f'59 Debt Sources: Data provided by the Miami -Dade County Finance Department and the Miami -Dade County School Board. For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assess property values. Value that is within the City's boundaries and dividing it by the County s and School Board's total taxable assess value. This approach was also used for the other debt. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Miami. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that ever taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. CITY OF MIAMI, FLORIDA FOR FISCAL YEAR ENDED SEPTEMBER 30, 20073 SUMMARY OF DEBT RATIOS, MEASUREMENTS AND DEBT CONSTRAINTS CRITERIA Debt Ratios General Obligation & Limited Ad Valorem Debt Per Capita $590.99 General Obligation & Limited Ad Valorem Debt as a Percentage of Taxable value 0.98% Non -Self Supporting Revenue Debt Per Capita $11E.91 Non -Self Supporting Revenue Debt as a Percentage of Taxable Assessed value 0:69% General Governmental Debt Service (non -self supporting) as a Percentage of Non -Ad Valorem General Fund Expenditures 53 91% General Government Direct Debt Per Capita $39 Net Direct Debt as a Percentage of Taxable Assessed Value O.9S% General Government Debt Service as a Percentage of Non -Ad Valorem 84,79 General Fund Revenues Source: Data provided by the Mimi Peete CountvCity of Miami -Finance Department APPENDIX B MASTER INDENTURE AND FORM OF SERIES 2008 INDENTURE /0 Pat - Ai( D'- h i; pn ro Et&t. L N-r ce t 7id B-1 APPENDIX C GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007 66 peo vi D tAptk Dot n /iI7_ Ov-Pea_ i-M) C-1 APPENDIX D FORM OF BOND COUNSEL OPINION [APPENDIX E] [SPECIMEN MUNICIPAL BOND INSURANCE POLICY] �a of )V D D D E (6,2,24r/(Jr b 7 Cl S APPENDIX F FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT /o & P 0/j JZD ttei�N m-f711 T�ur�cL�`7fb ) F-1 /c Ct zPLi,rTi TTC -% DISCLOSURE DISSEMINATION AGENT AGREEMENT This Disclosure Dissemination Agent Agreement (the "Disclosure Agreement"), dated as of September _ , 2008, is executed and delivered by The City of Miami, Florida (the "City") and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the "Disclosure Dissemination Agent" or "DAC") for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the "Rule"). SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings: "Annual Report" means an Annual Report described in and consistent with Section 3 of this Disclosure Agreement. "Annual Filing Date" means the date, set in Sections 2(a) and 2(f), by which the Annual Report is to be filed with the Repositories. "Annual Financial Information" means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement. "Audited Financial Statements" means the financial statements (if any) of the City for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b) of this Disclosure Agreement. "Bonds" means the bonds as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto. "Certification" means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice required to be submitted to the Repositories under this Disclosure Agreement. A -Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the City and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies. 1 "Disclosure Representative" means Finance Director or her designee, the senior member of the City or his or her designee, or such other person as the City shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent. "Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C, acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the City pursuant to Section 9 hereof. "Holder" means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. "Information" means the Annual Financial Information, the Audited Financial Statements (if any) the Notice Event notices, and the Voluntary Reports. "Notice Event" means an event listed in Sections 4(a) of this Disclosure Agreement. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934. "National Repository" means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The list of National Repositories maintained by the United States Securities and Exchange Commission shall be conclusive for purposes of determining National Repositories. Currently, the following are National Repositories: 1. Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: (609) 279-3225 Fax: (609) 279-5962 http://www.bloomberg.com/markets/rates/municontacts.html Email: Munis@Bloomberg.com 2. DPC Data Inc. One Executive Drive Fort Lee, New Jersey 07024 Phone: (201) 346-0701 Fax: (201) 947-0107 http://www.dpcdata.com Email: nrmsir@dpcdata.com 2 3. FT Interactive Data Attn: NRMSIR 100 William Street, 15th Floor New York, New York 10038 Phone: (212) 771-6999; (800) 689-8466 Fax: (212) 771-7390 http://www.ftid.com Email: NRMSIR@interactivedata.com 4. Standard & Poor's Securities Evaluations, Inc. 55 Water Street 45th Floor New York, New York 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 http://www.disclosuredirectory.standardandpoors.com/ Email: nrmsir repository@sandp.com "Official Statement" means that Official Statement prepared by the City in connection with the Bonds, as listed on Appendix A. "Repository" means the MSRB, each National Repository and the State Depository (if any). "State Depository" means any public or private depository or entity designated by the State of Florida as a state information depository (if any) for the purpose of the Rule. The list of state information depositories maintained by the United States Securities and Exchange Commission shall be conclusive as to the existence of a State Depository. Currently, the following depositories are listed by the Securities and Exchange Commission as available State Depositories: 1. Municipal Advisory Council of Texas P.O. Box 2177 Austin, Texas 78768-2177 Phone: (512) 476-6947 Fax: (512) 476-6403 http://www.mactexas.com Email for filings: mac@mactexas.com 3 2. Municipal Advisory Council of Michigan 1445 First National Building Detroit, Michigan 48226-3517 Phone: (313) 963-0420 Fax: (313) 963-0943 http://www.macmi.com Email for filings: mac@macmi.com 3. Ohio Municipal Advisory Council 9321 Ravenna Road, Unit K Twinsburg, Ohio 44087-2445 Phone: (330) 963-7444 Toll -free: (800) 969-OMAC (6622) Fax: (330) 963-7553 http://www.ohiomac.com http://www.ohiosid.corn Email for filings: sid filings@ohiomac.com "Voluntary Report" means the information provided to the Disclosure Dissemination Agent by the City pursuant to Section 7. SECTION 2. Provision of Annual Reports. (a) The City shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Paying Agent, not later than 30 days prior to the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to each National Repository and the State Depository (if any) not later than not later than June 30th of each year, commencing with the fiscal year ending September 30, 2008. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement. (b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the City of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification) no later than two (2) business days prior to the Annual Filing Date, or (ii) 4 instruct the Disclosure Dissemination Agent in writing that the City will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent that a Notice Event as described in Section 4(a)(12) has occurred and to immediately send a notice to each National Repository or the MSRB and the State Depository (if any) in substantially the form attached as Exhibit B. (c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 12:00 noon on the first business day following the Annual Filing Date for the Annual Report, a Notice Event described in Section 4(a)(12) shall have occurred and the City irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to each National Repository or the MSRB and the State Depository (if any) in substantially the form attached as Exhibit B. (d) If Audited Financial Statements of the City are prepared but not available prior to the Annual Filing Date, the City shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, for filing with each National Repository and the State Depository (if any). (e) The Disclosure Dissemination Agent shall: (i) determine the name and address of each Repository each year prior to the Annual Filing Date; (ii) upon receipt, promptly file each Annual Report received under Section 2(a) with each National Repository, and the State Depository, (if any); (iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with each National Repository, and the State Depository (if any); (iv) upon receipt, promptly file the text of each disclosure to be made with each National Repository or the MSRB and the State Depository (if any) together with a completed copy of the MSRB Material Event Notice Cover Sheet in the form attached as Exhibit C, describing the event by checking the box indicated below when filing pursuant to the Section of this Disclosure Agreement indicated: 1. "Principal and interest payment delinquencies," pursuant to Sections 4(c) and 4(a)(1); 4(a)(2); 2. "Non -Payment related defaults," pursuant to Sections 4(c) and 5 3. "Unscheduled draws on debt service reserves reflecting financial difficulties," pursuant to Sections 4(c) and 4(a)(3); 4. "Unscheduled draws on credit enhancements reflecting financial difficulties," pursuant to Sections 4(c) and 4(a)(4); [5. "Substitution of credit or liquidity providers, or their failure to perform," pursuant to Sections 4(c) and 4(a)(5);] 6. "Adverse tax opinions or events affecting the tax-exempt status of the security," pursuant to Sections 4(c) and 4(a)(6); 7. "Modifications to rights of securities holders," pursuant to Sections 4(c) and 4(a)(7); 8. "Bond calls," pursuant to Sections 4(c) and 4(a)(8); 9. "Defeasances," pursuant to Sections 4(c) and 4(a)(9); 10. "Release, substitution, or sale of property securing repayment of the securities," pursuant to Sections 4(c) and 4(a)(10); 11. "Ratings changes," pursuant to Sections 4(c) and 4(a)(11); 12. "Failure to provide annual financial information as required," pursuant to Section 2(b)(ii) or Section 2(c), together with a completed copy of Exhibit B to this Disclosure Agreement; 13. "Other material event notice (specify)," pursuant to Section 7 of this Agreement, together with the summary description provided by the Disclosure Representative. (v) provide the City evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement. (f) The City may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent and the Repositories, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. 6 SECTION 3. Content of Annual Reports. (a) Each Annual Report shall contain Annual Financial Information with respect to the City, including the information provided in the Official Statement under the headings: [To Come] (b) Audited Financial Statements prepared in accordance with generally accepted accounting principles ("GAAP") will be included in the Annual Report; provided, however, if the audited financial statements of the City are not completed prior to June 30t of any year, the City shall provide unaudited financial statements on such date and shall provide the audited financial statements as soon as practicable following their completion. Audited Financial Statements (if any) will be provided pursuant to Section 2(d). Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the City is an "obligated person" (as defined by the Rule), which have been previously filed with each of the National Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The City will clearly identify each such document so incorporated by reference. SECTION 4. Reporting of Notice Events. (a) The occurrence of any of the following events, if material, with respect to the Bonds constitutes a Notice Event: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; [4. Unscheduled draws on credit enhancements relating to the Bonds reflecting financial difficulties;] [5. Substitution of credit or liquidity providers, or their failure to perform;] 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of Bond holders; 8. Bond calls; 7 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; 11. Rating changes on the Bonds; 12. Failure to provide annual financial information as required; The City shall promptly notify the Disclosure Dissemination Agent in writing upon the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c). Such notice shall be accompanied with the text of the disclosure that the City desires to make, the written authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and the date the City desires for the Disclosure Dissemination Agent to disseminate the information. (b) The Disclosure Dissemination Agent is under no obligation to notify the City or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within five business days of receipt of such notice, instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c), together with the text of the disclosure that the City desires to make, the written authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and the date the City desires for the Disclosure Dissemination Agent to disseminate the information. (c) If the Disclosure Dissemination Agent has been instructed by the City as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with the State Depository (if any) and (i) each National Repository, or (ii) the MSRB. SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, notices of Notice Events, and Voluntary Reports filed pursuant to Section 7(a), the City shall indicate the full name of the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided information relates. SECTION 6. Additional Disclosure Obligations. The City acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the City, and that the failure of the Disclosure Dissemination Agent to so advise the City shall not 8 constitute a breach by the Disclosure Dissemination Agent of any of its duties and responsibilities under this Disclosure Agreement. The City acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement. SECTION 7. Voluntary Reports. (a) The City may instruct the Disclosure Dissemination Agent to file information with the Repositories, from time to time pursuant to a Certification of the Disclosure Representative accompanying such information (a "Voluntary Report"). (b) Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice, in addition to that required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice. SECTION 8. Termination of Reporting Obligation. The obligations of the City and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to an issue of the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds of such issue, when the City is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. SECTION 9. Disclosure Dissemination Agent. The City has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The City may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as Disclosure Dissemination Agent, whether by notice of the City or DAC, the City agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the City shall remain liable until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days' prior written notice to the City. 9 SECTION 10. Remedies in Event of Default. In the event of a failure of the City or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders' rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein. SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent. (a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the City has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information or any other information, disclosures or notices provided to it by the City and shall not be deemed to be acting in any fiduciary capacity for the City, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the City's failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the City has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon certifications of the City at all times. THE CITY AGREES TO INDEMNIFY AND SAVE THE DISCLOSURE DISSEMINATION AGENT AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, HARMLESS AGAINST ANY LOSS, EXPENSE AND LIABILITIES WHICH THEY MAY INCUR ARISING OUT OF OR IN THE EXERCISE OR PERFORMANCE OF THEIR POWERS AND DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES (INCLUDING ATTORNEYS FEES) OF DEFENDING AGAINST ANY CLAIM OF LIABILITY, BUT EXCLUDING LIABILITIES DUE TO THE DISCLOSURE DISSEMINATION AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The obligations of the City under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and neither of them shall incur any liability and shall be fully 10 protected in acting in good faith upon the advice of such legal counsel. The fees and expenses of such counsel shall be payable by the City. SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the City and the Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the City or the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposed amendment to the City. No such amendment shall become effective if the City shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Trustee of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of New York (other than with respect to conflicts of laws). SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 11 The Disclosure Dissemination Agent and the City have caused this Continuing Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized. ATTEST: Priscilla A. Thompson, City Clerk APPROVED AS TO FORM AND CORRECTNESS: Julie Bru City Attorney APPROVED AS TO INSURANCE REQUIREMENTS: LeeAnn Brehm Risk Management Director DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent By: Name: Title: THE CITY OF MIAMI, FLORIDA, as City By: Name: Pedro G. Hernandez Title: City Manager 12 62. C-C)14 PL 73-1 f 'c N C°-L©SiN — EXHIBIT A NAME AND CUSIP NUMBERS OF BONDS Name of City Obligated Person(s) Name of Bond Issue: Date of Issuance: Date of Official Statement: The City of Miami, Florida The City of Miami, Florida Non -Ad Valorem Refunding Revenue Bonds Taxable Pension Series 2008 Maturity ( 1) Principal Amount Interest Rate Yield Price Initial CUSIP Number IS2 CAnv-PI-2 TFD 47` es'1 J6- EXHIBIT B NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT City: The City of Miami, Florida Obligated Person: The City of Miami, Florida Name of Bond Issue: Non -Ad Valorem Refunding Revenue Bonds Taxable Pension Series 2008 Date of Issuance: NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above -named Bonds as required by the Disclosure Agreement, dated as of , between the City and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. The City has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by Dated: Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the City cc: City Obligated Person Ct P 7 ) fir dt...Li/VG EXHIBIT C MATERIAL EVENT NOTICE COVER SHEET This cover sheet and material event notice should be sent to the Municipal Securities Rulemaking Board or to all Nationally Recognized Municipal Securities Information Repositories, and the State Information Depository, if applicable, pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D). Issuer's and/or Other Obligated Person s Name: Issuer's Six -Digit CUSIP Number: or Nine -Digit CUSIP Number(s) of the bonds to which this material event notice relates: Number of pages of attached material event notice: Description of Material Events Notice (Check One): 1. Principal and interest payment delinquencies 2. _Non -Payment related defaults 3. _Unscheduled draws on debt service reserves reflecting financial difficulties 4. _Unscheduled draws on credit enhancements reflecting financial difficulties 5. _Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions or events affecting the tax-exempt status of the security 7. _Modifications to rights of securities holders 8. Bond calls 9. Defeasances 10. Release, substitution, or sale of property securing repayment of the securities 11. Rating changes 12. _Failure to provide annual financial information as required 13. Other material event notice (specify) I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: Name: Title: Employer: Digital Assurance Certification, L.L.C. Address: City, State, Zip Code: Voice Telephone Number: Please print the material event notice attached to this cover sheet in 10-point type or larger. The cover sheet and notice may be faxed to the MSRB at (703) 683-1930 or sent to CDINet, Municipal Securities Rulemaking Board, 1900 Duke Street, Suite 600, Alexandria, VA 22314. Contact the MSRB at (703) 797-6600 with questions regarding this form or the dissemination of this notice.