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Fee Proposal 2
NAL Proposal to Provide Financial Advisory Services City of Miami November 1, 2010 FfrstSouthwest 4.419 A PlainsCapital Company. Request for Proposals for Financial Advisory Services # 245238 CONTACT PERSON AND FIRM'S LIAISON FOR THE CONTRACTOR: Edward Marquez, Senior Vice President E-MAIL: edward.marquez@firstsw.com PHONE: 305.819.8886 FAX: 305.819.9992 LOCAL BUSINESS ADDRESS: 18851 NE 29`h Avenue, Suite 520, Aventura, Florida 33180 FEIN: 75-0708002 Member FINRA & SIPC I «J 20I0 FirstSouthwest 0 U m o z, o N CV -IJ.. Q 0)-- to to E o'er sac � 2 N o zai� 5049 Page 1 oil Florida Department of State Division of Corporations Public .Access System Electronic Filing Cover Sheet Note: Please print this page and use it as a cover sheet Type the fax audit number (shown below) on the top and bottom of all pages of the document. (((H04000014777 3))) Note: DO NOT hit the REFRESH/RELOAD button on your browser from this page. Doing so will generate another cover sheet. Tos Division of Corporations Fax Number : (850)205-0383 From: Account Nalne ; C T CORPORATION SYSTEM Account Humber : FCA000000Q23 Phone : (8S0)222-1092 Fax Number s (850)222-9428 FOREIGN PROFIT QUALIFICATION First Southwest Company Certificate of Status Certified Copy Page Count Estimated Charge 05 $70.00 J. BRYAN JAN L 2Q04 Mips:/Jefilasanbiz,orescripteefilcovz cxe 1/21/04 APPLICATION BY FOREIGN CORPORATION FOR AUTHORIZATION TO TRANSACT BVS1IVESS I2v FLOR1DA l� ek IN CO FP,LIANCE IG7TH SECTION 6071503, FLORIDA STATUTES', ME FOLLOWING IS SULIA077: 7'1 '' REGISTER FOREIGN CORPORATION TO TRANSACT OUSINESS IN THESTATE OF FLORIDA. c-•, First Southwest Cowpony• (Eater name of corporation; must include INCORPORATED," 'COMPANY." "CORPORATION," ft`,‘.�ry "Inc," 'Co.,' "Corp," "Inc," "Co,` or "Corp!') - cwi5 (If name unavailable in Florida, enter alternate corporate name adopted for the purpose of transacting business in Florida) 2. Delaware 3. 750708002 (State or country under the law of which it is incorporated) (1tEt number, if applicable) r1_ 3122146 5. Perpetual 6. 1i1104 (Date of incorporation) (Duration: Year corp. will cease to exist or "perpetual') (Date fast transacted business in Florida. If corporation lus not transacted business its Florida, insert "upon qualificarion ") (SPX SECTIONS 507.1501, 607,1502 and 817.1SS, F.S.) 7 325 North St. Paul Street, Suite S00, Dallas, 7X 75201 (Principal office address) 325 North St. Paul Street, Swim 800, Dallas, TX 75201 (Current mailing address) g, Inveseolent Banking; Pineociat Advisory Strvicec (Purpose(s) of corporation authorized in home state or country to be carried out in state ofFlorida) 9. Name and street address of Florida registered agent (P.O, Box or Mail Drop Box NOT acceptable) Name: C T Cotporatfon System Office Address: 1200 South Pine bland Road Plantation , Florida 33324 (City) (Zip code) 10, Registered agent's acceptance: Mewing been named as registered agent and to accept,rervice ofprocers for the above stared co►poratfon at the place designated in this application, I hereby accept the appaitrrmertt as registered agent and agree to act to this capacity, I farther agree to comply with the provisions of all statutes relative to the proper and complete performance of rr{y denies, and I stet familiar with Ina accept Ms obligations of my position as registered agent. C T Corporation Systeah agent's signature) Michael E. JoneS Assistant Secretary I I. Attached is a Geri tiioaze a ease duly authenticated, not more than 90 days priorto delivery of this application to the Department of State, by e Secretary of State or other official having custody of corporate reconds in the jurisdiction under the law of which it is incorporated. 12. Names and business addresses of officers and/or directors: rurr•ter' OJrrdya.au.in, A. DIRECTORS Chairman: See attachment ffr lilt of Dircctars Address: cI'(r``t� Vice Chairman: Address: ID Enactor: Address. Director: Address: B. OFFICERS Pr;dent FElict A FCinberg, Chairman & Chief Executive Officer A.ddrasst 325 North Sr. Paul 5trcct, Suite Boo Dallas, TX 75201 vice president Don Campbell Address: 325 North SC Paul Street, Suite 800 Dallas, 'CSC 75201 secretary: Dan Campbell Address: 325 North Sr. Paul Street, Suite BOO, Dallas. TX 75201 Treasurer. Address: NOTE: if nyh sary, u may ach addendum to she application listing additional offices andfor directors. 13. �ttlirar igner of Dor or Officer listed in number 12 of the application) 24. bon Campbell, Secretary (Typed or printed name and Capacity of person signing application) MAN • 7Nr saner c : +nM* OM{f, Directors: y,- -7 .-o F'<:" • fp7,, Hillel.A Feinberg Chairman & 325 N. St. Paul Suet 9 Chief Executive Officer Suite 800 Dallas, TX 75201 First 'Southwest Company Application for Certificate of Authority List Directors Office: Address : Michael J. Matz: Vice Chairman. 32$ N. St Paul Street Suite 800 Dallas, TX 75229 Paul M. Hass Vice Chairman 325 N. St. Paul Street Suite 800 Dallas, TX 75205-3311 Thomas W. Masterson Director 1021 Main Street, Suite 2200 Houston, TX 77002 fIeazy A. Sauer, Jr. Director 1021 Main Street, Suite 2200 Houston, TX 77002 David K. Medanich Director 777 Main Street, Suite 1200 Fort Worth, TX 76102 Michael G. Battolotta Director 1021 Main. Street, Suite 2200 Houston, TX 77002 Anne B. Entrekin Director 70 Northeast Loop 410 Suite 850 San Antonio,. TX 78216 Delaware The First State PAGE 1. I, RARRIEz-SWITft# 'W'INDSOYi, SE TART- OX smAxE-_OF-TVE--STATE' -OF DEZAWAFtE, Db HEREHY CEAT1PT "FIRST SOUTHwEsT 00HPANY" IS DULY INCORPORATED UNDER TEE LA= OF 'IHE STATE OF DELAWARE Al= is rm GGOD STANDING AND RAS A LEGAL C.t'JRroAATE EXISTENCE 90 FAR AS THE RECQ,RU3 or THIS OFFICE SHOD', AS or THE TWENTR-FIRST DAT OF .7ANG ART, A. _ 2004. AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE NOT BEEN ASSESSED TO pA.TE . 3715039 8300 0400440E9 Harriet Smith Windsor. Secretrryd Sstce AUTHENTICATION: 2883424 (DATE; 01-21-04 Proposal .to Provide Financial Advisory Services City of Miami November 1, 2010 FfrstSouthwest "14P A PlainsCapital Company. Request for Proposals for Financial Advisory Services # 245238 CONTACT PERSON AND FIRM'S LIAISON FOR THE CONTRACTOR: Edward Marquez, Senior Vice President E-MAIL: edward.marquez©firstsw.com a) CI) PHONE: 305.819.8886 > 0 c-Ci 2 .T FAX: 305.819.9992 o < CO CO LOCAL BUSINESS ADDRESS: 18851 NE 291h Avenue, Suite 520, Aventura, Florida 33180 E w c > o (13 o c FEIN: 75-0708002 z i Member FINRA & SIPC IC 2010 FirstSouthwest [Type text] � Table ��� �.7�uv�e0�^�on{ents 1.Cover Page lTable ofContents 3. Executive Summary (Transmittal Letter) 4.Overall Qualifications and Experience 1 5.Qualifications and Experience ofKey Personnel 21 0.Overall Ability and Utilization ofTechnology 38 7. Fee Proposal 40 8. Local Presence 40 APPENDICES A Debt Book 8 Credit Analysis c Florida Market Commentary O Letters «/Reference E Required Forms p pirsuavumwest's Client List for the Past Three Years Member nwx^ump I 2010,irsu"mhweu 3. Executive Summary (Transmittal Letter) FfrstSout west4Q A PlainsCapital Company 18851 NE 29th Avenue, Suite 520 Aventura, Florida 33180 Edward Marquez Senior Vice President 305.819.8886 Direct Edward.Marquez@firstsw.com 305.819.9992 Fax November 1, 2010 Pablo Velez City of Miami — City Clerk 3500 Pan American Drive Miami, Florida 33133 Dear Mr. Velez: On behalf of FirstSouthwest, I appreciate the opportunity to respond to the City of Miami's (the "City') Request for Proposals for Financial Advisory Services #245238 to serve as the City's Financial Advisor. The following outlines some key qualifications of FirstSouthwest that demonstrates why that we are ideally suited to fulfill the City's financial advisory needs. Overall Qualifications and Experience FirstSouthwest is a fully -diversified investment banking firm that has been providing quality financial advisory services since 1946. According to MuniAnalytics, from October 2007 through September 2010, FirstSouthwest is nationally ranked as the #1 financial advisory firm for number of bond and note transactions completed overall and for city -level issuers in particular. During this period, we advised on 2,295 transactions totaling $80.55 billion par amount, of which 1,283 transactions, totaling $18.56 billion par amount were on behalf of cities. Notably, during the past decade, FirstSouthwest provided financial advisory services on more issues than did any other firm, and we ranked #1 for nine of the past ten years for number of bond and note issues completed. Other national rankings for the same period include the following: • #1 for number of general obligation bond issues — 1,816 issues, $39.09 billion par amount. • #1 for number of competitive bond issues — 1,340 issues, $18.00 billion par amount. • #1 for number of negotiated bond issues — 1,030 issues, $113.47 billion par amount. Qualifications and Experience of Key Personnel FirstSouthwest will provide the City with an experienced, well-rounded financial advisory team that is very familiar with the municipal issuance process, Florida statues, procedures, and debt practices. Our business philosophy incorporates the "team concept," with senior level personnel and specialists in order to provide the best possible service to our clients. The core team proposed to serve the City. Edward Marquez, Lakshmi McGrath, Edward Stull and Joel Tindal have 75 years of combined experience with local government financings in Florida. Overall Ability and Utilization of Technology FirstSouthwest provides accurate, up-to-the-minute market information that the City will need to navigate today's volatile financial markets. In our role as financial advisor, we believe maintaining a trading and underwriting desk is essential to properly advising the City on market conditions, credit conditions, and optimal financial structures. FirstSouthwest's underwriting and trading desks routinely provide recommendations based on their active market involvement and extensive institutional investor relationships. These capabilities provide an enormous advantage to the City and differentiate our team from other advisory firms that do not have actual market involvement and capabilities. Member FINRA & SIPC I © 2010 FirstSouthwest Proposal to Provide Financial Advisory Services November 1, 2010 Page 2 of 2 FirstSouthwest's professionals are immersed in today's market events. The company holds two to three company- wide calls each week to discuss market events and to provide our bankers with ideas and solutions for today's dynamic marketplace. FirstSouthwest is on the cutting edge of financial solutions for municipal issuers by offering the broadest array of ancillary public finance services, including structured product (derivatives), P3 advisory services, specialized consulting, arbitrage rebate, continuing disclosure, asset management and leasing services. We also strive to keep our clients up-to-date as evidenced by our weekly Florida Market Commentary distribution. State -of -the -Art Technology The software that FirstSouthwest utilizes includes DBC Finance, MUNEX Advanced Decision Support Software for Public Finance and Financial Management Systems, Micro Muni Debt Refund and Sizing, Microsoft Office Suite, and multiple proprietary finance and capital markets software packages. By maintaining several different software packages and in-house experts, we are capable of independently evaluating financial decisions and providing significant assistance to clients in the planning stages of any project. Summary of Work to be Performed We believe sound financial advice should incorporate all facets of any transaction. FirstSouthwest evaluates strategic objectives, marketing and technical considerations, investment policies, and arbitrage matters at the planning and structuring phase of every transaction in which we participate. This ensures the City that every aspect of a transaction has been considered before the terms of the transaction are finalized. Our Work on Behalf of the City We have had the distinct honor of serving the City as Financial Advisor over the past five years. During this time, we believe that we have demonstrated that we are always accessible, our advice has been conservative and sound and we truly care about the City meeting its financial goals. As Senior Vice President of the firm, I am certified to make representations for FirstSouthwest and am authorized to bind the firm. My contact information, including address and phone number, is noted above on the company letterhead. Should you have any questions regarding our response or require additional information, please contact me at 305.819.8886. ly yours, Edward Marquez Senior Vice Presi Member FINRA & SIPC IC 2010 FirstSouthwest 4. Overall Qualifications and Experience a) Describe the Proposer's organization; years Proposer has been in business providing a similar service(s) and indicate whether the City has previously awarded any contracts to the Proposer. FirstSouthwest is a diversified investment banking firm focused on one mission: to provide superior financial advisory and related services to public entities in Florida and nationwide. FirstSouthwest is confident that our 64 years of experience with providing financial advisory services to city issuers, along with our extensive analytical and human resources will provide the full scope of financial advisory services the City seeks. FIRSTSOUTHWEST AT A GLANCE Founded in 1946 360 Employees Firm Wide 21 Offices in 11 States; 2 Offices in Florida 147 Employees in Public Finance; 10 in Florida TEN "Deal of the Year" Awards Reliable, Firsthand Market Information Financial Advisor to the City of Miami since 2005 #1 Financial Advisor in the Nation for Number of issues for Nine of the Past Ten Years* Financial Advisor to municipal issuers on more transactions in the past ten years than any other firm* * Source: MuniAnalytics History of FirstSouthwest as Financial Advisor Since our founding in 1946, FirstSouthwest has played a pivotal role in shaping the landscape of public finance. In fact, FirstSouthwest was one of the earliest founders of the concept of "financial advisor". During the 1940s and 1950s, the municipal securities industry was virtually unregulated and void of the oversight present today. FirstSouthwest recognized the need for governmental bond issuers to have knowledgeable and experienced advisors acting as their advocates during bond sales. How it all began. The onset of our role as a financial advisor began early in a relationship with a city when we advised the city's leaders that, rather than offering their issue to only one underwriting firm, which was the only method then used, they instead should accept Ffrst5outhwes competitive bids from multiple underwriting firms. Our advice and assistance with the competitive bid process resulted in a far lower cost of financing for our client. Soon thereafter, the concept of a financial advisor adding value to issuers' financings expanded across the State of Texas and eventually nationwide. Since then, FirstSouthwest has earned a national reputation as a trustworthy firm committed to unparalleled excellence. We take seriously the trust our clients place in our abilities, as we have helped meet the financial objectives of more than 1,600 governmental entities nationwide. How we have grown. FirstSouthwest has grown over the years, both organically and through acquisition. We acquired Houston -based Masterson Moreland Sauer Whisman Inc. in 1996; the New England financial advisory practice of Fleet Boston Financial Group in 2001; Friedman, Luzzatto & Co., a leading provider of equipment leasing services, in 2003; and New York - based Arimax in 2004. This growth added offices throughout New England, New York, California and Alaska. We organically grew in Florida by establishing our offices in Orlando in 1987 and in South Florida in 1990. In addition to external acquisitions benefiting our clients, we strategically added departments internally in an effort to provide comprehensive services. For example, in the mid 1990s, FirstSouthwest began hosting seminars and consulting with clients on the new continuing disclosure regulations. We formally established a fully -staffed, dedicated department in 2002. Other examples of our evolvement include adding departments related to arbitrage rebate in 1987; investment management in 1988; and swap advisory in 1990. Our proactive efforts related to expanding our service capabilities have withstood the growing complexity in the industry. Organization of FirstSouthwest On December 31, 2008, FirstSouthwest Holdings LLC ("Holdings"), the parent of FirstSouthwest merged with a PlainsCapital Bank, a subsidiary of PlainsCapital Corporation. Holdings, FirstSouthwest and the two other wholly owned subsidiaries of Holdings, FirstSouthwest Asset Management, Inc. and FirstSouthwest Advisory Services Inc., a provider of pension evaluation services, are all based in Dallas, Page l 1 Texas. PlainsCapital Corp. is a privately held financial services company also headquartered in Dallas. FirstSouthwest Advisory Services, Inc PtainsCapitalHank JFirstSut west FirstSouthwest Asset Management, Inc. Public Finance Corporate flnancc pital Markets FA Cent Disc OPEB Florida Offices 20 Other Offices Structured Finance Pointed° * office Lora Hod,' °Mee Locations with Sales or Trading Personnel(Ao Commitment to Florida FirstSouthwest opened an office in the State of Florida in 1987 and currently has offices in Orlando and Aventura, employing seven licensed bankers and three other full-time staff. The professionals who are based in our Aventura office will coordinate and manage the City's engagement. Our ten Florida -based personnel are dedicated solely to public finance. F9ffsS©tl thwes� Office Locations and Size of Firm FirstSouthwest is headquartered in Dallas, Texas, and maintains 22 offices located in I1 states (Alaska, Arkansas, California, Colorado, Connecticut, Florida, Massachusetts, New York, North Carolina, Rhode Island and Texas). Nationwide, FirstSouthwest employs approximately 360 people. The following map illustrates FirstSouthwest's numerous office locations throughout the United States. Texas Dailas HO Fort Worth :wino San Antonio Congview Houston El Pa.o Lubbock McAllen Clifton New York sadnoetts Borten elorcester Rhode Island en . Connecticut GlaatGntsure North Carolina Charlotte Arkansas FayeneeJie Dallas (HQ). Denver, Houston. FI. Worth. Florida Orlando n Antonio. Boston. New York) Advantages of a Local Presence FirstSouthwest's presence in the South Florida area provides distinct advantages to the City including: • Commitment of local support to the City offering readily available resources. By virtue of a local office, we can be at the City's offices within short notice. ■ In-depth knowledge of Florida issuers, providing expertise that rivals that of any other firm. ■ Familiarity with entities with which the City will need to associate. Our experience is constantly being built upon by participating in a multitude of public finance engagements for state, City, Pag? r2 and city -level issuers within Florida, providing invaluable experience that will aid and benefit the City when securing funding for its infrastructure needs. Commitment to Public Finance FirstSouthwest's Public Finance Department is the largest department in the firm. All of FirstSouthwest's branch offices and 39% percent of total staff firm wide are dedicated almost exclusively to public finance; 53% of total personnel are dedicated to public finance or sales and underwriting. The following graph, which shows the dispersion of personnel among the different service and support divisions of the firm, helps illustrate the weight of public finance in the firm. Because of our commitment to issuers in the public sector, the City will receive attention from all corners of FirstSouthwest. Operations 12% Sales/Underwritngl Corp Cap Mkts_ 14% 53% FIRSTSOUTHWEST PERSONNEL BY DEPARTMENT m. on.w i. avml IT 8% Corporate Services" 7% Arbitrage 8% C Planning 3% Asset MGMTfTexSTAR 3% Other' 2% Clearing 2% CompliancelLegal Structured 2% Products 2% Corp Finance 1% Public Finance 39% eae E.eeunn.n t....w 'Wades lawu.g.Hfl, E.eNive,Ggonm Servwee At FirstSouthwest, we organize our Public Finance Department by industry, region, and product, giving us a focus group for nearly every type of public entity: state and local government projects, power, water/wastewater, economic development, housing, education, state revolving funds, transportation, and healthcare. All areas of our firm will support our Finance Team as necessary when providing financial advisory services to the City. Debt Capi Markets Municipal Underwriting, Trading and Sales; MC Planning Systems: Portfolio and Treasury management Investor Feedback Institutional Mid -Market Greatest Value in Financial Services Corporate ,Finance :. - Clearing •'' Service:.. Arbitrage - -.Rebate, . Portfolio, ,.Management.. - Investment Advisory & Reporting; Compliance Reviews; Cash Management - Corporate Restructurings; Merger Acquisitions; Private Placements and Public Offerings - Clearing; Execution; Operations; Prime Broker Rebate & Yield Restrictions Calculations; _ - IRS Audit Assistance I Support Public, Private and Joint Ventures Access to Retail Market Information In -House Consulting On Tax Issues Supports Investment Yield -Related Assumptions in Analysis Data and Information P, IIBLIC:EINANCE DEPARTMENT-1 Financial Advisory 'Focus'Groups: State & Local Government Public Power SRF School District Healthcare Economic Development Transportation Airport Seaports Convention CenterlHotet Higher Education Student Loan Sports Complex Corporate Lessor Services: Appropriation Structure Obligations: Equipment and real property financing: Master Lease Programs; Lease Lines of Credit Non -Debt Alternative Market information Product Groups Remarketing (Short -Tenn Products) Operational Efficiency Consulting Pension & Employee Benefit Consulting Credit Analysis Technical Analysis Continuing Disclosure Structured & Derivative Products Strategic & Capital Planning F rstS©,2thwes Page 13 Previous City of Miami Contractual Agreements FirstSouthwest became the financial advisor to the City of Miami on December 2, 2005. We have worked with the City on the following transactions and/or activities: • Issuance of the City's $30,615,000 Non -Ad Valorem Variable Rate Refunding Bonds, Taxable Pension Series 2006 - These variable rate refunding bonds were issued pursuant to an exercised option under a Swaption Agreement that the City had executed with Morgan Stanley. The transaction locked in present values savings of in excess of $5 million to the City's benefit (a percentage savings of 9.63% as measured against the refunded bonds). During the course of the transaction, we assisted the City to negotiate an improved annual debt service savings of $50,000 per year during the life of the refunding bonds due to a technically deficient notice of exercise by the swap counterparty. Assisted the City in developing a comprehensive Master Swap Policy which was approved by the City Commission. • Issuance of $40,000,000 Health System Revenue Bonds, Catholic Health System Series 2006 (Mercy Hospital Refunding Bonds) - The City's Health Facilities Authority served as the conduit financing agency for this transaction, which brought debt service relief to Mercy Hospital, which is located in the City of Miami. Assisted the City in developing an underwriter RFP that the City subsequently issued to create an underwriting team successfully that will be available to the City throughout a five-year period. Issuance of the City's $103,060,000 Limited Ad Valorem Tax Refunding Bonds, Series 2007A and $50,000,000 Limited Ad Valorem Tax Bonds, Series 2007B. Both series were issued in furtherance of the City's Homeland Defense/Neighborhood Capital Improvement Program. The Series A Bonds were issued to refund certain outstanding Series 2002 Bonds at a present value savings of more than $3.5 million. The Series B Bonds were issued to provide approximately $51 million of new money proceeds for the capital program. FirstSouthwest This transaction is notable in that it was structured to eliminate any increase in ad valorem debt millage to the City's residents in spite of $51 million of new money proceeds being provided; it was accomplished during the same time period that the State Legislature was actively pursuing tax reform; and the City received its ratings (with Fitch Ratings providing an upgrade) the dayafter the Legislature's special session. Also as part of this transaction, the City was able to get MBIA to modify its additional bonds test (from the Series 2002 transaction) so that future GO bonds do not fall under the 1.218 mill debt service limitation contained in the bond covenants. FirstSouthwest assisted the City in the issuance of $80,000,000 Street and Sidewalk Improvement Special Obligation Bonds, Series 2008. This bond offering was secured by three City revenue sources, namely local gas taxes, a transportation sales tax and a surcharge on all public parking within the City. The bonds were structured with a 1.35 times debt service coverage requirement and achieved an underlying rating of "A3/A-", from Moody's and Standard & Poor's, respectively. ■ The City executed three loans with the Sunshine State Governmental Financing Commission totaling $68.5 million. FirstSouthwest assisted the City in optimally structuring these loans into the City's debt portfolio as well as addressing each loan's documentation requirements: Issuance of $36,420,000 Health System Revenue Bonds, Catholic Health System Series 2008 issued through the City's Health Facilities Authority - This debt issue allowed Mercy Hospital to restructure a portion of its debt portfolio into a fixed rate mode. • Assisted the City to issue $65 Million Street and Sidewalk Improvement Bonds, Series 2009 while maintaining the ratings of A3/A-/A- from Moody's, Standard and Poor's and Fitch, respectively. Unlike the Series 2008 Street Improvement issue, these bonds were efficiently issued without credit enhancement. ▪ FirstSouthwest assisted the City in its issuance of its $37,435,000 Non -Ad Valorem Refunding Revenue Bonds, Taxable Pension Series 2009 - These bonds were issued on a fixed rate basis and provided for the termination of an interest rate Page 14 swap agreement. The bonds were also efficiently issued unenhanced relying on the City's credit ratings of A3/A from Moody's and Standard and Poor's, respectively. • Issuance of $51,055,000 Limited Ad Valorem Tax Bonds, Series 2009 - These bonds were the last installment under the City's Homeland Defense/Neighborhood Capital Improvement Program which provided capital funding of multiple projects throughout the City. The bonds were efficiently issued on an un-insured basis. Their ratings were A/A3/A- from Standard and Poor's, Moody's and Fitch, respectively. ■ Assisted in the issuance of S 101,370,000 Parking Revenue Bonds, Tax Exempt and Taxable Series A and B, to provide parking facilities at the new Marlins baseball stadium that is now being constructed. ■ FirstSouthwest is currently involved in the advanced planning for two Community Redevelopment Agencies (CRA) district transactions that are scheduled to occur in late 2010. b) Provide a general description of the Proposer's financial advisory capabilities and discuss its qualifications and experience in representing other public entities, including past experience and scope. General Financial Advisory Capabilities Since inception, we consistently have been ranked as a leading financial advisory firm nationally based on both number of issues and par volume. The following table demonstrates our activities in the role as financial advisor in the last decade alone. FirstSouthwest Experience The Last Decade as Financial Advisor Par Amount Par Issues # of Year (US $ mil) Rank Issues Rank Issuers 2000 3,931.69 4 238 2 2001 2002 2003 9,992.47 11,182.13 17,578.18 3 492 5 683 3 789 1 92 167 176 153 Farst5outhwest Par Amount Par Issues # of Year (US $ mil) Rank Issues Rank Issuers 2004 16,984.08 3 791 1 120 2005 22,737.55 2 896 2006 22,755.16 3 876 1 129 103 2007 35,248.37 2008 24,030.46 2009 26,572.72 2010* 18,701.59 2 910 1 146 3 685 1 86 3 736 2 81 3 552 1 72 *As of 9/30/10 Source: MuniAnalytics Among ail firms providing financial advisory, consulting and underwriting services, FirstSouthwest is uniquely positioned and is the financial advisor that represents the greatest value for City. We understand the entire spectrum of the financial markets while offering a high level of responsive and personalized service. We have considerable experience in the areas that may be most relevant to the City — general and special obligation debt transactions, competitive and negotiated bond transactions, and bond anticipation notes. In fact, we are the premier financial advisory firm when it comes to the issuance of tax-exempt debt. Number of Tax -Exempt Transactions FirstSouthwest Public Fin Mgmt FiscalAdv & Mkt Ehlers&Associates Capital Markets Adv MuniAnalytics: October 1, 2010 — September 30, 2010 ,W414W Industry -Leading Experience FirstSouthwest has the experience to assist the City in realizing its financial goals. Our experience is constantly expanding by our participation in a variety of public finance engagements for state, City, and city - level issuers within Florida, providing invaluable experience that will benefit the City. In providing financial advisory services to such a great volume of issuers, much of our experience involves providing the same services as requested in the City's Page 15 RFP. The following tables demonstrate our prevalence in many areas of finance, as relevant to the needs of the City. Financial Advisory Rankings October 2007 through September 2010 Number of Bond and Note Issues Source: MuniAnalytics City National Overall FirstSouthwest Public Fin Mgmt Fiscal Adv & Mkt ABISMONSM90 1",306 Ehlers & Associates _ 1',077, Capital Markets Adv r .849. — Negotiated Sales Public Fin Mgmt FirstSouthwest RBC Capital Markets :' 343, Kaufman Hall 262" FirstSouthwest 2,165' Ehlers&Associates • 1''030' Public Fin Mgmt 625 Capital Markets Adv 406 • Springsted 402. Competitive Sales FirstSouthwest Fiscal Adv &Mkt Public Fin Mgmt ;.. Ehlers & Associates SouthwestSecurities 24Z` Capital Markets Adv -1;265, 1'135i 93'5' 807' General Obligation FirstSouthwest Fiscal Adv & Mkt ,rimgamitikitt Public Fin Mgmt Ehlers&Associates 973! Capital Markets Adv 834' 1',294 1,276 Public Improvement FirstSouthwest Public Fin Mgmt 764' Ehlers &Associates 4soi Capital Markets Adv -. 401 Springsted '. .363:i c) Provide a listing of general governmental clients over the past three (3) years for which the Proposer has served as financial advisor. Include name, address, type of entity, type of work performed, phone number(s) and contact persons within each organization. The City reserves the right to contact any reference as part of the evaluation process. For the three-year period ending September 30, 2010, FirstSouthwest provided financial advisory services to 802 issuers on behalf of 2,294 transactions totaling $80.5 billion par amount (Source: MuniAnalytics). For brevity, we list in the following table, select governmental clients similar to the City in size and nature and for whom FirstSouthwest currently provides services similar to those listed in the City RFP. Note that for all clients listed, we provide a complete scope of services. We list all 802 clients that we served over the past three years in Appendix F. Client/Address Contact Person/ Title Telephone Number City of Miami, Florida 444 Northwest 2"d Avenue Miami, Florida 33128 City of Palm Bay, Florida 120 Malabar Road, SE Palm Bay, Florida 32907 City of Fernandina Beach, Florida 204 Ash Street Fernandina Beach, Florida 32034 Sarasota County, Florida 1660 Ringling Blvd., Suite 400 Sarasota, Florida 34236 Miami Parking Authority 190 N.E. Third Street FirstSo hwe Mr. Larry Spring, Chief Financial Officer Mr. Pete Chircut, Treasurer Mr. Lee Feldman, City Manager Ms. Patricia Clifford, Controller Mr. Peter Ramsden, Clerk of the Circuit Court Finance Director Scott Simpson Finance Director 305.416.1011 305.416.1945 321.952.3412 904.277.7311 941.861.5166 954.587.4738 Page 16 Sale Issuer Date 9/17/10 Sarasota County 9/17/10 Sarasota County 9/9/10 Sarasota County. 8/18/10 Bay County 8/4/10 Miami -Dade Expressway Authority 8/4/10 1 Miami -Dade Expressway Authority 7/22/10 Miami -Dade County 7/22/10 l City of Miami 6/17/10 Orlando -Orange County Expressway Authority i 4/26/10 .l City of Sanford 4/21/10 Citrus County Client/Address Contact Person/ Title Telephone Number Miami, Florida 33132 City of North Miami 776 NE l25'h Street North Miami, Florida 33132 —North Miami CRA 615 N.E. 12411' Street North Miami, Florida 33161 Miami -International Airport 1 I 1 N.W. Street, Suite 2550 Miami, Florida 33414 City of Hialeah Gardens, Florida 10001 NW 87'hAvenue Hialeah Gardens, Florida 33016 City of Irving 825 W. Irving Blvd. Irving, Texas 75060 Carlos Perez Finance Director TonyE. Crapp, Sr. Executive Director Anne Syrcle Lee Chief Financial Officer Lydia Monzon-Aguirre Director -Division of Bond Admin. Marcos Piloto Director of Finance Tommy Gonzalez City Manager 305.416.1324 305.899.0272 305.375.5147 305.375.5147 305.558.41 14 x213 972.721.2586 The proposed project team members have worked on the following issues within the State of Florida over the past three years. Financial Advisory Experience of FirstSouthwest in the State of Florida October 1, 2007 — September 30, 2010 Issue Description Revenue Bonds, Series 2010B (Manatron System) Revenue Bonds, Series 2010A (Data Center) Capital Improvement Revenue Bond, Seres 2010 Capital Improvement Revenue Refunding Bond, Series 2010 Toll System Refunding Revenue Bonds.S10B j Toll System Revenue & Refunding Revenue Bonds S10A&B Aviation Revenue Bonds, Series 2010B Special Obligation Parking Revenue Bonds, Refunding Revenue Bonds, Series 20103. Utility System Revenue Note, S 2010 Capital Improvement Revenue and. Refunding Bonds, S 2010A Par Amount Issue ($ millions) Type * $3.04 TE, NM $2.35 TE, NM $20.13 TE, NM $28.32 TE, NM $17.12 TE,.R $395.59 TE, NM, R, D $503.02 TE, R , , $101.37 TETNM $201.12 TE; R $14.72 j TE, R $9.91 TE, R FirstSouthwest Page [7 Sale Date Issuer 4/21/10 Citrus County 3/22/10 Sarasota County 3/18/10 Orlando -Orange - 1 County Expressway Authority 3/03/10 Seminole County 3/03/10 Seminole County 3/03/10 City of Cocoa Beach 2/16/10 City of Sebastian 2/05/10 Lake County 2/10/10 i Miami Dade County 1/28/10 City of Fernandina Beach 1/20/10 Peace River/Manasota Regional Water Supply Authority 1/14/10 Miami Dade County 12/17/09 City of Palm Coast State Road 100 CRA 12/17/09 12/17/09 12/08/09 12/08/09 11/23/09 11 /19/09 UCF Foundation UCF Foundation Okaloosa County Okaloosa County City of Edgewater City of Miami 11/13/09 Citrus County 11/13/09 i Citrus County 11/06/09 Escambia County 10/23/09 City of Miami 10/23/09 City of Miami 10/19/09 Martin Count Issue Description • Capital Improvement Revenue Bonds, S 2010A (Federally Taxable - Build America Bond - Direct Subsidy) Recovery Zone Facility Revenue Bonds (JDL Proj) S 2010 Revenue Bonds, S 2010A Water & Sewer Revenue Bonds, S 20108 (Taxable Build America Bonds) Water & Sewer Revenue Bonds, S 2010A Cash Defeasance (Utility System Improvement Revenue Refunding Bonds, S 2002), S 2010 Local Option Gas Tax Revenue Note, S 2010 Industrial Development Bonds, S 2004) Covanta II, Inc. Resource Recovery Double Barreled Aviation Bonds (General Obligation), S 2010 Utility System Subordinate Revenue. Bonds, S 2010 Promissory Note, S 2010 - Refinance of the•S 2008 BAN Aviation Revenue Bonds, S 2010A Redevelopment Revenue Note, S 2009 Taxable Promissory Note, S 2009 Tax -Exempt Promissory Note, S 2009 Okaloosa County, Florida (Taxable -Sales Tax Revenue Bonds, S 2009B) Build America Bonds Okaloosa County, Florida (Sales Tax Revenue Bonds, S 2009A) Water & Wastewater Refunding Revenue Bonds, S 2009 Special Obligation Bonds, S 2009 (Street & Sidewalk Improvement Program Local Option Fuel Tax Revenue Bond Anticipation Note, S 2009 Allonge Special Assessment Promissory Note (2009) Environmental` Improvement Revenue Bonds, S 2009E Parking System Revenue and Revenue Refunding Bonds, Taxable S 2009 Parking System Revenue and Revenue Refunding Bonds, Tax Exempt S 2009 y Utilities System Refunding Revenue Bonds, S F rst5outhwest Par Amount ($ millions) $15.10 Issue Type * T, NM $8.00 T, NM $334.57 TE, NM $70.71 T, NM $5.26 ! TE, NM $1.88 0 $2.46 TE, NM, i R $5.19 0 $239.76 NM $5.22 TE, R $55.00 TE, R $600.00 $4.00 TE, NM TE, NM $7.39 T, R, D $12.54 TE, R, D $23.88 T, NM $2.74 TE, NM $7.95 TE, R $65.00 j TE, NM $10.00 TE, R $5.00 TE, NM $10.00 TE, NM $6.49 TE, NM, • R $60.11 TE, NM, R, D $28.68 TE, R Page 18 Sale Date Issuer 10/15/09 Martin County 09/30/09 City of Ocoee —09/30/09--Citrus-County--- 07/31/09 I Indian River County 06/26/09 Charlotte County 06/15/09 Sarasota County 05/19/09 City of Miami 05/05/09 ' City of Fernandina Beach 05/04/09 Florida Agricultural & Mechanical University (FAMU) 04/24/09 Miami Dade County 03/31/09 Escambia County 03/26/09 Escambia County 03/13/09 Escambia County 02/11/09 City of Palm Bay 02/03/09 Charlotte County 01 /31 /09 Citrus County 12/30/08 UCF Foundation 12/19/08 I Martin County 12/15/08 City of Palm Coast 12/08/08 j City of Ocoee 12/05/08 Sarasota County 12/01/08 Bay County 11/19/08 Orange County. Industrial Development Authority 10/08/08 ! City of Sanford FirstSokathwest Issue Description 2009B Utilities System Improvement Revenue Bonds, S 2009A Capital Improvement Refunding Revenue Note, S 2009 Communications -Services TaxRevenue-Note-- (2009) Water and Sewer Revenue Refunding Bonds, S 2009 Par Amount Issue ($ millions) Type Revenue Note (Murdock Village), S 2009 Special Assessment Revenue Note (S. Siesta Key Beach Restoration District), S 2009 Limited Ad Valorem Tax Bonds, S 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) Marina Revenue Note, S 2009 Guaranteed Energy Savings Performance Contract - Siemens Miami International Airport (Hub of the Americas) Aviation Revenue Bonds, S 2009A and 2009B Solid Waste Disposal Revenue Bonds, Second S 2009 Solid Waste Disposal Revenue Bonds, First S 2009. Environmental Improvement Revenue Bonds, S 2009A Special Assessment Bonds, S 2009A (Water Improvements - USA 31 Utility System Revenue Bond, S 2009 Allonge to the Water & Wastewater System Promissory Note, S 2007 Bank Loan Extension University Tower & Biomolecular Research Annex Bank Loan, S.2008 • Master Lease Agreement No. 05217, Schedule No. 03, S 2008 Stormwater Revenue Note, S 2008 Water & Sewer System Refunding Revenue Note, S 2008 Infrastructure Sales Surtax Revenue Bonds, S 2008E Water System Revenue SRF Requirement LOC, S 2008 Industrial Development Revenue Bonds (Diocese of Orlando. Project), S 2008 i Taxable Promissory Note, S 2008 $7.99 TE, NM $5.00 TE, R —$1.2-20 T-E—R--. $26.37 TE, R $58.30 TE, NM $2.01 TE, R $51.06 TE, NM $1.30 j TE, NM $2.48 TE, NM $600.00 TE, NM $65.40 TE, NM $65.00 TE, NM $8.00 TE, NM $3.94 TE, NM $8.00... TE, NM $12.50 TE, R $10.40 TE, NM $4.82 ; 0 $9.00 TE, NM $5.35 TE, R $69.90 TE, NM $4.93 0 $48.00 TE, R, D $10.00 T, NM Page 19 Sale Date Issuer Issue Description 10/01/08 Peace River/Manasota Utility System Revenue BANs, S 2008 Regional Water Supply Authority 09/29/09 Citrus County Allonge to the Capital Improvement Revenue Bonds (Emergency Operations Center), S 2007) Bank I Loan Extension Par Amount ($ millions) $30.00 Issue Type * TE, NM $14.00 I TE, R 09/11/08 Sarasota County 08/20/08 Miami Parking Authority 08/20/08 Miami Parking Authority 08/12/08 ' Citrus County 07/30/08 Charlotte County 07/01/08 City of Miami 07/01/08 Charlotte County 07/01/08 City of Fernandina Beach 06/17/08 Charlotte County 06/12/08 Bay Harbor Islands 06/09/08 City of Panama City 06/05/08 I Miami -Dade County 06/05/08 Miami -Dade County 05/22/08 City of Tavares 05/14/08 City of Sanford 05/12/08 j City of Miami Health Facilities Authority 05/08/08- Seminole Community College Foundation 05/01/08 Orlando -Orange I County Expressway Authority 05/01/08 Orlando -Orange County, Expressway Authority 05/01/08 Orlando -Orange County Expressway Authority 03/31/08 Bay County Infrastructure Sales Surtax Revenue Bonds, S 2008A Taxable Variable Rate Parking System Revenue Refunding Bonds, S 2008 Tax -Exempt Variable Rate Parking System Revenue Refunding Bonds, S 2008 Capital Improvement Refunding Revenue Bonds, S 2008 Utility System Refunding Revenue Bonds, S 2008 Sunshine State Loan Murdock Village Note, S 2008 Golf Course Revenue Note, S 2008 Utility System Revenue Bonds (LOC for DSRF), S 2008 Bay Harbor Parking Garage Bank LoanS 2008 Capital Improvement Revenue Note, S 2008 Miami International Airport Aviation Revenue Bonds, S 2008B (NON-AMT) (S B Price to Call 2023,2028 and 2038) Miami International Airport Aviation Revenue Bonds, S 2008A (AMT) (S A Price To Call 2024- 2027) Capital Improvement Revenue Note (Road I Improvements), S 2008 Sales Tax Revenue Bonds, S 2008 Health System Revenue Bonds Catholic Health East Issue, S 2008 Promissory -Note S 2008 Weekly Variable Rate Demand Refunding Revenue Bonds, SubS 2008E-1 $74.00 TE, R $3.88 $37.07 $3.02 $23.46 $42.50 $88.30 $0.29 T, TE, R TE, R, D TE, R TE, R TE, NM TE, NM TE, NM $10.50 0 I $4.94 I TE, NM $1.92 TE, NM $166.44 TE, NM $433.57 TE, NM $1.50 TE, NM $18.00 TE, NM $36.42 TE, R $1:20 TE, NM $131.03 TE, R Weekly Variable Rate Demand Refunding Revenue $118.50 TE, R Bonds, SubS 2008B-2 Weekly Variable Rate Demand Refunding Revenue i Bonds, SubS 2008B-3 and 2008E-4 Water System Revenue Bonds (Southport System), S 2008 A/B/C $249.58 TE, R $2.53 TE, NM FfrsttSouthwes Page 110 Sale Date Issuer 03/11/08 Charlotte County 02/28/08 North Miami 02/28/08 North Miami _02425/08 Sarasota Count 02/22/08 Issue Description Limited General Obligation Bonds (Conservation Charlotte Project), S 2008 Sewer Rehab Bank Loan 1 Pepper Park Improvement Bank Loan y Tax -Exempt Adjustable Mode Industrial Sarasota County 02/06/08 City of Ocoee 02/01/08 j City of Tavares 01/16/08 City of Palm Bay 12/18/07 Martin County 12/17/07 Orange County Industrial Development Authority 12/05/07 j Miami -Dade County 11/30/07 City of Tavares 11/28/07 I Bay County 11/28/07 City al Ocoee 11/28/07 I City of Ocoee 11/15/07 City of Miami 11/14/07 Citrus County 10/27/07" North Miami 10/04/07 UCF Health Facilities Corporation 10/04/07 Hialeah Gardens _- Health Facilities Authority 10/03/07 City of Miami Development Revenue Bonds (Sarasota Military Academy Project), S 2008 Limited Ad Valorem Tax Bonds, S 2008 (Environmentally Sensitive Lands and Parkland Program) 2020-28 and 2029(5.25) Priced to Par Call Non -Ad Valorem Revenue Note (Police Station), S 2006 Capital Improvement Revenue Note (Wooton Park Project), S 2008 Weekly Variable Rate Taxable Special Obligation Bonds, S 2008 (Pension Funding Project) Infrastructure Surtax Revenue Note, S 2007 Industrial Development Revenue Bonds (Catholic Charities of Central Florida; Inc. and Diocese of Orlando Project), S 2007 Miami International Airport (Hub of the Americas) Aviation Revenue Refunding Bonds, S 2007C and 2007D Industrial Development Revenue Bond (Lifestream Behavior Center, Inc.), S 2007 Utility System Revenue Bond Anticipation Notes, S 2007 Non -Ad Valorem Revenue Refunding Notes; S 2007 B (Taxable) Non -Ad Valorem Revenue Refunding Notes, S 2007 A (Tax -Exempt) Special Obligation Bonds, S 2007`(2024, 2026, 2028, 2030 and 2032 Priced to•Par Call) Local Option Fuel Tax Revenue Bond Anticipation , Note, S 2007 North Miami/School Board Bank Note 06 I Health Facilities Revenue Note (Medical College Learning Resource Center), S 2007 -Revenue and -Revenue Refunding _Bonds;-S'200T (Catholic Health'Services•Obligated Group Facilities) S 200T(LOC Issued by SunTrust Bank) (2024 and 2031 Priced to Par Call) i Sunshine State Loan Total 104 transactions, totaling $4,446.15 million paramount Par Amount Issue ($ millions) Type * i $51.83 i TE, NM, i R $4.00 TE, NM $5.28 , TE, NM $4.20 TE, NM $83.61 TE, NM $4.00 TE, NM $7.40 ; TE, NM $38.35 T, N M $25.00 j TE, NM $45.00 TE, NM, D $411.35 TE, R $7.00 TE, NM $21.00 J TE, NM $1.16 T, R $2.95 TE, R $80.00 TE, NM. $10.00 TE, NM $124.00 TE, NM $37.00 TE, NM $48.64 - TE, NM, R $6.00 ' TE, NM *TE= Tax Exempt; T= Taxable; NM= New Money; R= Current or Advanced Refunding; D= Derivative used in the structure; and 0= Other Ff s Southwest Page i11 d) Discuss the primary markets the firm(s) serve, and provide a sample of the various types of municipal debt issuance for which the Proposer has served as financial advisor over the past three (3) years, excluding issuances from or involving the City. As the leading firm for number of issues completed, it is no surprise the breadth and depth of FirstSouthwest's experience extends to likely every type of municipal debt issuance. The general and special obligation debt transactions and services related to the issuance of bonds, notes, certificates or other financial instruments include the following select markets, among others. ■ Airport Bonds ■ Airport Hotel Revenue Bonds • Bank Anticipation Notes • Bank Loans/ Fixed and Variable • Bond Anticipation Notes ■ Commercial Paper Notes • General Obligation Bonds • Grant Anticipation Notes • Hospital Bonds ■ Hotel Occupancy Tax Bonds • Housing Revenue Bonds • Industrial Revenue Bonds ■ Lease Purchase/ Revenue Bonds • Limited Tax Notes • Mortgage Revenue Bonds ■ Municipal Utility District Bonds • Refunding Bonds ■ Road Bonds Sales Tax Bonds and Notes • School Bonds ■ Special Tax Bonds • Subordinate Lien Bonds • Tax and Revenue Notes • Tax Anticipation Notes • Tax Increment Bonds • Tax/ Revenue Anticipation Notes • Taxable Bonds ■ Utility Revenue Bonds • Variable Rate Bonds and Notes • Variable Rate Demand Bonds FirstSouthwest The following table breaks down our experience among the various uses of proceeds during the past three years. FirstSouthwest as Financial Advisor October 2007 through September 2010 Source: MuniAnalytics Use of Proceeds Par Amount (US$ mil) Gen Purpose/Pub Improvement Primary & Secondary Education Higher Education Water & Sewer Toll Roads/Highways/Streets Airports Hospitals Civic & Convention Centers Mass/Rapid Transit Other Transportation Total All 26, 765.11 11, 376.56 9,485.02 8,153.92 8,075.20 5,007.14 3,698.15 1,254.58 983.28 822.83 80,551.03 Market Resources FirstSouthwest is a registered broker/dealer with FINRA, with its activities regulated by the SEC and abides by the MSRB rules. The firm is also a member of the SIPC. We believe that the discipline of maintaining an active broker/dealer operation benefits our clients in numerous ways. Primarily, we are active participants in the marketplace every day, not merely observers. Risking our capital gives us additional perspective into the nuances of the underwriting process, and lends us valuable credibility with the underwriting community. Other broker/dealers know that we are willing and able to provide the same functions we ask of them. They know we are speaking on a daily basis to many of the same institutional investors. Therefore, our clients benefit from market advice that we obtain from firsthand, direct, real-time information as opposed to secondhand observations obtained from calling other firms or compiled from information vendors. We strongly believe that this approach distinguishes our services from our competitors, but most importantly, it provides a higher quality service to our clients and allows them to achieve the lowest possible cost of borrowing. The underwriting desk at FirstSouthwest works in partnership withourbanking professionals from the Page 112 beginning preliminary structuring, updating with current scales and coupon ideas, call features, priority of order decisions all the way to the final allocations. We have multiple underwriting .professionals with more than 25 years of experience each working for both national and regional firms. They understand all facets of the underwriting process, from how to capture the largest retail sales percentage to working witli the most difficult institutional orders. As much as 70% of our underwriters' time is invested in working with financial advisory clients. The City can be confident that when the time arrives to price its issue, our professional underwriters will be watching over every detail of the transaction and getting the most value for the City's securities the market will allow. Sarasota County An excellent example of the benefits of maintaining a desk is Sarasota County's offering of $69,895,000 of Infrastructure Surtax Revenue Bonds, Series 2008B on December 5, 2008 in which FirstSouthwest acted as financial advisor. The County had a long history of competitive sales. In this instance, however, in order mitigate the County's market execution concerns, the bonds were sold through a negotiated sale. During the order period, under the advisement of FirstSoutlnvest's long-term underwriting desk, the County wits able to negotiate a risk component on the unsold balances with the underwriters,• thus successfully completing . the sale in an extremely difficult and unpredictable market. Had the County not been able to negotiate this, only half of the bonds would have been sold at the original offering prices. The County would have been faced with either a second offering of bonds months later at considerable additional cost, or consenting to re -pricing entire maturities at higher yields. In the end, it was determined that the risk component included in the gross spread represented considerable cost savings to the County. In our role as financial advisor, FirstSouthwest's underwriting and trading desk routinely provides recommendations regarding the following matters based on their active market involvement and extensive institutional investor relationships: FirstSouthwest Structure Call options and premiums • Yields • Coupons Placement of Term Bonds and pricing • Serial Bonds and Pricing • Capital Appreciation Bonds and pricing ■ Cost effectiveness of insurance • Credit aspects • Underwriters' takedown and spread • Syndicate rules • Allocation of bonds In short, these capabilities provide an enormous advantage to the City and differentiate FirstSouthwest from other advisory firms, which do not have actual market involvement and capabilities. Although the City may only require some of these services to be provided by FirstSouthwest, the expertise of all the professionals in these auxiliary areas is shared with the public finance bankers and utilized when specific questions arise. Our underwriting and trading desk has active dialog with retail, Tier-1, and Tier-2 institutional investors on a daily basis. This provides a significant advantage to our clients in structuring new issues. For example, knowing the existing buyer base of the City's outstanding bonds can play an important role in obtaining the best rates and terms possible. The table below displays the current top holders of the City's debt. City of Miami Top Institutional Holders of Bonds ParAmount ($wDs) Franklin Templeton Investments $ 19,000 USAA Investment Management Co 18,625 PM! Mortgage Insurance Co 16,145 The Vanguard Group, Inc 12,015 Eaton Vance Management Inc 10,000 Thornburg Investment Management Inc 8,675 BlackRock Investment Management LLC 7,935 Nationwide Insurance Co 5,000 Deutsche Asset Management 5,000 Invesco PowerShares Capital Management LLC 4,500 Source: Thomson Reuters as of 10/29/2010 The following case studies further demonstrate the diversity of our experience. Page 113 City of North Miami, Florida NOR I-i'MIAMI FoALAMiteMolft Om In 2007, we assisted the City of North Miami to transact a $124 million bank bond to facilitate the construction of two public schools within city limits. The transaction, in which the City served as a conduit agency, allowed the Miami -Dade Public School District to advance the construction of the two schools multiple years forward fi-om what was originally planned within its capital improvement program. FirstSouthwest assisted the City, in January 2010, to issue its $17,685,000 Taxable Promissory Note, Series 2010 to refund its Series 2002 taxable variable rate pension obligation bonds. North Miami Community Redevelopment Agency In 2007, we assisted the North t Miami CRA with the issuance of a $10,750,000 Line of Credit with Regions Bank. The line of credit allowed the CRA to meet commitments that it had made to Miami -Dade County in the area of project financing. Miami -International Airport FirstSouthwest has been serving as financial advisor to the Miami -Dade County Aviation Department (the "MDAD") since August 1995. Through the MDAD, Miami -Dade County owns and operates Miami International Airport (MIA), three general aviation airports, one flight training airport, and one decommissioned airport. Our work with the MDAD includes the following: Plan of Finance for Capital Improvement Program ("CIP") for Terminal and Runways. The CIP consists of nearly $6.3 billion for new construction and renovations to be completed in 2012, of which $6.2 billion will be bond financed. A program of this magnitude offers a challenge in striking a balance between managing annual rates and charges and achieving the lowest overall borrowing cost. The challenge was increased by a bond indenture created in 1954 and the unique debt pattern of the MDAD's outstanding 23 bond issues with a total principal amount of nearly $1.8 billion. In 1995, MDAD had plans to develop a new airport on a green field site, and FArstSt u hwes the debt was issued to be easily refundable. However, the County did not approve the development plan, but engaged FirstSouthwest to help MDAD restructure its finance plan. FirstSouthwest investigated several refinements to the plan of finance, through the creation of a new indenture or substantial amendments to the existing one._. In addition, FirstSouthwest developed and maintains a computer database for all the MDAD's outstanding issues which permits us to monitor and model numerous refunding and restructuring scenarios, as well as develop debt service projections for alternative CIP construction schedules. Among our • accomplishments on behalf of MDAD: To take full advantage of the AMT holiday in the first half of 2010, MDAD decided to accelerate their borrowing and raise the remainder of the funds to complete their CIP projects.. FirstSouthwest assisted in MDAD developing detailed rating agency presentations focused on: (i) the need for the CIP, while focusing on the rapid construction progress and that the end of program was in sight; (ii) the quality of the airport's management; and, (iii) the strength of the local service area even in the down economic times. As a result, the MDAD maintained its underlying ratings for its two Aviation Revenue Bonds. The $600 million Series 2010A sold in January and the $503,050,000 Series 2010 B bonds sold in July. Also in 2010, FirstSouthwest assisted in the issuance of a subordinate lien bond for the airport in support of the MIA's MIC-MIA Program. This series of bonds while paid from rates and charges from the Airline Use Agreement was backed by the full faith and credit of Miami -Dade County (the "County"). The Double Barrel issue was negotiated with the County nine years prior when the project was needed to secure the TIFIA loan that helped fund the Intermodal Center. The Bonds were priced during a volatile market. FirstSouthwest's underwriting desk was instrumental in assuring the best pricing during negotiations with the lead underwriter maximizing retail and jump starting the institutional order period by holding back every third maturity during retail for institutional orders. The result was a very successful re -pricing for the benefit of MDAD. Commercial Paper. In July 2000 and after FirstSouthwest assisted the MDAD in implementing a $400 million Commercial Paper Program, significantly reducing its overall debt service while at the same time managing the debt issuing process. Given the cost Page 114 benefit that MDAD derived from the program, Miami - Dade County renewed the CP Program for another five years in July 2005. The MDAD enters the debt markets approximately twice a year with issue sizes from $300 to $600 million. The ability to manage the timing into the market has allowed the airport to consistently market its debt at levels lower than the traffic engineers' studies had contemplated. •To date MDAD has issued $2.6 billion in total: $2.2 billion AMT CP notes and $404 million in Non-AMT CP notes. They borrowed monies for their CIP at lower short term rates and paid off the CP with bonds --- significantly reducing their overall debt service as well as the need for a longer capitalized interest period since MDAD was able to more effectively manage the timing of its debt issuance process. Transportation Infrastructure Finance and Innovation Act of 1998 ("TIFIA") Loan. In conjunction with the Florida Department of Transportation ("FDOT"), we negotiated and structured a $164 million TIFIA loan from the United States Department of Transportation ("USDOT") for the Miami Intermodal Center project. The project is comprised of a consolidated rental car center, right of way acquisition, MIC/MIA connector and road and highway improvements. The overall FDOT project is estimated to cost $1.3 billion and is needed to reduce area roadway congestion, improve Miami International Airport curb front space and ground transportation access, and improve the air quality in the vicinity of Miami International Airport. The $164 million TIFIA loan represents permanent 35- year financing for 100% of the consolidated rental car facility. The loan is secured by a Customer Facility Charge assessed on a "per transaction day basis" for each rental car contract of participating rental car companies. The interest rate on the loan is the 30-year U.S. Treasury plus 15 basis points, which is likely 160 basis points below the taxable AAA -insured rate that could have been obtained in the public market. The combination of the below market interest rates and the 35-year maturity facilitated an investment grade rating and substantially reduced the interest expenses and transaction costs. Transportation Secretary, Rodney Slater, approved the funding for the loan on September 27, 1999. We believe that FirstSouthwest team's familiarity with specialized federal and state transportation financing programs and our experience with transportation capital improvement projects will FirstSouthwest be a tremendous asset for the Airport in serving as its financial advisor. State Infrastructure Bank. In conjunction with the Florida Department of Transportation ("FDOT"), we negotiated and structured a $50 million SIB loan for the Viaduct Project. The project consists of an elevated roadway providing access from the Palmetto Expressway to MIA's Westside and Northside air cargo handling facilities, so that trucks entering and exiting the air cargo area can travel on the Viaduct and avoid street congestion and allowing for ease of movements going from airside to the duty free zone. FirstSouthwest familiarity with SIB loans from our extensive turnpike and tollway practice helped facilitate the low cost of borrowing from this program. Short -Term Securities. MDAD issued $139.705 million, MBIA Insured bonds, as taxable fixed rate for an Initial Period from May 2003 through April and then converted them to tax-exempt AMT 35-day Auction Rate Mode in May 2005 through February 2008. However, given the turmoil in the financial markets in early 2008, due to the downgrades of the municipal bond insurance companies and its impacts on the municipal bond market, in particular the auction rate bonds, we assisted MDAD in refunding their bonds to a fixed interest rate in by mid -March 2008--- the entire process took less than one month. Ongoing Consulting Projects. FirstSouthwest also provides a number of ongoing consulting projects for MDAD. • Public -Private Partnership projects • Development of a new CIP for refurbishment and maintenance of older buildings Creation of a new smaller -sized Commercial Paper Program • Disaster recovery planning City of Hialeah Gardens, Florida New York City. The City of Hialeah Gardens selected FirstSouthwest as its first - ever financial advisor. We introduced the City's staff to the rating agencies and walked them through formal presentations in We subsequently assisted them in completing two competitive bid bond transactions. Page 115 Of particular note, one of the transactions that we conducted on the City's behalf was the first municipal bond transaction to use Miami-Dade's One -Half Cent Transit Surtax as a revenue pledge. It was well - received by the banking community. e) Describe examples of swap transactions the Proposer participated in and describe the method utilized to confirm pricing and to evaluate the -risks and rewards. Our swap advisory clients include issuers from all sectors of the tax-exempt spectrum: transportation, general obligation, revenue, housing authorities, higher education, health care, public power, water and sewer, and other 501(c)(3) issuers. Our experience includes both competitive and negotiated transactions. Each swap is unique, and generalizing our experience is difficult, except to say that we have worked with all types of issuers and all types of transactions and will provide technological resources (described later) to support the City's oversight of its derivative contracts. FirstSouthwest as Swap Advisor: 107 Transactions, $9.44 Billion Notional Amount Non -Pram Omar Suva Flo SS.\No Wing $716 Conv.nrlm� . ral .n,.r$124 $a g Source: Internal Records, 10/01/07 to 09/30/10 As swap advisor, we perform a variety of services. FirstSouthwest always performs an extensive analysis of the risks entailed in any transaction. We calculate standard market scenarios to determine the client's ability to withstand changes in market conditions. Our analytical expertise is second to none, and we regularly are asked to update our projections during the life of the transaction. Documentation of the swap is a very important part of the process. We carefully review the confirmation, and any modifications to the standard ISDA documentation. Cancellation and termination provisions are always hot topics, as these can often FirstSouthwest make or break a transaction. We routinely evaluate the cost of the termination to determine if it is advantageous to our clients to terminate or continue with the swap. Swap Valuation Methodologies. When evaluating structures with embedded options FirstSouthwest uses the same analytical . framework as we do when evaluating structures without embedded options. Before recommending any swap transaction, we will work with the City to identify needs and review alternative financing structures. The City can review and select among these proposals to continually refine its financing plan. As the City considers the integration of options into derivative swap products, careful analysis of counterparty risks and disclosure requirements, volatility of the securities or contracts being entered into, as well as the effectiveness on a risk -reward basis of the transaction contemplated, requires rigorous due diligence, including review of the City outstanding debt and swaps in conjunction with any planned transactions. Many of our clients successfully utilize interest rate swaps and other structured financial products to improve their debt structures. Hybrid structures commonly are used to accomplish the following: • Reduce the cost of borrowing • Manage interest rate exposure • Generate debt service savings Broaden investor base for debt offerings • Enhance asset/liability management The tax-exempt swap market appears to be entering a new phase of creativity and sophistication while remaining true to its conservative and risk -averse roots. The following chart summarizes the various financial products and typical applications. FirstSouthwest Structured Products Group Experience with Derivative Products Financial Product Typical Applications Fixed -to - Floating Swaps and Options Floating -to - Fixed Swaps and Options Increase variable rate exposure; create synthetic floating rate debt without liquidity costs, generate ihterest cost savings, hedge short- term asset returns. Hedge future refunding of non - advance refundable, create synthetic fixed rate debt at levels lower than the traditional cash market allows, Page 116 Financial Product Typical Applications Caps Collars Rate Locks/Caps Debt Service Caps Forward Delivery Bonds Basis Swaps Conversion Options. Structured Notes Total Return Swaps increased call flexibility for future debt issuance. Hedge interest cost, limit exposure on variable rate debt. Hedge interest cost on variable rate debt using floor to off -set purchase price, increase and hedge short-term asset returns; reduce budgetary uncertainty. Hedge financing cost on interest rate sensitive, fixed rate issuance in process. Cap financing cost on interest rate sensitive fixed rate issuance in process. Refund non -advance refundable high coupon debt; lock -in financing cost on future fixed rate issuance. Generate swap income and partially hedge existing variable rate risk. Lower interest cost on outstanding fixed or variable rate bonds by selling an option. Fixed income instrument with tailored risk/reward characteristics. Establish synthetic position in an investment. Engagements as Swap Advisor The following case study is an example of the types of transactions and services FirstSouthwest provides to its clients. City of Atlanta FirstSouthwest has been the financial advisor for the City of Atlanta, Georgia (the "City") since 2001 and its swap advisor since 2008. During the period as swap advisor, the our group has advised the City on the precise timing for exiting several swap transactions. By entering into interest rate swaps to hedge and/or enhance its variable rate and fixed rate bond financings, the City realized significant economic benefit. The following table summarizes the economic advantage to the City related to certain interest rate swap agreements. FirstSouthwest Bond Series Swap/Debt Structure Cumulative Benefit 1999A-1/A-2 Synthetic Floating $29,000,000 20018 & 2001 Synthetic Fixed $22,900,000 2003RF Synthetic $19,200,000 !: Fixed TOTAL BENEFIT $71,100,000 Pay -Floating Swap. The City's pay -floating interest rate swaps related to the Water and Wastewater Revenue Bonds, Series I999A-1 and Series 1999A-2 were executed as "fair value" hedges. The fair value of the Series 1999A-I and 1999A-2 bonds is the net present value of all the future cash outflows. As short- term rates fluctuate, so do the fair values of the bonds. By swapping fixed interest rate payments for short- term floating rate payments, the City reduced its exposure to changes in the fair values of the bonds. At the same time, the City was able to take advantage of historically low short-term interest rates, resulting in an overall net benefit of approximately $29 million as compared to the alternative of paying the blended fixed rate of 5.13% over the holding period. FirstSouthwest provided the City with frequent valuations and helped facilitate negotiations with the counterparties. This ultimately led to the the City terminating the swaps in 2009 and receiving termination payments totaling $21,620,000. - Pay -Fixed Swaps. The City's pay -fixed interest rate swaps related to the Variable Rate Water and Wastewater Revenue Bonds, Series 2001 B and 2001C and its Variable Rate Airport Revenue Bonds, Series 2003RF were executed as "cash flow" hedges. These swaps are designed to reduce the City's exposure to fluctuations in cash flows related to floating rate interest payments on the bonds. The total net benefit to the City using this strategy over traditional fixed rate debt is approximately $42.1 million. It is also important to note that, had the credit crisis not occurred and the VRDB markets continued to perform as they had at the time of the bonds' issuance, the net benefit could have been considerably more than this amount. In addition to swap advisory services, FirstSouthwest is currently providing bond proceeds reinvestment services, online monitoring through the FairValue Page 117 Advisor' ''r system and GASB 53 services for the fiscal year ended June 30, 2010. Pricing and Risk Reward Methodology Before we make recommendations to our municipal clients, regarding the time to enter or exit swap transactions, FirstSouthwest draws upon a variety of resources for monitoring market conditions. FirstSouthwest has worked closely with some of the nation's premier swap providers in designing and implementing a pricing technology that is "on -market." We run mark -to -market pricing and payment verification on a regularly scheduled basis for the majority of our swap advisory clients. Additionally, we have developed a proprietary system that we use for formulating our recommendations for pricing. We compare our results against the pricing proposed by potential counterparties. FirstSouthwest believes that all fees should be negotiated and disclosed prior to pricing to avoid any "surprises." We also provide our clients with comparison pricings from other transactions to ensure the best execution. When determining whether to procure a derivative product on a competitive or negotiated basis, it is essential to establish that the terms and conditions of the product under consideration reflect industry standard conventions and are evaluated based on their fair market values. The more generic and standard the size and terms of the product desired, the more likely a competitive bid may result in a fair price. The complexity of certain projects; the uniqueness of the client's circumstances; a particular counterparty's generation of beneficial ideas and structures; and the desire to limit exposure to counterparties all may be valid reasons for negotiating a particular derivative product transaction rather than seeking competitive bids. There are several criteria that influence the decision for issuers to procure derivative products through negotiated or competitive channels; they include: the size, maturity range, and complexity of the trade; the basis on which the trade is executed: LIBOR or BMA; the credit structure; the desire for issuers to reward firms for developing solutions to problems; and the number of bidders desired. FirstSouthwest believes that the decision to employ a negotiated procurement for a derivative product can be influenced by many factors specific to the particular transaction contemplated. As a FfrstS®ut west swap advisor, we strive to provide the greatest amount of market liquidity to the transactions our clients employ, regardless of the method used. Often a competitive negotiation among firms pre - qualified (as to credit quality of the counterparty, past performance and understanding of the structure for a particular transaction). proves beneficial and allows for broader participation. In some cases, a client may wish to allow the less cost-efficient bidders to match the lowest cost submitted for a transaction. If this is the case, the size of the transaction must be large enough that the fixed costs for each of the counterparties does not impact the efficiency of the particular transaction. If a client wishes to allow matching of the lowest cost bid, that intention should be disclosed in writing to all permitted bidders. f) Provide two (2) Letters of Reference on letterhead, for whom similar services have been performed. Include those from governmental entities and private entities as applicable. This information is subject to verification as part of the evaluation process. Letters of References from clients for whom FirstSouthwest performed services similar to those listed in the City's RFP are included in Appendix D. g) Provide information from within the past five (5) years concerning current or past litigation and bankruptcies involving the Proposer, if applicable, as related to the scope of services being sought within the confines of this RFP. Indicate the reason(s) and outcome(s). FirstSouthwest has been involved in no bankruptcy proceedings or litigation related to the provision of financial advisory services within the past five (5) years. h) Provide any other information deemed relevant, including any exceptions to the requirements of the RFP. There are no exceptions to the RFP. Knowledge of the City of Miami Having served the City of Miami as financial advisor over the past five years, we are extremely knowledgeable of the City operations, goals, plans and financial challenges. If selected to serve the City under this RFP, there will be no learning curve to overcome. Given the challenges that the City will face in the near and intermediate term, having professionals on board Page 118 with institutional memory and knowledge of the nuances of the various financial issues is of great benefit. We have included in Appendix A an updated profile of the City's debt structure. In the interest rate environment as of 10/19/10, the City could partially advance refund its Series 2002A General Obligation, Bonds and Series 2002 Limited Ad Valorem Bonds for present value debt service savings of 2.8% and 4.38% of the amount of refunded bonds, respectively. These refunding possibilities should be further examined by the City. The City should also consider restructuring its Sunshine State loans. The reasons being: 1) The City's debt service will substantially increase in FY 2012 if no action is taken; 2) The current fixed interest rate environment is at near historical lows; 3) Interest rates may begin to rise as economic growth occurs and more cash is put into the economy; and 4) The Sunshine State Program overall is facing increased liquidity fees which will increase the costs to the City under the program. In Appendix B, we include a credit analysis of the City which shows: 1) General Fund and Debt Statistics trends from FY 2005 through FY 2009; and 2) A comparison of the City's financial and demographic information as of FY 2009 compared to Aa3 and A2 cities rated by Moody's with populations of between 300,000 to 600,000 and Moody's Medians for Aa3 and A 1 credits This analysis should be updated for FY 2010 activity when it is available. The FY 2009 data shows that the City has a relatively low overall debt burden (1.5% versus 3.4% and 4.7% for A 1 and Aa3 Medians respectively). It also shows that the City's General Fund Balance as of a percentage of revenues was close to the Al median percentage (4.8% versus 5%). It is expected that this Key Indicator of credit strength will worsen when FY 2010 activity is factored in. FirstSouthwest has invested heavily in its resources. Having these types of tools available for use in FirstSouthwest preparation for rating presentations and for long-term strategic planning is another reason why FirstSouthwest should be selected to serve as financial advisory. We Strive to Educate We continually try to keep our clients informed on the financial marketplace so they can make the best decisions for the public's good. One way we do this is by distributing our weekly Florida Market Commentary which recaps the prior week's activity in the Florida bond marketplace. We generally include published articles of interest as well as periodic updates from FirstSouthwest Asset Management. A copy of a recent Florida Commentary is included in Appendix C. Accountability and Transparency FirstSouthwest believes that when an issuer is selecting a financial advisor, accountability and transparency are paramount. As a broker/dealer, FirstSouthwest is subject to the rules and regulations of various governmental bodies including the U.S. Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA"), among others, and we adhere to the rules of the Municipal Securities Rule Making Board ("MSRB"). FirstSouthwest is also a registered securities dealer under the SEC Act of 1934 and functions as a member of the Depository Trust Company and the National Clearing Corporation. Such heightened level of accountability and the transparency behind all of our advice and actions distinguish us from most other firms that provide financial advisory services without being subject to such oversight and capital requirements that go along with such regulation. Financial reform is corning to the municipal marketplace, and all financial advisory firms will come under greater regulatory supervision. Compliance to SEC and other rule -making entities is expensive, time consuming and requires focus, time and effort by regulated companies. FirstSouthwest has the infrastructure already in place to stay fully compliant to such rules and regulations, so the City can be assured that our focus on the City's needs will not be diverted. Other Areas of Business While financial advisory is the core business of FirstSouthwest, we have responded to today's Page 119 increasingly complex public finance landscape by raising the bar on the services, resources, and experience our firm offers. In fact, FirslSoutlnvest is the nwst well-equipped and resourceful investment banking firm in the nation. Our Public Finance Department is structured to provide clients with access to multiple professionals with expertise in diverse areas of finance: structured products, underwriting and trading, continuing disclosure, arbitrage rebate calculations, and investment management, among others. Underwriting! Remarketing Swap Advisory Debt Capital Markets 1 Arbitrage i Rebate Financial Advisory Corporete Finance Asset Management Pension and OP EB Advisory 1 Clearing ; Services ContinuingDisclosure The following table summarizes the volume of our participation providing these select services. Service Volume of Participation Arbitrage Rebate Calculation Services** Continuing Disclosure Services** As of September 2010, provided calculations to 470 clients on more than 3,100 bond issues, totaling $126 billion par amount As of March 2010, provides services for approximately 622 clients and annually files more than 650 reports Investment As of-June-30, 2010, actively manages Management** $6:11 billion for 33 state and local governments; also servesas the investment advisor for an additional $4:73 billion Structured For the five-year period ending Products** September 30, 2010, served as swap advisor on 201 transactions, totaling $17.34 billion in notional amount. Underwriting* For the five-year period ending • September30, 2010,.served'as:senior or co -managing underwriteron294 transactions totaling.$16.11 billion par. amount, Sources: *FirstSouthwest Internal Database; **MuniAnalytics Brief descriptions of the FirstSouthwest specialty practice groups that may be of interest to the City follow: Continuing Disclosure. The firm is one of the few financial advisors that offer a separate continuing disclosure service to assist municipal bond issuers with FfrstSo thwes the preparation of required annual financial filings and ongoing material event notices. Investment Management. FirstSouthwest Asset Management ("FSAM") provides investment management services and investment pool administration for the public sector. FSAM serves as either the investment manager or the advisor for $10.85 billion in public funds. investment Structured Products: FirstSouthwest has maintained a dedicated swap and reinvestment desk since 1990 and considers our derivative practice to be an integral branch of the firm. Our clients include issuers from all sectors of the tax-exempt spectrum and include both competitive and negotiated transactions. Each swap is unique, and generalizing our experience is difficult, except to say that we have worked with all types of issuers and all types of transactions. Underwriting: FirstSouthwest is one of the leading municipal underwriting firms in the region, drawing national experience serving numerous types of entities. This space left intentionally blank Page 120 Public Private Partnerships (P3) As a trailblazer in this highly specialized area of finance, FirstSouthwest is on the leading edge of the recent movement toward the further integration of the public and private initiatives. The firm endeavors in each public -private partnership engagement to ensure an - optimal- use of private sector experience and resources to expand and enhance the effectiveness of limited public sector resources. FirstSouthwest's P3 Specialty Practice Group, Mr. Michael G. Bartolotta, Vice Chairman of FirstSouthwest and recently elected Chairman of the MSRB, has evaluated, or is in the process of evaluating, a number of privatization opportunities for clients nationwide and offers to its clients valuable insight in this area. Mr. Marquez also possesses experience working on P3 projects with Mr. Bartolotta and other Florida based staff members. Our experience spans all sectors of the industry, including serving as financial advisor and concession advisor to toll authorities and other public sponsors, as well as strategic advisor on public/private projects. FirstSouthwest has advised on sales or mergers of assets with values as much as S20 billion. Collectively, FirstSouthwest's team personnel have provided advisory services on transactions and reports including, but not limited to: Water/Seaport Port of Corpus Christi (Concession Advisor) ■ Coastal Water Authority (Asset Sale) ■ San Diego Unified Port District • Texas Water Development Board • Texas Water Resources Finance Authority (Asset Sale) Municipalizations (i.e. private transfer to public) • Fernandina Beach, Florida • Winter Park, Florida Airports • Dallas/Fort Worth International Airport • Houston Airport System (Special Facilities) • Miami -Dade International Airport Transportation ■ Harris County Toll Road Privatization Study F rs 5o At '9wesZ ■ Harris County Toll Bridge Acquisition • Metropolitan Transit Authority of Houston ■ Denver Regional Council of Governments • Central Texas Regional Mobility Authority TIFIA Financing • New York State Thruway Authority, Advisor on Tappan Zee Bridge Replacement/Privatization ■ Bilfinger BOT — Concession (Design, Build, Finance Concession) Tobacco Asset Securitization • Tobacco Asset Securitization Corporations o New York o Rhode Island o New Jersey o Virginia o Private settlement 5. Qualifications and Experience of Key Personnel a) Provide detailed background information on the Financial Advisor (individual) to be assigned by the Successful Proposer to the City's account for the duration of the Contact term. Include a detailed resume, and indicate whether Proposer agrees to the City's terms to approve any future Financial Advisor(s) should the initial Financial Advisor leave the Successful Proposer's firm during the Contract term. By far, the most valuable resource FirstSouthwest has to offer is experienced and skilled professionals. FirstSouthwest utilizes the expertise and knowledge of each professional to the fullest extent by implementing a "team concept." That is, for every client, the Project Manager will access all applicable personnel resources within our firm. By selecting FirstSouthwest, the City gains unlimited access to all 360 staff members therein. The team approach provides a higher level of experience, proficiency, ideas and client service. Mr. Marquez will serve as the primary contact to the City with Ms. Lakshmi McGrath, a Vice President also located in our Aventura office, providing support to Mr. Marquez in her role as Co -Project Manager. The City's financial advisory team will be supported strongly by Mr. Ed Stull and Mr. Joel Tindal as the Senior Support and Analytical Bankers, Mr. William P age I 21 Johnson in Arbitrage Rebate, Mr. David Brayshaw in Derivative Products, Ms. Mary -Katherine Sells in Credit Analysis, Mr. Pete Stare in Underwriting, Ms. Donna Ciccimarro in short-term pricing, and Ms. Julie James in Disclosure Services will also provide specialized support. Edward Marquez will be assigned as the Project Manager and lead banker on the City's account throughout the duration of the Contract term. His detailed resume follows: Edward Marquez Senior Vice President 18851 NE 29t' Avenue, Suite 520 Aventura, Florida 33180 Telephone: 305.819.8886 edward.marquez@firstsw.com Areas of Focus Specializes in airport, seaport, transportation and general government financings Profile • Has 23 years experience in investment banking and public finance • Joined FirstSouthwest in 1998 • Senior advisor on more than S5.1 billion in debt issuance ■ Former CFO of Miami -Dade Public School District ■ Former city manager for the City of Miami, Florida • Former finance director for Miami -Dade County Education ■ Bachelor of Business Administration in Accounting, Florida International University Fi9'st5cuthwest Current Affiliations • Government Finance Officers Association • United Way Trustee Past Affiliations • Florida International University Council of 100 Licenses Held • Registered Representative of the Financial Industry Regulatory Authority o Series 7 Iicense, General Securities Representative o Series 63 license, Uniform Securities Agent o Series 79 license, Investment Banking Representative Agreement for Approval by City FirstSouthwest agrees to the City's terms to approve any future Financial Advisor should the initial Financial Advisor leave the firm during the Contract term. It should be noted though, that the internal "team approach" being proposed by FirstSouthwest provides for a fully qualified and seasoned individual to replace Mr. Marquez in his unlikely absence from the Finn. Lakshmi McGrath will serve in the role of Co -Project Manager on the engagement, and would be able to step into the role of Project Manager, assuring the City uninterrupted quality service. b) Should the Proposer propose a joint venture or team approach to include more than one firm, provide detailed qualifications and experience of the proposed team, including qualifications and experience of each team member and the work of a similar nature performed by each. Include previous City experience, if applicable, and resumes of team members. FirstSouthwest does not propose a joint venture or team approach that would include more than one firm to provide services to the City. This space is intentionally left blank. Page 122 c) Describe the experience, qualifications, and other vital information, including relevant experience on previous similar projects within the last three (3) years of the Project Manager and all key individuals who will be assigned to this project and the functions to be performed by each. Qualifications_of Project Managers The following tables summarize the qualifications of core team members, as well as list the accounts, since June 2007, where they have served as lead project manager: Edward Marquez Years' Experience Senior Vice President i FirstSouthwest 12 Public Sector 23 QUALIFICATIONS Has served as financial advisor or placement agent on $3.92 billion in debt issuances since 1998 and served as underwriter on an additional $2.01 billion in financings ▪ Has more than 23 years experience in investment banking and public finance • Joined FirstSouthwest in 1998 • While in the public sector, had lead responsibility for more than $5.1 billion in debt issuance • Former CFO of Miami -Dade Public School District Former City Manager for the City of Miami, Florida where he developed a Five -Year Financial and Operational Recovery Plan which was successfully implemented by the city. • Former Finance Director for Miami -Dade County The table below lists the accounts that Edward Marquez has acted as lead project manager on beginning October 1, 2007 through July 31, 2010: Sale Issuer Bond Description Issue Size Issue Sale Type Date ($ Millions) Description * 07/22/10 City of Miami Spec Oblig Prking Rev Nds S10A&B 101.37 NM 07/13/10 Collier County, FL Spec Ob Rev S10 62.50 NM 01/26/10 North Miami, FL S10 Fixed Rate Refunding of SO2 17.52 RF Pension 11/19/09 Miami Spec.Obliga Bds, 09 (Street & 65.00 NM Sidewalk) N C N/A N 10/23/09 Miami Parking Authority Parking Sys Rev & Rev Rfdg Bonds 09 60.11 NM & RF N 10/23/09 Miami Parking Authority Parking Sys Rev & Rfdg Bds 09 Txbl 6.48 NM & RF N 07/10/09 Miami Rfdg Rev BdsTxb) Pension 09 37.43 RF N 05/20/09 Miami 03/25/09 Miami 08/27/08 Miami Parking Authority 08/27/08 Miami.Parking Authority Lmtd Ad Valorem Tax Bds 09 (Homeland Sec) City of Miami Sunshine State, Series 09 Tax Exempt VR Parking Sys Rev Rfdg Bds, Taxable VR Parking Sys Rev Rfdg Bds, SOB 51.05 NM N 20.00 NM P 37.07 RF N 3.88 RF N 08/14/08 Miami Sunshine State Loan 08 42.50 NM P 06/12/08 Bay Harbor Islands 08Y Harbor Parking Garage Bank Loan 4.93 NM P Page (23 05/12/08 Miami Health Facility Authority 02/28/08 North Miami, FL 02/28/08 North Miami, FL 01 /07/08 12/14/07 11/15/07 Miami 10/03/07 Miami Miami Health Facility Authority Miami Health Facility Authority 08/08/07 Miami -Dade Co, FL TOTALS Health System Revenue Bds, CHE, Sr 08 Sewer Rehab Bank Loan 08 Pepper Park Improvement Bank Loan 08 Revenue Bonds 08 (Mercy Hospital Proj) Revenue Bonds 07 (Mercy Hospital Proj) Spec Obligation Bds 07 (Street&Sidewalk) Sunshine State Loan 07 Public Service Tax Rev Rfdg SO7A 37.00 NM N 4.00 NM P 5.27 NM P 30.00 NM P 30.00 NM N 80.00 NM N 6.00 NM N/A 30.62 RF C $736.64 *Key: N: Negotiated, R: Remarketing, NM: New Money, RF: refund P: Private Placement C: Competitive Mr. Edward Marquez provided consulting services to the following clients: • West Palm Beach Hotel • Florida Port Financing Community • City of Doral • Fort Lauderdale Downtown Dev Auth • Miami Parking Authority • Riviera Beach Community Redevelopment Agency • North Miami Community Redevelopment Agency • North Miami, FL • Bay Harbor Islands • City of Miami ■ Fort Lauderdale Downtown Authority ■ City of Hialeah, FL • Hialeah Housing Authority • Oakland Park, FL ■ Sunny Isles Beach, FL Development The following table summarizes the qualifications of Lakshmi McGrath who will serve as Co -Project Manager. Lakshmi McGrath Vice President Years' Experience FirstSouthwest 12 Public Sector 23 Qualifications Has served as financial advisor or placement agent on $5.35 billion in debt issuances since 2003 and served as underwriter on an additional $506 million in financings, and over $2 billion in Previously served as Vice President in the Corporate Trust department at First Union National Bank and administered a large diverse portfolio of bond issues for major Florida and Georgia issuers (specialization in Housing) Has more than 16 years of banking, trust operations and administration experience in both corporate and consulting environments FfrstSouth Page 124 The table below lists the accounts that Lakshmi McGrath has acted as lead project manager on beginning August 1, 2007 through July 31, 2010: Sale Issuer Bond Description Issue Size Issue Sale Date ($ Millions) Description * Type * 08/04/10 Miami -Dade Expressway Toll System Refunding Authority Revenue Bonds S108 08/04/10 Miami -Dade Expressway Toll System Refunding and Authority Revenue Bonds S10A&B 07/22/10 Miami -Dade County Aviation Revenue Bonds, Series 20108 $17.12 RF N $359.59 NM, RF N $503.02 NM N 03/24/10 Hialeah Gardens, FL Trans Tax Rev Bds S10 $2.50 N/A N/A 02/10/10 Miami - Dade Co Aviation Dept GO Double Barrell Bds S10 239.75 NM N 01/14/10 Miami - Dade Co Aviation Dept Aviation Rev Bds S10A 600.00 NM N 04/24/09 Miami -Dade Co Aviation Dept Aviation Revenue Bonds 09B 211.56 NM N 04/24/09 Miami -Dade Co Aviation Dept Aviation Rev Bds, Ser 09A 388.44 NM N 06/05/08 Miami -Dade Co Aviation Dept Aviation Rev Bonds 086 (Miami Intl AP) 06/05/08 Miami -Dade Co Aviation Dept Aviation Rev Bds SO8A (Miami Intl Airpt) 03/12/08 Miami -Dade Co Aviation Dept Aviation Rev Rfdg Bds 03E 12/05/07 Miami -Dade Co Aviation Dept Aviation Rev Rfdg Bonds 07D (Non-AMT) 12/05/07 Miami -Dade Co Aviation Dept Aviation Rev Rfdg Bds, S07C (AMT) 10/04/07 Hialeah Gardens Health Rev & Rfdg Bds, S07 Facilities Authority 166.43 NM N 433.56 NM N 139.70 R R 43.65 RF N 367.70 RF N 48.64 NM & RF N TOTALS $2,641.94 *Key: N: Negotiated, R: Remarketing, NM: New Money, RF: refund Ms. Lakshmi McGrath provided consulting services to the following clients in the last three years: Miami -Dade Expressway Authority Miami -Dade Co Aviation Department FirstSouthwest This space is intentionally left blank. Page 125 The following table summarizes the qualifications of Edward Stull who will provide Senior Project Support. YearsExperience Edward Stull Managing Director FirstSouthwest 8 Public Sector 24 QUALIFICATIONS Has served as financial advisor or placement agent on $3.49 billion in debt issuances since 1998 and served as underwriter on an additional $4.41 billion in financings • Has more than 24 years experience in investment banking and public finance • Joined FirstSouthwest in 2002 • Served as a relationship manager with SunTrust Bank specializing in direct bank loans, letters of credit, liquidity facilities, investments, cash management and interest rate hedging products • Served as the lead financial advisor on the $1.07 billion financing for the Orlando -Orange County Expressway Authority, a complex financing that received recognition as The Bond Buyer's "Deal of the Year" as one of the 10 most innovative deals in the country for 2003 The following table lists the accounts that Edward Stull has acted as lead project manager on beginning October 1, 2007 through September 30, 2010: Sale Date Issuer Bond Description Issue Size Issue Sale ($ Mil) Description Type * 09/17/10 Sarasota County Revenue Bonds, Series 2010B $3.04 NM (Manatron System) 09/17/10 Sarasota County Revenue Bonds, Series 2010A (Data $2.35 NM P Center) 06/10/10 Illinois State Toll Highway Auth Toll Hwy Sr Rfdg Rev Bds S10A 279.30 RF N 06/18/10 Sarasota Co, FL Ed Fac Rev Bds S10 (Sch of Arts & 11.04 NM & RF Sciences) 03/22/10 Sarasota Co, FL Recovery Zone Fac Rev Bds (JDL 8.00 NM Proj) S10 03/03/10 Cocoa Beach, FL Util Sys Rv Rfdg SO2 Cash 1.88 RF P Defeasance 10 02/16/10 Sebastian, FL Gas -Tax Revenue Note, S10. 2.46 NM & RF P 02/02/10 Fernandina Beach, FL Util Sys Sub Rev Bds 910 521 NM N 12/17/09 Sarasota Co, FL Cap_Irnp Bds, SO9B (BABs - RZEDB) 10.13 NM 12/17/09 Sarasota Co, FL Cap Imp Rev Bds Txbl (BABs), SO9A 10.19 NM 10/16/09 Martin.Co, FL Utility Sys Imp Rev Bds 09A , . 7:99 NM • 10/20/09 Martin Co, FL Util Sys Ref Rev Bds, S09B 28.67 RF 07/31/09 Indian River Co, FL W&S Rev Rfdg Bonds 09 26.37 RF 06/16/09 Sarasota Co, FL Sp.Assess Rev Note (S Siesta Bch) 2.01 NM S09 05/20/09 Palm Bay, FL Refinance Txbl-Spl Oblig Bds, SO9 38.18 RF N N P P FirstSo thwest Page 126 05/07/09 Fernandina Beach, FL 02/13/09 Palm Bay, FL 12/19/08 Martin Co, FL 12/05/08 Sarasota Co, FL 09/11/08 Sarasota Co, FL 07/02/08 Fernandina Beach, FL 02/22/08 Sarasota Co, FL 02/25/08 Sarasota Co, FL 01/16/08 Palm Bay, FL 12/18/07 Martin Co, FL TOTALS Marina Revenue Note, S09 Bank Loan 1.30 Special Assessment Bds, S09 Lease Purchase Financing, S08 Infrastructure Sales Surtax Bds 086 Infrastructure Sales Surtax Bonds SOBA Revenue Note, S08 Ltd Ad Val Tax Bds (ESLPP/Parkland) S08 Rev Bds (Sarasota Military Academy) S08 Txbl Spec Obligations 08 (Pension Fund) Infrastructure Surtax Revenue Note 07 NM P 3.93 NM P 4.81 NM P 69.89 NM N 73.99 NM N 0.29 NM P 83.600 NM N 4.00 NM P 38.34 NM N 25.00 NM P $736.64 "Key: N: Negotiated, R: Remarketing, NM: New Money, RF: refund P: Private Placement C: Competitive Finally, the remaining key individual rounding our core team for the City of Miami is Joel Tindal. As the lead analyst for Florida, Mr. Tindal has worked on virtually all of the transactions listed in our chart (starting on page 21) that shows our financial advisory experience over the past three years within the State of Florida. Below we show the years of service and educational background of the entire team City of Miami's Advisory Team Team Member Title/Position Years at FSC Role on Engagement Education Edward Marquez Sr. Vice President 12 Project Manager BBA — Fla. Intl Univ./AA — Univ. of Florida 45 Hours of Graduate Studies — FIU Lakshmi McGrath Vice President 12 Co -Project Manager BA (Mathematics) — Rutgers University Edward Stull, Jr. Sr. Vice President 9 Senior and Analytical Support BS (Finance) — University of Florida Joe Tindal Vice President 5 Senior & Analytics Support BS (Business Administration) - University of Florida Peter Stare Sr. Vice President 13 Underwriter BBA — Southern Methodist University Donna Ciccimarro Vice President 1 Short -Term Pricing Support BA (English Education) - Monmouth University Dave Brayshaw Vice President 18 Derivative Products Support BBA and MBA —Texas Christian University Mary -Katherine C. Sells Vice President 5 Specialized Credit Support BS - Boston College William Johnson Senior Vice President Julie James 4 Arbitrage Rebate Support Vice President 7 Continuing Disclosure BBA (Accounting) - Southern Methodist University MS (Taxation) - Texas Tech University BS (Business Administration) - University of FirstSouthwest Page 127 d) Provide an organization chart showing all individuals to be assigned including their titles. Include a resume of each individual(s) who will be directly involved in the work for the City as specified within this RFP. FirstSouthwest offers a staff of experienced and skilled professionals for its engagement with the City. The organization chart below sets forth how we plan to staff the engagement with the City: Edward Marquez Senior Vice President Aventura Office 23Years of Experience Lakshmi McGrath Vice President Aventura Office 23Years of Experience .,S�� EMURt&ANALYFTICAL.SUPi'OR13 Edward D. Stull, Jr. Managing Director Orlando Office 24 Years of Experience Joel Tindal Vice President Orlando Office 5 Years of Experience 4e PRICINOSUPPORT; LONG-TERM Peter B. Stare Senior Vice President Dallas Office 35 Years Experience SHORT-TERM Donna Ciccimarro Vice President New York Of rice 23Years Experience DERIVATIVES David R. Brayshaw Senior Vice President Dallas Office 24Years Experience ARBITRAGE REBATE William Johnson Senior Vice President Dallas Office 17 Years of Experience CREDIT Mary -Katherine C. Sells Vice President Dallas Office 18 Years Experience DISCLOSURE Julie James Vice President Dallas Office 7 Years Experience A resume for Mr. Edward Marquez response to question 5a. Resuines is included in our A resume for Mr. Edward Marquez is included in our response to question 5a. First5outhwes Missouri -Columbia Lakshmi McGrath Vice President 18851 NE 29th Avenue, Suite 520 Aventura, Florida 33180 Telephone: 305.819.8886 lakshmi.mcgrath@firstsw.com Areas of Focus Specializes in public finance Profile • Joined FirstSouthwest in 1998 ■ Has been in the municipal business since 1987 • Serves as financial advisor to issuers including Miami International Airport, Miami -Dade County Expressway Authority, Housing Finance Authority of Lee County, and other South Florida issuers ■ Provides quantitative financial analysis, models proposed financing structures, analyzes credit and cash flow, reviews legal documentation, prepares rating agency and bond insurer presentations, obtains credit enhancement, and oversees the general processing of financings ■ Involved in more than $6 billion in new money, refunding, variable rate debt issuances, and over $2 billion in commercial paper transactions • Previously served as the lead banker in a wide array of financings for Florida issuers, including utility systems, ad valorem and non -ad valorem issues, and many other types of general governmental financings, as well as many financings in specialized sectors such as housing, transportation, and healthcare ■ Previously served as Vice President in the Corporate Trust department at First Union National Bank and administered a large diverse portfolio of bond issues for major Florida and Georgia issuers (specialization in Housing) • Has more than 16 years of banking, trust operations and administration experience in both corporate and consulting environments • Has worked for the First Union National Bank, Federal Reserve Bank of Atlanta/Miami Branch, Page 28 Southeast Bank, N.A., Bradford Trust, FIDATA Trust, Wall Street Trust, and Bank of New York (which acquired Wall Street Trust) Education • Bachelor's degree in Mathematics, Rutgers University Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FINRA) o General Securities Representative, Series 7 o Uniform Securities Agent, Series 63 o Investment Banking Representative, Series 79 Ed Stull Managing Director 20 North Orange Avenue, Suite 1209 Orlando, Florida 32801 Telephone: 407.426.9611 ed.stull@firstsw.com Areas of Focus Specializes in the areas of transportation and toll financing ; cities; counties; water, sewer and storm water utilities; special assessments; CRAs; and not -for - profit organizations Profile • More than 24 years experience in banking and public finance Joined FirstSouthwest in 2002 ■ Has provided services for issuers such as Orlando -Orange County Expressway Authority; Oklahoma Turnpike Authority; New York State Thruway Authority; Illinois State Toll Highway Authority; Buffalo and Fort Erie Public Bridge Authority (Peace Bridge); Tampa -Hillsborough County Expressway Authority; Miami -Dade County Expressway Authority; Sarasota County; Martin County; Indian River County; Taylor County; Lake County; the Cities of Miami, Cocoa Beach, and Fernandina Beach, Florida; and the Florida Ports Financing Commission F rstSo theses ■ Prior to joining FirstSouthwest, Ed served as a relationship manager with SunTrust Bank where he specialized in providing direct bank loans, letters of credit, liquidity facilities, investments, cash management and interest rate hedging products to a variety of clients in the governmental and institutional markets • Served as banker and financial advisor for two regional investment banking firms Accomplishments ■ In 2003, Ed served as the lead financial advisor on the $1.07 billion financing for the Orlando - Orange County Expressway Authority, a complex financing that received recognition as The Bond Buyer's "Deal of the Year" as one of the 10 most innovative deals in the country for 2003 Education ■ Bachelor of Science in Finance, University of Florida Current Affiliations • International Bridge, Tunnel and Turnpike Association Florida Citrus Sports Past Affiliations ■ Central Orlando Kiwanis Club, past treasurer • Central Florida Crimeline, board member ■ Heart of Florida United Way, Fund Distribution Committee Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FINRA) o General Securities Representative, Series 7 o Municipal Securities Principal, Series 53 o Uniform Securities Agent, Series 63 o Investment Banking Representative, Series 79 Page 129 Joel Tindal Vice President 20 North Orange Avenue, Suite 1209 Orlando, Florida 32801 Telephone: 407.426.9611 joel.tindal@firstsw.com Areas of Focus Specializes in public finance Profile ■ Joined FirstSouthwest in 2005 ■ Provides quantitative financial analysis, models proposed financing structures, analyzes credit and cash flow, reviews legal documentation, prepares rating agency and bond insurer presentations, obtains credit enhancement, and contributes to the general processing of financings • Participated in over S4 billion in municipal transactions including fixed and variable rate municipal bonds, private placements, and interest rate swaps Education ■ Bachelor of Science in Business Administration majoring in Finance, University of Florida Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FINRA) o General Securities Representative, Series 7 o Uniform Securities Agent, Series 63 o Investment Banking Representative, Series 79 Peter B. Stare Senior Vice President 325 North St. Paul Street, Suite 800 Dallas, Texas 75201 Telephone: 214.953.4040 peter.stare@firstsw.com Area of Focus Municipal bonds FWs So hwest Profile • Joined FirstSouthwest in I996 • Responsible for the competitive and negotiated underwriting efforts of both tax-exempt and taxable municipal issues • Has been involved in the securities industry since 1974 in the areas of sales, trading, underwriting, and portfolio management ■ Worked with several regional and nationally recognized firms managing their trading desks, municipal bond departments, and investment divisions Education ■ Bachelor of Business Administration, Southern Methodist University Past Affiliations ■ The Municipal Advisory Council of Texas, board member ■ Municipal Bond Clubs of Dallas and Houston, president Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FITNRA) o General Securities Representative, Series 7 o Municipal Securities Principal, Series 53 o Uniform Securities Agent, Series 63 Donna Ciccimarro Vice President 250 West 57th Street, Suite 1420 New York, New York 10107 Telephone: 212.474.8823 donnasciccimarro@firstsw.com Areas of Focus Tax-exempt money market trading and underwriting Profile • Joined FirstSouthwest in May 2009 • Has worked in the municipal securities industry for 23 years P age J30 Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FINRA) o General Securities Representative, Series 7 o Uniform Securities Agent, Series 63 o Investment Banking Representative, Series 79 Mary -Katherine C. Sells Vice President 325 North St. Paul Street, Suite 800 Dallas, Texas 75201 Telephone: 908.766.7100 marykatherine.sells@firstsw.com Areas of Focus Specializes in public finance Profile • Joined FirstSouthwest in 2005 as a vice president in credit research Has worked extensively with local governments, utilities, school districts, and other nonprofit entities preparing credit evaluations ■ Compiles detailed reviews, including credit assessments and debt capacity studies, in areas including higher education, healthcare, and other not -for -profit institutions • Provides credit analysis for other governmental entities, including municipalities, counties, enterprise systems, and transportation issuers ■ Has compiled and produced rating and enhancement presentations for healthcare, higher education, local government, school district, and utility clients • Provided credit support for ongoing client requests • Previously worked at George K. Baum and Company in Denver for 16 years and responsible for credit and debt capacity evaluation for a diversity of sectors Worked with Mobil Oil Corporation in their production and exploration division Education • Bachelor of Science, Boston College F rstSourchwes • Master of Business Administration, University of Denver Current Affiliations • National Federation of Municipal Analysts (NFMA) • NFMA Board of Governors (2009-2010) • GASAC (GASB) Member (2010-201 1) Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FINRA) o General Securities Representative, Series 7 o Uniform Securities Agent, Series 63 o Investment Banking Representative, Series 79 William (Bill) Johnson, CPA Senior Vice President 325 North St. Paul Street, Suite 800 Dallas, Texas 75201 Telephone: 214.953.8817 william.johnson@firstsw.com Areas of Focus Arbitrage rebate Profile • Joined FirstSouthwest in October 2006 • Has more than 15 years of experience with federal taxation and arbitrage rebate • Serves as the primary contact for issuers and provides technical support to the Rebate Compliance group ■ Has provided arbitrage consultation and education services to clients, explaining the application of the arbitrage regulations and assisting issuers with the implementation of computational/internal reporting procedures to ensure their compliance with the rebate requirements • Worked with clients to re -engineer their data gathering efforts to reduce the time and effort required to gather and assemble rebate calculation information Page 132 • Has high -volume data gathering and conversion experience, as well as large project management experience • Worked previously at Arthur Andersen in their Municipal Bond Services Group and for BondResource Partners (the Arthur Andersen successor). Education • Bachelor of Business Administration in Accounting, Southern Methodist University • Master of Science in Taxation, Texas Tech University Current Affiliations • National Association of Certified Public Accountants ■ Texas Society of Certified Public Accounts Past Affiliations • Texas Instruments Incorporated Arthur Andersen LLP • BondResource Partners LLP Licenses Held • Registered Representative of the Financial Industry Regulatory Authority (FINRA) o General Securities Principal, Series 24 o General Securities Representative, Series 7 o Uniform Securities Agent, Series 63 • Licensed Certified Public Accountant Julie James Vice President 325 North St. Paul Street, Suite 800 Dallas, Texas 75201 Telephone: 214.953.8701 julie.james@firstsw.com Areas of Focus Continuing Disclosure services FfrstSouth _test Profile ■ Joined FirstSouthwest in November 2003 • Primary duties in the Continuing Disclosure Department include training related to continuing disclosure, preparing reports and material event notices as well as determining each client's disclosure compliance through the five-year look - back process. Education ■ Bachelors of Business Administration, University of Missouri -Columbia e) Should Proposer propose to utilize a Sub- Consultant(s) to perform any of the services, Proposer must identify the Sub -Consultants) and those services to be performed by the same. Proposer must provide Sub-Consultant(s) qualifications and experience in detail, highlighting all similar experience as addressed in this RFP and anticipated to be performed by the Sub- Consultant(s). Proposer must clearly reflect in its Proposal any Sub -Consultants) proposed to be utilized, and provide for the Sub -Consultants) the same information required of the Proposer. The City retains the right to accept or reject any Sub- Consultant(s) proposed. FirstSouthwest does not propose using a Sub - Consultant to perform any services provided to the City. 6. Overall Ability and Utilization of Technology a) Describe Proposer's overall ability to perform the services described within Section 3.0 of this RFP, and its specific policies, plans, procedures or techniques to be used in providing the services to be performed. Based on our extensive and varied experience with public entities, FirstSouthwest provides a full -service approach to providing financial advisory services that ensures every aspect of an issuer's needs is addressed. The driving force behind our long history of success, our approach combines all of the firm's public finance capabilities and additionally employs as needed representatives of our other specialty groups. The following chart summarizes each step of our approach: Page 133 Customary Phases in a. FirstSouthwest Financial Advisory Engagement PHASE:1 - J/' * _'s .0 ?.,- n ^l t'T,•t 4: ,N•+. -$?u eti•—m"-%PHASE-7..1.!* n r r ,7ry r. ,r� arkethu a Sale Deb �, i ; 4..;�5 '. tt n ';..� Develop iv Flnancing �Prognin r^m ,-ro..3'ii�,K .� •..i, �n..i4 t r * • w , 97 0t, t* `` atitngand , n vx anceme w b a �L 4f } x, rt MtE 1 ' { i7yr'3. 5 ?tiGp r,: a e� F; r �u Y , 3 7a.y`.4'P 1 7s 1f STCaF YSfi u �1 ;ttProvtde t r w C p0ngmngSetviii Ilk �'f • Conduct Survey of Financial Resources • Review Existing Debt • Analyze Range of Debt Alternatives • Develop Plan of Finance '... • Structure the Financing • Design issue Features • Evaluate Market Innovations • Determine Method of Sale, • Coordinate with Bond Counsel to Establish Legal 1 Requirements • Participate in Selecting Underwriter or Syndicate for Negotiated Sales •Arrange Related Service Providers • Review Offering Documents • Consider Disclosure Requirements with Bond and Underwriting Counsel •• Distribute to Potential Purchasers • Develop Bond Rating Strategy and Presentation • Make Bond Insurance Recommendation and / or Surety Recommendation •Coordinate Pre -sale and Pricing • Conduct Sale of Debt • Close Transaction • Prepare Transaction Summary _ • Maintain Continual Contact • Comment on Implications of Local Actions •Evaluate Financing Alternatives&Monitor Refunding Opportunities • Participate in tong -range Strategic Planning for Capital Improvements and Debt Structure • Monitor Legislative& Regulatory Changes We recognize that the City may require a customized approach and scope of services, and we will readily accommodate needs not mentioned in the Request for Qualifications. Additionally, because of the experience and competence of our professionals, FirstSouthwest confidently assures timely and responsive service during the process of preparing for and completing any transaction. Phase 1: Develop Financing Program For the planning and structuring of tax-exempt financings, FirstSouthwest will incorporate the implications of arbitrage rebate, investment policies, marketing, and technical considerations. Furthermore, our financing strategies factor in the implications of relevant financial issues, both current and potential, ensuring clients that the relevant aspects of a transaction will be considered before terns are finalized. In order to determine available borrowing capacity, we will evaluate the existing debt structure and financial resources of the City. FirstSouthwest will analyze the projected sources of revenue that may be pledged to secure payment of debt service, and we will assist in determining the cash flows that are legally available to pay principal and interest as well as the optimal revenue pledge in terms of the overall credit rating of the City and the marketability of the issue. FirstSouthwest will devise and recommend a plan for financing bonds to be issued through monitoring and controlling the costs of fees and expenses incurred, a Fh s Scut wes maturity schedule, and other terms and conditions requested by the City. FirstSouthwest will recommend the investment of bond proceeds in compliance with federal arbitrage regulations, and will provide sound, current advice concerning the ongoing legislative considerations of new bond or borrowing initiatives. Furthermore, we will provide oversight, coordination, and experience in the development of new bond or borrowing initiatives. Upon completion of Phase 1, the City and FirstSouthwest will have designed a financing strategy that facilitates the success of all future financing initiatives. Phase 2: Set Financing Terms FirstSouthwest will perform analyses to determine the timing of the offering, appropriate size of the bond issue, and structure of each financing. In addition, we will evaluate the cost effectiveness of various financing alternatives to recommend the structure that achieves the highest possible credit rating within the constraints of the City. We have the technical capability and experience required to assess virtually every type of financial structure contemplated by a government issuer or conduit borrower. Therefore, we are able to run scenarios that quantify the benefits and costs of various structuring considerations, such as: tax-exempt bonds versus Build America Bonds, fixed versus variable rate debt, credit enhancement, optimal call dates and prices, Page I 34 desired maturity dates, premium versus discount bonds, and serial versus term bonds. FirstSouthwest will prepare cash flow forecasts that will enable the City to evaluate the annual debt service requirements associated with alternative financing structures. We will recommend the method of sale that maximizes the marketability of the City's securities and minimizes the overall borrowing cost. We offer a distinctly different approach to providing technical services from our competitors. Often investment banking firms use the technical area as a training ground for new bankers; however, we believe that structuring a bond transaction requires the implementation of innovative financing techniques by experienced professionals. The team of professionals carefully selected to work with the City have the ideal combination of expertise, skill, and creativity to address and achieve future financing needs of the City. Phase 3: Coordinate Related Service Providers FirstSouthwest will assist with the evaluation of proposals from financial printers, paying agents/registrars, and trustees. We will participate in document preparation and assist bond counsel in the coordination of the offering, prepare information as necessary for the rating agencies and will help the City maintain ongoing relationships with credit rating agencies. We will disclose all fees, define all relationships, and meet the City's needs by facilitating excellent working relationships with the City's other service providers. We serve as financial advisor for approximately 600 transactions per year. Our professionals work daily with bond attorneys, financial advisors, and underwriters. Because we often commit our own capital for the benefit of our clients, we understand the role of underwriters. Our underwriting capability enables us to negotiate as equals with underwriters during the structuring, marketing, and pricing phases of a transaction. Furthermore, we have a long history of working with minority and female -owned firms involved in all facets of the investment banking industry. For these reasons, our firm is well equipped to provide recommendations on the composition of the financing team. Ffrst5o thest Phase 4: Prepare Documentation FirstSouthwest will coordinate closing details and post - closing duties, including the development of closing memorandum and the final preparation of documents necessary for financing current and future projects. Our participation ensures the creation of documents that will provide credit strength and operating flexibility to the City, security to the investor, and marketability for the underwriter. Additionally, we will assist with the preparation of an Official Statement and other disclosure documents that describe all terms and conditions of the transaction. Phase 5: Coordinate Rating & Credit Enhancement Process For the past three years, FirstSouthwest served as financial advisor on 2,282 bond issues nationwide. At least two of the three major ratings agencies rated the majority of these transactions. Our bankers interact closely with the rating agencies throughout a transaction. This experience has led our firm to develop detailed rating strategies for our clients. As a result of our experience, FirstSouthwest has unparalleled relationships with Moody's Investors Service, Standard & Poor's, and Fitch. This continual "hands-on" exposure to all aspects of the rating process affords the City a major advantage: an in-depth understanding of the rating agencies' typical concerns regarding municipal credits. We will closely guide the City through the presentation process in order to help City achieve its ratings goals. Bond Rating Strategy Although issuers have much in common, they and their presentations to the rating agencies are unique. After analyzing the City's finances, FirstSouthwest will determine the relative strengths and weaknesses. We then can anticipate and prepare for the lines of questioning and propose a presentation outline. As part of the rating process, we will make recommendations on how the bond rating will be communicated: by mail or through personal presentations, and which agency or agencies will be approached for the bond rating. We have been involved in a wide variety of presentation formats, ranging from the coordination of written materials to the organization of on -site visits and the preparation of audiovisual productions. During this process, we will focus on the best method for Page I35 presenting information most likely to influence the rating outcome. FirstSouthwest takes a supportive role, rather than active, in the actual presentation of materials, because the rating agencies stress direct discussions with the issuer. Therefore, we will fully prepare City staff for the presentations they will make to the rating services. Our participation in the actual presentation will focus primarily on preparing solid answers for different lines of questioning, drawing from experience gained from our participation in many other presentations. Credit Enhancement and Liquidity Facilities A thorough knowledge of credit enhancement and liquidity facilities, and relationships with providers of third -party credit enhancement and commercial banks may be of benefit to the City in seeking to accomplish its plan of finance. We regularly explore the use of bond insurance, letters of credit, liquidity facilities, and self -liquidity to lower the interest and issuance costs of our clients. The tremendous volatility and dislocation seen in the credit markets paired with the changing capital positions of many financial institutions have presented unprecedented challenges to public sector and not -for - profit entities. In the recent past, the credit markets have been jolted by multiple dislocating factors stemming from the subprime mortgage crisis. This has profoundly impacted the municipal market in a variety of ways, ranging from the deterioration of the ratings of municipal bonds insurers and banks, withdrawal or curtailment of investment activity by major institutional sectors and the current liquidity crisis. As a result of the preceding, a thorough knowledge of credit enhancement and liquidity support and relationships with the providers thereof has never been more important in assisting issuers in achieving their financial objectives. Phase 6: Conduct Marketing and Sale of Debt FirstSouthwest will take the steps necessary to obtain the broadest possible participation in bidding. We ensure that investors and underwriters understand the City's credit and the mechanics of the sale, evaluating such to determine the most beneficial financing structure. For a negotiated sale, we will represent the City in all areas of pricing and sale. We will assist with the negotiation of covenants, coupons, expenses, First5Y ut `tl Vest takedowns, and yields to ensure that the City's bonds are sold at market rates. Our professionals will conduct pre -pricing calls with the City and the underwriters, set marketing priorities, monitor all orders, and balance requests for re -pricing. FirstSouthwest's constant evaluation of alternatives to re -marketing and the implementation of those alternatives, when appropriate, will be highly beneficial to the City. We will recommend approval of final pricing only after our underwriting desk has assured the City that the borrowing has achieved a fair cost of capital for the sale date, based on to -the -minute market conditions for that type of security. Phase 7: Ongoing Services Maintain Continual Client Relations As part of FirstSouthwest's comprehensive service, we will continue to offer assistance to the City by: • Commenting on the credit implications of local actions and events • Developing debt management policies • Evaluating financing alternatives • Participating in long-range strategic planning for capital improvements and debt structure Developing financial models to analyze the full range of debt funding alternatives • Evaluating the appropriateness and benefit of derivative products • Identifying cost savings or debt service restructuring opportunities • Providing an ongoing link between such parties as underwriters, bankers, insurers, investors, regulators, trade groups, and other issuers Monitor Legislative and Regulatory Changes FirstSouthwest will monitor legislative, economic, budgetary and regulatory changes as they relate to the City and advise as to relevant and beneficial action and participation. Additionally, we will continue to comment on the credit implications of local actions and events, develop debt management policies, evaluate financing alternatives, and evaluate the appropriateness and benefit of derivative products and services. Page 136 b) State the location where the primary work will be performed. Provide the branch or other subordinate units or divisions that will perform or assist in performing any work resulting from this RFP. The primary office location where FirstSouthwest will perform work for the City will be our office in Aventura, Florida. On an as needed basis, technical or specialty assistance may be sought from the Orlando, Florida office as well as the Austin, Fort Worth, and Dallas, Texas offices. c) Identify if Proposer's proposed plan meets the requirements of the Scope of Services as described in Section 3.0; meets the requirements with modifications and an explanation of how; or whether it cannot provide the requirements and the reason(s) why. The proposed plan will meet the Scope of Services as described in Section 3.0 with no modification. d) Describe Proposers approach to project organization and management, including responsibilities of the Proposer's management and staff personnel that will perform work under this engagement. Include discussion of the methodology to be utilized when a sub -consultant is used to assist the Proposer in the performance of the Specifications/Scope of Work or in the provision of specified analysis when needed. The project manager Edward Marquez will coordinate all of FirstSouthwest resources in the performance of the scope of work. He and Ms. McGrath will handle the day-to-day issues arising from the engagement. Joel Tindal will be primarily responsible for analytical number runs with Ms. McGrath as a backup. Mr. Stull will serve as a Senior Banker "sounding board" for complex issues as they arise. All other personnel will be utilized on an as -needed basis. e) Describe innovative products and items the Proposer has submitted for clients. Innovation We have received ten "Deal of the Year" awards for innovative and effective banking strategies, listed below. Our bankers were at the forefront of several innovations in municipal finance, including the use ofa forward derivative transaction in 1994; Internet competitive bidding; and the issuance of municipal debt in foreign markets, specifically a yen -denominated FirstSouthwest Samurai Bond with a cross currency swap for the State of Kentucky in 1989. 2009 Regional Title The Dallas City Hospital District for its $705 million deal to renovate Parkland Memorial Hospital (The Bond Buyer) ■ 2008 Regional Title Financial Advisor to the Camino Real Regional Mobility Authority (The Bond Buyer) • 2006 Small Issuer Financial Advisor to the Town of Clayton, New Mexico (The Bond Buyer) • 2005 Southwest Region Financial Advisor to the Central Texas Regional Mobility Authority (The Bond Buyer) ■ 2004 Runner -Up Financial and Swap Advisor to New Mexico Finance Authority — State Department of Transportation (The Bond Buyer) • 2003 Regional Title Financial Advisor to Dallas/Fort Worth International Airport (The Bond Buyer) • 2003 Financial and Swap Advisor to Orlando - Orange City Expressway (The Bond Buyer) • 1996 Swap Advisor to the City of Fort Worth (The Bond Buyer) ■ 1993 Financial and Swap Advisor to the City of Lewisville, Texas (Institutional Investor) • 1990 Financial and Swap Advisor to the Dallas/Fort Worth Regional Airport (Institutional Investor) FirstSouthwest is the prominent provider of financial advisory and related services to state and local issuers across the nation. We serve as financial advisor to hundreds of cities, including four of the ten most populous cities in the nation. We have been an innovator to this client base dating back nearly 65 years. Our relationships are long-standing, which is a testimony to our dedication to service and customer loyalty. We have an impressive record of innovation in public finance and have even been awarded "Deal of the Year" awards from The Bond Buyer and Institutional Investor on ten different occasions, as previously mentioned. We are constantly looking for every advantage to make the issues of our clients more attractive to the municipal market, more cost effective, and designed to satisfy the unique needs of each commitment. Many of the issues we bring to market include innovative thinking tailored to meet the particular needs of our clients, based on the wealth of experience gained from the volume of transactions we originate. A sampling of some of the problems our clients have encountered and solutions that we've developed as well as select case studies follow: Problem Solution Result City with no market access hit with $20 -million judgment -in -high -interest -rate --- environment. After entering into questionable lease transaction, City defaults when payments exceed 25% of budget. Single coupon rate bidding method proves extremely inefficient in high interest rate environment. Using NIC bids forced use of ascending coupons; not always beneficial to issuer. Pool issuer wants to sell serial bonds competitively. Participant borrowers want -Capital Appreciation Bonds. TIF District was capturing what would be General Fund revenue but only after TIF bonds matured. A lease proposed structure would cost millions.of additional interest cost, but issuer wanted to. make energy improvements Taxable debt costing significant additional interest costs for issuers. Negotiated direct placement of "paper" with -litigant-at rate -tied -to -local -assessed-.-_____ valuation. Negotiated with City for payments equal to 12% budget. Negotiated with leaseholders for substitution of "market" interest rate. Allowed for multiple rates bidding in manner that forced lowest True Interest Cost. Utilized TIC bids which allowed more flexible bids and lower costs. Pool sells serial bonds. Structured underlying CAB obligations that match semi-annual serial payments. Refunded the TIF bonds to mirror revenue stream, shortening the life of the bonds and the District created to issue the debt. Structured debt as level debt service up front and equal principal in later. years, using thepremium received in the deal to. offset the larger principal payments` Issued the taxable debt simultaneous with tax exempt debt, including refunding bonds, affording a de minimus 5% amount of what would otherwise be required to be taxable, to be tax exempt, and structured it to mature in the long end, and the taxable in the short end of the maturities. Affordable debt payments save City more tha n..$30-million ._Investment.grade_rating._ restored. Restructured loan made bondholders whole. Allowed City to avoid bankruptcy. Five credit rating increases in 18 months. More efficient bidding. Lower total interest payments to cities and towns. Today all sales utilize TIC bids because of the advantages for both the underwriter and issuer. Pool issuer gets competitive serial loan as desired. Borrowers.get negotiated CAB structure as desired atsame rates as level debt service. Freed up revenues from the District to flow into the General Fund sooner than originally projected, and saved interest costs on the original TIF bond. Saved. millions for the City in debt service costs.and the more costly ESCO lease • structure. This solution iS .being reproduced. by many issuers.. Saved hundreds of thousands of interest expense with one or another variation of this methodology for multiple issuers. f) Describe Proposer's in-house computer software and technical capabilities to include technical support, computer modeling, financial analysis, econometric projections, and pricing modeling. Analytical Resources FirstSouthwest's approach to providing financial advisory services centers on detailed analysis and continuous technical support during the planning process and throughout each transaction. We develop FirstSouthwest detailed financial models to help quantify the benefits and risks of any proposed financing or refunding. We want the City to have total confidence in the final transaction structure and to be assured that all options are analyzed thoroughly. Evident of our commitment to provide the highest level of analytical support, FirstSouthwest has an exemplary quantitative analysis group. Page 138 Representative analyses, which we are able to perform to best establish the fundamentals of each transaction, include the following: • Produce cash flow models with the flexibility to calculate bond capacities based on debt service installments; utilize sales and use tax forecast, operating revenues federal and state grants, expenditures and growth factors; model construction drawdowns and interest earnings; and project revenue increases, etc. Size a financing including allowance for capitalized interest, construction costs, escrow requirements, insurance costs, interest earnings, issuance costs and reserve funds. ■ Structure a payment amortization to a tailored schedule based on projected revenue and expenditure constraints. • Defease outstanding debt utilizing a state of the art advance refunding software system that will structure an optimal escrow fund, structure new debt on a level, front-end or tail -end savings basis, and provide as necessary other structures. • Calculate the issue price of an issue and, using this price, calculate the arbitrage yield as defined by the Tax Reform Act of 1986. • Calculate an internal rate of return or "true interest cost" and provide present value schedules based on such yield for use in evaluating bids or modeling present values of cash flow projections. • Develop debt service schedules, which can be used to illustrate the debt service requirements on an actual, bond, or fiscal year basis while assuming annual, semi-annual, or monthly payments. Our schedules also can accommodate serial and term bonds, discount and premium bonds, and zero coupon bonds, including premium capital appreciation bonds. ■ Provide refunding analysis, which can be used to illustrate savings on a gross basis or a present value basis of refundings. Refunding Opportunities FirstSouthwest has developed a customized software solution, which we utilize to identify, monitor and track potential reftmdings that can benefit our clients. By running similar credits on a generic scale and using pre -determined assumptions, the software determines any potential savings for the issuer. If selected, we will FfrstSt ut wes input all available information on the City's current debt and provide ongoing market updates, refunding and structuring ideas to the City. Technology Resources FirstSouthwest currently employs 31 skilled individuals who maintain FirstSouthwest's nationwide network, build or otherwise devise software and other department solutions and maintain daily information technology ("IT") operations. Such extensive personnel resources make it possible for our firm to have state-of- the-art hardware, software and networking capabilities. FirstSouthwest's approach to providing financial advisory services centers on detailed analysis and continuous technical support during the planning process and throughout each transaction, often before an underwriter is selected. We develop detailed financial models to help quantify the benefits and risks of any proposed financing. We want our clients to have total confidence in the final transaction structure and to be assured that all options are analyzed thoroughly. The software packages FirstSouthwest utilizes include DBC Finance, MUNEX Advanced Decision Support Software for Public Finance and Financial Management Systems, Micro -Muni Debt Refund and Sizing, Microsoft Excel, and Lotus 123. Occasionally, specific software is built on a contract basis for clients should the complexities of transactions exceed the capabilities of the standard software packages. FirstSouthwest maintains proprietary models for the evaluation of derivative structures and investments. In addition to the software that directly supports the public finance effort, we subscribe to Bloomberg, Reuters, Telerate, Dalnet and Thomson Reuters. Real -Time Market Data Our continuing investment in the underwriting and trading desk information technology capabilities is fundamental both to broker/dealer operations and enhances the value of the financial advisory services that FirstSouthwest provides. Therefore, FirstSouthwest is committed to staying abreast of the latest developments in the digitalization of fixed income trading. Since the emergence of the Electronic Communication Networks ("ECNs") and electronic bid submission systems, we have been a pioneer, working with the leading vendors in the field to provide unique insight. Among the vendors we are actively utilizing today are: Bloomberg, i-Deal, MuniAuction, Thomson, Page 139 MuniCenter, Bonddesk and Valubond. We have recently engaged Random Walk, a consulting firm notable for its development of the Real Time Reporting System ("RTRS") for the MSRB. The real-time data that FirstSouthwest can access as a result of being a broker/dealer provides a distinct advantage to our financial advisory clients by allowing us to ensure that our clients' bonds are priced and sold at market levels. FirstSouthwest professionals are immersed in today's market events. The company holds two and sometimes three company -wide calls each week to discuss market happenings and to provide our bankers with a network of ideas and solutions. Among all public finance firms, we are on the cutting edge of financial solutions for municipal issuers and offer the broadest array of ancillary public finance services, including structured product (derivatives), arbitrage rebate, continuing disclosure, asset management and leasing services. g) Describe the Proposer's experience with Internet bidding, and the Proposer's means of evaluating these bids; the Internet bidders; and its providers. Experience with Internet Bidding FirstSouthwest has remained on the cutting edge of utilizing and evaluating internet-based bidding as a tool in the capital -raising process of municipal finance. As a result, in today's market we are one of the leading finns to offer electronic bidding as an option to all of our clients who competitively bid bonds. In calendar year 2009, 5,631 bonds transactions were competitively bid nationwide. FirstSouthwest served as financial advisor on 401 of these transactions. Of those, approximately 99.9% of FirstSouthwest's competitively bid transactions incorporated internet bidding into the process, more than any other financial advisor. Although we will use any internet bid provider the City prefers, FirstSouthwest has found that the Parity system offers some distinct advantages over other providers. The Parity system is fed by the widely accepted bid calculation package, Bidcomp, which feeds into both the I -Deal wire system and the Book - running software package; 1-Deal and Book -running are communications and "back office" recordkeeping vehicles, respectively, which are used by most underwriters. Using an internet-bidding system that offers underwriters additional benefits (i.e., saved Fa rs So homes labor) encourages the participation of bidders. Additionally, because FirstSouthwest is an underwriter that has access to Parity for the placement of bids, we have the ability to pretest the client's bid parameters on the system prior to the actual sale. Finally unlike other systems that attempt to create an "auction" type process, Parity requires that underwriting firms place their best bids the first time in order to be successful. We have found that institutional investors prefer Parity because they can know quickly if their purchase orders can be filled. Ensuring that investors are happy is of great importance to ensure ongoing access to them. While we are impressed by the current technology's capacity to deliver faster, more accurate bids, we have a policy of providing more than one alternative to the prospective bidders. All intemet-based systems are inherently subject to hardware problems; e.g., communication lines can (and do) go down. Therefore, FirstSouthwest insists on providing simultaneous availability of fax and telephone bids. These too are tools once considered cutting -edge technologies that still provide an efficient backup bid delivery system. 7. Fee Proposal a) Proposer shall fully complete Attachment A to include all proposed fees and shall return the same with the proposal response. Failure to return Attachment A with the proposal response fully completed and signed, shall be cause to deem Proposer non -responsive. The City is not seeking to procure a Financial Advisor on a retainer basis. b) Proposer shall provide any and all additional costs, item by item, as identified by the Proposer in any other area not previously discussed, and detail what those costs, if applicable, would entail. Proposer shall also include which entity (Proposer or City) would be responsible for payment of those costs. "Attachment A — Fee Proposal" starts on the following page.• 8. Local Presence For Proposers seeking local preference consideration in the evaluation process, the Proposer shall maintain a local office within the City per the Section 1.50 Local Preference requirement herein. FirstSouthwest maintains a local presence via our office in Aventura. Page I40 ATTACHMENT A - FEE PROPOSAL Proposers shall filly complete and return this Attachment with their Proposal Response. Failure to so complete and return the same shall disqualify Proposer. Additionally, Proposer may describe services and fees in detail along with this Attachment A. Description Bond Issues: Y Established Debt Program Transaction Fee Stated in Dollars ($) per Bond Terms: Fee First S10,000,000.00 $ 1.00 Second S I 0,000,000.00 $ 0.95 Next $20,000,000.00 $ 0.90 Over $40,000,000.00 $ 0.70 * Minimum Fee of $17,500.00 New Debt Program Transaction Fee * Stated in Dollars ($) per Bond Terms: First $10,000,000.00 $ 1.00 Second $10,000,000.00 $ 0.95 Next $20,000,000.00 $ 0.90 Over $40,000,000.00 $ 0.70 * Minimum Fee of $17,500.00 Separate Task Assignment: Hourly Rate Scale by Class/Type (Principal/Partner, Officer, Associate, Para - Professional, etc.) Title: Senior Vice President and Above Hourly Rate: $ 195.00 Title: Vice President Hourly Rate: $ 185.00 Title: Assistant Vice President Hourly Rate: $ 150.00 Title: Associate Hourly Rate: $ 100.00 Title: Analyst Hourly Rate: $ 75.00 Title: Administrative Staff Hourly Rate: $ 50.00 Name of Proposer: t(R ST �o �'i to west 6. eti-n) Authorized Signature: _ W0.43 Date: N/21 ) o Page 41 ADDITIONAL COSTS The City shall be responsible for the following expenses if and when applicable, whether they are charged directly to the City as expenses or charged to the City by First Southwest as reimbursable expenses: • Paying agent/registrar/trustee • Verification fees • Other Consultant fees • Miscellaneous, including copy, delivery, and phone charges • Bond counsel o Bond printing • Bond ratings o Computer structuring • Credit enhancement c CPA fees for refunding e Travel expenses ® Underwriter and underwriters counsel e Official statement preparation and printing fee �Descnpt�ori�� Actual costs and in accordance to Fla. Statutes Business related travel Facsimile Transmissions $0.25 per page Black and White Copies $0.10 per page Color Copies $0.25 per page Telephone Conference Services Actual Costs Other costs incurred at request of City Actual Costs The payment of reimbursable expenses that First Southwest has assumed on behalf of the City shall NOT be contingent upon the delivery of bonds and shall be due at the time that services are rendered and payable upon receipt of an invoice submitted by First Southwest. Swap Advisory Services First Southwest's pricing for work -related to alternative financing methods (i.e. derivative products e.g. interest rate swaps or synthetic financing structures) is as follows: A. Hourly rates (see Attachment A for hourly rates) for: 1. Review of the various proposals received by the City from underwriters; educating staff and policy makers of pros and cons of derivative products both generic as well as those being pitched to the City; and 3. development of formal policies regarding the use of derivative products. Page 42 B. For the execution of a derivative product, First Southwest will charge the lesser of: 1. the net present value of two basis points (0.02%) on the notional principal face of the transaction; or 2. $2.00 per $1,000 of the financial products notional face. This execution fee covers the negotiation of the derivative's terms with the counterparty; coordinating the execution of the transaction, and issuing a fair market value opinion to the City after closing. First Southwest also will periodically monitor the closed derivative transaction and provide market opportunity analyses when warranted. The financial product provider shall be notified, prior to any transaction execution, of the obligation to pay First Southwest the execution fee within three business days of the closing date. • First Southwest will quantify anticipated fee with the City prior to any transaction execution and • Financial products provider(s) will be required to certify to the City in writing the execution fee paid to First Southwest. C. As part of the execution fee, First Southwest will be available to discuss with the external auditors . any aspects of the derivative transaction. However, should the City require updated and formal fair market valuations at fiscal yearend, a separate fair market opinion fee will need to be negotiated. The pricing above does not include reimbursement of expenses. The pricing also is applicable to all financial products procurement methodologies (i.e. competitive, negotiated, hybrid). First Southwest also provides distinct services that, should the City wish to take advantage of, have a pricing structure that is not hourly in nature such as: Reinvestment of Bond Proceeds, Escrow/Reserve Funds etc. FirstSouthwest abides by U.S. Treasury regulation § 1.148-5(e)(2)(iii)(B)(1) regarding fees charged for serving as bidding agent for all reinvestment transactions. For bidding agent services, FirstSouthwest charges the lesser of (i) $35,000 or (ii) 0.2 percent of the initial amount invested. Please note that the above fees are paid -by the provider of the agreement and not by the Issuer. Depending on the amount of service required, the fee can be negotiated to a reasonable level reflective of the preparation and on -going maintenance involved; on a transaction -by -transaction basis. Arbitrage Rebate Calculation Services Fees for arbitrage rebate calculation services equal a per -issue base fee of $1,260 (assuming continued electronic transmission of data) for each year of calculation. If the issuer chooses to utilize this service, a separate agreement with First Southwest Asset Management, Inc. will need to be executed. Continuing Disclosure Services Full continuing disclosure services have a one-time set-up fee of $1,500 and a fee thereafter of $1,500 per year per pledged revenue stream. If the issuer chooses to utilize this service, a separate agreement with First Southwest will need to be executed. Page 43 City of Miami Appendix A Debt Book FirstSouthwes Tab _ Page 11 Analysis of Outstanding Debt City of Miami, Florida As of October 1, 2010 First5outhwest A PlainsCapital Company. Contact: Edward Marquez, Senior Vice President 18851 N.E. 29th Avenue, Suite 520, Aventura, Florida Phone: 305.819.8886 Fax: 305.819.9992 Member FINRA & SIPC (Subsidiary of PlainsCapital I rL` 2010 FirstSouthwest Tale of Contents October 1, 2010 Tab A Summary of Outstanding Debt General Obligation Debt Summary Special Obligation Revenue Debt Summary Parking System Revenue Debt Summary B Rating Reports Moody's Standard and Poor's FitchRatings Firs Southwest. fc-V9, Table of Cortento, Pagel Plember FINRA & SIPC Sbidiny ofPlninsCapital ) 0 2010 FirstSokillwesi FT, City of Miami, Florida Tab A: Summary of Outstanding Debt As of October 1, 2010 FirstSouth.west A PlainsCapital Company Member FINRA & SIPC 'Subsidiary or PI ainsCapital IQ 2010 FirstSouthwest Year Ending December 31 — 2010 2011 2012 2013 21)14 $51,055,0110 Limited Ad Valorem Tax Bonds Series 2009 (I1onleland Defense/ Neighborhood Capital Improvement Projects) Princip d Caupen 3,8811 3.000% 1,205 S.000% 785 / 3011 3.00% / 5.1)0'%, 700/605 3.25% / 5.00% 2015 200 / 1,8411 4.00% / S.00"/ 2016 2,135 5.1100 2(117 890 / 1,345 4.00"A, / 5.00'%, 2018 2,34)) 5.1100"A. 21)19 2,460 5.000 2020 2,575 .1.510'/, 2021 3,1)511 .1.5011%, 2022 4,695-(.750%. 2023 4I1I 5.111111'/. 2024 3,1(d0 5.0110'/, 2)125 3,325 5 000'r 2026 3,495 5.125"A. 2027 3,685 5.251N, 21)28 3,885 5.375"S, 2029 .1,101) 5.51)0% P.'S j S50,0110,001) Limited Ad Valorem Tax Bonds Series 2(10711 (Homeland Defense/ Neighborhood Capital Im1rovcmtint Projects) I'rioc11ua1 .,,-.... Coupon��__ 7,325 7,71)5 8,1195 8,515 8,95(I 115/9,295 Aar $1113,060,000 Lintitetl Ad 'Valorem Refunding "fax Bonds Series 2007J\ (Homeland Defense/ Neighborhood Capital Improvement Projects) S4,180,000 General Obligation Refunding Bonds Series 2003E ^- f'aNnctplT,�, Coupon Principal 145 4.0110 % 1,29(1 150 4.000/ 1,375 155 4.000'%, 1,365 160 170 1,220 / 8,421) 790 / 11,625 355 / 12,795 15,21)5 15,670 16,9911 18011/ 17,1-15 4.000 4.125"/„ 4.125"/0 / 5.000%, 4.25"/. / 5,00 4 25"•), / 5.1)11".:, 5.111111"1. 5.11)III 5.110117,, I.511 / Coupon _� 3.00)1% 3.125%, 3.5011 3.500'Z, 2030 Next Call Dated Dale Coupon 1)ates \lability Dates Underlying Rating Credit Enhancer Paying Agent Purpose Notes 1/1/2019() Par 5/29/2(109 January 1 .duly 1 January 1 A3 (\I), BB13+(S&P), A- (1?) I• • . • None U.S. Bank Ncw Money Color Legend Non -Callable 50 1/1/2017 n Pain 7/ t 0/2007 .lanuary 1 .lull' 1 January 1 A3 (81), 111313+(S&P), A- (F) \USIA Commerce Bank Neu, Noncy Callable n.10247.9$ii;'r./, t. I/1/2017 @ I'at 7/ 111/2(11)7 January 1 July 1 .I:tnuary 1 A3 (\1), BBB+(S&P), A- (F) I\ I Il1A Commerce Bank Refunding Adranee refunded a porlion oldie Limited Ad Valorem Tax lionds. Series 2002 Non Callable 12/2/21103 June 1 December 1 December 1 Al (\1), A- (S&P), A (17) XL Capital Assurance U.S. Bank Refunding 518,680,000 General Obligation Refunding Bonds Series 20(13 I pp E1i!8'I Coupon 5.000 6. 3.000'%. Non Callable 5/ 1 /2003 .lanunry 1 .duly 1 AI (8!),.4-(S&P),A (f) \IBIA U.S. I3:m ): Refunding Current refunded the General Oblieation Current refunded the General Obli Refunding Bonds, Series 1992 Relimding Bonds. Series 199 out /est , 'i '< t:T 'a 1y _} p�% 1'''r J F S"F .. P`3::b (J�,.. 4 -^,.s. l a r r' t 1 .1 r. w,• "�' r„ ' 'R' ' «' "S ,k ,+}}.K yi�6 5 ,/.. '>• .,ta f'y4 •`rh `:�"� t j +<4a ""`�i' '�`. x N +d.,lP�M J+II�•R}+ HM+'.4 ^�'� 1 4. MG ..t .b• •G rr -1�' r.r ':'i'.S �_ , ,� '�'6 n, �r,,g ` Y 14C 5�. .Y+y:!F'r i' i +�i;+a"(� i't.ais � : 1 �{��..�/r� y,� • ,�.M��� ol Mla 75••!'KiW''-2M4.ti`•c: r n4 111141 .stPgillil nmil ♦.p.../� (�{ LY , if14,0. �000er '�" f7vw-, 'L. (Aoo: s' ^!.T�.:.- 1A ire., 1?'' 1 .+t ut ion �r . �( fib(( 11,0 ! f._ (�P/�v �1 2FI�0 .?4'li �. •.. f;1: J>• u k bt , i.gr •nj`1r'� !. e 't.�y-7Y n { 1 •I1 �f.P,_�. 1) ,� 'i 4 ♦t, ';�.tt t 3' ! !{',, l.. ,,. i 5 , t a ,?i L fi l z}� J - .. - r••' a -.' -- ;., .b.�+ Ai" .a.' ✓< ,t :;t6 y i4 '[7 iq „gtti 44, c 3 p c. y, J NFt' t W l tr Niri�.o tt, i:�.a4� iF .t r�� _ :YF� .'yi. i,'v-.i'jK: • :0. •. a' e ti• � y�{ `.. .;•!c1: f �. #- +�" -- �; . �: N, .. ..r_ n,. t rr�iy�-: r r e..r� ,. _off .,�- H � � �`, '� ' i : .. ,. � . �. � t .. - ' ,..., �.;'^...+' y ... , >; t. :`� `�,.._ two Yi . is t, c .,s.,. } ; � Year Ending December 31 5153,186,406 Limited Ad Valorem Tax Bonds Series 2002 (homeland Defense/ Neighborhood Capital Improvement Projects) S32,510,000 General Obligation Refunding Bonds Scrics 2002A .c,�..ar� $70,100,000 General Obligation Refunding Bonds Scrics 1992 59,150,000 General Obligation Refunding Bonds Series 1981 Principal Coupon Principal Coupon Principal Coupon Principal Coupon 2010 2011 2012 2013 — 2014 4,338 4,243 4,1113 4,1123 CAB CAB CA It CAB 2,595 4,280 4,3110 4,7411 5.375% 5.375/ 5.375'%. 5.375;5. 1,660 6.000% 315 11.5011 2015 2016 2017 2018 2019 3.855 1,423 / 1,025 1,635 2.375 1,110 CA 11 CA It / 4.4110% 4.51109., 4,600,5. -1.70119.. 6,275 685 715 5,375'SS. 5.11011'%, 5.1100'%, j — --- 2020 2021 2022 2023 _2024 1,-1811 1,035 4.8110'/. 4.875",1, y 1 1 2025 2026 2027 2028 2029 2030 t5AV6;fn OTA 5 �ul> 'i !•`u Next Call Dated 'Date Coupon Dates Maturity Dates Underlying Rating Credit Enhancer Paying Agent Purpose Notes ,r. ° `+30;644$4, d:ia ,r..-4 = . .; ,.... ,.! �;>�a:- P.�:,,k�e r. t:a^ �:1�`,re�23,59Q�.•� r . x.+.!c ..s�t?a, t�!�^�'fli �N�^ �, •) 6GQ4r. viz '.nF..i;,. � . ,? � J N s . 1, { F k.e...."�c..�s.:,ara.3ta �.w � g i:,'.�3�5:2'e�t "i� � , kklit1 fi,;.::�5:�,t.}. tir.'S� 1/1/2012 (a) 102 / CA Bs & t7 100 / CIBs 8/8/2002 January 1 July 1 January 1 A3 (I11), BBB+ (S&P), A- (F) MB1A U.S. Bank New Money 9/1/2012 xy Pnr 4/1/2002 March 1 September 1 September 1 Al (NI), A- (S&P), A (F) MBIA Hank of New York Refunding Current refunded General Obligation Bonds, Series 1991 & Series 1992 Advance refunded General Obligation Bonds, Non Callable 11/15/1992 June 1 December 1 December 1 Al (M), .A- (S&P), A (F) FGIC Bank of New York Refunding Advance Refunding of General Obligation Bonds, Series 1936, Series 1936A, Series 1987 Currently Callable (rx; Par 8/1/1981 February 1 August 1 August 1 I A- (S&P) N/A i JPMorgan New Money Color Legend Series 1995 Non -Callable Callable $30,000,000 $25,000,000 co $20,000,000 a) $15,000,000 en < $10,000,000 $5,000,000 $0 -- City of Miami, Florida All Outstanding General obligation Debt As of October 1, 2010 (19/ rri 9", rp rf0 rfjp (-1C‘ re re re r1/6N re re `19i (19 `1, q c '15) (19 r19 n Principal Interest 1 i I $30,000,000 $25,000,000 $20,000,000 U cn p $15,000,000 $10,000,000 $5,000,000 $0 City of Miami, Florida All Outstanding General Obligation Debt by Series As of October 1, 2010 \NN ,�0, Nni N�` NG) N� N1 Nc� �°' �o ,N 00' do 0.� ti� do �1 ti �� O �o ro �o (1, �O �O �O �O �O �O �o O O �O ,O �o ,Lo ,Lo Series 2009 El Series 2007B Series 2007A '6; Series 2002 ': Series 2002A u Series 2003B © Series 2003 Series 1992 Series 1981 FirstSouthwest OP? BOND DEBT SERVICE City of Miami, Florida All Outstanding General Obligation Debt Aggregate Debt Service Schedule As of October 1, 2010 Period Ending Principal Interest Debt Service 10/01/2011 14,237,664.20 13,776,940.82 28,014,605.02 10/01/2012 11,578,375.50 13,688,034.53 25,266,410.03 10/01/2013 11,017,644.00 13,746,697.28 24,764,341.28 10/01/2014 11,592,518.50 13,795,672.78 25,388,191.28 10/01/2015 12,339,948.50 13,761,374.03 26,101,322.53 10/01/2016 14,908,304.40 11,170,643.12 26,078,947.52 10/01/2017 17,000,000.00 9,067,485.02 26,067,485.02 10/01/2018 17,865,000.00 8,195,566.27 26,060,566.27 10/01/2019 18,775,000.00 7,287,312.52 26,062,312.52 10/01/2020 19,725,000.00 6,334,395.02 26,059,395.02 10/01/2021 21,075,000.00 5,330,584.39 26,405,584.39 10/01/2022 23,640,000.00 4,231,350.01 27,871,350.01 10/01/2023 7,725,000.00 3,457,593.76 11,182,593.76 10/01/2024 10,865,000.00 2,992,843.76 13,857,843.76 10/01/2025 11,420,000.00 2,435,718.76 13,855,718.76 10/01/ 202 6 12,010, 000.00 1,847,784.39 13,857,784.39 10/01/2027 12,635, 000.00 1,224,868.77 13,859, 868.77 10/01/2028 13,295,000.00 564,943.76 13,859,943.76 10/01/2029 4,100,000.00 112,750.00 4,212,750.00 265,804,455.10 133,022,558.99 398,827,014.09 Prepared by FirstSouthwest (ebf) (Finance 6.017 Miami:GO) Page 1 ,Ysst.4?iFc, j+Yt %n 1-?•,': _y. ' •'Tv.::NG',t <is x[s17 Z,` Buis. .i/thlror r. :' ,3x se f.r:( .S. ,7 ._y-S b, :; ,{}._ .s>"F. iy,�,eyr"r "i"i... �. rt a'•'R .5i.e':A• (• ^i Pt jet 3 [j- t :6 f,7, �.y �2 A}., r7 ��� n ')" `T, , e: T � � fl+.;.. t p. �1e: �i',a,•. Xlw f; s.- .a. aV r s�+�aaf r� _ X ' T i 7 d. 'ir , �; . �. j .v: aii'r, t<ci.:, • ?7,; a is I ..>:: ;"",'Gyy. �' .: �... ex i ���' aiu, All RI , .� w I:� v. !�1'.P .. ,gMili 9d 1.4 rSP, 0 �. ,..�.-- ,�._ ' /(�� 1, A P f PF,I nr:' M+..,..�. rrr QBOie �31.,,_ Li. Pg. Ig ! �. t1't..r. n �,�,��. - i t�lA_) Vk � -^rs,/- lQ�},.ri "b'MF I. :�i• ReY0 a lledt t .i ,1 3� i, ;{� '< r3 (�$. x . sR'.` .1 ,1,yT '�',. ��,�• �', r� •sK 11:(• ( J4.12• .. 'r',' v11 r q _ fir^ ahf�'p.. F i to ,� �', ; , f,� `a�`',. - •,aYr',... $art :q-. r.r. rn '� Ji, _r;• -�.; ,t a `:' Y r y'"C 2t h'I. I I`,'�} - t .s 'at Ai. 1. y' a..z+r'.j .r2�,•d';k. .�'�'.. '¢F .'r'A - ' YE Yt,} ,. •,S.'%'i ., i'" s 4.4 r, k" s t .4...x:�: .,�i:l '_;c. ,�•r ,er If'{r. , fin' ��. . .1 •x.. .y w a. k r „ •,• k ,� "a . 4r'+.•. it'd" i�., ,� S, {5' �: �fi:��y�Y'n�4�+h�,�� .. • , _. .. ,.i, 'a.c„ t.., i ` ..•:ic:. • .7. ,a.,, „yj Y.Su. r... hl-c+. ` L�',y.. _.'•ti• : � . eKlr 1 .. .,. .1 ';. .L �.,, r.c�l dwA Eke .1 ,._ _ a: r� ,. • t.�.._..r" >...E.r Year Ending December 31 516,930,000 Taxable Special Obligation Parking Revenue Bonds Series 2010E (Marlins Stadium Project) 534,540,000 Special Obligation Parking Revenue Bonds Series 2010A (b'lariins Stadium Project) 565,000,000 Special Obligation Revenue Series (Street and Improvnmc Bonds 2009 Sidewnik it Program) S37,435,000 Non -Ad Volorern Refunding Revenue Bonds Taxable Pension Series 2009 ....A S30,000,000 Special Obligation Bonds Series 2007 (Street and Sidewalk Improvement Program) 528,390,000 Special Obligation Non -Ad Valorern Revenue Refunding Bonds Series 2002C Principal Coupon Principal Coupon Principal Coulon_ Principal Cou nnl 1 Principal Coupon Principal Con I( i 2010 2011 2012 2013 ____ 2014 211I5-V-'�---""---- 2016 2017 2018 2019 2020 2021 2022 2023 2024 335 400 425 450 475 1,5115 1,630 1,3011 1,9.15 '-"-J--_..-�- 5.935% 5.935 % 5.935 % 5.935 % 5.935% 7.4�13';E 7.44 3% 7.4439E 7.4439E - - - - -ry 910 930 960 1 005 _ 1 - 1,045 1,090 1,141) 1,195 1,250 I,.{IIII I..tGll 1,42_5 1,5110 1,575 2.500%, 3.000'%, 3.000"A. _ 5.000'% 4.000% _ 4.000'% 5.000 % 4.250%, 4.250%, 4.50U':6 4.51IIi ".1, 4.750% 5.1111119E 511011% 1,275 765 1,065 2,295 _ 100 _ IUO 1,150 / 5,050 6,130 7,025 6095 5011 510 5311 5511 570 3.400 % 4,750 % 4.750%, 4,750% _ 5,250% 5.500% 6.35 % / 6.75 % 6.750 % 6,750 % 7.000% ZOOU91, 7.111111 ;: 7.1111119 7.1111112. 7.550')'. 1 1,470 I 4.000%. 150 / 1,380 ! 4.00 % / 3.50% 1,590 I 4.000% 655 / 1,000 ) 4.00 % / 5.00 A 560/1,170 i 4.00%/3.75% 770 / 1,035 I 4,00 %/ 5.00% 1,830 i 4.000 % 1,170 ' 5.0011 ,._._ Ju,n._•--_. ^- i 4.2509. _,155 4.3 •." I 2,2511 4.501191111";, 2,.455 I 4.5E 2.4711 2511E 2.a115 I 5.2511'2. 2,040 j 3.700 % 2,115 3.750% 2.195 4J1101% '_,'_:1i 4.a1a";. ' t"5 _--4.2111� 22.475 j 4.31in% 2.530 4.3759E _.,..._ti�, ; ---- 2025 2026 2027 2028 2029 2.11Y11 3.235 2.5111 7.4.13% 7.443% 7.4111. (.275 431.15 4,235 5.1111)1'2. 5.11002, 5.11011% 1,6141 1,7.15 1,8.10 1,9411 2,1145 5 25u"•. 5.250% 5.2511'2. 5,2502, 5,251111, 3,725 7.550% 2,745 I _ _I),; -__� l 2,395 5. 25119E 1115 / 2!745 I 4.759E / 5.259E 3,215 ..25011. 3..185 I ^.250'%: I ) 2030 2031 2032 21133 2034 4.1511 6,670 7,3511 7,735 3,1411 5.11011% 5.251114 5'5111E 5.251175, 5,25119E 2,155 2,2811 2,4115 2,5411 2,690 5.5111125E9E 5.5110 5.5111191, 5.511095 5.51111",E 3,5711 5_=�ilt-__ 3,701) ) 5.254(1'. 3.465 52502. 4,175 5_0111)2. 4_335 5.1111119E _____.4 2035 2036 2037 2033 2039 ,r. ii',F:.ki1T07'AI.S.N:'4, Next Call Dated Mtge Coupon Dales NI:iturily Dales Underlying Baling Credit Enluuicer Security Paying Agent Purpose Notes 0,51i5 9,1115 9,031) 1)1,350 2.0911 5.250"2, 5.25119E 5.25119E 5.2511% 5,25119E 2,3.15 3.11115 3,1211 3,74n 9,2_45 5.625,E 5.62591, 5,6259E 5.6259E 5.62511. �'_-�-_ _-______._ (,1U'.. 4.S511 5,1195 � 5.01111",;, 5,111)1111. 5.110119E `.•16 B30' r F,-,.itri.r�*a` s:!;;e.ai.64n....>S....r.... ._`K i::... 65,000. -ia-� , ; ao..;,a ..:. r.,'i{5S037A33:.t . _ ,. g__...-,w.:,,.<I 4ua.:av:77 ua ,z, ....4r_ ..�...........,.« .r_,j 16.06s:4:1.is ;.`.::,r..+e.: ..iuiilF't;+i! 7/1/2020 TO. Par 7292010 January 1 July I July 1 A2 (M), BBB+ (S&P), A- (F) Assured Guaranty I) CDT, 2) Parking Revenues, 3) Parking Surcharge TD Bank Ncw (Money 7/1202094) Par 7/292010 January 1 July 1 July 1 A2 (51) BBB+(S&P) A (F) Assured Cuomo ly - 1) CDT, 2) Parking Revenues, 3) Parking Surcharge TD Bank New Money I/12019 @. Par 12/2/2009 January 1 July 1 January 1 A2 (nq, A- (S&P), A (F) None 1) Local Option Gas Taxes, 2) 80 % of Transportation Surinx, 3) 20 % of Parking Surcharge TD Bunk New 0lo11cv 12/1/2019 c: Par 7/16/2009 June 1 December 1 December I A2 (AI), BBB+(S&P) None CB& A U.S. (tank Refunding Current refunded Non -Ad Valorem Variable Rale Refunding Revenue Bonds, Taxable Pension Series 2006 1/12018 n Par 12/5/2007 January 1 July 1 January I A2 (51), A- (S&P), A (F) MBIA 1) LOGT, 2) Transportation Surtax. 3) Parking Revenues Commerce Bank New Money 10/1/2012 n Par 10/31/2002 April 1 Ocloher I October 1 A- (S&P) FG1C CB& A ' U.S. flank Refunding Current refunded Sunshine State Governmental Financing Commission Tax Exempt Commercial Paper Revenue Color Legend Notes, 1994 _ _. Non -Callable Callable Year Ending December 31 20111 2011 2012 2013 2014 2015 2016 2017 2013 2019 2021) 2021 2022 2023 2024 S27,895,1100 Special Obligation Non -Ad Valorem Revenue Refunding Bonds Series 2002A S62,135,01)0 Non -Ad Valorem Itevein,c Bonds 'taxable Pension Series 1995 S11,500.000 S.E. Overtown Conununily Redevelopment TIP Bonds Series 1990 S65,27 .325 Special Revenue Refunding Bonds Series 1937 2025 2026 2027 21)23 2029 2030 21131 2032 2033 2034 2035 21136 2037 2038 21139 1 Nest Call Coupon Principal Con 1,925 I 7,000 2,290 3.87516 2,065 7.000'%. 2.375 4.90090 2,215 7.0110 2.4711 5.50111',. 2,375 7.111111 /, 2,6115 4.251190 2,5-15 7.00090 9611 4.2511".), 2,730 7.01104/" 1.11011 .1.375% 2.935 7.2110 1.1111) .1.5011"., 3,15(1 7.2511 1p911 4.62596 3,385 720081, 1,135 4.7511');, 3,640 7 20l1"G 1.190 4.900I4 _...—..-39111 .-`.. 7.20119/,, 1.215 .1.375,i, 1,31111 5,0IIIIR:. 1.365 53)1111'!.. 1,1311 5,000':;. 15011 5.11111184 9/1/2012 (d Par Dated Dale ... 7/1/2002 Coupon Dates ((lard, l September 1 ((I:purity Dales Scplcmbcr 1 Underlying It NA Credit En Rancor Sccurilc Paying A gun Purpose Notes C13&A U.S. Bank Refundin" Advance refunded Special Obligation Series 1930A, Series 1937, Gmuan lced Entitlement Series 1989. Special Obligation Series 1995 Color legend Non -Callable Cur. -end). Callable 11 r:,r IGdI I'rov isims Sold) 12./1/1995 Jane 1 December 1 December 1 N/A Alnbac CR& :\ US. Vatic New money Callable 1`rinrillal I Cnupym 235 0.5uu 255 2911 3115 8s1109:, Ill( 3,511t1"6 1 EIRMENEMIMI 1 .. 7.Ui.•�` Cat rcntly Callable with 30-day non ice r? Pay 11/1/1990 3/1/1999 Principal Coupon 933 366 31)1 731 629 Non Callable CAR CAR CAR CAB CAR April I October 1 January I July 1 October 1 .l:nmar). 1 N/A N/A N/A ((IRIA 1) Clt,\ 'Fax Increment Itevem,es 1) Net Revs of Convention -Comer Garage 2) Certain C._u-inlecd linlillcu,cul Roux 2) Par lion of PST Maroc i 11anks Tram 1.1.S. Rank New (((Duey Refunding Advance refunded Convention Center & Pinking Garage Bonds. Series 1080 uthc l');c, \'oar Ending Deccnnbcr 31 51,709,864 Gran Central Corporate Loan S20,000,000 Sunshine Stale Government Financing Commission Loma Series 1995 Variable Rate S42,500,000 Sunshine Slate Government Financing Conmtission Loans Series 1995 Variable Rate S6,600,000 Sunshine State Government Financing Commission Loans Series 1995 Variable Rate 56,112,000 Parrot Jungle Loan S3,500,000 Sunshine Slate Government Financing Commission Secondary Loan 1995 Variable Rate Principal Coupon Pried nil CuuL„ Principal Coop.. Fria cfj Coupon Principal Coupon Principal Coupon 2010 2011 2012 2013 2014 1,709 0.000% 1,500 I,500 1,500 \'ariablc• Variable" Variable• 4,295 8,330 8835 Variable Variable• Variable" — - Variable. �1 1,556 70.082% ( i 290 305 325 Variable. Variable• j Vriable• j i 2015 2016 2017 21118 2019 2020 2021 2022 2023 2024 4,000 4,200 Variable Variable _.__._ 10,735 10,305 _ _._.__ Variable" Variable' 6,600 I I I 2026 2027 21128 2029 I 2030 2031 2032 2033 2034 t 1 i _ _ . _ t_. _,:fr:"ti L:S6 ...:# ::ts_.ia ..x".K. ,,..._ January 1 July 1 July 1 CB& A 5liami-Dade County New Blaney Redevelopment • Subject to LIBOR + 0.2%. Interest is calculated monthly and paid to the trustee Suarterly i 2035 21136 2037 2039 2039 Nest Call Dated Date Coupon Danes Maturity Danes Underlying Rating Credit Enhancer Security Paying Agent Purpose Notes .. '£d:. ,, 709 •d•:,. . January 1 Jmly N/A Tar Increment N/.\ Nov Redevelopment H9t. +tsir 2.,,i :ext.w: . July 1 1 Revenues Olmncy .. ri::: 2.700,. (_ _ Monthly July A3 CB& Deutsche NOV Facility Improvements .;b.. nq. a; fltfir..:.. _a, 42:500;i;,7 ., nk+....,.w._r_usih sW:..r..6,600e.. ..,.u. tu._,L•..,,•.?i 4_,r. ..li i (111) • A Bunk Trust Blaney I .1 .aSec920 6ik.i5t . :;a=sirir'ra a;-A`.talf i Monthly July 1 A3 (NI) CB& A Deutsche Rank Trust Nov Blaney Redevelopment • Subject to LIBOR + 0.2% Interest is calculated monthly and paid to the trustee quart sly 1 (01) A Bank Trust Money 01on1l11y July 1 A3 (NI) CB& .\ Deutsche Rank Trust New Blaney Monthly July A3 CB& Deutsche New Color Legend Non -Callable Callable '�.[xf�'\i R''GI L..,2'it�. )-i)--L[ R' rr, _ -! Ic"J t W. .4r.;�, n' U'l� stly r_ �,esr Y t_ E��'�,.a:fj' Ir {ieLi•.c"��`-3'F[\..+'r•i•�.,A'wf.tu...,.Rll; fli�';9� h.Fil :e i` J :, . t C Ilr99.,N :3`?Y•-kT^l7. r ti..jNld y Jl. r e ' /f tit TI., `.11/FI�.t1Y -1f �t1sr t(� tt' i L;y �tY iu (�y2' l��y:: 1� Y <c.. An M„ I. LI. 1a fs{1'ffC If, fs� l f, ..� t y{- , 1'tc� 'Nr� ssl'1 b id( ra, y.{ o}'11iQjj1l. Pl 1 f .. tr:lr " F 4 ni r 4js p$ym�jlt_iI-Ui�. ..., L!! 1 fib y i G i r�.'!i: 'idplu" y ,l V i - ' rf'�+'• a a� ntre Der .t 1�f"Ca�Y.e!}�a3,.,;2 .p r �4tr.��{�t.�. i�;{, �r �f L�a71} fi', Yl a g ,t yy�}} Ij yy L 4 x y Jy Ir '4. uCUCI'![ <t�- Sa b s, 7r 1� t(trY..•_ry ,,��J_. ,.�.',a'c. c,.l�,> s�w,�?o{'_ L ^{ .T-) :t? "Jr t �l ? L'tlT. H1 't`r t, t '�� .., s tiS r~'�'�#}� rrz.t +: 4if2r��C ar 'Me yNif^h11 45hJ i!� lt,t 'till 1 v r n `�y . Y''-• L1} Y�r.�7'�' ..1 f.' j1 I'M w,t!- P—T...lr •.`R ta:k51+'e?;'..,..,t..t' r1.e13. 7 'C. `Live 's' A - 3..� 'h i�t f.Fs@h��T +.i '. ai�?s •{4 I-` Year Endino .. ..r 53.999,000 'Wagner Square Scclion 9103 IIUI) Loan Variable Ralc" ...a..... .,�.dF, ,.. .. S5.500.1100 \\'ynn'ood Scclio 11110S II111 loon Variable (tale" 1 t: _ r v.. .,t .,%rozn S5.100,000 S.E.Overlonit I':u'k \\'csl Swim] 0103 11(1D 1.o:111 ._ _...,1 :{.. .... .. .. L_'.:::_; 327.630,900 Sunshine Slate Cot'crn,ncnl Fin:u16112 Commission Loans Series 1995 Variable Rate Uccaubcr 31 2010 2011 2012 2(113 21111 20(5 2016 2(117 2019 2019 1'rincip:d __ 195 193 2111 2114 2117 2I0 213 216 219 r._._ Coupon Variable Variable. Variable" \':vi:d,le• Variable• Variable" Variable" varinbtc• Variable• Principal 325 325 325 325 330 33(1 Coupon ..an.^Prin�iV;ll Variable Variable variable \'ariablc• Variable Variable* ...' 500 550 625 62 Cun Corn T^ _. _. 9.910% 9p3(1'%, 9990"/., %•5 9.030' � Princih:d. T -� 1.336 1.943 21167 _, _.., ... . Caupuu "__ .' j Variable Variable" Variable• 2020 2021 2022 2023 202-1 376 392 339 395 401 \'ariablce Variable" Variable Variable \':u'i:Ibie" r it ILLL 2025 2026 2027 2u29 2029 ( 1 I I I 2030 2031 2032 2033 2034 2035 2036 2037 2033 2039 • Efiguramag® Ncxl Call 1' Dated Dane Coupon Dates lllaturily Dates Cludniving liming Credit Enhancer 1 Security Paving Agent Purpose Notes : t, .. ..... Monthly July Couuuoany Redevelopment Funds JPMor700 New (Redevelopment Color Legend .;( i .,r_, IK. .. -_ _. . . I Block Cram Pioocy n 1::6.) .960.; .L J' :..;ar:._ Monthly July I Con,numitr li ed erelopnl Iltocl: Cr:u,l Fundsme Jl'Marg:u, New money Focilily improvements 2... Va.2Or.L:i.. e:. ,la:mary 1 July Couununiuv Iiedevclopment Funds .1P5lnrgan New Reties .,1le.l'. , l ';:a July 1 1 Bind' Bind' Grans Money elopmcnt Monthly July 1 A3 (01) CDC A Deuische dank Trust New Money Facility Improvements _ Non -Callable _ —_y ---Call_ab_ --- Callable --- �—-----_-- _--- — Callable —-- -----------•---- —_- Callable ---- ulh\ t'PR. $60,000,000 $50,000,000 co $40,000,000 $30,000,000 co cr) a) c:s) < $20,000,000 $10,000,000 $0 City of Miami, Florida All Outstanding Special Obligation Revenue Debt As of October 1, 2010 r19 r19 r19 r19 r0 99 99 r19 19 99 r19 rl%) rt) rl%) (1%) r1%) rl%) rl%) rle ii Principal Interest $60,000,000 $50,000,000 m $40,000,000 U tU o $30,000,000 $20,000,000 $10,000,000 $0 City of IVliami, Florida • All Outstanding Special Obligation Revenue Debt by Series As of October 1, 2010 o o o o o o o O o o o o o o o o o q, q, q, qql, l, tOq, 1OqOOq, ll9,� Series 2009 . Taxable Pension Series 2009 a Taxable Pension Series 1995 Parrot Jungle Loan in $6,600,000 Sunshine Loan Series 2010A ni Series 2007 a Series 2010B ta Series 2002C ni $42,500,000 Sunshine Loan t.j Gran Loan in $20,000,000 Sunshine Loan r+ Series 2002A ri $5,500,000 Wynwood HUD n $27,630,900 Sunshine Loan Series 1987 IA $3,999,000 Wagner Square HUD RI $5,100,000 S.E. Overtown HUD $3,500,000 Sunshine Loan Series 1990 FirstSouthwest4 ' BOND DEBT SERVICE City of Miami, Florida Alt Outstanding Special Obligation Debt Aggregate Debt Service Schedule As of October 1, 2010 Period Ending Principal Interest Debt Service 10/01/2011 15,413,410.20 27,267,159.21 42,680,569.41 10/01/2012 19,895,215.30 25,933,117.20 45,828,332.50 10/01/2013 24,810,629.50 25,212,681.62 50,023,311.12 10/01/2014 27,136,860.00 24,148,316.34 51,285,176.34 10/01/2015 24,986,406.90 22,845,093.98 47,831,500.88 10/01/2016 31,180,000.00 17,255,177.38 48,435,177.38 10/01/2017 16,388,000.00 16,030,689.14 32,418,689.14 10/01/2018 14,176,000.00 15,059,787.89 29,235,787.89 10/01/2019 15,524,000.00 14,145,889.13 29,669,889.13 10/01/2020 15,231,000.00 13,200,987.25 28,431,987.25 10/01/2021 11,152,000.00 12,430,995.38 23,582,995.38 10/01/2022 7,659,000.00 11,889,288.21 19,548,288.21 10/01/2023 8,060,000.00 11,448,392.06 19,508,392.06 10/01/2024 8,496,000.00 10,972,599.31 19,468,599.31 10/01/2025 8,555,000.00 10,466,857.27 19,021,857.27 10/01/2026 11,600,000.00 9,837,475.37 21,437,475.37 10/01/2027 8,675,000.00 9,206,175.56 17,881,175.56 10/01/2028 9,190,000.00 8,692,187.51 17,882,187.51 10/01/2029 9,665,000.00 8,212,581.26 17,877,581.26 10/01/2030 10,175,000.00 7,705,318.76 17,880,318.76 10/01/2031 12,710,000.00 7,168,443.76 19,878,443.76 10/01/2032 13,720,000.00 6,486,650.01 20,206,650.01 10/01/2033 14,450,000.00 5,756,331.26 20,206,331.26 10/01/2034 15,215,000.00 4,992,418.76 20,207,418.76 10/01/2035 16,020,000.00 4,186,203.13 20,206,203.13 10/01/2036 16,870,000.00 3,335,509.38 20,205,509.38 10/01/2037 18,105,000.00 2,439,643.76 20,544,643.76 10/01/2038 19,090,000.00 1,460,943.76 20,550,943.76 10/01/2039 12,135,000.00 411,740.63 12,546,740.63 436,283,521.90 338,198,654.27 774,482,176.17 Prepared by FirstSouthwest (ebf) (Finance 6.017 Miami:SPOB) Page 1 Year Ending DI:C.1113er 31 201 0 2011 21)12 2013 2014 2015 2016 21)17 21/18 2019 2020 2021 2022 2023 2024 2025 2026 2027 2023 2029 20311 2031 2032 2033 2034 $60,110,0011 Miami Parking Authority Parking System Revenue Refunding Bonds Series 201)9 ' 54,14 OtUdkii411,Yrb .a. S6,435,000 bliami Parking Atilhurily Parking S).stein Revenue Rebinding. Bonds Taxable Serles10119 S13,490,000 hliami Parking Authority Parking System Revenue Refunding Bonds Series 1998 35 1.8611 1,940 2,030 2.120 2,220 2,325 2511/ 2,185 1,450 /1,095 2.675 2,805 2,945 2,375 / 720 1,6311/ 1,6211 1,710 /1,7115 1,790 /1,795 4.250%. 4.37514. 4.511119.1. 4.500% 4.625% 4.750%. 4.7311%, 4.875%. / -1.625% 4.375"..1. / 5.1100% 5.0011% 5.0110%, 5.125'Z. 5.125% / 5.11110% 5.125%. / 5.1110114. 5.125% / 5.0011"A. 5.1259/.. / 5.1101N. 1,505 5.112.Z. 1.585 5.•I09% 1,670 5.6119"4 1,725 5.659% 910 960 1.1105 1,1)61) 1.115 2U35 2036 2037 2038 2)139 3,770 3,955 .1.155 2,4.15 /1,9211* 2,295 /2,29114 i'Avte:1,1•TOTALE153-ii, i1s60 110 Next Call Dated Date Cr...1)1011 Dates Maturity pmes Underlying Rating Credit i1111311CUI Security Paying Agenl Purpose • Notes • 5.01111.11. 5.111109,1, 5.10111'11. 5.1111.11. / 5.35/.. 5,00'11. / 5.35% 10/1/2019 6Par • " 11/5/2009 April 1 Octo.be.r. 1 October 1 A.2 (N1) Assured Guaranty Parking Syslem Revenues '11) Bank Refunding Current I efund Tax -Exempt and Taxable Variable Rate Pre kitty. System Revcatte Beads, Series 2006 • Uninsured MiNittaftaigia Nun Callable It/5/2009 April I October 1 A2 (NI) None ',0:rE1M41'A44'11 October I Parking System Revenues 'El) 13atilt Refunding Current refund Tax-Exenipt and Taxable Variable Rate Potting System Revenue I3onds, Series 2006 5.0(10"/e 5.000% 5.250.% 5.250%. 5.251).Z. Non -Callable 11/1/1998 April 1 October 1 October 1 A2 (5)), .A (S& P), A (E) N1111.1. Parking System Revenues Sun Bank Refunding / No) Money Advance refund Parking System Revenue Bonds. Series )992A Color Legend Non -Callable Callable 1 r;I: 1 Aggregate Debt Se $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 City of Miami, Florida All Outstanding Parking System Revenue Debt As of October 1, 2010 r -r -r el Principal Interest FirstSouthwest' BOND DEBT SERVICE City of Miami, Florida All Oustanding Parking System Revenue Debt ' Aggregate Debt Service Schedule As of October 1, 2010 Period... Ending Principal Interest Debt Service 10/01/2011 910,000 3,586,335.06 4,496,335.06 10/01/2012 960,000 3,540,835.06 4,500,835.06 10/01/2013 1,005,000 3,492,835.06 4,497,835.06 1D/01/2014 1,060,000 3,440,072.56 4,500,072.56 10/01/2015 1,115,000 3,384,422.56 4,499,422.56 10/01/2016 1,505,000 3,325,885.06 4,830,885.06 10/01/2017 1,585,000 3,248,949.46 4,833,949.46 10/01/2018 1,670,000 3,163,216.82 4,833,216.82 10/01/2019 1,760,000 3,069,546.52 4,829,546.52 10/01/2020 1,860,000 2,970,441,26 4,830,441.26 10/01/2021 1,940,000 2,889,066.26 4,829,066.26 10/01/2022 2,D30,000 2,801,766.26 4,831,766.26 10/01/2023 2,120,000 2,710,416.26 4,830,416.26 10/01/2024 2,220,000 2,612,366.26 4,832,366.26 10/01/2025 2,325,000 2,506,916.26 4,831,916.26 10/01/2026 2,435,000 2,396,478.76 4,831,478.76 10/01/2027 2,545,000 2,283,235.00 4,828,235.00 10/01/2028 2,675,000 2,157,797.50 4,832,797.50 10/01/2029 2,805,000 2,024,047.50 4,829,047.50 10/01/2030 2,945,000 1,883,797.50 4,328,797.50 10/01/2031 3,095,000 1,732,866,26 4,827,866.26 10/01/2032 3,250,000 1,575,147.50 4,825,147.50 10/01/2033 3,415,000 1,410,610.00 4,825,610.00 10/01/2034 3,585,000 1,237,722.50 4,822,722.50 10/01/2035 3,770,000 1,056,235.00 4,826,235.00 10/01/2036 3,955,000 867,735.00 4,822,735.00 10/01/2037 4,155,000 669,985.00 4,824,985.00 10/01/2038 4,365,000 462,235.00 4,827,235.00 10/01/2039 4,585,000 237,265.00 4,822,265.00 71,645,000 66,738,228,24 138,383,228.24 Prepared by FirstSouthwest (ebf) (Finance 6.017 Miami:PARK) Page 1 Fitch at . 1.1 unemployment rates have historically been higher than those of the state and nation. Direct debt levels are moderately tow and should remain so as the city finances the 5573 million portion of the CIP for which funding has been identified; the overall plan totals $1.1 billion, notably lower than the previous CIP. Overall debt levels are above average. Plans for tax -supported debt in the near term are limited to bonds secured by tax increment revenues. For repayment of the special obligation parking revenue bonds, Miami -Dade County agreed to provide the city with a portion of its CDT revenues through fiscal 2039, subordinate to prior county commitments, for the purpose of funding the parking facility. Debt service on these bonds is ascending and relies on growth in the CDT, which Fitch believes is likely over the long term. Maximum annual debt service on the bonds of $12 million that occurs in fiscal 2038 would utilize a relatively small 2.4% of fiscal 2010 projected general fund revenue. Non -ad valorem revenues, which include franchise fees, CST, PST, and intergovernmental revenues, comprised more than 50% of total general fund revenues in fiscal 2009. Debt Statistics (5000) This Issue 105,005 Outstanding Debt 616,224 Direct Debt 721,229 Overlapping Debt 1,102,062 Total Overall Debt 1,823,291 Debt Ratios Direct Debt per Capita (5)4 1,745 As % of Market Value' 2.3 Overall Debt per Capita (5)4 4,413 As % of Market Value" 5.8 'Population: 413,201 (2009 estimate). "Market value: 531,381,000,000 (fiscal 2011). Note: Numbers may not add due to rounding. General Fund Financial Summary (5000, Audited Fiscal Years Ended Sept. 30) Property Tax Revenue Other Tax Revenue Total Tax Revenue Licenses and Permits Fines and Forfeits Charges for Services Intergovernmental Revenue Other Revenue General Fund Revenue General Government Public Safety Expenditures Public Works Expenditures Culture and Recreation Expenditures Other Expenditures General Fund Expenditures General Fund Surplus/(Deficit) Transfers In and Other Sources Transfers Out and Other Uses Net Transfers and otherSources7(Uses) Total Fund Balance As % of Expenditures, Transfers Out, and Other Uses Unreserved Fund Balance As % of Expenditures, Transfers Out, and Other Uses Note: Numbers may not add due to rounding. 2006 2007 2008 2009 214,329 258,757 258,294 266,860 41,342 42,257 35,319 36,228 255,671 301,014 293,613 303,088 28,469 32,830 29,789 26,032 5,175 5,284 6,032 6,396 91,981 77,174 74,998 76,508 53,267 54,097 51,321 47,234 16,707 19,697 16,681 12,262 451,270 490,096 472,434 471,520 38,809 61,209 57,525 56,699 187,938 249,795 249,882 249,478 50,574 56,377 54,859 54,939 15,112 20,202 24,277 28,301 159,574 142,180 138,707 137,176 452,007 529,763 525,245 526,593 (737) (39,667) (52,811) (55,073) 52,097 62,913 76,818 47,785 42,209 49,052 30,880 46,319 9,888 13,861 45,938 1,466 126,256 100,450 93,577 39,973 25.5 17.4 16.8 7.0 125,362 96,681 88,961 24,852 25.4 16.7 16.0 4.3 Miami, Florida July 22, 2010 Fitch: Related Research applicable Criteria •Tax -Supported Rainy Critsria, Dec. 21,2C09 U.S. Loccl Government Tax -Supported Rating Criteria, Dec. 27, 2C09 Rating History —GO Bonds Outlook/ 'Rating Action Watch Date 'A Downgraded Negative 7/2/10 AA- Revised' Negative 4/30/10 iA Affirmed Negative 10/30/09 A Affirmed Stable 5/8/09 Affirmed Stable 11/1/07 A Upgraded Stable 6/15/07 A- Upgraded Positive 2/20/04 !BBB+ Affirmed Positive 10/28/03 • 'BBB+ Assigned Stable 3/8/02 'Reflects recalibration. Rating History — Special !Obligation Parking Revenue Bonds Outlook/ Rating Action Watch Date IA- Assigned Negative 7/2/10 Rating History — Limited Ad Valorem Outlook/ Rating Action Watch Date A• Revised' Negative 4/30/10 'A- Affirmed Negative 10/30/09 A- Affirmed Stable 5/8/09 A- Upgraded Stable 6/15/07 B88+ Upgraded Positive 2/20/04 ;BBB Affirmed Positive 10/28/03 BBB Assigned — 7/11/02 'Reflects recalibration. Rating. History — Streets and. :sidewalks Revenue Bonds Outlook/ !Rating Action Watch Date A Affirmed Negative 7/2/10 A Revised' Stable 4/30/10 'A- Affirmed Stable 10/30/09 A- Affirmed Stable 5/8/09 :A- Assigned Stable 11/1/07 'Reflects recalibration. 43 strapped city. Factors contributing to the shortfall in fiscal 2010 include property tax collections performing below budget (collections were at 90%, compared with the budgeted rate of 95%); shortfalls in licenses and permits and charges for services, the result of construction project slowdowns; a one-time litigation payout ($3.4 million); and higher than anticipated medical claim payments related to workers' compensation. The city is facing tremendous fiscal challenges as it prepares its fiscal 2011 budget, and the five-year forecast is grim, yielding increasing operating deficits annually, which quickly deplete city resources. For fiscal 2011, general fund revenues are expected to be down 9%, the result almost exclusively of a 15% taxable assessed valuation (TAV) decline with no offsetting millage increase. Most other revenues are expected to be unchanged from fiscal 2010, which may be optimistic given declines in recent years. Expenditures are projected to rise 7%, with pension and salary obligations producing the most substantial increases. City administration has proposed far-reaching benefit changes, including the shift from a defined benefit to a defined contribution retirement program, to plug much of the anticipated fiscal 2011 $100 million operating deficit and fundamentally alter the structure of its operating budget. Negotiations are ongoing with all bargaining units. The city declared financial urgency, pursuant to Florida State Statute 447.4095, to open negotiations with the fire union prematurely. The fire union reached an impasse, and a special magistrate has been assigned. The city expects other unions to reach an impasse as well. The city commission will ultimately have the authority to impose contracts on any unit that reaches an impasse, although the political will to impose far-reaching changes to the compensation structure is uncertain. City officials have proposed a backup plan in the event negotiations are stalled or results are insufficient to cut costs, which includes massive layoffs in all city departments, including police and fire. Fitch believes it unlikely that the city will be able to accomplish its objective of reducing operating expenditures in fiscal 2011 by more than $80 million, almost exclusively with salary cuts, changes to its healthcare benefits, and dramatic changes to its pension plans, but expects that it will achieve some concessions to reduce the current budgetary gap. The city's TAV more than doubled between fiscal years 2004 and 2008, increasing at an annual average rate of 19%. The construction boom that drove tax base growth over the past six years slowed substantially in fiscal 2009, and taxable values retracted 6% and 16% in fiscal years 2010 and 2011 (on a preliminary basis for fiscal 2011), respectively. Fitch expects that the relatively manageable decline in fiscal 2011 may be followed by more severe declines as sharply lower real estate values are incorporated into the tax rolls. Housing data obtained by Fitch suggest that the city's residential real estate market is heavily exposed to nontraditional mortgage products and that the foreclosure problem is severe and worsening. Foreclosure activity in Miami is nearly three times the national average for the most recent quarter. Property taxes are providing 50% of budgeted general fund revenue in fiscal 2010. The area economy is diverse, with a large international component. The presence of healthcare, higher education, and professional and business services balances the tourism component of the city's- economy. Sector- employment statistics are well balanced among education and healthcare, professional and business services, leisure, trade/transportation, and government, although all but education and healthcare retracted between 2005 and 2009. Employment in the construction sector retracted nearly 5% between 2005 and 2009, evidence of the weakened construction environment that is additionally evident in the real estate sector. Employment and labor trends were positive annually through 2007 and retracted slightly in 2008. However, recent monthly statistics indicate expansion in each at 1.4% and 2.8%, respectively, the latter contributing to the increased unemployment rate from April 2009 to April 2010. City Miami, Florida July 22, 2010 Fitch. B-ati. Tax Supported New Issue Miami, Florida Ratings New Issues Special Obligation Parking Revenue Bonds, Series 2010A Special Obligation Parking Revenue Bonds (Taxable), Series 2010B Outstanding Debt General Obligation Bonds' Limited Ad Valorem Bonds" Special Obligation Bonds A- A- A A- A 'Downgraded from 'AA-' on July 2, 2010. °Downgraded from 'A.' on July 2, 2010. Rating Outlook Negative Analysts Kelly McGary ,.1 813 224-0492 ke!by.racgar y 0f itchra tinns, com Rachel Barkley +1 212 908-0514 rachel. barkley0 f i tchra ti ngs. com New Issue Details Sale Information: $87,560,000 Special Obligation Parking Revenue Bonds, Series 2010A, and $17,445,000 Special Obligation Parking Revenue Bonds (Taxable), Series 20105, scheduled to price on or after July 21 via negotiation. Security: A den upon and pledge of the city's portion of the county -levied community development tax, a 3% • occupancy tax, as well as parking revenues as detailed in the parking agreement between the city and the Marlins stadium operator, and 80% of the city's 15% parking surcharge in the stadium parking facilities. If the above revenues are insufficient to pay debt service, the city has covenanted to budget and appropriate and deposit into the revenue fund, in sufficient amounts, non -ad valorem revenues lawfully available for such purpose. Purpose: To construct parking facilities, inctuding surface tots and parking structures, for approximately 6,000 parking spaces located at the site of the Florida Marlins baseball stadium. Final Maturity: 2039. i\:tZin ta:. .Ir-11)natic • The GO rating downgrade to 'A' from 'AA—' reflects substantially weakened financial flexibility and Fitch Ratings' expectation that structural budgetary pressures will persist. • The Negative Rating Outlook reflects Miami's projected fiscal deficits over the next several years, which, absent far-reaching expenditure reductions and governmental restructuring, will deplete city reserves. • The 'A—' rating on the special obligation parking revenue bonds is based on the city's covenant to budget and appropriate available non -ad valorem revenue (including franchise fees, communications services tax [CST], public service tax [PST], and intergovernmental and other revenues comprising more than 50% of total general fund revenues in fiscal 2009) in the event of a shortfall in pledged revenues. • City financial results have been volatile and characterized by operating deficits in recent years. Miami is continually challenged to manage expenditure growth in a flat or declining revenue environment. • Pension costs have risen dramatically, comprising 25% of general fund revenues in fiscal 2010. • Although the economic base has weakened, particularly as it relates to joblessness and the housing market, it remains diverse, and the city serves an important role as a key U.S. import and export base for Latin American and Caribbean goods and services. • The city's debt profile is manageable, and capital improvement plans (CIPs) have been reduced in recent years to address a slowdown in development and reduced resource availability. • For the streets and sidewalks revenue bonds, coverage of debt service by pledged revenues remains sound, despite recent declines. i'#.hat C id "rriLTer a Do i1izradL , • Inability to develop sufficient expenditure or revenue solutions to make significant progress in fiscal 2011 in addressing the large structural budget imbalance. • Significant decline in reserves from the low level expected at fiscal year-end 2010. _ r`ci.tt Summary Miami's financial performance has been volatile historically and remains severely pressured. Over the past several years, the city's fixed operating costs grew rapidly, particularly for public safety, and the rate of expenditure growth to support increasing pension obligations was staggering. Pension costs are projected to compose 25% of general fund revenues in fiscal 2011. General fund performance was notably weaker than previously expected in fiscal 2009; the vast majority of the larger than anticipated deficit was the result of a transfer of $28 million from the general fund back to the capital projects fund to replenish the prior year's transfer to support general fund operations. The total fund balance at the close of fiscal 2009 totaled $40 million, of which $24 million was unreserved, equal to 4.3% of spending. Recent projections show that the city will end fiscal 2010 with a $20 million reduction in general fund reserves, which leaves tittle financial cushion to the cash- Copyriebt b.7.) 2010 Standard &Poor's FinanCial ;1'0NT COLOR2BLUF:SerriCESUC (S&P),./FONT>. a subsidiary of The lizlcUrawiHill Companies, Io content (including ratings. ci edit-sulfite:1 analyses and data. model. saitwaie or other application or output therefrom; cr any parr thereof (Contain) may be !nabbed. reverse engineered, reproduced rrr Maui inn ed in any form by any means, or stored in a database ur retrieval system. without the prior mitten permission of S&P. The Content shall not be used for any UtilaWful or M0111110[4 ed delouses. S&P, its affiliates. and any third -party provide's, as well as their directors. officers. sinueholdors, employees or agents icollectively SDP Parties) do riot guarantee the accuracy; completeness. timeliness or availability el the Content. 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Serfs public ratings and analyses are made available cn its Web sites, mixiv.stendareandpoors.cale ince of charge). and VIWW.ta!ingStiiret I.COIT I Fitt; www.glubalcreclitoorial.corn {subscription). and may be distributed Memel) other means, inciudino via S&P publications ant! thitrlipaity ((Misnames's. Addi twat infounalinn about our tilings funs is availably 11 1W00I SlanflairtantilitintSCan Vow tii iu siaes Sra ildo rcl & Poor's 1 flatingsDirect On the Global Credit Portal I June 30, 2010 Sit/Hillary: Mianti, Florida; General Obliga(ion; Nliscellancores lax achieve structural balance will to a great extent determine the future direction of the raring. 4,1. • ' .Y•irn ••• -.4c•e• -sFtg,"WA itd va!pr.arp tax r.fd.c.. 'ands ..c.1 ix i-idslficrnerand Oefansa Co ir.,r; Froi) sec 20074 dua 01./C11,200-2022 SET 2007E dt!s: 01101.12073 2028 Urirlahance..1Ratfrg 8,33.,,(SP(18)/Nagaivrecncri&i Miami ltd 3dvald:e;a ttiX fizig bids & tax Odds Horheland Defense Cap !aid F:dj) sar 2007A due 0 i /01/2009-2822 ;set 20078 dt!e01/01/2823-26.76 11,1E9:ran:ad Ratitig 6,92.4,SPLIR)INadahve Downgraded Miami i1d d '117ocem 3 cad acdrec rnac rax (..1811,)(Nar.-,nl) f.krenhanr;a;a. Pating 58.E,SPUR)/Nagative Cidapcj;a7.4.e•i Miami taxatte canon f ixred rata rfdci anas ser 2008 due 09/.0012026 Iona Term Parind 88.8+1Neciative N.:ma:rad:ad Miami GO long Tar) Ratir,g A-/Negaave Gov.Pgradad Miami go rfdg hods ser 20033 did 12/02/2003 due 121010004-2013 Unanharnad Rating A-SFUR)/T•!e.cat:ve Do•shoraded Miami go rldg bnds ser 2003 dtd 05010003 due 07/01/2004-2012 titcariraticartRating A-{9F1.18}1,.•ladacive OcvmpredaC Miami ltd ad valorem, tax hods tinefrhanee.:1RatThd BE,E.S8LiR)thlacjditive Davnicradad Miami GO ltd ad valorem tax (Homeland Defense Cap imp Proji ilay-rnciraaed Miami GO ridg bncisser 2002A dtd 04/010002 due 09/01/2002-2017 (.(aalliaA:etiRatirrg Many issues are enhanced by bond ibsurame. Da-.'ingrease Complete ratings information is available CO RatingsDirect on the Global Credit Portal subscribers ar www.globalcreditportal.com and RatingsDirecr subscribers ar www.raringsdirect.com, All ratings affected by this raring action can be Found on Standard & Poor's public Web site au www.standardancipoors.com. Use rile Ratings search box located in the left column. www.standardandpoors.comiratingsdirect 5 Suurnx),_w: h'li;uui, Florida: C;crrcr,rl C)bfi ,rrkur: Miscullancims s close fiscal 2010 wirh a $19.7 million shortfall. \(Iam)gemeni cxpecrs revenues to come in 5I4. i million below budget while it projects expenditures rube S 5'.2 million urer budget. Once again, it expects properry cis collccnon.s ro come in below budget due to a 90% collection rate and parks and projects recreation expendintres to be over budget IS3,15 million). Benefits and risk managemenr increased by approximately `u11 million in fiscal 2010 and management projects it ro be 55.7 million over budget. Pension costs increased by 36`1, to S90 million in fiscal 2010 and continue to he one of the main sources of expenditure pressures (please see section on Bargaining Unir Negotiations). Based on these projections, total fund balance would decline to S20.3 million or 3.9% of expenditures. Ir is unclear hose much of this would be unreserved. For fiscal 2011, Miami has a 599 million budget gap boscd on a '15.5`0 decline in AV, a flat millage rare of 7.674 milk, and no increase in user or solid waste fees. Management. projects the budget for 2011 ro increase by 537 million, or 7.3%. 1t expecrs mosr operaring expenditures ro remain in line with currcnr projections for fiscal 2010 with some exceptions. Health care costs are projected to increase by 10°1,. Pensions would increase by $25 million, or 27 ro 5115 mi(lion based on actual costs, nor estintares. Pensions accounr for approximately 20`4 of the 555 million budget. Gap -dosing measures total 5219 million and include 5135 million in revenue enhancements and 553 million of expenditure reductions. The revenue enhancements are mostly made up of the monerization of a portion of the city's parking assets, which management estimates will generare approximately 5125 million in one-time revalues as well as some increases to fire and solid waste fees. The expenditure reduction porrion of the plan will be, in our opinion, more difficult to achieve as it requires salary reductions, changes to health care plans, and $32 million in pension costs reductions due to a change from a defined benefit plan ro a defined contribution plan (527 million). Management is currently in negotiations with three of its four bargaining units and invoked Florida Statute 447.4095 (Financial Urgency) to reopen negotiations with its firefighters union (please see Bargaining Unit Negotiations for more detail). As required by its financial integrity ordinance, Miami most develop a plan co brim_ its unreserved fund balance back in compliance \within rswo years. If the city monetization of its parking assets goes through as planned, it would likely allow the ciy to build up its reserves. However, we believe the city would still need to implemenr permanent cost reductions to close what the city is projecting ro be a S142 million shortfall in 2012. OuCIO 01( The legotiye outlook reflects our assessment of the continued financial pressures t\-liami is under and its reliance on one-time revenues tit> close the projected budget gap in fiscal 2011. While gap -closing measures also include expenditure red usrions, historically these hove been ouch harder ro achieve. Although initial signs of economic recovery appear to be surfacing, we believe the recovery will likely be slow and, absent significent resrrucruring of Miami's labor contracts, expenditure growth will likely continue to ourpoce revenue growth. Revenues will likely continue to ise under pressure based on current and projected declines in assessed values stemming from a soft housing marker, a weakened economy, and continuing foreclosures. Revenue increases, either through fee increases, increased roses, or asser sales, could help to close the projected budget gap, but unless the city can take control of its growing pension costs, ewe believe long -term -structural balance will be difficult ro maintain. The city is projecting significant our -year gaps even with the adoprion of properrr tax rate increases. While asset sales could provide \'II;tini 1e'Irl) a short -tern) financial cushion and improved liquidirr, srrticnnallw balanced operations will dictate ins' porentiol for raring tutprovetltenr. Failure to generate significant one -tine revenues, absent considerable expenditure reductions, could lead to further credit deterioration. In our opinion, management's ability and willingness ro Sranclard & Poor's 1 Ratings0irer.l on the Global Credit Portal June 30, 2010 4 buunwn y: Alianlr, Florida; General Oblre,pion; ;\Qiscellatr-'ous 7a.v ancillary facilities, including retail space, located adjacent to the \Marlins Baseball Stadium. A portion of the proceeds will be used ro capitalize interest and refinance die ciry's 520 million special obligation parking revenue bond anticipation note. The city's financial flexibility has been greatly reduced by growing fixed costs and limited tax -raisin; flexibility and willingness. I:ising pension costs are die main driver of the ciry's fixed cost pressures. In fiscal 2010, pension funding amounted ro 17% of coral general fund expenditures. City management expects pension costs ro increase to 21% and 22% of budget in fiscal years 2011 and 2012, respectively. Public safety costs make up 42°' and 40% of die fiscal 2011 and 2012 budgets, respectively. Debt service carrying charges further increase this fixed charged cosy as more than half of debt service is paid from non -ad valorem revenues. Miami's ability to reduce expenditures is ro n great extent dependent on its ability to negotiate its contracts with its bargaining units and its willingness to reduce other expenditures. The combinarinn of a dramatically weakened local economy with the stare's recently enacted property tax reform measures will likely result in limited revenue growth over the next few years. At the same time, the city's fixed costs continue to rise at a much faster rare than revenues. The city's ability ro increase its revenues is constrained by declining AV, a 10-mill levy cap (currently at 7.674 mills), and die city conunission's unwillingness to raise taxes and fees on a population that is experiencing a 12% unemployment rate. The declines in AV will require an increase in the city's Tillage rare just ro keep revenues at the saute level as in prior years. Management's projections include raising the city's Tillage rate by 0.25 mills annually from 2012 to 2015 ro S.764 mills, assuming that AV do nor decline more than currently projected. Fiscal 2009 marked the third consecutive year of Fund balance reductions for the city of Miami. The city, which had initially adopted a balanced budget, posted a 539 million operating deficit before transfers and a 553.6 million fund balance reduction afar Transfers. As of November 2009, the city expected to reduce fund balance by 524.3 million. However, the actual operating deficit was 515 million higher based on audited financials. Total general fund revenues came in 517 million, or 3.411 under budget. Property tax revenues carve in 59.5 million under budget due ro a lower -than -budgeted collection rare. The city budgets collections at 954% as required per sate law, but actually only achieved an 89% collection rate. License and permit fees also came in under budget by 54.7 million, as did interest earnings. Charges for services fell .56.7 million short of estimates. On the expenditure side, public safety continues ro be the largest item, representing 49`1 of total expenditures and Miami's biggest cosy overrun. Although management was able to reduce expenditures by approximately 516 million in other areas, the city had a 514 million increase in expenditures tied primarily to overtime (S12 million). Group benefits and health care claims were S7 million over budget while the ciry's parks and recreation department exceeded its budget by 54.5 million. The city, which is currently subject to an SEC inquiry over the use of capital funds and impact tees, had transferred 525.3 million in capital funds over two years that it did not expect to use for capital projects to balance its 2007 and 2008 budgets. Although the funds were Transferred to the general fund to close the budget gap, the city still incurred capital expenditures associated with the. projects for which these funds were originally budgeted, leaving the capital funds with a 520 million funding shortfall. In fiscal 2009, management decided to reverse the 5211.3 million transfer, re-establishing the funds to the capital fund and increasing the general fund's operating deficit by that amount. The city's total general fund balance declined from S93.57 million ro 539.97 million. Its unreserved fund balance teas 524.55 million, or 4.7% of expenditures, which in our view is adequate for the rating. Miami failed to meet its financial ordinance requirement that it keep irs unreserved fund balance equal to 10'1'1, of the three-year average of general revenues, which for 2009 was 594 million. Pased on year-to-date actuais through April and projections For the remainder of the yeti, management expects to www.standardandpoors.con/ratingstlirect Summary: to ic.a; General. Obligation.; Miscellaneous Tax U 137.ao ma so. Q5iig p'=.ere. snd Ilvliatn Lfing T'R; T iiIYy S i ., r=ra0 5 .. 2010..-: d4 e O7/01 J2 fli1 6B0+; Negaciive LISS17.445 mil wx.abi: sp'. o !.Jng 72ln1 SOring bads Mai tiladdns 'trjl ser 2010B due 07/01l202- Ratic)fiat o Standard & Poor's Ratings Services assigned its '080+' rating and negative outlook ro Miami, Fla.'s tax-exempt special obligation parking revenue bonds, series 2010A (Marlins Stadium Projecr) and taxable special obligation parking revenue bonds, series 20:10B (Marlins Stadium Project). The special obligation bonds are secured by the city's covenant to budget and appropriate and are rated one notch below Miami's GO raring. On June 16, 2010, Standard & Poor's lowered its long-rerm and underlying ratings (SPLIR) ro 'A-' from 'A+' on Miami's general obligation (GO) debt. At the sarne rime, Standard & Poor's lowered its raring on the city's debt backed by its covenant to budget and appropriate ro '8801+' from 'A'. Please see the press release published June 16 for derails on the recent downgrade. The rarings reflect our opinion of the cir:'s: • Reduced financial flexibility clue ro growing fixed charges, primarily pension costs, and limited rax-raising capacity and willingness; • Trend of operating deficits over die past three years, with another operating deficit projected for fiscal 2010 and an idenrified $99 million budget gap for fiscal 201 1; • Economy that, while serving as a regional business, financial, and liealth care center for south Florida, Central America, and South America, is currently experiencing a significant downturn due rc a severely weakened housing marker; rising unemploymenr and low wealth and income levels, which rranslare into lower assessed values (AV), limited taxing flexibility and lower properry rax, license and permit charges for services revenue; • Unsettled bargaining unit conrracrs char are currently under negotiation, bur which have historically been a source of financial pressure on the city; and • Rising debt ratios clue to additional capital needs and declining AV. Partially mitigating these weaknesses, in our opinion, are the city's: • Efforts to sell assets in order ro close the go p and partially replenish its reserves;. • (Role as a regional business, financial, and health cart center for south Florida, Central America, and South America, which is likely to lead to long-term economic growth; and • Reserves, which a1rhougli declining, are currently considered adequate for die revised rating. The city is issuing tie bonds to fund the cost of consrruccin ; a garage not to exceed 6,000 parking spaces and Standard & Poor's RatingsDirect on the Global Credit Portal I June 30, 2010 2 Summary: Miami, Florida; General Obligation; Miscellaneous Tax Primary Credit Analyst John Sugden-Castilio, New York 01212-438 1678: iohn_sugdengsiar,dardand oors.cam Secondary Credit Analyst Le T (bath, New York (1) 212-438-5544; le_quach@standardandpocrs.com Table of Contents Rationale Outlook www.siandardandpoors.com/ratingsdirect 1 and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make ils own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly -owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually al som under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy." Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Ply Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761 G of the Corporations Act 2001. WHAT COULD MAKE THE RATING GO UP: - Restoration on structural budgetary balance and rebuilding of reserves - Economic stabilization and growth in major revenue sources WHAT COULD MAKE THE RATING GO DOWN: - The inability to restore structural balance and continued deterioration of reserves - Deepening economic conditions affecting major revenue sources Analysts John Incorvaia Analyst Public Finance Group Moody's Investors Service Alexandra J. Cimmiyotti Backup Analyst Public Finance Group Moody's Investors Service Geordie Thompson Senior Credit Officer Public Finance Group Moodys Investors Service Contacts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 MOODY'S INVESTORS SERVICE © 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODYS"). All rights reserved. CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. 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Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third -party sources. However, MOODYS is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODYS have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODYS or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, MANAGEABLE DEBT POSITION TO ACCOMMODATE EXPECTED DEBT ISSUANCE Direct net debt burden is a moderate 1.3% as a percent of total valuation (1.9% overall debt burden). The city's general obligation debt (limited and unlimited lax) retires al an average rale with rapid falloffs in debt service'requirements after 2022 through maturity in 2029. Non -ad valorem obligations also pay out at an above average rate (54.5% within 10 years), allowing for future financing flexibility. The city has adopted a debt management policy which considers creditworthiness, security and payment of bond issues, covenants, and ongoing disclosure. The city-hasi a six -year. $1.1 billion capital program which. is 47.9%unfunded ($526.9.million) and 52.1% funded ($573.1 million). Upcoming borrowing plans include two tax increment district financings of undetermined amounts by later in 2010. The city's variable rate debt is represented by loans from the Sunshine State Financing Commission and is moderate at about 9.4% of total city debt. The city's debt structure includes no derivative products. STATISTICS: Security: The bonds are secured by the city's portion of Convention Development Taxes (CDT) received from the county pursuant to interlocal agreement, 80% of the city's 15% parking surcharge fees generated at this facility and by bulk sale revenue based on fees negotiated between the city and the stadium operator pursuant to a parking agreement. Ultimate security provided by city's covenant to budget -and -appropriate legally -available non -ad valorem revenue. Payout (all non -ad valorem including current offering), 10 years: 54.5 % 20 years: 72.6% 30 years: 100% FY 2009 Net Available Non -Ad Valorem Revenues: $213.1 million (net) Estimated MADs on all Non -Ad Valorem Obligations: $42.5 million (2014) Total Non -Ad Valorem Obligations Outstanding (including current offering): $292.2 million Debt Burden: 1.8% Population (2008 census es timate): 413,201 Fiscal 2010 Full Value: $52.1 billion Full Value, per capita: $126,202 FY 2010 Operating Tax Rale: $7.674 (compared to $10 limit) Fiscal 2009 General Fund Balance: $39.97 million (7.7% of General Fund revenues) Fiscal 2009 Unreserved General Fund Balance: $24.85 million (4.8% of General Fund revenues) Fiscal 2009 Undesignated General Fund Balance: None City as % State (2000 census), Per Capita Income: 70.2% Median Family Income: 59.7% Unemployment Rate (3/2010): 12.5% (12.0% FL and 10.2% U.S.) RATING METHODOLOGIES USED AND LAST RATING ACTION TAKEN Miami's Special Obligation Parking Revenue (Non -Ad Valorem) bond rating was assigned by evaluating factors believed to be relevant to the credit profile of the issuer such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the issuer, iii) the projected performance of the issuer over the near to intermediate term, iv) the issuer's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the nature of the dedicated revenue stream pledged to the bonds, vi) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) and the issuer's management and governance structure related to payment. These attributes were compared against other issuers both within and outside of the issuer's core peer group and the sales tax rating is believed to be comparable to ratings assigned to other issuers of similar credit risk. The last rating action with respect to Mami was on April 8, 2010 when a negative outlook on the city's A2 G.O. ULT, A3 G.O..LT and A3 non -ad valorem bonds was assigned based on the municipal scale. The ratings were subsequently recatibrated to Aa3, A2 and Al respectively on April 23, 2010. Outlook The negative outlook reflects Moody's expectation that Ivtami s financial operations will remain strained over the medium -term horizon as the city -grapples with reduced reserves and budget pressures while trying to implement a recovery plan. Ultimate long-term credit standing is dependent on the ability of officials to re-establish budgetary structural balance and restore reserves to prescribed policy levels in an adverse economic environment that impedes revenue growth. Improvement of financial condition appears to require either significant city cuts or infusion of one- time revenues or some combination of both. commitment. With assumptions as presented, gross debt service coverage begins at about 1.23 times, increasing to a high of 1.34 times (2016 to 2020) before declining to about 1.21 times in the last 8 years of the maturity schedule (excluding the final year paid largely from the cash reserve). These vulnerabilities, along with narrow coverage and slow payout, place credit weight on the covenant pledge. Although non -ad valorem funds provide the basis of support for the assigned Al rating, the city's continually -weakened financial position could be exacerbated if a significant amount of additional non -ad valorem funds would be required to repay this or other non -self-supporting obligations currently being paid from other sources. Available gross non -ad valorem revenue of approximately $252.4 million ($213.1 million net of essential general govemment and public safety costs) in fiscal 2009 is significant in relation to the estimated $42.5 million in maximum annual debt service (MADS) on all non -ad valorem obligations (including Sunshine State loans). In as much as available revenues are also utilized for operating purposes, the citys deteriorating financial position lends little credit support to the bonds. Non -ad valorem funds are an important component supplementing property tax revenues used for basic essential general government and public safety expenditures, and are expected to grow in importance given the depressed economic environment and property tax reform which will restrict property tax revenue growth going forward. About 54.8% of all covenant obligations (including the current issue) are repaid within 10 years and all obligations are scheduled for repayment within 30 years. Debt service requirements gradually decline from the $42.5 million peak in fiscal 2014 to below $20 million by 2020 (through maturity in 2039). On the current offering, debt service increases from $6.5 million in 2011 to $12 million in 2037 (bonds due in 2039). FISCAL OPERATIONS CHARACTERIZED BY CONTINUING STRUCTURAL IMBALANCE AND DETERIORATING RESERVES Despite the implementation of financial and debt principles, recent declines in revenues associated with property tax reform and a struggling economy as well as rapidly -rising fixed costs have posed significant challenges in maintaining structural balance and adherence to financial policies. Resolution of financial difficulties appears to require either significant city cuts or infusion of one-time revenues or some combination of both. Since fiscal 2007 the city has consistently depleted reserves due to revenue shortfalls and overspending. In fiscal 2007, the city utilized $25.8 million of reserves due to the settlement of a class action lawsuit filed against the city's fire -rescue assessment fee ($15 million) and settling its union contracts ($35 million). In fiscal 2008 fund balance was reduced by another $6.9 million reduction, due to declines in major revenue sources including slippage of current property tax collection rates as well as increases in public safety and risk management costs. Thus total General Fund balance declined to $93.6 million (17% of revenues) and the undesignated balance was $44.6 million (8.1% of G.F. revenues). In fiscal 2009, despite making almost $35 million in cuts, revenue shortfalls and poor budgetary performance drove a $53.6 million operating deficit ($28.4 million represented by a return to capital). The deficit reduced total fund balance from $93.6 million in 2008 to $39.97 million which represented about 9.5% of the total required 20% rolling three-year reserve policy level. Entering fiscal 2010, officials cut $118 million by reducing personnel costs (positions and salary reductions) of $64.8 million, reducing operating expenses by $10.3 million, reducing capital and non -operating expenses by $21.4 million and increasing overall collections by $21.5 million. Eight -month forecasts through May 2010 indicate a 520.8 million imbalance thus far this year which will require officials to utilize even more of the remaining reserve. Going forward, future budgets will continue to be significantly challenged by escalating pension and health care costs as well as projected increased personnel and operating expense growth, the combination of which could be significant. Officials have projected that if nothing is done to adjust the budget, soaring pension, health care and salary increases will help create budget deficits of 599.6 million in fiscal 2011 and $143.8 million in fiscal 2012, resulting in a negative $223.2 million fund balance at the end of fiscal 2012. To date, efforts to achieve union concessions and the citys resistance to raise tax rates to at least partially offset valuation declines have been serious detriments to regaining financial integrity. Potential exists in the near term for significant city layoffs and service reductions. Pursuant to fiscal policy, officials are required to present a two-year recovery plan to the city commission shortly to get fund balance back to prescribed levels. It is unlikely that the city could achieve structural balance and restore fund balance to prescribed levels within two years solely through revenue increases or expenditure cuts without dependence on one-time revenues. The city's ability to restore reserves to policy levels and maintain budgetary structural balance in an environment of rising fixed costs will dictate ultimate credit quality. In addition, actuaries have identified the city's other post employment benefit liability (OPEB) pursuant to GASB 45. at a substantial $480 million as of October 1, 2006, with theARC at $27.2 million, in relation to the city's funding only the pay -go portion of about $10 million annually. The city is looking at a variety of strategies for reducing the liability, including changing to a defined contribution plan for retirees and changing the prescription drug plan design and another valuation for fiscal 2010 is being targeted. Also. double digit increases in health care costs has prompted a review of the city's health care plan. Resolving the spiraling increases in pension and health care costs is essential in the restoration of structural balance. ECONOMY STRONGLYAFFECTED BY HOUSING CRISIS; LONG-TERM OUTLOOK FAVORABLE The city has been strongly affected by the residential housing crisis. leading to significant foreclosure activity, significant fall -off in construction activity and high unemployment. Foreclosed properties increased from 221 in 2007 to 806 in 2009, and were already at 743 for the first four months of 2010. As the pace of foreclosures appears to be accelerating with increasing vacant inventory, housing values have declined precipitously. Median single family home values declined 48.6% from their 2007 highs of $380,100 to $195,300 in 2009 with some minor recovery to $197,500 seen as of March 2010, while condominium values declined about 47.6% to $142,500 over the 2006 to 2009 period, with continued decline to $138,800 seen as of March 2010. In addition, tax certificate sales doubled between 2006 and 2009 to $62.1 million, although they produced $18.2 million in revenues to the city's General Fund in fiscal 2009. Unemployment, at 12.5% in March 2010, is high relative to both the state (12.0%) and nation (10.2%). The city did experience assessed value growth in fiscal 2009, albeit a slight 1.6% increase. significantly below the 5-year average of 15.8%, driven by the slowdown in the real estate market and the effects of property tax reform, increasing assessed value to $39.7 billion ($57.7 billion full value). A 6.9% taxable value decline in fiscal 2010 would have been more significant were it not for $3.7 billion of new construction coming on the tax roll that year. The preliminary estimate for fiscal 2011 indicates another tax base decline of about 15.5%. City estimates include additional tax base declines in the next few years. The city is mature with population increasing only marginally (1%) over the past decade through the 2000 census, but about 14.0% since that time (to 413,201 in 2008) with redevelopment and new construction having brought more residents into the city. Amajority of city residents are foreign -born, and the 2000 census poverty level (28.5%) was more than twice that of the state (125%) and nation (12.4%). Unemployment, foreclosures and housing value declines will continue to weigh heavily on a poorer population base. According to Moody's Economy.com (March 2010) the Mami (MIA) economy will emerge from recession more slowly and less vigorously because of its outsize exposure to a still -fractured housing market. The unemployment rate, which will peak near 13% at the end of the year, will not reach its equilibrium rate of 6.5% until 2014. Long term, MIA's growing infrastructure, strong international trade ties, and stature as an attractive international tourism destination will allow it to outperform the nation. INVESTORS SERVICE New Issue: IVIOODY'S DOWNGRADES CITY OF Pr1IAV1I (FL) 535M G,O. ULT BONDS TO Al FROM Ana, AND $235M G.O. LT BONDS TO A3 FROMA2; OUTLOOK IS NEGATIVE Globe: Credit Research - 01 Jul 2070 MOODY'S ASSIGNS A2 RATING AND NEGATIVE OUTLOOK TO SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2010A AND 20108 (TAXABLE) Municipality FL Moodys Rating ISSUE RATING Tax -Exempt Special Obligation Parking Revenue Bonds, Series 2010A (Marlins Stadium Project) A2 Sale Amount $87,110,000 Expected Sale Date 07/22/10 Rating Description Pecial Obligation Parking Revenue (Non Ad Valorem) Taxable Special Obligation Parking Revenue Bonds. Series 2010E (Marlins Stadium Project) A2 Sale Amount $17,365,000 Expected Sale Date 07/22/10 Rating Description Special Obligation Parking Revenue (Non Ad Valorem) Opinion NEW YORK, Jul 1, 2010-- Moody's Investors Service has assigned an A2 rating and negative outlook to Mami's (FL) sale of $105 million Special Obligation Parking Revenue Bonds, Series 2010A($87.6 million, Tax -Exempt) and Series 2010E ($17.4 million, Taxable) (Marlins Stadium Project). Concurrently, Woody's has downgraded the city's $34.5 million General Obligation (ULT) bond rating to Al from Aa3 and the city's $234.5 million General Obligation Limited Tax bond rating toA3 from A2. In addition, a negative outlook has been assigned to the ULT and limited tax ratings. The limited tax bonds would likely require a levy of about 0.98 mills in fiscal 2011 (given expected tax base declines) in relation to a maximum allowable levy of 1.218 mills. The tax base would have to decline about 27 % further before one-time coverage of debt service. Moody's has also downgraded to A2 from Al the rating, and assigned a negative outlook. on the city's outstanding $106 million rated non -ad valorem obligations (including $68.6 million in loans issued through the Sunshine Stale Governmental Financing Commission) backed by the citys covenant pledge. The downward rating revisions reflect the citys continuing severely narrow financial condition exacerbated by uncontrolled pension increases and rapidly rising health care costs which have made the ability to adhere to established financial principles untenable. The ratings also incorporate the city's weakened, but still sizable, tax base, broad -based and regionally -important economy with favorable long-term recovery prospects and a moderate debt profile. The negative outlook reflects Moody's expectation that Mami's financial operations will remain strained over the medium -term horizon as the cily grapples with reduced reserves and budget pressures while trying to implement a recovery plan. Ultimate long-term credit standing is dependent on the ability of officials to re-establish budgetary structural balance and restore reserves to prescribed policy levels in an adverse economic environment that impedes revenue growth. Improvement of financial condition appears to require either significant city cuts or infusion of one-time revenues or some combination of both. The Special Obligation Parking Revenue Bonds are secured by the city's portion of convention development taxes (CDT) received from the county pursuant to interlocal agreement, 80% of the city's 15% parking surcharge fees generated at this parking facility, bulk sale revenue based on fees negotiated between the city and the stadium operator and the city's covenant to budget -and -appropriate legally -available non -ad valorem revenue (covenant pledge). The rating is based on the expected moderate debt service coverage from specified pledged revenues and the very slow initial bond payout with an ascending debt service structure, but ultimate security lies with the city's covenant pledge. The expectation that the debt service will be paid from specified pledged revenue without material dependence on non -ad valorem funds is an important rating factor given the citys weak financial condition. Bond proceeds will be used to construct a maximum of 6,000 total spaces (4 garages and refurbishing surface lots) for a new stadium being built for the Florida Marlins baseball team. Legal provisions include allowance for completion bonds of up to 10% of original bond par ($10.5 million) and a debt service reserve being funded with cash ($10 million). The flow of funds requires that pledged revenue be deposited into the Sinking Fund only five days prior to a debt service payment date. Use of funds also includes $3.8 million of capitalized interest. The SEC has requested documents from the city pursuant to an investigation related primarily to financial disclosure and transfer of certain funds. In addition, the city is a defendant in a whistle -blower suit and a class action suit. The potential outcome of any of these actions is unknown at this time. VARIETY OF SPECIFIC PLEDGED REVENUES TO REPAY PARKING BONDS WITH ULTIMATE SECURITY PROVIDED BY COVENANT PLEDGE Bond security includes 80% of the 15% parking surcharge imposed by the city and generated at this parking facility, fixed amounts of the • county's convention development tax (CDT) distributed to the city pursuant to an interlocal agreement, and parking revenues from the stadium operator pursuant to a parking agreement. CDT revenues are expected to compose 36.1 % of total pledged revenue in fiscal 2012 (56.4% al MADS in 2037), stadium operator revenues 54.1% in fiscal 2012 (45.7°/ in 2037) and the parking surcharge revenues 9.7% in 2012 (8.5% in 2037), based on growth assumptions or increases pursuant to the CDT interlocal agreement. The vulnerabilities associated with these revenue sources include: the availability, if any, in any given year of CDT revenues after the county pays its own debt and other related prior obligations; generation of sufficient parking surcharge revenues; and potential bankruptcy of the stadium operator resulting in failure to honor its Journalists: (212) 553-0376 Research Clients: (212) 553-1653 MOODY'S INVESTORS SERVICE © 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collective y, "MOODYS"). All rights reserved. CREDIT RATINGS PRE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. 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Any publication into Australia of this document is by MOODYS affiliate, Moody's Investors Service Ply Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODYS that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. 2009, is high relative to both the state (11.69%) and nation (9.7%). The city did experience assessed value growth in fiscal 2009, albeit a slight 1.6 % increase, significantly below the 5-year average of 15.8%, driven by the slowdown in the real estate market and the effects of property tax reform, increasing assessed value to $39.7 billion ($57.7 billion full value). A6.9 % taxable value decline in fiscal 2010 would have been more significant were it not for $3.7 billion of new construction coming on the tax roll that year. Officials anticipate another decline in existing taxable values of about 10% next year with new construction not expected to provide a material counterbalance. The city is mature with population increasing only marginally (1 %) over the past decade through the 2000 census, but about 14.0% since that lime (l0 413,201 in 2008) with redevelopment and new construction having brought more residents into the city. Amajority of city residents are foreign -born, and the 2000 census poverty level (28.5%) was more than twice that of the state (12.5%) and nation (12.4%). Unemployment, foreclosures and housing value declines will continue to weigh heavily on a poorer population base. According to Moody's Economy.com (March 2010) the MGami (MIA) economy will emerge from recession more slowly and less vigorously because of its outsize exposure to a still -fractured housing market. The unemployment rate, which will peak near 13% al the end of the year, will not reach its equilibrium rate of 6.5% until 2014. Long term, MIA's growing infrastructure, strong international trade ties, and stature as an attractive international tourism destination will allow it to outperform the nation. STATISTICS: Debt Burden: 2.0 % Population (2008 census estimate): 413,201 Fiscal 2010 Full Value: $52.1 billion Full Value, per capita: $126.202 FY 2010 Operating Tax Rate: $7.674 (compared to $10 limit) Fiscal 2008 General Fund Balance: $93.58 million (17.0% of General Fund revenues) Fiscal 2008 Unreserved General Fund Balance: $88.96 million (16.2% of General Fund revenues) Fiscal 2008 Undesignated General Fund Balance: 544.63 million (8.1% of General Fund revenues) City as % State (2000 census), Per Capita Income: 70.2% Median Family Income: 59.7% Unemployment Rate (12/2009): 11.9% (11.6% FL and 9.7% U.S.) RECALIBRATION OF RATING TO THE GLOBAL RATING SCALE: PRINCIPAL METHODOLOGY The rating assigned to Miami (FL) was issued on Moody's municipal rating scale. Moody's has announced as plans to recalibrate all U.S. municipal ratings to ifs global scale and therefore, upon implementation of the methodology published in conjunction with this initiative, the rating will be recalibraied to a global scale rating comparable to other credits with a similar risk profile. Markel participants should not view the recalibralion of municipal ratings as rating upgrades, but rather as a recalibration of the ratings to a different rating scale. This recalibration does not reflect an improvement in credit quality or a change in our credit opinion for rated municipal debt issuers. For further details regarding the recalibration please visit www.moodys.com/gsr. The principal methodology used in rating Miami s G.O. bonds was " General Obligation Bonds Issued by U.S. Local Governments ," published in October 2009 and available on www.moodys.com in the Rating M thodologies sub -directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub -directory on Moody's website. The last rating action with respect to Miami (FL) was on November 3, 2009 when the cily's long term rating was affirmed in conjunction with a special revenue bond sale (Streets and Sidewalks). Analysts John Incorvaia Analyst Public Finance Group Moody's Investors Service Alexandra J. Cimmiyotti Backup Analys t Public Finance Group Moody's Investors Service Geordie Thompson Senior Credit Officer Public Finance Group Moody's Investors Service Contacts MOODY'S INVESTORS SERVICE Rating Update: MOOOY'S AFFIRMS MIAMI'S (FL) A2 GENERAL OBLIGATION BOND RATING AND REVISES THE OUTLOOK TO NEGATIVE FROM STABLE Global Credit Research - 08 Apr 2010 A3 RATINGS ON CITY'S LIMITED AD VALOREM AND NON -AD VALOREM OBLIGATIONS ALSO AFFIRMED AND OUTLOOKS REVISED TO NEGATIVE FROM STABLE fvtunicipality FL Opinion NEW YORK, Apr 8, 2010 — Moody's Investors Service has affirmed the A2 rating on Miami's (FL) $33.9 million outstanding general obligation bonds and revised the outlook to negative from stable, At the same time, we have also affirmed the city's A3 ratings and revised the outlooks to negative from stable on $243 million limited ad valorem bonds (1.218 mills) and $106 million non -ad valorem obligations (including $37.4 million taxable pension bonds and $68.6 million Sunshine State loans). The rating affirmations and revised outlooks reflect the citys continuing and severely weakened financial condition due to a combination of revenue declines associated with property tax reform and the depressed economic conditions exacerbated by uncontrolled pension increases, rapidly rising health care costs and poor budgetary practices that have'made adherence to established financial principles unsustainable. While financial remedies will soon be considered that could possibly improve the citys weakened financial picture, restoration of budgetary structural balance is yet to be achieved. Future long-term financial health is tied to resolution of rapidly rising fixed costs and improvement in major revenue sources. The area's domestic and international ties and broad -based economy provide favorable prospects for long-term economic recovery despite current economic weakness. FISCAL OPERATIONS CHARACTERIZED BY CONTINUING STRUCTURAL IMBALANCE AND POOR BUDGETARY PRACTISES Despite the implementation of financial and debt principles, recent declines in revenues associated with property tax reform and a struggling economy as well as rapidly -rising fixed costs have posed significant challenges in maintaining structural balance and adherence to financial policies. In 2000, the city adopted anti -deficiency and financial integrity ordinances that institutionalized financial concepts related to spending, reserves, long-term financial and capital planning, internal oversight and structurally -balanced budgets. For the most part, officials were able to improve the city's cash and equity position since a period of state oversight in the mid-1990's through fiscal 2006. And despite utilization of $25.8 million of reserves in fiscal 20D7 partly due to the settlement of a class action lawsuit filed against the city's fire -rescue assessment fee ($15 million) and settling its union contracts ($35 million) officials were still in compliance with prescribed reserve policy levels. Fiscal 2008 resulted in another $6.9 million reduction in fund balance due to declines in major revenue sources, including slippage of current property tax collection rates, as well as increases in public safety and risk management costs. At the end of fiscal 2008, the city had a $6.9 million operating deficit that reduced total General Fund balance to $93.6 million (17% of revenues) and an undesignated balance of $44.6 million (8.1% of G.F. revenues). The citys reserve policy requires maintenance of both designated and undesionated reserves at 10% each of the prior three year average of general revenues. Officials missed the unreserved/designated balance level by about $290,000 in fiscal 2008 due to a new state requirement to reflect Building Department expenditures as a reserve. In fiscal 2009, despite making almost $35 million in cuts, revenue shortfalls and poor budgetary practices drove what is expected to be a $53.6 million operating deficit ($28.4 million represented by a return to capital), more than twice the amount anticipated in November 2009. The deficit would reduce total fund balance from $93.6 million in 2008 to about $39.97 million in fiscal 2009, which would represent about 9.5% of the total required 20% rolling three-year reserve policy level. Entering fiscal 2010, officials cut $118 million by reducing personnel costs (positions and salary reductions) of $64.8 million, reducing operating expenses by $10.3 million, reducing capital and non -operating expenses by$21.4 million and increasing overall collections by $21.5 million. Five -month (February 2010) forecasts indicate a $28.3 million imbalance thus far this year which will likely require officials to utilize even more of the remaining reserve. Pursuant to fiscal policy, officials are required, within the next 60 days, to present a two-year recovery plan to the city commission to get fund balance back to prescribed levels. b is unlikely that the city could achieve structural balance and restore fund balance to prescribed levels within two years solely through revenue increases or expenditure cuts without dependence on one-time revenues. Going forward, future budgets continue to be challenged by escalating pension and health care costs as well as projected increased personnel and operating expense growth, the combination of which could be significant. Management's ability to restore reserves to policy levels and maintain budgetary structural balance in an environment of rising fixed costs will dictate ultimate credit quality. In addition, actuaries have identified the city's other post employment benefit liability (OPEB) pursuant to GASB 45, at a substantial $480 million as of October 1, 2006, with the ARC at $27.2 million, in relation to the citys funding only the pay -go portion of about $10 million annually. The city is looking at a variety of strategies for reducing the liability, including changing to a defined contribution plan for retirees and changing the prescription drug plan design, and another valuation for fiscal 2010 is being targeted. Also, double digit increases in health care costs has prompted a review of the citys health care plan. Resolving the spiraling increases in pension and health care costs is essential in the restoration of structural balance. ECONOMY STRONGLYAFFECTED BY HOUSING CRISIS: LONG-TERM OUTLOOK FAVORABLE The city has been strongly affected by the residential housing crisis, leading to significant foreclosure activity, significant fall -off in construction activity and high unemployment. Foreclosed properties increased from 221 in 2007 to 711 in 2008 and initial unemployment flings rose 45% in 2008 to 123,518. More recently, the pace of foreclosures appear to be accelerating with increasing vacant inventory and housing values are declining precipitously. Median single family home values declined 49.8% from their 2007 highs of $380,100 to $190,900 at September 2009, while condominium values declined about 51,1% to $132,900. In addition, tax certificate sales more than doubled between 2006 and 2008 to $69.8 million, although they produced $20.7 million in revenues to the city's General Fund in fiiscal 2008. Unemployment, at 11.9% in December City of Miami, Florida Tab B: Rating Reports As of October 1, 2010 F rst5out 2west A PlainsCanital Company Member FINRA & SIPC (Subsidiary of PlainsCapital I Le? 2010 FirstSo,Ihwest Fitch..Ra-t.in. Li Bond proceeds will be used to construct parking facilities, including surface lots and parking structures, for approximately 6,000 parking spaces located at the site of the Florida Marlins baseball stadium. The construction agreement provides for a fixed construction budget of $84.5 million, inclusive of a contingency. The Miami Parking Authority will operate, manage, and control the project, in accordance with the city parking agreement. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN UMJTATJONS AND DISCLAIMERS. -PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: KEIT://FITCHPATINGS.00M/UNDERS ANDINGCREDITRATINGS. 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Miami, Florida July 22, 2010 City of Miami Appendix B Credit Analysis FirstSouthwest A PlainsCapital Company 00' Member F[NRA & SIPC 1 0 2010 FirstSouthwest Moody's Investors Service MFRA 26-October-2010 Credit Senior Most Rating Tax Backed Rating Description 'State Al Neg LT SR GO FL Miami, FL Selected Financials and other Datapoints 2005 2006 2007 2008 2009 Financial Data : Financial Statistics & Ratios �o al General Fund Revenues ($000) 440,881 503,367 553,009 549,252 519,306 !General Fund Balance as % of Revenues 26.6 i 25.1 18.2 17.0 7.7 Unreserved General Fund Balance as % of Revenues 25.8 24.9 j 17.5 ! 16.2 ! 4.8 !Unreserved, Undesignated GF Balance as % of Revenues 9.5 8.3 7.3 8.1 0.0 !Total General Fund Balance ($000) 117,105 126,257 j 100,450 93,577 1 39,973 Financial Data : Debt Statistics & Ratios ! !Direct Net Debt Outstanding ($000) 378,063 367,425 I 396,433 507,536 L 565,170 :Overall Net Debt Outstanding ($000) 660,011 635,495 678,381 789,484 ; 847,118 :Direct Net Debt as % of Full Value 1.2 0.9 0.8 0.9 1.0 !Direct Net Debt Per Capita ($) 978 909 968 1228 1368 !Debt Burden (Overall Net Debt as % Full Value) 2.1 1.6 1.4 1,4 1.5 (Overall Net Debt Per Capita ($) 1,708 1,573 1,656 I 1,911 i 2,050 !Debt Service as % of Operating Expenditures 7,9 7.8 7.2 I i 9.5 , Payout, 10 Years, All Tax -Supported Debt (%), Current Value 60.1 60.1 60.1 i 60.1 ! 60.1 !Payout, 10 Years, General Obligation Debt (%), Current Value 58.4 58.4 58.4 58.4 58.4 !Adjusted Debt Burden as % of Full Value 2.1 1.6 ! Financial Data : Tax Base Statistics and Ratios Total Full Value ($000) 32,133,104 39,120,900 47,925,277 ; 55,249,892 57,676,763 `Full Value Per Capita ($) ;Average Annual Increase in Full Value (%) Flop Ten TaxPayers as % of Total, Most Recent Value 83,157 96,822 116,971 j 133,712 I 139,585 11,2 14.3 16.8 j 17,4 15.8 8 8 8 ! 8 8 Financial Data`:' Demographic. Statistics 'Actual/Estimated Population, Annual Value Population 2000 Census 362,470 !Per Capita Income (2000 Census) 15,128 !Per Capita Income as % of State (2000 Census) 70.2 !Per Capita Income as % of U.S. (2000 Census) 70.1 !Median Family Income (2000 Census) 27,225 !Median Family Income as % of State (2000 Census) 59.7 ;Median Family Income as % of U.S. (2000 Census) 54.4 !Population Change 1990-2000 (%) 1.1 !Median Home Value (2000 Census) 120,100 404,048 413,201 � | | ! dy's Investors Service MFRA r Criteda: Aa3-A2 Cities. 2000Pv 300K-60 K --------------------��------''---------�T=- --~— ----' Selected Financials and other Datapoints Aa3Mod|anoFresno, CA St. Louis, MO|AiMedians --- acked Rating Description LT SR GO i LT SR GO 7.7 served General Fund Balance as % of Revenues 9.8. 11.9 7.8 5.0 :Fm*aincl6I Data : Debt Statistics & Ratios Burden (Overall Net Debt as % Full Value) 4.7 4.2 5 3.4 ----- )ut, 10 Years, All Tax-Supporled Debt Current Value 64.3 49.4 79.2 62.4 )ut, 10 Years, General Obligation Debt Current Value 79.2 :74.7 Financial Data Tax Base'Statistics an Ratios�: Value Per Capita 57,337 62.74 age Annual Increase in Full Value_-____'__-__~_ TmTm % of Total, Most Recent Value 8 Capita County Income (2000 Census) 1.5.559 lan Family Income as % of State (2000 Census) 7 | �� � Cleveland, OH,! Pittsburgh j �a»�A»a' � Toledo, OH U�y r° Al A2 KiamiFL -----'` �� 519,306 77 4.8 0.0 39,973 565,170 84710 1.0 1,368 1.5 2,050 9.5 ___ 60.1 58.4 l / � / ] ` | | i xInvestors Service MFRA htehx: xURxudCNoo;200OPop300�0 K _ _ -- ' _ '-- -----------------'--'----------�---- '�-- -- -`--�--- ---\'- — --�-'--'---`----' �- Selected Financials and other Datapoints Medians i Anaheim, CA j Arlington, TX Atlanta, GA Boston, MA :4 1 Charlotte, NC ' Cincinnati, 0 General Entity Information ed Rating Description LT SR GO LT SR GO LT SR GO LT SR GO LT SR GO LT SR GO LT SR GO LT SR GO mancial Data Financial Statistics & Ratios Net Debt - ~ hn'an'c"ial Data Tax Base Statistics a d Ratios Financial D'at'a Estimated Population, Annual Value 453,152 332,458 925 4. `j _. / ' / �- --/ -j . , sInvestors Service MFRA * onj hmho All Rated Cities; 20VOPop 300-600K - , Selected Financials and other Datapoints Colorado ! Kansas City, Donve�'CO / BPaoo'TX /Fo�^Wo�^h.TX, Fmsm-'C— hUoTown, NY � Las Vegas, N , Springs, CO M ^Senior Most Rating ISSUER LT ed Rating Description LT SIR GO LT SR GO LT SIR GO LT SR GO LT SR GO LT SIR GO i LT SR GO LT SR GOLT RATING Financial Data 2,317 43 -Supported Debt (%), Current Value 4 .4 1 ears, General Obligation Debt (%), Current Value 52.7 66.9 88.2 Financial Data': Tax Bas� Statistics and Ratio s e Annual Increase in Full Value Statistics i pita Income as % of State (2000 Census) 102.2 - �Cleveland, OH y's Investors Service fv1FRA tober-2010 LIU Criteria: All Rated Cities; 2000 Pop 300-GOOK ..... ........ _ a• cramento, Selected Financials and other Datapoints OmahaPittsburgh , NE PortlandS OR Santa Ana, CA Seattle, WA St Louis, MO ; Tampa, FL Toledo, 0 City, PA CA .................... ______, ,„ . . _ 7 mreattimm,i ,ostre-onmew, 2009 2009 2009 ; 2009 2009 II 2009 2009 2009 I 2008 , . ; . General Entitylnforniation • • • ..• -• ; • • • • ‘•-• •• • • • • - a: it Senior Most Rating Aaa • Al 1 Aaa ; Aa2 • 7, Al Aaa Aa3 . Aa1 A2 . .. . • • .. ... cked Rating Description LT SR GO LT SR GO LT SR GO ISSUER LT I RATING .'I LT SR COP LT SR GO : LT SR GO ISSUER LT LT SR GO Financial Data : Financial Statistics & Ratios : • : • - ,.,_, _ . . . . • , General Fund Revenues ($000) 271441749 560973 ,265. . . , 4o6,966 l 211,745 _..f 930456026346005 332 ,; 230,799 al Fund Balance as % of ues Reven. ' 10.4 13.9 •;, 23_ .8 17.7 i 7.7 • 20.9 13.6 ; 351 1.9 ..._ : ! erved al F e Genrund Balance as % of Revenues _ ....... ____ _ . ... . 8.9 12.6 ' 23.8 16.1 ; 5.2 ;I. 10.2 7.8 33.3 : -0.8 ervedted, UndesignaGF Balance as % of Revenues . ... 8.9 . . 12.6 i 23.8 0.2 7; 0 7.1 ;, 25.5 ; -1.6 General Fund Balance ($000) 28,090 61,389 133,755 72,088 ; 16,336 194,023 62,054 ; 121,605 4,391 Financial Data : Debt Statistics & Ratios • I -_,.,_ • I ..................__ ... Net Debt Outstanding ($000) 766,491 697,451 312,820 536,545 i 172,510 ; 939185 701,154 : 437755 : 261,196 II Net d a Debt O utstnng ($000) _ ..........„ 1,253,687 1 340 628 688 969 -2 139 443 447 659 ; 1 770 255 946,820 ; 1,032,637 ', 527,282 _ Net Debt as % of Full Value 2.9 4.6 0.3 1.3 i 0.6 ; 0.7 3.8 1 , 2.1 ........... „... ..... __. ., 2,085 Net Debt Per Capita ($) 1,686 561 1,157 li 509 1,560 1,979 i 1,284 891 . , .. 3-urden (Overall Net Debt as % Full Value) . 4.7 8.8 0.8 51 L 1.6 I 1.3 51 f 2.3 4.3 il 14e1 Debi Per Capita ($) 2,757 4,007 _ .. 1,235 ', 4,613 ; 1,320 ;: 2,941 2,672 , 3,029 . , 1,799 8.2 Service as % of Operating Expenditures 19.4 22.7 3.4 , 10.6 ; 8.6 ; 0 8.5 8.6 1, 16Years, All Tax -Supported Debt (°/0), Current Value 55.8 83.7 92.2 ; 44.9 , 49.3 61.2 79.2 . 49.3 79.3 ii, -i6 Years, General Obligation Debt (%), Current Value 57.3 83.7 92.2 i • ! 61.2 ; 79.2 ; 79.3 Financial Data : Tax Base StatiStids and:Ratios Full Value ($000) 26,509,936 15,169,115 90,943,842 i. 41,830,577 28,688,411 ; 137,830,854 II 18,461,966 ij 44,961,864 12,278;64 alue Per Capita ($) ... 68,298 __- 45,340 163,06.8 90192 l 84,594 i 228,955 I 51920 131 987 , 41,679 ge Annual Increase in Full Value (%) 6.4 0.9 i 10.4 11.2 ; 8.4 I : 10.4 I'- 10.7 ; 10.2 ; -6.5 . .:. en If axi6ayers as % of Total, Most Recent Value ; 3 11.3 . 5.1 3.8 . I 4.2 , . 1.4 , 0.5 6.6 , Financial Data Demographic Statistics . : .._. I/Estimated Population Annual Value 454731 .__ 334563 ; 556,370 446530 ; 355662 : 602000 i 355663 : 349,25.0 ation 2000 Census 390,007 334,563 '; 529,121 407,018 i 337,977 i 563,374 i 348,189 ; 303,447 313,619 apita County Income (2000 Census) 21,756 I 18,816 I 22643 ,., 18721 1 12152 30,306 •; 16,10.8 •I; 21-,'953 -;: 17,36e . ; apita Income as % of State (2000 Census) 110.9 i 90.1 If 108.1 , 82.4 . 53.5 . ; 131.9 ;: 80.8 i 101.8 f. . . . apita Income as % of U.S, (2000 Census) 100.8 87.2 :, 104.9 I; 86.7 ; 56.3 140.4 74.6 i 101.7 - ._., n Family Income (2000 Census) 05 2,821 -:; 38,795 i 50,271 ; 42,051 i 41,050 :, 6 ,195 32,666 - ' i --466-17 i 411,15 --- .. ..... .... ...» . .. . ..' n Family Income as % of State (2000 Census) 10.6.8 i" 78.9 103.3 I, 79.3 77,4 i 115.7 70.8 888 ..... j t? n Family Income as % of U.S. (2000 Census) 101.5 77.5 : 100.4 : 84 82 I 124.3 i 65.1 ; 81 ; 82.3. ation Change 1990-2000 (%) 16.1 -9.5 : 21 ; 10.2 •; 15.1 9.1 ; -12.2 ; •8.4 : -5.8 n Home Value (2000 Census) - 94,200 59,700 154900 i 128800 1 184500 : 259,600 1. 63,900 : 81500. ;: 76,300 _ .... . _ Moody's Investors Service MFRA 26-October-2010 View Criteria: All Rated Cities; 2000 Pop 300-GOOK Selected Financials and other Datapoints Tucson, AZ General Entity Information 'Current Senior Most Rating ;Tax Backed Rating Description i Virginia Washington, •Wichita, KS Tulsa, OK Beach, VA "; DC 2009 2009 2009 2009 2009 a1 Aaa Aa2 Aa1 LT SR GO LT SR GO LT SR GO LT SR GO LT SR GO Financial Data: Financial Statistics & Ratios Total General Fund Revenues ($000) 434,623 268,890 i 1,061,048 6,027,123 I 198,010 :General Fund Balance as % of Revenues t 9.1 s 18.8 15.4 15.3 12.4 Unreserved General Fund Balance as % of Revenues 3.9 15,5 14.4 3.6 11.3 lUnreserved, Undesignated GF Balance as % of Revenues s 3.9 i 10.4 8 7 L 0 5.5 'Total General Fund Balance $000 39,728 •, 50,523 163,681 920,483 24,622 Financial Data:: Debt Statistics & Ratios ;Direct Net Debt Outstanding ($000J 603,467 421,752 1,011,268 : 6,406,164 563,028 Overall Net Debi Outstanding ($000) 1 136,964 514,647 999,710 6,271,186 910,145 (Direct Net Debt as % of Full Value 2 1.6 1.7 4.2 2.7 'Direct Net Debt Per Capita ($) i 1,110 I 1,090 2,344 _ �....._......._______ P 10,824 1,524 Debt Burden (Overall Net Debt as % Full Value) ( 3.8 ! 1.9 1.7 6.4 4.4 Overall Net Debt Per Capita $ 2,092 1,330 2,305 10 784 2 464 Debt Service as % of Operating Expenditures 9.5 9.9 • 6.8 7.8 25 ;Payout,10 Years, All Tax -Supported Debt (%); Current Value 87.1 70.7 72.8 42.1 88.3 ?Payout, 10 Years General Obligation Debt (%), Current Value ? 81 70,7 72.8 421 88 3 1. Financial Data : Tax Base Statistics and Ratios i ;Total Full Value ($000) 30,304,695 26,900,873 1 61,286,941 153,039,555 20 910,840 Full Value Per Capita ($) 55,752 69,511 t 142,048 ? 258,586 56,617 ;Average Annual Increase in Full Value (%) 12.1 4.1 14.2 18.2 4.9 . Top Ten TaxPayers as % of Total, Most Recent Value 9 10.6 4 6.8 . Financial Data : Demographic Statistics ;Actual/Estimated Population, Annual Value !543,566 387,000 ? 431,451 591,833 369,340 572,059 344,284 'Per Capita Income 16 322 21,534 22,365 28,659 20,647 Per Capita Income as % of State (2000 Census) • 80.5 122 93.3 100 100.7 :Per Capita Income as % of U.S. (2000 Census) 75.6 99.8 103.6 132.8 . 95.6 Median Family Income (2000 Census) 37,344 44,518 53,242 46,283 49,247 ;Median Family Income as % of State (2000 Census) _ 79.9 109.4 98.3 100 99 2 Median Family Income as % of U.S. (2000 Census) 74:6 89 106.4 92.5 98.4 Population Change 1990 2000 (%) _.... __.._____ __ _-.----___ 20.1 __:._... 7 8.2 -5:7 13.2 Median Home Value (2000 Census) 96,300 83,600 123,200 157,200 78 900 P County (2000Census) 2.3 / 3.5 5. 5 '\ 6.5 8.5 9.5 9.8 10.3 10.8 11.0 11.5 13,5 Aaa.Q 1 Aa2.Q1A '.Q A1.Q 1 A2.Q A3.Q faa1.0 Baa2.Q Baa3.Q SG1.Q SG2.Q SG3.Q QRATE Moody's investors Service QRATE Evaluated 26-October-2010 Miami, FL General Obligation - 7 Variable City Model i Moody's Rating Rating Description QRATE Inputs Al Q-Rating. LT SR GO Score Aa2.Q .. FY 2009 Moody's Base Case Institutional Presence Level of Issuer Flexibility Year of Full Valuation General Fund Balance as % of Revenues Direct Net Debt as % of Full Value Payout, 10 Years, GO Debt (%), Current Value Total Full Value ($000) Per Capita Income (2000 Census) No Medium 2008 7.7 1.0 58.4 57,676,763 15,125 Issuer Flexibility - In order to improve the accuracy of the predicted ratings, we have created a FinancialFlexibility variable that seeks to incorporate the ability of the issuer to manage its fiscal position in a timely manner. While most issuers have what we would identify as "Medium" flexibility, some issuers have the ability to raise revenues and/or cut expenditures expeditiously and therefore have a "High" level of operating flexibility. Conversely, many issuers are unable to raise property or sales tax rates due to various state and local regulations, or cannot reduce expenditures easily due to such factors as union representation of the work force or consent decrees from courts. In this case, we would assign a "Low" financial flexibility value to the FinancialFlexibility field. The results generated by Moody's Quantitative Ratings Estimator (Moodys QRATE) may or may not reflect a Moodys rating actually assigned to such issuer whether or not the ultimate events related thereto differ materially from the factors used as inputs in Moodys QRATE. Material changes in such structures or scenarios, external factors, and the passage of time may also result in a Moodys rating which is different from the results generated by Moodys QRATE. The use of Moodys QRATE does not compel Moodys to assign a particular rating or any revision thereof to any of the issuers. Moodys may at any time refuse to issue any rating, or, if already issued, revise or withdraw such rating. Moody's has developed a Quantitative Ratings Estimator modeline product called "QRATE" (Quantitative Ratings Estimator) that it describes as a "predictor model" that is able to generate a quantitatively derived rating that "...should come close to an actual rating from an analyst". The Moody's QRATE model utilizes six variables that have been determined to statistically predict the analysts' actual rating. The final analysis"scores" the results, with the score being a numerical representation of Moody's rating scale. Through our use of this product, we are able to provide the City with detailed insights into Moody's rating methodology, which it may utilize to its benefit during discussions with rating analysts at the major rating agencies regarding its underlying credit quality. nnrnn .....J nnnrr J..-nrn 4n ne 4nnn nn..i.. 40,C,inn4n City of Miami Appendix C Florida Market Commentary FirstSouthwes A PlainsCapital Company . Member FINRA & SIPC1@ 2010 FirstSOuthwest Ed Marquez From: Ed Marquez Sent: Tuesday, October 19, 2010 2:28 PM To: FSC Commentary Attachments: Hi Folks, Florida Commentary 10-18-10 E. Marquez.pdf; First Southwest Asset Management Economic Summary - 3rd Qtr 2010.pdf; The Bond Buyer - Rollover Risk Less In Munis.pdf; The Bond Buyer - Floating Rate Notes Tell a Tale.pdf Attached is this week's Florida Commentary as well as two Bond Buyer articles dealing with (1) roll-over risk being less in the municipal marketplace due to scheduled amortizations of principal and (2) the anticipated popularity of Floating Rate Notes. Also included is First Southwest Asset Management's economic recap of the 3' quarter. ^i Hope you find this useful. Have a areat week!! Ed Ed Marquez Senior Vice President FirstSouthwest direct 305.819.8886 fax 305.819.9992 cell 305.321.3332 13851 NE 29th Avenue, Suite 520, Aventura, FL 33 I S0 I - rida Market Commentary FirstSouthwest<P BER 11 - OCTOBER 15, 2010 exempts finished the shortened week mostly unchanged with the exception of a few spots, mainly in the shorter end of the curve where the market continues to hold its own. Dealers continue to place bonds tructively from the large issuance week ending October 8, which has helped the market sustain these current levels. The slightly over $5.9 billion that made it to market this week was manageable and was met mixed results. Traders and underwriters appear to be poised for the likely onslaught of Build America Bond issuance as issuers push to come to market with the BAB extension being uncertain at this time. MMD MA -scale was slightly better to unchanged across the curve with the 5-year yielding a 1.16% or 2 basis points better than the week prior, the 10-year yielding a 2.32% or 3 basis points better than the prior and the 30-year yielding a 3.73% or weaker by 1 basis point from the week prior. Indexes this week showed improvement with the Bond Buyer Index posting a yield of 3.82%, 2 basis points better than the week prior and the lowest level for the index since May 4, 1967. The Revenue Bond x posted a yield of 4.57%, 1 basis point better than the week prior, and the lowest it has been since posting the same level back on May 31, 2007. 30-day visible supply is slightly over $15.5 billion with approximately $7.5 billion set to come to market the week of October 18-22. again. most participants are focused on price discovery. Most will attempt to stay light in inventories and hang on until the end of the year. We haven't gotten to the "folding our tents" stage but the move up in s several weeks back caught some off guard and most will not likely be looking to get biindsided again so close to the end of the quarter and end of the year. To be continued. Market 1\4overs Source: Bloonthet' Year History of Weekly Floating Rate Index (SIFMA) vs. Bond Buyer 25-Bond evenue Bond Index (RBI) and 30- Year Treasury ntrce: "I'huntsun Reuters and The Bond Buyer - S IFMA weekly Tax -Exempt Index = 0.27 % (10/13) -Revenue Bond Index =4.57 % (10/14) -30-year Treasury = 3.90 % (1 0/14 ) Co - Trinspoltation Imp Ref Rev Bds, Series ev Fin Corp. - Ed Fac Rev Bds, Series 2010A of Lakel4nd- Energy Sys Rev & Ref Bds, Series. A O\��0 'L\00 0\^�\00 O\^�\00\,\O\,\O \,�O Al/NR/AA (None).: NR / NR / BBB (None) Al / AA- / AA- (AGMC) 10/15/10 10/13/10 10/7/10 $53.035 $57.245 $199.300 fi,LtWgvunF ".Jiioraw ;tAcitttill!' 10/13 10/14 10/14 10/14 10/14 10/15 10/15 10/15 10/15 10/15 10/18 10/19 10/19 10/19 10/19 10/19 10/21 10/21 10/21 10/21 MBA Mortgage Applications Producer Price Index (MoM) PPI Ex Food & Energy (YoY) Initial Jobless Claims Continuing Claims Consumer Price Index (MoM) CPI Ex Food & Energy (YoY) Advance Retail Sales Retail Sales Ex Auto & Gas U. of Michigan Confidence Capacity Utilization Flousing Starts Housing Starts MOM% Building Permits Building Permits MOM% ABC Consumer Confidence Initial Jobless Claims Continuing Claims Leading Indicators Philadelphia Fed. 2.50%/0.93% N/A 4.00°/r/0.65% 4.00%/2.16% N/A 5.00%/1.90% 0.10% 1.50% 445K 4450K 0.20% 0.90% 0.40% 0.30% 68.9 74.8% 580K -3.00% 575K 0.7% 455K 4410K 0.30% 1.8 .... 5.00%/3.36% 5.00%/5.05% 5.00%/3.19% 14.6% 0.40% 1.60% 462K 4399K 0.10% 0.80% 0.60% 0.40% 67.9 FL Investment Pool Information October 13, 2010 Overnight 30-Day September 2010 September 2009 Fed Outlook 3 - Nov 14 - Dec 26-Jan 15 - Mar 27 - Apr 22-Jun 9 - Aug 20 - Sep 20-Nov 1.3 - Dec 4.125%/4.33% Mat.12/1/29 6.00%d5.72% 5.25%/4.23% Mat 111/1/29 rJ\.>SJY 0.32% 0.31% 0.32% 0.32% 0.25% 0.25% 0.25% 0.25% 0.50% 0.50% 0.50% 0.50% 0.75% 0.75% N/A 6.00%/6.00% N/A For additional information, please contact: Ed Marquez • Direct: 305.819.8886 • edward.marctuez(Wfirstsw.com ephs depict historical interest rates and their respective relationships. Fumrn Interest rates are dependent upon many [actors such no, but not limited to, Interest rate trends, tax rates, supply, changes in laws, rules and regulations, as wall as changes in mad d rating agency considerations. The effect of such changes in such assunlpinns may be mateilal anri could affect the projected results. These results should he viewed with these potential changes In mind as well as the understanding that there may be ns in ttto 5hor1 lane nuukel or no mn,kol may axis( al all. ECONOMIC SUMMARY In comparison to the second quarter of 2010, the third quarter was a bit dull. The BP oil spill was finally capped, the volcano in Iceland is no longer spewing smoke, the European sovereign debt crisis is in repair mode and so tar, the U.S. has gotten through hurricane season without taking a major hit. When the report card For second quarter economic growth was finalized, GDP had increased by a modest 1.7%, establishing a disconcerting downward trend after 5.0% and 3.7% annualized GDP numbers from the previous two quarters. So far. data suggests growth in the just completed third quarter may have been stronger ...but not strong enough. The housing market took a major dip after- the Federal tax credit expired at the end of April, and the labor market lost psychological ground when it shed a million census workers. Unresolved concerns that the Bush tax cuts would not be extended at the end of the year fostered a sense of uncertainty that dealt a further blow to confidence. Many surveys suggested Americans Jch worse than they had in 2009 ...and for good reason. Tne Wall Street Journal reported that almost halt of all Americans are now living in a household in which someone receives government benefits, more than at am time in history. Federal unemployment compensation has soared from S25 billion annually before the recession to nearly $200 billion now. Eighty years ago when the Great Depression began, Social Security, Medicare and the food stamps programs didn't exist. Today's government safety net goes a long way in explaining why the "Great Recession" of 2007-2009 was mostly devoid of depression era images of soup lines and apple vendors, but it's also making it harder and harder to- fix -the underlying problems when dollars intended as economic stimulus are just plugging holes and keeping people afloat. Bond yields began a shocking nose dive from recent highs in April and have kept on falling, establishing a series ofnew lows. The two- year Treasury -note traded at a yield of 1.17% in early April, ended the quarter at 0.43%, and has already dropped below 0.35%1 the first week of October. The two-year has never been this low. The 10-year Treasury -note, which yielded 3.99% in April, had fallen to 2S 1% by quarter end and just below 2.409% by early October. MAJOR EVENTS Oddly enough, there really taereti t any major events, per se, that had an effect on the markets. The media keyed on the announcement in September by the National Bureau of Economic Research (NBER) that the recession that began in December 2007, had officially ended in June 2009. This almost seemed like a joke, and in fact comedians had a field day. Jay Leno told his audience, "what they don't tell you is the next recession started in July of last year;' and David Letterman reported that "...they were popping champagne at the unemployment office." The NBER also decided that any subsequent downturn would constitute its own recession and not a continuation of the last one. This announcement silenced tram:; who were calling for a "double clip,' and may add "growth recession' to a number of financial dictionaries. A growth recession happens when the economy is growing but at such a slow pace, unemployment is still on the rise. HOUSING I,C..O ech — 400 s"c0 - eM' Ezisong Herne Saar Now Hame Sates 0 r u n t Fit+F+hi+�-F1 Wi : r+++w.++rtd+++e+a+w N 1: r I N 11 f 1 I f r t -> z E. - n z -> z NEV.;ANC 0%••iE SPL-- The average 30-year mortgage rate in the U.S. matched a record low of 4.32% for the. week ending Sept 30''', but despite historically low lending rates, the volume of mortgage applications dropped for the fifth straight week. There comes a point when interest rates have been so lots for so long that most of those who can refinance, already have. New mortgage loans have mirrored home sales, which are floundering without government support. Existing home sales plunged 27.2% in July, as the annual sales pace declined to 3.8 million, the slowest since 1995. The inventory of existing homes rose to 12.5 months, the most since 1999. New home sales for July unexpectedly fell by 12.4% to a 276k annual pace, the lowest since record keeping began in 1963, while the inventory of new homes rose to 9.1 months. At the time, the total estimated number of new homes on the market was only 2I0k. By comparison, in 2005, a record 1.28 million new single-family houses were sold. August saw a modest rebound as existing home sales climbed back above 4.1 million and Heir home sales matched the revised 238k sales pace from July, but the long-term outlook remains cloudy at best. Douglas Duncan, Fannie Mae's Chief Economist told Bloomberg Radio in September that seven million U.S. homes were vacant or in the foreclosure process. Morgan Stanley housing analyst Oliver Chang believes this number could be closer to eight million. On top of the bloated housing inventory and huge shadow inventory, there are an estimated five million loans 60 days or more pass due, representing 10% of all mortgages. It's a deep hole. In the short run, the housing market may get some unlikely help as a number of servicing banks. including Bank of America. Wells Fargo and JP Morgan Chase have halted the foreclosure process until they can dig themselves out from under a mountain of incomplete or incorrect documents. Ultimately, the housing problem wait be solved until a critical number of American workers are rehired. r EMPLOVMMENT onemPleym.m Nato n.al, Nag, 1)wral 122151, Change in Nonfarm PawnIls anamoloymeniRa,e pilot,! (man,: in Non The employment theme during the quarter centered on the federal census workers. They beefed up payroll numbers early in the year when they were hired and hammered them back down during the summer months when they were laid -off en masse. The September payroll report proved to be even more of a dud than most experts had predicted. The establishment surrey showed nonfarm payrolls had dropped by 95k in September, well below the median forecast for a 5k decline. Government jobs led the declines with a total drop of 159k. Of this, final paychecks to Census workers totaled 77k. The October report shouldn't be distorted by these temporary workers since only a fraction remain. Private sector payrolls, which have been a more reliable hiring indicator, rose by 64k in September. During the quarter, private payrolls increased by 273k. Although this may sound like a lot, it isn't nearly enough to bring the unemployment rate down. In September, unemployment remained at 9.6%. Bloomberg News reported that it was the 14''' consecutive month at or above 9.5%, the longest stretch since 1948 when monthly recordkeeping began. But if there's a silver lining, it's found in the same household survey that determines the unemployment rate. Deutsche Bank reported that household employment was up by 2.3 million for the first eight months of the year and expected the gap between the establishment and household surveys to gradually close. CONSUMER SPENDING Retail sales rose by 0.4% in August after rising by 0.3% in July. Although still quite low, these sales numbers were hewer than in the prior two months, reinforcing the notion that the economy is showing modest improvement. In July, consumer credit dropped by 53.6 billion, the sixth straight decline and the IS'h drop in the past 19 months. By contrast, during the last recession in 2001, consumer debt increased in every month. Since the fall of 2008, households have shed a total of $163 billion in non -mortgage debt. FTN Chief Economist Chris Low expressed the problem well in a recent client call when he said, "the economy simply doesn't grow without expanding credit" And it isn't just a lack of borrowing that's holding back more vigorous expansion. Cash - out refinancing. a virtual ATM machine dispensing huge amounts of discretionary dollars to homeowners during the housing boom years, has virtually disappeared. According to Freddie Mac, through most of 2006 and 2007, over 80% of homeowners who refinanced their mortgages tool. advantage of escalated prices to extract equity amounting to between 570 and S85 billion PER QUARTER. This number has subsequently dropped to around S9 billion per quarter. The difficult thing to fully comprehend is that the cash -out frenzy was an aberration that drove economic growth beyond where it would normally have taken itself. INFLATION ®CPI —4—awe, co Core consumer inflation is at the lowest level in 44 years, rising at an annual rate of only 0.9% in each of the last five months. Since Fed officials would prefer to see the general price level rising at closer to 2.0%, this decline in the rate of inflation has sparked concern that deflation could eventually evolve. The U.S. doesn't have too much historical experience with deflation, but Japan provides a scary example. After their own real estate bubble burst 20 years ago, they drifted into a prolonged recession thateventually ushered in a severe case of deflation. To reignite demand. they gradually cut interest rates to near zero where they've remained for over a decade. Despite extremely loose monetary policy, the general price level is still falling. The problem with deflation is that producers have less incentive to build inventories because the selling price of goods could eventually drop below the cost of production. Rdeanwhile consumers have little incentive to spend when they believe they'll be able to buy goods at cheaper prices down the line. The net result is a further slowing of economic growth. A weaker economy means even less demand, which feeds deflation in a downward spiral. Once it gets started, it's tough to stop. One significant reason tile Fed will likely keep interest rates near all-time lows for at least the next year, is to spur demand so that prices rise, at least a bit. STOCK NIA Lt KETS .Alt of the major indexes increased significantly during the second quarter, with the DO\V and the S&P 500 rising more than 1_0%. and the NASDAQ up 12' . In the prior quarter. the DOWN had dropped more than 10%, while the S&P and NASDAQ both fell in excess of 12%. Although the stellar stock market performance is a bit puzzling given the fragile and uncertain state of the economy, the S&P companies themselves have done well with Q2 profits at SIS'9 billion, a 3S° increase 1'Ol' and the sixth highest quarterly total ever. 'S7 m let s ttke?' io t} ore late is ca i1;e C aile Cra & . Scan Nidntrre CF tltistt^asrPepoft hai..ineastirespianred-o i ar 'i. i:Js f it_-4% SeniorPortfolio.ti learrore i ai'tn-tug3Sf_,.t6 zTET9itest Cre1•o,...r.IIUUt7cetiia iTs.[t'. Octoher3,7U10 more L' ac a et3dc .CC fU1ii r.cc c C L:Ct ._ .l e4 iJ52 :Cr :c:.. , a tom..{... , 1-11 E.: 4il• .t. 6/30/10 ..,I�.... 9,774 i 1,031 2,109 9/30/10 10,778 1,141 2,369 %Change forQ3-2010 410.4% +10.7% +12.3% Last 6 30/18, 0.00% 018% I 0:22 0 _0 61 % 1,1:78%, 2,93% High 01710 0 22% 0 67%1 i 90% 3.18% Low 0.13% 0.18% 0.42% 1.23% 2.47% End .9/30/10 0.00% 0.16% 0.19% 0.43% 1.27% 2.51% ease tn: oitliii $iaamher,_ surtiet o 0 01 the apron- Wp coitLri is shezes corstr tte tnflatten morn., , s417,a ., he eono-nvsu» gt it ai . the unemplus IaLr T 1re ruiiit n t m � 1 hi the of nert er r Therecnierp.srxz.staissfit+zr?(ate but'itzItaketimetounfold' Rollover Risk Less In Munis - Bond Buyer Article Page .1 of THE ONLY NEIN PAPER OF PUBLIC FINANCE Rollover Risk Less In Munis Level Debt Service Is Key Friday, October 15, 2010 By Dan Seymour Most municipal analysts bristle at the claim that California will "become the next Greece." Among the important differences is that California prepares to repay debts with its own revenues; Greece assumes it can repay its debts by borrowing more, A common risk in most financing markets is "rollover risk." When a borrower has a debt maturity coming due, it often needs to borrow again to pay off the existing loan, or "roll it over." This presumes access to functioning. capital markets where investors are willing to extend loans. One needn't look too far back in time to see this is not always the case. Borrowers unexpectedly facing the prospect of failing to roll over debt was a primary cause of the financial crisis of 2008 and the sovereign debt crisis of 2010. Since municipal borrowers in the U.S. generally plan to pay off debt steadily over time from taxes and other organic revenues; rather than roll it over, this risk is far slighter in municipal investing than in most other markets. Municipalities that sell bonds to raise money for a project commonly size the maturities of the bonds to achieve level debt service. This means the interest and principal payments will be roughly even each year until the final bond matures. This follows a public finance economics concept known as "pay as you use," which holds that taxpayers should pay for a project evenly over its life, rather than all at once at the beginning or the end. This tendency means that municipalities usually have a predictable cost of repaying debt each year. They do not need to borrow money again to pay off the debts they already have. "You don't have rollover risk or market access issues, which you have with sovereign or corporate issues," said Eric Friedland, group credit officer for public finance at Fitch Ratings. "`eVhen people ask us to compare California to Greece, one of the check rnarks for the municipal market is the fact that the conventional municipal issuance is 20-to-30-year amortized, that doesn't expose the issuer to refinancing risk." An important disclaimer: municipalities in the U.S. are not completely immune to rollover risk. Municipalities use bond anticipation notes, tax anticipation notes, commercial paper, and some other tools that rely on market access for bridging gaps between cash receipts and outlays. Plus, municipalities have about $390 billion in variable -rate debt obligations, which are long-term debt structures supported by two- or three-year bank guarantees. The need to regularly renew these guarantees exposes governrnents to the risk that banks lose their appetite for guaranteeing municipal debt. Friedland said some of the credits Fitch is most concerned about are weak issuers with shaky market access that will need to meet short-term liabilities. Generally, though, municipalities' rollover risk is far slimmer than http://www.bondbuyer.com/issues/ 119_447/california next greece-10186... 10/18/2010 Rollover Risk Less In Munis - Bond Buyer Article Page 2 of 3 it is for sovereign governments or corporations. Borrowers in these markets routinely structure their debt profiles assuming they can repay debt by borrowing new money later. The International Monetary Fund's Global Stability Report, released last week. focused in large part on sovereign rollover risk, The risk of a country failing to find lenders has spiked. This is essentially what happened to Greece in May. It planned to meet an $11.9 billion bond repayment by selling more bonds. As concerns about its ability to meet this payment swelled, investors grew skittish about lending the country money. Canada needs to raise a little more than 10% of its gross domestic product to repay maturing debts through the end of next year. Italy's needs are closer to 20% of GDP, according to the IMF report. Japan needs to scrape up half its annual economic production to pay off maturing debts, In explaining why Japan was unlikely to "dysfunction," the IMF cited a stable investor base — not dependable tax revenues or fiscal discipline. Contrast that with the most fiscally troubled states. According to its annual report for fiscal 2009, California is facing about $2.9 billion in debt maturities this year and a similar amount next year — less than 0.4% of the state's GDP. Illinois will have to repay about $1.5 billion in principal this year and next, or 0.3% of its GDP. The totality of state and local governments' interest paid and debts retired or refinanced in 2008 was 2.4 o of U.S. GDP. Aside from its diminutive size, what is noteworthy about this figure is how stable it is over time. In 2007, state and local governments' interest paid plus debts retired or refinanced in 2008 represented 2.3% of U.S. GDP, The figure has stayed between 197% and 2.66% since 1995. Not so for the federal government, which based on current debt outstanding will next year spend 6.9% of current GDP repaying interest and principal, followed by a spike to 8.5% in 2012. Friedland said there are plenty of issuers that have sold bonds to finance projects, and could budget for the interest and principal payments on those bonds for years without accessing the market again. "We view the fact that there is significantly less use of bullet maturities by municipal issuers as a credit positive," said Nicholas Sourbis, a managing director at the bond insurer National Public Finance Guarantee. "The fact that municipal issuers tend to favor level debt service doesn't mean they're not reliant at all on market access ... it just means that they're less susceptible to problems refunding maturing debt than, for instance, sovereign issuers." A good illustration of the perils of rollover risk can be found in Bell, Calif,, which according to its latest annual financial report has a $35 million lease revenue bond maturing next month. For a city with about $10 million in annual property tax collections, paying off the principal is impractical. That forces Belt to turn to investors for the money to repay the debt, at e time when the city has gotten tremendous amounts of bad publicity over exorbitant salaries to city managers. The California attorney general's office Thursday said it plans to seek a court order placing Bell under some sort of receivership or monitoring. "This one has a balloon payment coming due, and is not exactly a popular credit," said Richard Ciccarone, head of municipal research at McDonnell Investment Management. "You're dependent on either the bank or the bond market to cover you.... This is why level debt service is much more manageable. A credit like that is going to have a very hard time trying to pull off a payment of $35 million from internal sources." http://www.bondbuyer.com/issues/119_447icalifonda_next_greece- I 0186... 10/18/2010 i-- Rollover Risk Less In Munis - Bond Buyer Ariicle Page 3 of 3 A Financial Crisis Inquiry Commission report in May fingered rollover risk as a principal culprit in the financial crisis. Banks became overly reliant on short-term financing vehicles like asset -backed commercial paper and reverse repurchase agreements. When some banks were unable to roll these over, they faced insolvency. The IMF last week found the biggest threat to banks is not mortgage credit or toxic assets, but their own liabilities. Banks have not done much to lengthen the maturity of their liabilities since the crisis, the IMF found, and they need to refinance more than 54 trillion of debt over the next two years. ID 2010 The Bond Buyer and SourceMedia Inc., AU rights reserved. Use, duplication, or sale of this service, or data contained herein, except as described in the subscription agreement. Is strictly prohibited. Trademarks page. Client Services 1-800-221-1809, 8:30am - 5:30pm, ET For information regarding Reprint Services please visit: http://license.icopyright.net/3.7745ticx_id=20090817FNNRUTWS http://www.bondbuyer.eom/issues/119_447/california_ne,ct greece-10186... 10/18/2010 Floating- Rate Notes Tell a Tale - Bond Buyer Article Page 1 of G 11-1E DAILY NEWSPAPER OF PUBLIC Fit ANCE FLOATING-RATE NOTES Floating- Rate Notes Tell a Tale New VR Product Slips in Popularity Tuesday, October 12, 2010 By Dan Seymour Early this year, the municipal floating-rate note was fast emerging as a potent toot for local governments to maintain some variable -rate component in their debt profiles. Then, its emergence slowed. Some municipalities with a need for variable -rate borrowing in the first few months of the year turned to floating-rate notes to achieve the debt structure formerly provided through auction -rate securities or variable - rate demand obligations. A small flurry of FRN deals from names like Massachusetts, Louisiana, and the District of Columbia in the first half seemed to be setting the stage for the product to become a favored means of restructuring VRDO facilities. Issuance of the product has slowed since the summer, and, other than student -loan securitization pools, FRN deals have been very sparse the past few months. But some market participants have said they expect this market to grow as more issuers face expirations on Liquidity facilities and cannot get good pricing on renewals. The ARS market is mothballed and bank guarantees remain scarce and expensive, leaving traditional means for municipal variable -rate borrowing either stressed or moribund. One banker in New York expressed confidence that the FRN market will grow next year, though it may not soon expand to the size of what the ARS or VRDO markets were in their respective heydays, "There's going to be a lot more of these," said Chris Alwine, head of municipal operations at Vanguard, the mutual fund behemoth. "Our expectation is that more of these will be issued simply because the cost of the facilities that are attached to VRDOs has gone up." FRNs are municipal obligations with interest rates resetting regularly, often monthly or quarterly. The rates are derived from a benchmark rate — typically either the Securities Industry and Financial Markets Association seven-day swap rate or the one- or three-month London Interbank Offered Rate — plus a fixed spread negotiated at issuance. Take as an illustration the South Carolina Public Service Authority, better known as Santee Cooper. The state-owned electric and water utility normally floats commercial paper for interim financing on its capital plan. In July, Santee Cooper took a different course, selling a $234.9 million issue of one-year floating-rate notes underwritten by Goldman, Sachs Et Co. and Bank. of America Merrill Lynch. The utility, in a statement, said the FRNs represented the "least -cost financing option for raising short-term capital." littp://www.bondbuyer.conVissues/l19_444/floating_rate_notes-10 84037... 10/18/2010 Floating- Rate Notes Tell a Tale - Bond Buyer Article Page 2 of 6 The taxable notes pay monthly interest at a rate of one -month Libor plus 25 basis points. The securities offer no put option. Unlike ARS, floating-rate notes do not rely on continuing demand in the secondary market. And unlike most VRDOs, they do not require support from a bank, a crucial impetus for the flood of issuance this year and what market experts believe is the potential for issuance in the future, "The big advantage is that it eliminates what had become pretty costly liquidity facilities, and also eliminates the renewal risk for those bank facilities," said Howard Cure, director of municipal research at Evercore Wealth Management. Nine months into the year, municipal governments have shattered the record for sales of bonds with floating rates based on a reference index, according to Thomson Reuters. Municipalities in 2010 have sold 27 floating- rate debt deals worth $6 billion through the end of September. The record for annual issuance until now was $2.52 billion, in 1999. According to a Bank of America Merrill Lynch estimate, there are now about $40 billion of outstanding muni FRNs, still dominated mainly by student loan debt and prepaid gas deals. Some market participants have said the lower -for -longer interest rate landscape that took shape in the spring likely slowed issuance. Investors are most Likely to buy a floating-rate note if they think interest rates are going to rise, One finance official for a frequent issuer said he believes the only reason governments are not bringing more FRNs to market is the extraordinarily low borrowing costs issuers can realize in the fixed-rate bond market. Record -low tax -exempts fixed rates provide less impetus for issuers to consider floating-rate products. A triple-A rated borrower floating 10-year debt at 2.5%, based on the h1unicipat Market Data scale, can often "fix out" of VRDOs and save money at the same time. Some issuers reportedly have been able to save money by refunding VRDOs with fixed-rate bonds even after accounting for swap termination fees. — Not all have that luxury. VARIABLE -RATE PLUMBING Massachusetts in March came to market with a possibly seminal $538.1 million floating-rate note based off the SIFMA swap rate. The deal was a way of coping with a portfolio of deep -out -of -the -money swaps and a banking sector increasingly skittish about guaranteeing municipal debt. Understanding Massachusetts' dilemma requires an exploration of the plumbing and history of variable -rate muni financing. Municipal governments over the past few decades have relied primarily on two products for variable -rate borrowing, both of which have become anywhere from burdensome to inaccessible. First to fall apart was the auction -rate security, which is long-term debt with an interest rate resetting regularly, perhaps every two weeks, at an auction where the securities change hands. Municipalities sold $185.88 billion of ARS frorn 2004 to 2008, according to Thomson Reuters, and by some reckonings the market grew to more than $200 billion at its zenith that final year. In February 2008 the market froze. Auctions came and went with no bidders, saddling some municipalities with high penalty rates and investors with illiquid paper. The travails imposed an both municipalities and investors from the crisis prompted an exodus from the ARS market, which is now frozen solid. This exodus in turn enabled a massive wave of issuance in another product: the variable -rate demand obligation. http://www.bondbuyer.coln/issues/l 19 444/floating_rate_notes-1018403-... 10/18/201.0 Floating- Rate Notes Tell a Tale - Bond Buyer Article Page 3 of 6 A VRDO is also a long-term loan with an interest rate that resets regularly. Instead of setting rates at an auction, the VRDO's rate is reset by a remarketing agent, who determines the rate necessary to clear the market. In order to be eligible for ownership by money market funds — among the largest investors in short-term market's — VRDOs feature a put option enabling the investor to sell the debt back to the municipality. Because few governments have the financial wherewithal to repurchase their own debt at the investor's option, VRDOs typically carry a letter of credit or standby bond purchase agreement from a bank, promising to buy the debt from the investor exercising the put option, if nobody else will. • Municipalities sold $302.4 billion of puttable VRDOs from 2004 to 2009. According to an RBC Capital Markets estimate, the VRDO market hit its apex at more than $500 billion in 2009. Many issuers that used these structures now face two problems. BANK LIQUIDITY EVAPORATES When a JPMorgan Chase letter of credit on Louisiana's $200 million VRDO approached expiration in May, the state sought bids for a renewal with a different bank. It wasn't just that the state didn't like the bids it was getting. "To be quite truthful, we weren't getting any," said Whitman fling, director of the Louisiana bond commission. Variable -rate demand obligations suffer from reliance on a banking sector whose ability or willingness to extend credit to municipalities is vastly diminished. A VRDO might have a maturity in 20 or 30 years, and a bank liquidity facility expiring in two or three. That necessitates a renewal of the facilities every few years — a process that has gotten much tougher. The financial crisis decimated banks' ratings and disqualified many from writing credible guarantees on municipal debt. A gaggle of banks have exited the muni guarantee business the past two years, voluntarily or otherwise. Last year five banks — JPMorgan, US Bank, Wells Fargo Bank, SunTrust Bank, and Bank of America — wrote 65% of the new letters of credit issued to municipalities. The top five banks in the standby bond purchase agreement market wrote nearly 80% of new business last year, led by Royal Bank of Canada. The lack of competition in the market has now been compounded by potentially looming regulatory burdens imposed by Basel III, which would force banks to hold higher -quality capital and set more liquid assets aside to guarantee municipal debt. The upshot is that bank liquidity for VRDOs is more expensive. Before the crisis, these facilities reportedly often cost just five to 15 basis points. Double -A rated Massachusetts would have had to pay roughly 90 basis points to renew or replace a liquidity facility that expired in March, based on information in a press release from the treasurer's office. Since there was a ton of issuance three years ago, and since the typical credit facility on a VRDO has a term of three years, an enormous wave of facilities is expiring this year and next — roughly $200 billion, according to a Standard a Poor's estimate. Because VRDOs are puttable, the expiration of a liquidity facility would leave a an issuer vulnerable to investors demanding immediate repayment. http://www. bondbuyer.com/issues/ 119_444/ floating_rate_notes-1018403 -... 10/ l 8/201. 0 Floating- .Rate Notes Tell a Talc - Bond Buyer Article Page 5 of 6 Louisiana tells a similar story, converting its $200 million VRDO in June to an FRN bearing SIFMA plus 75 basis basis points, sidestepping the termination of swaps. THE CASE OF MASSACHUSETTS Of Massachusetts' $3.8 billion in variable -rate debt at the end of fiscal 2009, $3.5 billion was synthetically fixed, mostly with swaps valued at negative $325.7 million. The state in 2005 floated a $562.7 million VRDO supported by an SBPA from Citibank and converted into a synthetic fixed rate through a swap. The VRDO was scheduled to mature Feb. 1, 2028. The SBPA was scheduled to expire March 15, 2010, at — as the official statement put it — 5 p.m. Boston time. Citi has not sold an SBPA in several years, and bank liquidity would have been costly for the state to buy. Compounding matters, the swap the state entered promised to pay fixed rates of as high as 4% until 2028, while receiving the SIFMA swap rate, which is currently less than 0.3%. The swap counterparty — also Citi -- was entitled to a sizeable fee to terminate that deal. As of the end of fiscal 2009, the swap's value to Citi was $3i million. Was there any way to refund the VRDO facility without having to pay Citi $31 million to terminate the swap? In a deal led by Morgan Stanley, Massachusetts in March sold $538 million in FRNs, using the proceeds to refund the VRDO. The floaters priced at an average spread of 25 basis points over the SIFMA swap rate. The swap remains outstanding and the state essentially continues to pay a synthetic fixed rate by relating the floating- rate portion of the swap with the payrnents on the FRI'I. In a press release after the sale, the state treasurer said it saved 65 basis points compared with finding a new liquidity facility on the refunded VRDOs. The state claims it not only saved $7.5 million by paying less on the floaters than it would have paid the banks, but it also pared its vulnerability to the risk of depending on banks. Moody's Investors Service called the refunding a "credit positive" — despite an identical amount of debt outstanding — because of the relief of "bank counterparty risk" and "liquidity replacement risk." These solutions might not be for everyone. Louisiana's Kling points out that since investors have demonstrated demand for these products mostly for short periods, the FRN is not a long-term solution. Just as the necessity of renewing a bank facility every few years poses a risk to the issuer, keeping a swap outstanding and continually rolling over floating-rate products opens the possibility of a failed rollover, requiring a swap termination payment. "At the end of that three -to -five year period you're in the position of having to pay off the debt, as web as any associated swap payments, or you have to go through a refinancing structure again," Kling said. "That's the downside to doing it. This is an intermediate relief mechanism." Another notable SIFMA-based floater this year came from the District of Columbia, In 2008, the city came to market with a big, complex deal that, among other elements, included a $125.8 million VRDO supported by a letter of credit from Bank of America. The VRDO was slated to expire June 1, 2034, while the LOC was slated to expire May 21, 2011. The city in March sold $126,7 million of FRNs, with half maturing this year and yielding SIFMA plus two basis points, and the other half maturing next year and yielding SIFMA plus 18 basis points. It used the proceeds to refund the VRDO. http://www.bondbtryer.com/issues/119_444/tloating_rate_notes-101840 3-... 10/ l 8/2010 Floating- Rate Notes Tell a Tale - Bond Buyer Article Page 6 of 6 The deal was also underwritten by Morgan Stanley, which after Bank of America is the second -most active underwriter of FRNs this year, with $2.36 billion in deals for a 39.2% market share. JPMorgan is third, with an 8.8% market share. "What we're seeing right now is significant interest from issuers looking for alternatives to bank liquidity given the number of facilities that are corning up for renewal in 2011," Paul Palmeri, a managing director in JPMorgan's public finance group, said in an e-mail. "Given that there is a reduced number of liquidity providers in the market, coupled with the future potential . impact of Basel III, issuers are looking at floating-rate notes as an alternative to traditional VRDBs," he said. "We're in a unique position to assist issuers as these liquidity facilities come up for renewal, either in the form of traditional credit products or other capital markets solutions such as FRNs." V 2010 The Bond Buyer and SourceMedia Inc., All rights reserved, Use, duplication, or sale of this service,.or data contained herein, except as described in the subscription agreement, is strictly prohibited. Trademarks page. Client Services 1-800-221-1809, 8:30am - 5:30pm, ET For information regarding Reprint Services please visit: http://license.icopyrig:ht,net13.7745?icx_id=20090817FNNRUTWS littp://www.bondbuyer.cona/issues/119 444/floating_rate_notes-1018403-... 10/18/2010 City of Miami Appendix D Letters of Reference F rsi{5o theses A PlainsCapital Company... Member FINRA & SIPC I 0 2010 FirstSouthwest r-: I NURTHMIAMI October 20, 2010 To Whom It May Concern • • Please accept this letter of reference on behalf of First Southwest Company (FSC). FSC has served as financial advisor to the City of North Miami since November 2007. FSC has provided exemplary financial advisory services since the beginning of their engagement with the City. I have found the personnel from FSC's Miami office to be very reliable, informative and accessible. They have assisted the City in numerous ways including guiding us through a $124 Million conduit financing of schools within the City and a refunding of pension obligation bonds which were in a variable rate mode and that was structured originally with a swap that FSC helped us unwind. I would highly recommend their services as a financial advisor to any interested governmental Finance Director City of North Miami City of North Miami 1776 NE 125 Street 1 North Miami 1 Florida 133161 305.893.0511 Fax: 305.891.1015 M I AM I-DADE October 26, 2010 City of Miami 444 S.VV. 2"d Avenue Miami, FI 33130 To Whom It may Concern Re: First Southwest Company Finance Department Office of the Finance Director 111 NW 15treet • Suite 2550 Miami, Florida 33126-1995 T 305-375-5147 E 305-375-5659 miamidade.gov I am pleased to recommend First Southwest Company (First Southwest) as a financial advisory firm, to serve as financial advisor to your governmental entity. First Southwest has been providing financial advisory services for almost sixteen (16) years to Miami -Dade County Aviation Department (Miami International Airport). First Southwest has always assigned capable professionals to serve the County's needs as it accesses the capital markets. Their professionals have exhibited prudent advice and tactical thinking. We are confident on First Southwest's ability to provide expert and timely advice regarding every step of the issuance process from developing a finance program and setting finance terms, to assisting with rating agency presentation and marketing of the debt. First Southwest's underwriting desk has proven very valuable in structuring and pricing our aviation bonds, especially in this current market environment. We are confident of First Southwest's ability to provide financial advisory services to your entity and we gladly recommend First Southwest to the City of Miami. Si rely your l/sclia P. Monzon-Aguir irector Division of Bond Administration Av i` i12r x } w c { .. ' bU ` �S' P S H� p� p��x rr• �`p.p ,,. -, 4 s CiE�NI.41NERRiYlK O +Yt ..x{ �7ki.:YP ? }ki - -' 2- -kT.., 1� .. �-?=���aY�' -�-a--� -.n•v�r.�.:.2- Proposer Name: First Southwest Company Proposer: No 0- Yes 0 If yes, Company Name: Subconsultant/Subcontractor to stAZ.4rt '" r % ram. p . - ' k' xk w3y ; Gil d �TIOn� 9 n 3 ' r .G .2'` . �''' r Name of Reference (person completing form and available for follow-up): Marie Schafer Tide: CFO Phone Number: 305 637-3277 E-Mail Address: mschafer@mdxway.com {� tlg e..■`"{``Y,.'" ;,RiM�(R�.� ■3�se �}, ✓J f aY'13•y J''ih :Nh"r-FC4`•`9-,' +•- pa�F{iL' g `Y-•CYYR�o-5 134� y' c—uf. 3n° Agency Work Performed for: Miami Dade Expressway Authority Contract Title/Name: Financial Advisor Financial Advisor Services/Debt Issuance Brief Description of Services Performed Services performed as a Prime or as a Prime 0 Subconsultant/Subcontractor 0 to Subconsultant/Subcontractor: Type of Agency (Government, State, Local etc.): Transportation/Special District Government Contract Start Date (Month/Year): 2006 Re -Bid FY 2009 Current Contract Expires 2012 Contract End Date (Month/Year): 2009 Contract Amount: Hourly Rates .,x�,...>�a�rrx..4Y^+''':3"11.``. Outstanding X Excellent 0 Good ❑ Fair ❑ Poor 0 Level of Experience for Services Performed: Quality of the Services Performed: Outstanding X Excellent ❑ Good 0 Fair Cl Poor ❑ Proposer's Ability to Meet Contracted Time Frames: Outstanding X Excellent 0 Good 0 Fair 0 Poor ❑ Proposer's Response to Special Requests: Outstanding X Excellent 0 Good 0 Fair 0 Poor ❑ Additional Comments: Signature from Reference: RATING SCALE: Outstanding 90-100 /1! Excellent 20 — 89 Good 70 - 79 Date: Fair 66 - 69 Poor 65 and below r^ FI{LIX NI. I.:\S \R'11i., IiNO. (, Jr I.uUIS V. M;\RTINEZ, I SQ. b�Grd.b�rir JORCG NI. VIGIL, LSQ Treaurrer GUS PECIO, FOOT 1)/w el .S;x Semv,ny NIAUIiICE.. A. FERRG NLV:[17..\ (1;11111..RREL ROItRR•r\s.'. HOLI,AND, r.So. NICK A. IN.\\ DAR AL M:V.i)t)F, Ph.D GONZ.U.O SANARR[A SI IIiLL\' SNI I'if I I.\NO YVONNI°. SOI.LER N[CKINLEY NORNL\N R. \V,\RTN[,\N J.\VIER RODRicLI?/., I>.li. Exeaunr 1)rmty NIARG\ LUIS;\ NAVI,A LOB) .Serrer,rry MIAMI-DADE EXPRESSWAY AUTHORITY AN AGENCY OF THE STATE OF FLORIDA 3790 N.W. 21st St. Miami, FL 33142 tel 305.637.3:477 fax 305.637.3283 su+tcom 46[.3air7 wwv.mdx•way.com October 26, 2010 To Whom It May Concern, 1 understand that the City of Miami, Florida, has recently solicited proposals from municipal financial advisory firms for advisory services related to the issuance of debt and potential execution of swaps. First Southwest Company has served as financial advisor to the Miami -Dade Expressway Authority since 2000 and has provided a very comprehensive team to make certain that the Authority always has coverage when necessary. Some of the services that the Authority has received from First Southwest include traditional financial advisory work on bond transactions, interest rate swap analyses as well as investment management and arbitrage services. Additionally, First Southwest's underwriting desk was invaluable during the pricing our bonds, especially in this current market environment. In keeping with our policies, please accept the attached reference form as a as recommendation for First Southwest Company. Sincerely, Mar T. Schafer, CPA Director of Finance/Chief Financial Officer --- FirstSouthwest's Client List for the Past Three Years City of Miami Appendix E Required Forms FirstSouthwestiMR A PlainsCapital Company. Member FTNRA & S1PC 1 0 2010 FirstSouthwest Certification Statement Please quote on this form, if applicable, net prices for the item(s) listed. Return signed original and retain a copy for your files. Prices should include all costs, including transportation to destination. The City reserves the right to accept or reject all or any part of this submission. Prices should be firm for a minimum of 120 days following the time set for closing of the submissions. In the event of errors in extension of totals, the unit prices shall govern in determining the quoted prices. We (I) certify that we have read your solicitation, completed the necessary documents, and propose to furnish and deliver, F.O.B. DESTINATION, the items or services specified herein. The undersigned hereby certifies that neither the contractual party nor any of its principal owners or personnel have been convicted of any of the violations, or debarred or suspended as set in section 18-107 or Ordinance No. 12271. All exceptions to this submission have been documented in the section below (refer to paragraph and section). EXCEPTIONS: We (I) certify that any and all information contained in this submission is true; and we (I) further certify that this submission is made without prior understanding, agreement, or connection with any corporation, firm, or person submitting a submission for the same materials, supplies, equipment, or service, and is in all respects fair and without collusion or fraud. We (I) agree to abide by all terms and conditions of this solicitation and certify that I am authorized to sign this submission for the submitter. Please print the following and sign your name: SUPPLIER NAME: FirstSouthwest ADDRESS: 18851 NE 29th Avenue, Suite 520, Aventura, Florida 33180 PHONE: 305.819.8886 EMAIL' Edward.M uez@firstsw.c m SIGNED BY. c-(Jt TITLE: Senior Vice President FAX' 305.819.9992 BEEPER: N/A DATE' 10/29/10 FAILURE TO COMPLETE, SIGN AND RETURN THIS FORM SHALL DISQUALIFY THIS BID, Page 2 of 35 Certifications Legal Name of Firm: First Southwest Company Entity Type: Partnership, Sole Proprietorship, Corporation, etc. Corporation Year Established: 1946 Office Location: City of Miami, Miami -Dade County, or Other 18851 NE 29th Avenue, Suite 520, Aventura, Florida 33180 Occupational License Number: 339556-3 Occupational License Issuing Agency: Miami -Dade County Tax Collector Occupational License Expiration Date: September 30, 2011 Respondent certifies that (s) he has read and understood the provisions of City of Miami Ordinance No. 10032 (Section 18-105 of the City Code) pertaining ro the implementation of a "First Source Hiring Agreement.": (Yes or No) Yes. Do you expect to create new positions in your company in the event your company was awarded a Contract by the City? (Yes or No) No. In the event your answer to question above is yes, how many new positions would you create to perform this work? N/A Please list the title, rate or pay, summary of duties, number of positions, and expected length or duration of all new positions which might be created as a result of this award of a Contract. N/A Will Subcontractor(s) be used? (Yes or No) No. Page 3 of 35 State of Florida Department of State I certify from the records of this office that FIRST SOUTHWEST COMPANY is a corporation organized under the laws of Delaware, authorized to transact business in the. State of Florida, qualified on January 21, 2004. The document number of this corporation is F04000000354. I further certify that said corporation has paid all fees due this office through December 31, 2010, that its most recent annual report was filed on April 20, 2010, and its status is active. I further certify that said corporation has not filed a Certificate of Withdrawal. Given under my hand and the Great Seal of Florida, at Tallahassee, the Capital, this the Twenty Fifth day of October, 2010 larc.d. IL . Secretary of State Authentication DD: 700187059407-102510-F04000000354 To authenticate this certificate,visit the following site, enter this ID, and then follow the instructions displayed. https://efille.sunbiz.orgicertauthver.html FirstSouthwest's Client List for the Past Three Years City of Miami Appendix F FirstSouthwest's Client List for the Past Three Years FirstSo, thwes A PlainsCapital Company Member FINRA & SIPC 10 2010 FirstSouthwest FirstSouthwest's Client List for the Past Three Years Issuer ABAG Finance Authority For Nonprofit Corporations Sum Par # of Amount Issues (mil) $601.00 1 Adams Cheshire Regional School District $41.06 4 Addicks Utility District $94.60 2 Alamo Community College District $118.60 I 1 Alaska Housing Finance Corporation $6;669:55 - '-1•0' -- Alaska Industrial Development and Export $1,192.10 4 Authority Aldine Independent School District $983.35 1 Allen Independent School District $2,390.82 5 Alpine Independent School District $28.05 1 Amarillo Economic Development $489.15 1 Corporation Amarillo Junior College District $591.35 3 Angelina County Junior College District $165.00 2 Arkansas Development Finance Authority $1,645.20 4 Arlington Independent School District $419.00 2 Athol-Royalston Regional School District $14.57 2 Atlanta Downtown Development Authority $527.90 1 Atlanta Solid Waste Management $202.65 1 Authority Austin County $60.00 1 Bandera Independent School District $233.60 1 Barbers Hill Independent School District $23.40 1 Barker Cypress Municipal Utility District $76.70 2 Bay Colony West Municipal Utility District $30.65 1 Baybrook Municipal Utility District No. 1 $88.30 1 Bedford School District $39.35 1 Belknap County $132.70 3 Bell County $661.00 2 Berlin -Boylston Regional School District $203.85 1 Bexar County Hospital District $7,775.20 3 Big Oaks Municipal. Utility District - - -----$134,90 --- - 3 Bland Independent School District 1 $138.00 ( 1 Board of Managers; Joint Guadalupe $990.00 1 County -City of Seguin Hospital Board of Regents for the Agricultural and $4,041.70 4 Mechanical Colleges Oklahoma State University Board of Regents of the Texas A & M $14;497.15 12 University System Board of Regents of the University of $4,761.35 6 Houston System Board of Regents of the University of $2,137.60 2 North Texas System Board of Regents, Texas State University $4,598.25 4 System Member FINRA & SIPC I 0 2010 FirstSouthwest Issuer Bondsville Fire and Water District Borden County Independent School District Brazoria County Municipal Utility District No. 16 Brazoria County Municipal Utility District No. 31 Brazos River Authority Brewster County Bristol -Warren Regional School District Brockton Area Transit Authority Brown County Bryan Independent School District Burleson 4A Economic Development Corporation Burleson Community Service Development Corporation Bushland Independent School District Camino Real Regional Mobility Authority Canadian River Municipal Water Authority Canutillo Independent School District Cape Ann Transportation Authority Carroll County Carrollton -Farmers Branch Independent School District Castleberry Independent School District Cedar Hill Independent School District Central Texas Regional Mobility Authority Chariho Regional School District Charleston County Chelford City Municipal Utility District Chelford One Municipal Utility District Christoval Independent School District Cibolo Canyons Special Improvement District Cinco Municipal Utility District No. 1 Cinco Municipal Utility District No. 7 Cinco Southwest Municipal Utility District No. 1 Cinco Southwest Municipal Utility District No. 2 Cinco Southwest Municipal Utility Distric No. 4 Cities of Dallas and Fort Worth Citrus County City and County of San Francisco City of Abilene Sum Par # of Amount Issues (mil) $2.75 1 $250.00 1 $18.50 1 $35.00 1 $26.30 1 $29.25 1 $84.30 f 1 $275.00 t 3 $70.20 1 $280.00 ` 1 $35.40 1 $50.25 1 $91.00 1 i $2,333.55 1 $368.60 3 $273.35 j 1 $85.00 3 $435.00 3 $574.35 1 $77.15 I 1 $52.04 1 $948.80 1 $82:58 1 $2,957.75 i 4 $48.00 1 $31.10 j 1 $12.15 1 $225.20 1 $206.85 3 $18.15 1 $539.40 7 $232.85 3 $162.35 4 $2,810.05 ; 1 $250.10 1 $310.65 I 1 $482.45 7 FirstSouthwest's Client List for the Past Three Years Issuer City of Angleton City of Atlanta City of Azle City of Bastrop City of Baytown City of Bedford City of Beverly City of Big Spring City of Bonham City of Breckenridge City of Brockton City of Brownwood City of Bryan City of Bunker Hill Village City of Burkburnett City of Burleson City of Canton City of Carthage City of Cedar Hill City of Cedar Park City of Chicopee City of Cleburne City of College Station City of Colleyville City of Concord City of Coppell City of Corsicana City of Crandall City of Cranston City of Cuero City of Dallas City of Denison City of Denton City of DeSoto City of Dickinson City of Dover City of Early City of East Providence City of El Paso City of Euless City of Everett City of Fall River City of Farmers Branch Sum Par 4 of Amount Issues (mil) $80.50 I 2 $15,443.45 7 $61.60 2 $61.35 2 $685.80 3 $69.20 2 $1,204.68 j 8 $42.00 1 $32.80 2 $29.45 1 $445.00 4 $50.50 1 $499.15 3 $50.30 1 $24.75 1 $510.00 3 $14.00 1 $139.00 1 $190.90 3 $635.20 2 $350.20 6 $108.90 1 $1,021.75 j 7 $31.20 1 $219.37 ; 3 $265.00 2 $123.25 i 1 $10.40 1 $180.75 3 $15.25 1 $17,721.85 ; 12 $121.45 2 $2,110.50 9 $292.15 6 $34.10 ; 1 $315.59 3 $41.30 1 $282.00 4 I $3,749.30 7 $81.10 1 $144.11 1 3 $1,048.49 6 $171.60 2 Member FINRA & SIPC I ® 2010 FirstSouthwesi Issuer City of Fitchburg City of Forney City of Fort Worth City of Frisco City of Gainesville City of Galveston City of Gardner City of Garland City of Georgetown City of Glen Rose City of Glenn Heights City of Gloucester City of Grand Prairie City of Grapevine City of Greenville City of Groton City of Hackberry City of Harlingen City of Haverhill City of Heath City of Hidalgo City of Highland Village City of Hillsboro City of Holyoke City of Houston City of Huntsville City of Hurst City of Hutchins City of Irving City of Jacksonville City of Jasper City of Justin City of Kansas City City of Keene City of Keller City of Kerrville City of Kilgore City of Killeen City of Kingsville City of Kirby City of Kyle City of Lake Dallas City of Lake Jackson Sum Par k of Amount Issues (mil) $267.00 10 $396.05 j 1 $4,801.15 10 $1,045.55 5 $126.10 3 t $198.95 ; 1 $39.35 3 $3,282.95 11 $216.15 2 $30.20 1 $20.25 1 $1,008.20 j 7 $1,155.55 8 $600.45 5 $166.15 1 $791.35 I 6 $146.85 2 $56.30 1 $932.65 24 $134.45 1 $36.35 1 $176.95 3 $62.45 2 $162.40 6 $23,724.25 8 $64.05 1 $272.40 2 $53.00 2 $2,555.05 8 $62.00 1 $15.35 1 $46.05 2 $3,470.40 10 $87.25 ; 2 $358.30 6 $138.25 2 $79.25 2 $629.50 3 $61.60 2 $36.85 2 $228.00 1 $12.40 i 1 $285.70 7 FirstSouthwest's Client List for the Past Three Years Issuer City of Lancaster City of Lawrence City of League City City of Leander City of Leon Valley City of Levelland City of Lewisville City of Lowell City of Lufkin City of Lynn City of Malden City of Mansfield City of Marlborough City of McAllen City of McGregor City of Meadows Place City of Medford City of Melissa City of Melrose City of Memphis City of Mesquite City of Methuen City of Miami City of Midland City of Missouri City City of Mont Belvieu City of Muleshoe City of Murphy City of Nashua City of New Bedford City of Newburyport City of Newport City of Newton City of North Richland Hills City of Northampton City of Odessa City of Palestine City of Palm Bay City of Palmer City of Pawtucket City of Peabody City of Pharr Higher Education Finance Authority 1 Sum Par # of Amount Issues (mil) $349.95 i 2 $360.00 5 $1,010.75 5 $322.85 2 $36.35 2 $43.00 1 $363.45 $895.43 $174.00 $813.62 $1,152.83 $662.60 $377.68 $290.30 $35.80 $29.40 $70.85 j $185.75 $190.16 $5, 074.60 $219.30 $148.30 $4,424.05 $180.25 $1,230.05 $110.00 $40.00 $232.90 $132.65 $2,352.13 $180.25 $182.85 $1,668.50 $504.20 $153.45 $73.45 $40.00 $383.45 $15.05 $194.00 $143.90 $296.25 Member FINRA & SIPC I © 2010 FirstSouthwest 4 14 1 8 8 8 5 1 1 1 3 4 5 7 3 6 7 2 8 1 1 4 2 18 4 2 7 6 5 1 1 1 1 2 2 1 Issuer City of Pilot Point City of Pittsfield City of Plainview City of Plano City of Port Arthur City of Portsmouth City of Quincy City of Revere City of Richardson City of Rochester City of Rockwall City of Rosenberg City of Rowlett City of Royse City City of Sachse City of Salem City of San Angelo City of San Antonio City of San Juan City of San Marcos City of Santa Fe City of Seminole City of Shavano Park City of Shiner City of Somerville City of Southlake City of Springfield City of Sugar Land City of Taunton City of Temple City of Texarkana City of Texas City City of The Colony City of Tomball City of Tyler City of Vernon City of Waco City of Waltham City of Warwick City of Woburn City of Woodway City of Woonsocket City of Wylie Sum Par #t of Amount Issues (mil) $25.10 i 2 $921.79 15 $15.50 1 $1,519.00 9 $170.00 2 $470.00 3 $2,059.10 12 $1,095.92 12 i $1,489.80 ; 6 $293.68 3 $329.35 ( 2 $306.45 7 $134.30 3 $42.45 2 $406.90 2 $393.70 5 $101.45 1 $3,379.00 3 $59.05 1 $736.15 4 $1,417.35 ; 5 $31.50 1 $50.95 2 $13.95 1 $968.85 j 13 $878.65 5 $264.05 3 $1,390.90 11 $530.12 4 $382.10 3 $244.20 2 $140.20 1 $280.85 ( 4 $21.20 1 $51.20 1 $62.25 2 $574.00 4 $643.91 5 $192.55 j 1 $184.05 3 $46.85 J 2 $225.00 2 $643.10 4 Dripping Springs Independent School District Early Independent School District East Aldine Management District FirstSouthwest's Client List for the Past Three Years Issuer Cleburne Independent School District Clint Independent School District Clyde Consolidated Independent School District Collin County -Collin County Community College District - Commonwealth of Virginia Concord School District Coppell Independent School District Corsicana Independent School District County of Cheshire County of Mecklenburg County of Norfolk County of Pender County of Union Crane Independent School District Crockett County Consolidated Common School District No. 1 Dallas Convention Center Hotel Development Corp Dallas County Community College District Dallas County Hospital District Dallas County Park Cities Municipal Utility District Dallas County Utility and Reclamation District Sum Par # of Amount Issues (mil) $72.10 1 $370.76 3 $24.50 1 $1,251.80 $238.00 $2,814.70 $58.00 $610.20 $39.25 $349.00 $1,149.40 $40.00 $49.85 $1,365.00 $70.00 $100.00 $744.11 $4,113.10 $7,050.00 $330.00 3 1 2 2 2 1 4 1 1 1 2 1 1 4 1 1 $41.25 1 Dallas Independent School District ; $6,508.15 3 De Leon Independent School District $51.15 1 Denton County Fresh Water Supply $111.80 3 District No. 10 Denton County Fresh Water Supply $125.85 3 District No. 11-A Denton County Fresh Water Supply $167.35 4 District No. 6 Denton County Fresh Water Supply $208.70 3 District No. 7 Denton County Fresh Water Supply ( $19.00 1 District No. 8-A Denver City Independent School District . $149.90 1 Dickinson Independent School District ( $1,121.20 j 3 District of Columbia $55.25 1 Dormitory Authority of the State of New $6,000.00 1 York Downtown Dallas Development Authority $289.51 1 $961.70 1 $19.30 1 $133.65 ! 1 Member FINRA & SIPC I ©2010 FirstSouthwest Issuer El Paso Independent School District Emerald Forest Utility District Fallbrook Utility District Farmersville Independent School District Fayetteville Public Works Commission Fern Bluff Municipal Utility District First Colony Municipal Utility District No. 9 Forney Independent School District Fort Bend County Fort Bend County Levee Improvement District No. 10 Fort Bend County Levee Improvement District No. 15 Fort Bend County Levee Improvement District No. 17 Fort Bend County Levee Improvement District No. 7 Fort Bend County Municipal Utility District No. 116 Fort Bend County Municipal Utility District No. 121 Fort Bend County Municipal Utility District No. 122 Fort Bend County Municipal Utility District No. 123 Fort Bend County Municipal Utility District No. 129 Fort Bend County Municipal Utility District No. 133 Fort Bend County Municipal Utility District No. 137 Fort Bend County Municipal Utility District No. 138 Fort Bend County Municipal Utility District No. 140 Fort Bend County Municipal Utility.District No. 143 Fort Bend County Municipal Utility District No. 144 Fort Bend County Municipal Utility District No. 146 Fort Bend County Municipal Utility District No. 151 Fort Bend County Municipal Utility District No. 158 Fort Bend County Municipal Utility District No.162 Fort Bend County Municipal Utility District No. 165 Fort Bend County Municipal Utility District No. 167 Sum Pnr # of Amount Issues (mil) $2,343.88 $35.30 $31.85 $56.55 $1,508.65 $44.35 $67.60 $746.55 $1,431.50 $30.50 $138.75 $411.95 $71.20 $65.45 $50.85 $37.50 $108.60 $179.75 $71.00 $217.70 $265.85 $45.00 $68.10 $30.30 $90.70 $239.60 $18.70 $58.95 $52.50 $101.65 4 1 1 1 1 1 1 2 3 1 3 4 1 2 2 1 2 3 3 4 2 1 2 4 3 !2 FirstSouthwest's Client List for the Past Three Years Issuer Sum Par # of Amount Issues (mil) Fort Bend County Municipal Utility District $35.90 1 No. 169 Fort Bend County Municipal Utility District $32.40 1 No. 171 Fort Bend County Municipal Utility District $27.45 1 No. 176 Fort Bend County Municipal Utility District $30.00 ' 1 No. 34 Fort Bend County Municipal Utility District $176.75 1 No. 35 Fort Bend County Municipal Utility District $35.05 1 No. 41 Fort Bend County Municipal Utility District $64.30 2 No. 48 Fort Bend County Municipal Utility District $29.65 1 No. 67 Fort Bend County Municipal Utility District $13.55 1 No. 68 Fort Bend County Municipal Utility District No. 69 Fort Bend County Municipal Utility District No. 94 Fort Bend County Water Control & Improvement District No. 3 Fort Bend Flood Control Water Supply Corporation Fort Worth Independent School District Frenship Independent School District Friendswood Independent School District Frisco Economic Development Corporation Galveston County Fresh Water Supply District No. 6 Galveston County Municipal Utility District No. 14 Galveston County Municipal Utility District No. 30 Galveston. County -Municipal Utility -District_ No. 39 Galveston County Municipal Utility District No. 46 Galveston County Municipal Utility District •No. 68 Garland Independent School District Georgetown Independent School District Glasscock County Independent School District Godley Independent School District Grady Independent School District Grand Lakes Municipal Utility District No 4 Grand Lakes Water Control and Improvement District $15.40 1 $9.80 1 $13.30 $96.75 1 $5,324.95 $461.80 $1,093.15 $108.00 4 3 3 1 $15.15 1 $22.40 1 $25.00 1 $35.70 $62.00 2 $26:75 1 $633.95 $18.30 $40.00 2 1 1 $277.00 1 $100.00 1 $112.80 2 $59.05 2 Member FINRA & SIPC I ® 2010 FirstSouthwest Issuer Grand Oaks Municipal Utility District Grayson County Junior College District Greater Greenspoint Redevelopment Authority Greater Lawrence Regional Vocational Technical High School District Greater Texoma Utility Authority Greenwood Independent School District Groton-Dunstable Regional School District Hamilton-Wenham Regional School District Harlingen Consolidated Independent School District Harris County Harris County Cultural Education Facilities Finance Corp Harris County Flood Control District Harris County Fresh Water Supply District No. 51 Harris County Health Facilities Development Corporation Harris County Hospital District Harris County Municipal Utility District No. 104 Harris County Municipal Utility District No. 11 Harris County Municipal Utility District No. 120 Harris County Municipal Utility District No. 132 Harris County Municipal Utility District No. 149 Harris County Municipal Utility District No. 151 Harris County Municipal Utility District No. 156 Harris County -Municipal Utility District No. 157 Harris County Municipal Utility District No. 167 Harris County Municipal Utility District No. 173 Harris County Municipal Utility District No. 189 Harris County Municipal Utility District No. 200 Harris County Municipal Utility District No 239 Harris County Municipal Utility District No. 24 Harris County Municipal Utility District No. 249 Sum Par 4l of Amount Issues (mil) $20.15 1 $599.80 3 $190.00 1 $54.00 2 $41.80 $69.00 $72.50 $155.40 4 $980.25 2 $35,601.90 18 $7,389.75 6 $6,333.50 4 $43.65 1 $5,346.75 3 $2,079.60 2 $40.70 I 1 $51.00 1 $40.25 1 $18.00 1 $13.65 ( 1 $29.20 1 $96.00 i 2 -$97.55 -2 $232.50 $16.10 2 I $44.60 2 $58.00 1 $31.15 i $36.00 1 $25.22 i 1 Harris County Municipal Utility District No. 450 Harris County Municipal Utility District No. 49 Harris County Municipal Utility District No. 58 Harris County Municipal Utility District No. 64 Harris County Municipal Utility District No. 65 Harris County Municipal Utility District No. 70 Harris County Municipal Utility District No. 71 Harris County Municipal Utility District No 96 Harris County Utility District No. 14 Harris County Utility District No. 15 Harris County Utility District No. 6 Harris County Water Control and Improvement District No. 109 FirstSouthwest's Client List for the Past Three Years Issuer Harris County Municipal Utility District No. 25 Harris County Municipal Utility District No. 26 Harris County Municipal Utility District No. 281 Harris County Municipal Utility District No. 290 Harris County Municipal Utility District No. 341 Harris County Municipal Utility District No. 358 Harris County Municipal Utility District No. 364 Harris County Municipal Utility District No. 365 Harris County. Municipal Utility District No. 370 Harris County Municipal Utility District No. 383 Harris County Municipal Utility District No. 390 Harris County Municipal Utility District No. 391 Harris County Municipal Utility District No. 396 Harris County Municipal Utility District No. 397 Harris County Municipal Utility District No. Sum Par # of Amount Issues (mil) $16.50 1 $46.60 2 $61.80 2 $241.65 4 $68.55 2 $60.90 1 $27.75 1 $40.80 i 1 $108.15 1 $55.60 1 $54.50 3 $135.10 j 3 $63.60 2 $67.35 2 $64.10 2 401 Harris County Municipal Utility District No. $300.10 4 419 $49.00 2 $121.85 2 $12.25 1. $35.20 + 1 $27.85 1 $61.05 2 $193.80 2 $50.20 1 $35.90 $22.20 $20.10 $55.60 j Member FINRA & SIPC I 0 2010 FirstSouthwest Issuer Harris County Water Control and Improvement District No. 157 Harris County Water Control and Improvement District No. 96 Harris -Fort Bend Counties Municipal Utility District No. 1 Harris -Fort Bend Counties Municipal Utility District No. 3 Sum Par # of Amount Issues (mil) $70.00 $190.25 3 $49.60 2 $70.00 i 1 Harris -Fort Bend Counties Municipal Utility $35.00 1 District No. 5 Hays County Municipal Utility District No. 5 Hermleigh Independent School District Hialeah Gardens Health Facilities Authority Hidalgo County Health Services Corporation Hidalgo Independent School District Highland Independent School District Highland Park Independent School District (Potter County) Hockley County Hood County Hopkins County Hospital District Houston County Houston Independent School District Houston Independent School District Public Facility Corporation Howard County Hudson School District Humble Independent School District Hurst -Euless -Bedford Independent School I District $61.50 ; 1 $75.00 1 $486.40 I 1 $151.55 $54.00 I 1 $79.35 1 $105.01 1 $145.15 $70.20 $227.35 $135.0D $8, 815.05 $545.00 $115.70 $82.20 $1, 790.80 $1,043.30 1 2 1 1 8 1 1 1 2 1 Idalou Indepedent School District $153.05 1 Illinois Toll Highway Authority $2,793.00 1 Independent School District No. 1 of Tulsa $1,388.45' .. .5 County (Tulsa) Indian River County j $263.70 1 Johnson County $44.95 1 Kansas Development Finance Authority $309.50 j 1 Kaufman County Fresh Water Supply $31.95 1 District No. 1-C Keller Independent School District j $1,842.30 j 3 Kentucky Infrastructure Authority $2,084.30 1 Kentucky State Property and Buildings j $2,670.55 1 Commission Kerens Independent School District $21.00 1 Kilgore Economic Development i $27.75 1 Corporation FirstSouthwest's Client List for the Past Three Years Issuer Kleberg County Klondike Independent School District La Feria Independent School District La Joya Independent School District La Vega Independent School District Lake Worth Independent School District Lakeside Water Control & Improvement District No. 2-C Lakeside Water Control & Improvement District No. 2-D Lamar Consolidated Independent School District Langham Creek Utility District Lee College District Leon Independent School District Lexington County Llano Independent School District Londonderry School District Los Angeles Community College District Los Angeles Unified School District Lovejoy Independent School District Manchester Essex Regional School District Mansfield Independent School District Mansfield Park Facilities Development Corporation Martin County Maryland Water Quality Financing Administration Masconomet Regional School District Massachusetts Water Pollution Abatement Trust Mathis Independent School District May Independent.School.District_ McKinney Independent School District Medical Center Educational Building Corporation Memorial Municipal Utility District Merrimack Valley Regional Transit Authority Mesquite Independent School District Metropolitan Government of Nashville and Davidson County Metropolitan Transit Authority of Harris County Miami -Dade County Miami -Dade County Expressway Authority Sum Par J#of Amount Issues (mil) $60.00 1 $80.00 1 $125.00 1 $940.00 j 1 $239.50 2 $95.80 2 $20.40 1 $27.65 I 1 $1,344.00 1 $42.35 1 1 $24.25 1 $157.00 1 $262.65 1 $83.00 ! 1 $51.00 1 $26,814.15 8 $1,693.45 2 $448.37 J 1 $520.00 7 $2,100.65 ; 3 $29.90 1 $366.65 2 $979.40 2 $65.35 1 $2,050.05 1 $81.45 1 $14.85 ._ 1 $1,404.95 I 3 $2,406.25 4 $22.30 1 $377.76 6 $1,129.85 3 $8,916.00 2 $4,031.80 6 $29,541.25 6 $4,127.10 1 Member FrNRA & SIPC I e 2010 FirstSouthwest Issuer Michigan Municipal Bond Authority Michigan Tobacco Settlement Finance Authority Midland County Midland Independent School District Milisap Independent School Distract- --$24T00- Mission Consolidated Independent School District Mississippi State University Educational Building Corporation Modesto Irrigation District Modesto Irrigation District Financing Authority Montgomery County Drainage District No. 10 Montgomery County Municipal Utility District No. 112 Montgomery County Municipal Utility District No. 115 Montgomery County Municipal Utility District No. 18 Montgomery County Municipal Utility District No. 89 Montgomery County Municipal Utility District No. 94 Montgomery County Municipal Utility District No. 98 Montgomery County Municipal Utility District No. 99 Montgomery Independent School District Municipality of Anchorage Nantucket Islands Land Bank Nantucket Regional Transit Authority Narragansett Bay Commission Nashoba Regional School District New Hampshire Health and Education Facilities Authority New Hampshire Municipal Bond Bank New Jersey Transportation Trust Fund Authority New Mexico Finance Authority New York State Thruway Authority Newport Municipal Utility District North Carolina Medical Care Commission North Fort Bend Water Authority North Hays County Municipal Utility District No. 1 North Park Public Utility District North Texas Municipal Water District $4704.00 4 j $55,177.20 $109.67 $2,853.35 $1,424.00 $53.75 Sum Par fi of Amount Issues (mil) $2,461.60 1 $2,024.08 1 $219.95 1 $46.35 1 1 $590.00 1 $467.20 1 $1,321.45 ! 1 $1,002.55 1 $35.15 1 $45.75 1 $62.60 2 $84.70 2 $89.10 !. 2 $155.75 4 $11.25 1 $32.00 1 $238.20 j 1 $7,091.55 7 $150.95 ; 1 $47.50 3 $663.60 ; 1 $36.50 3 $1,955.55 1 3 $2,334.76 7 $10,067.53 j 2 3 11 3 2 1 1 $37.75 1 $5,100.30 N 12 FirstSouthwest's Client List for the Past Three Years issuer NorthPointe Water Control and Improvement District Northside Independent School District Northwest Harris County Municipal Utility District No. 24 Northwest Harris County Municipal Utility District No. 32 Northwest Harris County Municipal Utility District No. 6 Northwest Harris Municipal Utility District No. 23 Northwest Independent School District Northwest Park Municpal Utility District Okaloosa County Okiahoma Department of Transportation Oklahoma Water Resources Board Orchard Cultural Educational Facilities Corporation Orlando -Orange County Expressway Authority Paradise Independent School District Parker Parker County Paseo Del Este Municipal Utility District No. 10 of El Paso County Paseo Del Este Municipal Utility District No. 3 Patriots Energy Group Pecan Grove Municipal Utility District Pflugerville Independent School District Pioneer Valley Transit Authority Plano Independent School District Pleasant Grove Independent School District Port Freeport Port of Beaumont Navigation District of Jefferson County Port of Houston Authority of Harris County Princeton Independent School District Prosper Independent School District Providence Village Water Control and Improvement District of Denton County Quinlan Independent School District Reagan County Independent School District Red River Education Finance Corporation Regents of The University of New Mexico Regional School District No. 10 of the State of Connecticut Sum Par Amount (mil) $50.85 $5,484.70 $62.40 $40.20 $10.30 $25.40 $1,726.20 $59.20 $266.15 $982.30 $944.60 $608.00 # of Issues 2 7 1 3 1 1 1 1 1 $10,347.95 5 $165.38 $17.95 $600.00 $68.65 $33.50 $324.55 $361.40 $1,217.15 $1,027.50 $4, 085.60 $70.00 2 1 1 2 1 2 6 5 1 $32.60 1 $199.20 $5,842.85 $240.00 $1,027.21 $15.40 2 3 1 1 1 $136.90 1 $50.00 1 $692.65 $1,367.10 $178.00 2 1 4 Member FINRA Bt. SIPC I © 2010 FirstSouthwest Issuer Regional School District No. 18 of the State of Connecticut Regional School District No. 6 of the State of Connecticut Regional School District No. 8 of the State of Connecticut Sum Par # of Amount Issues (mil) $232.00 1 3 $46.05 $7.00 2 Reid Road Municipal Utility District No. 1 Reid Road Municipal Utility District No. 2 Rhode Island Clean Water Finance Agency Rhode Island Convention Center Authority $712.20 Rhode Island Economic Development Corporation Rhode Island Health and Educational Building Corporation Rhode Island Health and Educational Facilities Authority Rhode Island Turnpike and Bridge Authority Richardson Independent School District Robert Lee Independent School District Rockingham County Rockwall County Roosevelt Independent School District Roscoe Independent School District Round Rock Independent School District Sacramento Area Flood Control Agency Sacramento County San Angelo Independent School District San Diego Public Facilities Financing - Authority San Saba Independent School District Santa Rosa Independent School District Sarasota County School District No. 56 of Laurens County Scurry County Junior College District Seminole County Shallowater Independent School District Shawsheen Valley Regional Vocational Technical School District Sidney Independent School District Smithville Independent School District Socorro Independent School District Somerset Independent School District Somervell County Somerville Independent School District Southwest Harris County Municipal Utility $3,829.70 $5,211.80 $161.00 $500.00 $826.00 $150.00 $458.45 $607.90 $25.00 $55.00 $4,177.70 $849.65 $18,648.40 $1,211.50 1 -$1,619.30 $20.20 $137.00 1 $2,478.20 - -- $280.00- - I $58.90 $759.60 $24.60 $23.40 $15.74 $51.20 $424.05 $170.50 $143.80 $21.65 $25.75 $28.00 1 $21.50 j 1 $2,348.65 6 1 4 17 4 2 3 6 1 1 5 1 4 2 1 1 2 4 1 1 3 1 1 1 1 FirstSouthwest's Client List for the Past Three Years Issuer District No.1 Southwest Higher Education Authority, Inc. Spencer -East Brookfield Regional School District • Splendora Independent School District Spring Branch Independent School District Spring Creek Forest Public Utility District Spring Creek Utility District Stamford Independent School District Stanton Independent School District State of Connecticut State of Illinois 1 State of Mississippi State of North Carolina 1 State of Rhode Island and Providence Plantations State of South Carolina State of Texas Stephens County Strafford County Sugar Land 4B Corporation Tarrant County Tarrant County Cultural Education Facilities Finance Corporation Tarrant County Health Facilities Development Corporation Tarrant Regional Water District (A Water Control and Improvement District) Texas Affordable Housing Corporation Texas Department of Housing and Community Affairs Texas Higher Education Coordinating Board Texas Municipal Power Agency Texas Public Finance Authority Texas Southmost College District Texas State Technical College System Texas Tech University System Board of Regents Texas Water Development Board The Board of Governors of the University of North Carolina The Board of Trustees of the Institutions of Higher Learning of the State of Mississippi The Convention Center Authority of the Metropolitan Government of Nashville and Davidson County Sum Par # of Amount Issues (mil) $1,476.35 1 $45.00 3 $180.00 2 $3,184.05 2 $11.25 1 $76.20 1 $94.80 2 $90.00 1 $5,560.30 3 $10,560.00 2 $309.20 5 t $13,151.15 j 4 $17,618.10 10 I $2,998.60 t 1 $5,686.10 8 $90.00 1 $880.06 7 $91.95 j 1 $1,775.25 2 $1,487.35 3 $2,296.10 3 $1,587.85 2 $235.35 1 $140.00 1 $717.30 1 $368.35 1 $1,266.20 5 $172.50 3 $346.80 2 $1,708.25 1 $16,410.00 10 $3,590.60 ( 3 $52.50 1 $6,232.15 ! 1 Member FINRA & SIPC © 2010 FirstSouthlvest Issuer The Metropolitan District, Hartford County The Woodlands Road Utility District No. 1 The Woodlands Township Timber Lane Utility District Timberlake Improvement District Totar Independent School District Town of Addison Town of Andover Town of Arlington Town of Ashburnham Town of Auburn Town of Avon Town of Ayer Town of Barnstable Town of Barrington Town of Bedford Town of Bellingham Town of Belmont Town of Bolton Town of Boxford Town of Braintree Town of Bristol Town of Brookfield Town of Brookline Town of Brooklyn Town of Burlington Town ofClinton Town of Cohasset Town of Concord Town of Copper Canyon Town of Cornelius Town of Coventry Town of Cumberland Town of Danvers Town of.Darien . . Town of Dartmouth Town of Durham Town of East Bridgewater Town of East Greenwich Town of East Hampton Town of East Longmeadow Town of Easton Town of Ellington Sum Par # of Amount Issues (mil) $4,095.09 8 $312.90 3 $934.25 3 $46.50 ( 2 $18.60 1 $24.05 1 $345.00 1 $593.59 I 8 $438.84 10 $92.02 j 4 $51.94 6 $89.88 2 $64.40 3 $250.18 i 5 $92.00 1 $1,021.40 9 $277.83 5 $360.65 3 $99.46 6 $81.95 4 $3,553.03 5 $294.70 6 $406.25 5 $498.30 4 $66.85 3 $319.54 8 `$169.45 . 9 $535.56 15 $658.16 6 $20.00 j 1 $20.75 1 $43.30 1 1 $360.70 5 $679.93 10 $195.00 1 $50.61 1 $31.15 1 $50.81 1 5 $182.40 3 $89.55 1 3 $122.25 3 $264.45 , 4 $48.30 2 FirstSouthwest's Client List for the Past Three Years Issuer Town of Enfield Town of Fairview Town of Falmouth Town of Flower Mound Town of Foxborough Town of Framingham Town of Franklin Town of Glastonbury Town of Groveland Town of Hamilton Town of Hanover Town of Harwinlon Town of Holden Town of Holliston Town of Hubbardston Town of Ipswich Town of Jamestown Town of Johnston Town of Kingston Town of Ledyard Town of Leicester Town of Lexington Town of Lincoln Town of Lisbon Town of Londonderry Town of Lynnfield Town of Manchester By -The -Sea Town of Mansfield Town of Marblehead Town of Marlborough Town of Maynard Town of Medfield Town of Middleton Town of Middletown Town of Mooresville Town of Nahant Town of Nantucket Town of Narragansett Town of Needham Town of New Braintree Town of New Shoreham Town of Newbury Town of North Kingstown Sum Par # of Amount Issues (mil) $293.95 $135.75 $1,777.26 $501.45 2 4 16 6 $104.00 1 $1,085.77 10 $367.90 i 3 $670.65 $31.48 $5.76 $590.60 $8.50 $145.00 $119.15 $19.93 $248.01 $49.00 $75.50 $49.33 $258.95 $11.92 $501.12 $245.24 $22.45 $37.00 ( $154.70 $24.00 $16.75 $556.89 $50.35 $128.80 $55.50 $147.91 $108.85 $800.00 $126.99 $1,318.76 $215.00 $725.66 $3.56 $64.15 $28.59 $163.75 10 5 1 5 1 4 4 3 9 1 2 3 4 6 6 6 2 3 2 1 2 5 4 5 4 3 2 1 12 8 1 12 2 2 5 2 Member FINRA & SIPC 1© 2010 FirstSouthwest Issuer Town of North Providence Town of North Reading Town of North Smithfield Town of Northborough Town of Norwood Town of Oakham Town of Paxton Town of Plainville Town of Plymouth Town of Portsmouth Town of Princeton Town of Prosper Town of Raynham Town of Reading Town of Richmond Town of Ridgefield Town of Rockport Town of Rocky Hill Town of Rowley Town of Rutland Town of Salisbury Town of Saugus Town of Scituate Town of Scotland Town of Sharon Town of Shrewsbury Town of Somerset Town of South Kingstown Town of Southampton Town of Southborough Town of Southbury Town of Spencer Town of Stafford Town of Sterling Town of Stoneham Town of Stoughton Town of Sunnyvale Town of Templeton Town of Tiverton Town of Townsend Town of Tyngsborough Town of Uxbridge Town of Wakefield Sum Par # of Amount Issues (mil) $180.00 2 $230.07 j 10 $17.00 1 $429.65 I 6 $1,560.03 12 $11.10 2 $169.81 6 $13.65 ! 3 $1,314.43 11 $19.80 1 $54.25 5 $139.00 1 $2.15 1 $183.10 5 $11.50 1 $784.60 1 4 $150.05 6 $74.20 1 $83.68 9 $18.72 j 4 $128.79 6 $140.41 ! 4 $202.93 8 $84.55 1 3 $38.11 4 I $943.25 1 8 $10.00 1 $32.10 1 $21.85 1 $85.89 5 $109.80 3 $78.54 1 6 $445.35 4 $17.26 3 $148.50 2 $226.12 7 $10.90 1 $6.32 2 $201.20 2 $38.08 1 5 $44.18 5 $71.90 2 $13.90 3 FirstSouthwest's Client List for the Past Three Years Issuer Town of Walpole Town of Wareham Town of Warren Town of Waterford Town of Watertown Town of Webster Town of Wellesley Town of Wenham Town of West Boylston Town of West Springfield Town of West Warwick Town of Westerly Town of Westwood Town of Weymouth Town of Whitman Town of Winchester Town of Winthrop Town of Wolcott Travis County Municipal Utility District No. 11 Travis County Municipal Utility District No. 15 Travis County Water Control and Improvement District No. 17 Trinity River Authority Triton Regional School District Troy Independent School District Trustees of the Tulsa Airports Improvement Trust Tuloso-Midway Independent School District Turlock Public Financing Authority Tyngsborough Water District University of Connecticut University of Mississippi Educational Building Corporation University of North Carolina at Pembroke University of North Carolina at Wilmington Corporation University of North Texas Board of Regents Upper Blackstone Water Pollution Abatement District Upper Trinity Regional Water District Sum Par # of Amount Issues (mil) $226.13 1 6 $38.30 8 $58.70 i 2 $1,038.75 4 $257.39 I 8 $87.01 I 7 $908.88 ? 4 $40.09 4 $3.82 3 $480.09 4 $88.70 1 $126.50 1 $111.95 ; 3 $457.27 7 $150.00 2 $997.11 11 $17.00 I 1 $313.50 4 $65.00 1 $43.75 2 $108.75 1 $1,377.55 7 $10.00 1 $169.00 1 I $1,704.15 ! 4 $193.39 2 $323.65 i 1 $15.31 1 $1,807.55 2 $588.05 2 $208.90 j 1 $614.60 1 $576.25 I 1 $91.45 2 I $373.60 ! 2 Member FINRA & SIPC I 0 2010 FirstSouthwest Issuer Valley Ranch Municipal Utility District No 1 Varner Creek Utility District Verandah Municipal Utility District of Hunt County Victoria Independent School District Virginia College Building Authority Virginia Resources Authority Wachusett Regional School District Walsh Ranch Municipal Utility District Warren Independent School District Weslaco Independent School District West Harris County Municipal Utility District No. 14 West Harris County Municipal Utility District No. 17 West Harris County Municipal Utility District No. 21 West Harris County Municipal Utility District No. 5 West Harris County Regional Water Authority West Park Municipal Utility District West Travis -County Municipal Utility District No. 6 Weston Municipal Utility District Whitewright Independent School District Wilbarger County Junior College District Williamson County Municipal Utility District No. 10 Williamson County Municipal Utility District No. 11 Willis Independent School District Wimberley Independent School District Windfern Forest Utility District Worcester Regional Transit Authority Wylie Independent School District (Taylor County) Wylie Northeast Special Utility District Ysleta Independent School District Zephyr Independent School District Grand Total Sum Par # of Amount Issues (mil) $67.90 3 $50.00 1 $35.00 1 $590.00 $11,377.30 $676.55 $1,001.13 $32.50 $240.00 $250.00 $65.05 1 5 1 15 1 3 1 1 $19.90 1 $49.20 1 $27.65 i 1 $1,138.55 2 $52.45 ( 1 $30.00 1 $27.55 ; 1 $27.15 1 $117.65 ! 1 $109.10 2. $152.30 I 3 $133.65 $340.00 $48.35 $525.85 $28.85 $20.05 $219.05 $43.50 1 1 3 1 1 2 2 $805,510 2295