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HomeMy WebLinkAboutExhibit 51 c.� C (- be atet7),04-4-erg hzelcZAf) PRELIMINARY OFFICIAL STATEMENT DATED , 2009 DRAFT NEW ISSUE — BOOK ENTRY ONLY Ratings: [Standard and Poor's: " " Insured "_" Underlying Moody's: " " Insured "_" Underlying Fitch: " " Insured "_" Underlying] (See "Ratings" herein) In the opinion of Foley & Lardner LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings, and court decisions and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2009 Bonds is excluded from gross income for federal income taxes purposes, is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes and is not included in adjusted current earnings in determining federal alternative minimum taxable income of corporations. See "TAX MATTERS" herein. CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION BONDS, SERIES 2009 (Street and Sidewalk Improvement Program) Dated: Date of Delivery Due: January 1, as shown on inside cover The $ * City of Miami, Florida Special Obligation Bonds, Series 2009 (Street and Sidewalk Improvement Program) (the "Series 2009 Bonds") are being issued by the City of Miami, Florida (the "City") pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. R-07-0586 adopted on October 11, 2007 (the "Original Resolution") and Resolution No. R-09- adopted on , 2009 (the "Series 2009 Bonds Resolution," and together with the Original Resolution, the "Resolution"). The Series 2009 Bonds are being issued for the purpose of (i) financing the cost of acquisition, construction and improvements to certain roadways and streetscapes, (ii) [fund a deposit to the reserve account / paying the premium on a debt service reserve surety policy] and (iii) paying the costs of issuance of the Series 2009 Bonds, [including a premium in respect of the municipal bond insurance policy]. This cover page contains certain information for quick reference only. It is not, and is not intended to be, a summary of the issue. Investors must read the entire Official Statement to obtain information needed for the making of an informed investment decision. The Series 2009 Bonds are being issued by the City as fully registered bonds, which initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases will be made in book -entry form only through Participants (defined herein) in denominations of $5,000 and integral multiples thereof. Purchasers of the Series 2009 Bonds (the "Beneficial Owners") will not receive physical delivery of certificates. Transfers of ownership interests in the Series 2009 Bonds will be effected by the DTC book -entry system as described herein. As long as Cede & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such registered owner which will in turn remit such payments to the Participants (as defined herein) for subsequent disbursement to the Beneficial Owners. Interest on the Series 2009 Bonds is payable semi-annually on each January 1 and July 1, commencing January 1, 2010. Principal of, premium, if any, and interest on the Series 2009 Bonds will be payable by TD Bank, National Association, , as Paying Agent and Bond Registrar. Payment of the principal of, premium, if any, and interest, on the Series 2009 Bonds shall be secured by a lien upon and a pledge of (i) the proceeds of the Local Option Gas Taxes, (ii) eighty percent (80%) of the City's portion of the Transportation Surtax, (iii) twenty percent (20%) of the City's Parking Surcharge, (iv) such additional revenues as may be designated by a Series Resolution as Designated Revenues under the Resolution, and (v) all investment income realized by reason of the investment of moneys on deposit or credited to the Debt Service Fund created by the Resolution, whether such investment income is deposited or credited to the Designated Revenues Fund or remains in the Account in the Debt Service Fund where earned, all as defined herein (collectively, the "Designated Revenues"). The Series 2009 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes or to make an appropriation for their payment except from the Designated Revenues to the extent provided in the Resolution, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, redemption premium, if any, and interest of the Series 2009 Bonds. Certain maturities of the Series 2009 Bonds are subject to optional redemption prior to their respective maturities and mandatory redemption, as described herein under "DESCRIPTION OF THE SERIES 2009 BONDS —Optional Redemption and —Mandatory Redemption." See the inside cover page for maturities, principal amounts, interest rates, yields, prices and CUSIP numbers. [The scheduled payment of principal of and interest on the Series 2009 Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Series 2009 Bonds by (See "MUNICIPAL BOND INSURANCE" herein.)] Logo]] The Series 2009 Bonds are offered when, as, and if issued and received by the Underwriters, subject to the opinion on certain legal matters relating to their issuance by Foley & Lardner LLP, Miami, Florida, Bond Counsel and Law Offices of Richard Kuper, P.A., Miami, Florida, Associate Counsel. Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by KnoxSeaton, Miami, Florida, Disclosure Counsel to the City. Certain legal matters will be passed upon for the Underwriters by Akerman Senterfitt, Miami, Florida. First Southwest Company, Aventura, Florida is serving as Financial Advisor to the City. It is expected that the Series 2009 Bonds in definitive form will be available for delivery to the Underwriters in New York, New York at the facilities of DTC on or about , 2009. MERRILL LYNCH & CO. J.P. Morgan Raymond James & Associates, Inc. RBC Capital Markets Goldman Sachs Dated: , 2009 SERIES 2009 BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND CUSIP NUMBERS SERIAL BONDS Maturity Principal (January 1) Amount Interest Rate Yield Price $ TERM BONDS CUSIP Number % Term Bond Due January 1, 20_ Yield % Initial Cusip Number % Term Bond Due January 1, 20_ Yield % Initial Cusip Number THE CITY OF MIAMI, FLORIDA 3500 Pan American Drive Miami, Florida 33133 MAYOR Manuel A. Diaz CITY COMMISSIONERS Joe M. Sanchez, Chair Michelle Spence -Jones, Vice Chair Angel Gonzalez Marc D. Sarnoff Tomas P. Regalado CITY MANAGER Pedro G. Hernandez CITY CLERK Priscilla A. Thompson CITY ATTORNEY Julie O. Bru, Esq. CHIEF FINANCIAL OFFICER Larry Spring FINANCE DIRECTOR Diana M. Gomez BOND COUNSEL Foley & Lardner LLP Miami, Florida ASSOCIATE COUNSEL Law Offices of Richard Kuper, P.A. Miami, Florida DISCLOSURE COUNSEL KnoxSeaton Miami, Florida FINANCIAL ADVISOR First Southwest Company Aventura, Florida No dealer, broker, salesman or other person has been authorized by the City or the Underwriters to give any information or to make any representations in connection with the Series 2009 Bonds, other than as contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2009 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, [the Insurer,] DTC and other sources that are believed to be reliable. The Underwriters listed on the cover page hereof have reviewed the information in this Official Statement in accordance with and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expressions of opinion stated herein are subject to change, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the matters described herein since the date hereof. IN CONNECTION WITH THIS OFFERING OF THE SERIES 2009 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH SERIES 2009 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the Series 2009 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. [Other than with respect to information concerning (" ") contained under the caption "MUNICIPAL BOND INSURANCE" and APPENDIX E-- SPECIMEN MUNICIPAL BOND INSURANCE POLICY herein, none of the information in this Official Statement has been supplied or verified by makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the Series 2009 Bonds; or (iii) the tax exempt status of the interest on the Series 2009 Bonds.] NO REGISTRATION STATEMENT RELATING TO THE SERIES 2009 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2009 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS OFFICIAL STATEMENT SHALL NOT CONSTITUTE A CONTRACT BETWEEN THE CITY OR THE UNDERWRITERS AND ANY ONE OR MORE HOLDERS OF THE SERIES 2009 BONDS. TABLE OF CONTENTS Contents Page INTRODUCTION 1 PURPOSE OF THE ISSUE 2 THE SERIES 2009 PROJECT 2 ESTIMATED SOURCES AND USES OF FUNDS 3 DEBT SERVICE SCHEDULE 4 DESCRIPTION OF THE SERIES 2009 BONDS 5 General 5 Optional Redemption 5 Mandatory Redemption 5 Notice and Effect of Redemption 6 Book -Entry Only System 7 Registration, Transfer and Exchange 9 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost 10 [MUNICIPAL BOND INSURANCE] 10 [DEBT SERVICE RESERVE FUND SURETY BOND] 10 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS 11 General 11 Limited Obligations 11 Establishment of Funds and Accounts 11 Application of Pledged Funds 12 Reserve Fund 15 Hedge Agreements 15 Issuance of Additional Bonds 15 Refunding Bonds 15 Covenant as to Designated Revenues 17 LOCAL OPTION GAS TAXES 17 General 17 Collection and Distribution 17 First Levy 18 Second Levy 19 Eligibility 19 Historical Gasoline Sales in the County 20 TRANSPORTATION SURTAX 22 General 22 Levy of Transit System Surtax 22 Collection, Distribution and Uses 23 PARKING SURCHARGE 24 General 24 Levy of Parking Surcharge and Uses 24 Collection 25 THE CITY OF MIAMI 27 Background 27 City Government 27 1 Adoption of Investment Policy and Debt Management Policy 28 Capital Improvement Plan 29 Fiscal and Accounting Procedures 29 Indebtedness of the City 29 Recent Legislative and Constitutional Initiatives Concerning Ad Valorem Taxes 31 LEGAL MATTERS 33 LITIGATION 33 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS 33 TAX MA f l'ERS 33 Federal Tax Matters 33 De Minimis Safe Harbor Exception For Tax -Exempt Interest Expense Of Financial Institutions 35 Original Issue Discount 35 Original Issue Premium 36 RATINGS 36 FINANCIAL ADVISOR 36 AUDITED FINANCIAL STATEMENTS 36 UNDERWRITING 37 CONTINGENT FEES 37 ENFORCEABILITY OF REMEDIES 37 CONTINUING DISCLOSURE 37 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT 38 FORWARD -LOOKING STATEMENTS 38 MISCELLANEOUS 39 AUTHORIZATION OF OFFICIAL STATEMENT 40 APPENDICES APPENDIX A: GENERAL INFORMATION REGARDING THE CITY OF MIAMI APPENDIX B: FORM OF THE BOND RESOLUTION APPENDIX C: GENERAL PURPOSE FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 (Excerpt of the City of Miami Comprehensive Annual Financial Report) APPENDIX D: FORM OF BOND COUNSEL OPINION [APPENDIX E: SPECIMEN MUNICIPAL BOND INSURANCE POLICY] APPENDIX F: FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT APPENDIX G: DESCRIPTION OF SERIES 2009 PROJECT 11 OFFICIAL STATEMENT relating to CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION BONDS, SERIES 2009 (Street and Sidewalk Improvement Program) INTRODUCTION The purpose of this Official Statement, including the cover page and appendices, is to set forth information concerning the City of Miami, Florida (the "City") and the City of Miami, Florida Special Obligation Bonds, Series 2009 (Street and Sidewalk Improvement Program) (the "Series 2009 Bonds"), in connection with the sale of the Series 2009 Bonds. The City is situated at the mouth of the Miami River on the western shores of Biscayne Bay. It is the county seat of Miami -Dade County, Florida. The City comprises 34.3 square miles of land and 19.5 square miles of water. The City's diversified economic base is comprised of light manufacturing, trade, commerce, wholesale, and retail trade and tourism. For more information about the City, see "APPENDIX A — GENERAL INFORMATION REGARDING THE CITY OF MIAMI." The Series 2009 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. R-07-0586 adopted by the City Commission on October 11, 2007 (the "Original Resolution") and Resolution No. R-09- adopted on 2009 (the "Series 2009 Bonds Resolution," and together with the Original Resolution, the "Resolution"). The Series 2009 Bonds are being issued to (i) finance the cost of acquisition, construction and improvements to certain roadways and streetscapes (the "Series 2009 Project"), (ii) [fund a deposit to the reserve account / pay the premium on a debt service reserve surety policy] and (iii) pay the costs of issuance of the Series 2009 Bonds, [including a premium in respect of the municipal bond insurance policy]. See "PURPOSE OF THE ISSUE" and "THE SERIES 2009 PROJECT" herein. The Series 2009 Bonds will be on a parity as to source and security for payment with the $80,000,000 original aggregate principal amount of City of Miami, Florida Special Obligation Bonds, Series 2007 (Street and Sidewalk Improvement Program), currently outstanding in the amount of $ (the "Series 2007 Bonds" or "Prior Bonds"). Payment of the principal of, premium, if any, and interest, on the Series 2009 Bonds shall be secured by a lien upon and a pledge of (i) the proceeds of the Local Option Gas Taxes, (ii) eighty percent (80%) of the City's portion of the Transportation Surtax, (iii) twenty percent (20%) of the City's Parking Surcharge, (iv) such additional revenues as may be designated by a Series Resolution as Designated Revenues under the Resolution, and (v) all investment income realized by reason of the investment of moneys on deposit or credited to the Debt Service Fund created by the Resolution, whether such investment income is deposited or credited to the Designated Revenues Fund or remains in the Account in the Debt Service Fund where earned, all as defined herein (collectively, the "Designated Revenues"). The Series 2009 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes or to make an appropriation for their payment except from the Designated Revenues to the extent provided in the Resolution, as described herein. Neither the full faith and credit nor the taxing power of 1 the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, redemption premium, if any, and interest of the Series 2009 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS" herein. [Payment of the principal and interest on the Series 2009 Bonds will be guaranteed by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 2009 Bonds by an insurer to be selected.] The summaries of and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, statute, report or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Resolution, unless the context would clearly indicate otherwise. A copy of the Resolution is attached hereto as "APPENDIX B —FORM OF THE BOND RESOLUTION." All documents of the City referred to herein may be obtained from the City's, Finance Director, 444 S.W. 2nd Avenue, 6th Floor, Miami, Florida 33130, Telephone (305) 416-1324. PURPOSE OF THE ISSUE The Series 2009 Bonds are being issued for the purposes of (i) financing the cost of the Series 2009 Project, (ii) [fund a deposit to the reserve account / paying the premium on a debt service reserve surety policy] and (iii) paying the costs of issuance of the Series 2009 Bonds, [including a premium in respect of the municipal bond insurance policy]. THE SERIES 2009 PROJECT The Series 2009 Project consists of acquisition, construction and improvements to certain roadways and streetscapes, including but not limited to, roadway resurfacing, swale restoration, curbs, gutters, drainage improvements, sidewalks, lighting, landscaping and signage in the City. For a detailed description of the Series 2009 Project, see "APPENDIX G — DESCRIPTION OF THE SERIES 2009 PROJECT." [Remainder of page intentionally left blank] 2 ESTIMATED SOURCES AND USES OF FUNDS The table that follows summarizes the estimated sources and uses of funds to be derived from the sale of the Series 2009 Bonds: SOURCES: Principal Amount of Series 2009 Bonds [Plus/Less Net Original Issue Premium/Discount] TOTAL SOURCES $ USES: Deposit to Construction Fund $ Costs of IssuanceW TOTAL USES (1) Includes [municipal bond insurance and surety bond premiums], underwriting discount, financial advisory and legal fees and expenses, and miscellaneous costs of issuance. 3 DEBT SERVICE SCHEDULE The following table sets forth the aggregate debt service requirements for the Series 2009 Bonds and the Prior Bonds. Fiscal Year Series 2007 Ending Series 2009 Bonds Bonds Total September Principal Interest Total Debt Service Debt Service 30th 4 DESCRIPTION OF THE SERIES 2009 BONDS General The Series 2009 Bonds shall be issued as fully registered, book -entry only bonds in the denomination of $5,000 each or any integral multiple thereof, through the book -entry only system maintained by The Depository Trust Company, New York, New York. The Series 2009 Bonds shall be numbered consecutively from one (I) upward preceded by the letter "R" prefixed to the number. The principal of and redemption premium, if any, on the Series 2009 Bonds shall be payable upon presentation and surrender at the principal office of TD Bank, National Association, (the "Paying Agent"). Interest on the Series 2009 Bonds is payable semi-annually on January 1 and July 1 of each year, commencing January 1, 2009. Interest shall be paid by check and mailed to the owners in whose names Series 2009 Bonds are registered on the close of business on the 15th day (whether or not a business day) of the month preceding each interest payment date (the "Record Date"); provided, however, that the Holder of Series 2009 Bonds in an aggregate principal amount of at least $1,000,000 shall be entitled to have interest paid by wire transfer as provided in the Resolution. Interest on the Series 2009 Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. Optional Redemption The Series 2009 Bonds maturing on and after January 1, , are subject to redemption at the option of the City on or after January 1, , in whole or in part at any time, in such manner as shall be determined by the Bond Registrar, at a redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption without premium. Mandatory Redemption The Series 2009 Bonds maturing on January 1, , are subject to mandatory sinking fund redemption prior to maturity, in part by lot, on January 1, in the following years and in the following amounts, from and to the extent of Amortization Requirements and whether sufficient moneys are then on deposit in the Principal and Interest Account for such Series 2009 Bonds, at a redemption price of par, plus accrued interest to the respective dates of redemption: Year 20 *Maturity Principal Amount The Series 2009 Bonds maturing on January 1, , are subject to mandatory sinking fund redemption prior to maturity, in part by lot, on January 1, in the following years and in the following amounts, from and to the extent of Amortization Requirements and whether sufficient moneys are then on deposit in the Principal and Interest Account for such Series 2009 Bonds, at a redemption price of par, plus accrued interest to the respective dates of redemption: Year 5 Principal Amount 20 *Maturity Notice and Effect of Redemption At least thirty (30) days, but not more than sixty (60) days, before the redemption date of any Series 2009 Bonds, whether such redemption be in whole or in part, the City shall cause a notice of any such redemption signed by the City to be mailed, first class postage prepaid, to all Holders owning Series 2009 Bonds to be redeemed in whole or in part and to any Fiduciaries, but any defect in such notice or the failure so to mail any such notice to any Holder owning any Series 2009 Bonds shall not affect the validity of the proceedings for the redemption of any other Series 2009 Bonds. Each such notice shall set forth the name of the Series 2009 Bonds or portions thereof to be redeemed, the date fixed for redemption, the redemption price to be paid, and if less than all the Series 2009 Bonds shall be called for redemption, the maturities of the Series 2009 Bonds to be redeemed, the CUSIP numbers, the name and address (including contact person and phone number) of the Fiduciary to which Series 2009 Bonds called for redemption are to be delivered and, if less than all of the Series 2009 Bonds of any one maturity then Outstanding shall be called for redemption, the distinctive numbers and letters, if any, of such Series 2009 Bonds to be redeemed and, in the case of Series 2009 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. If any Series 2009 Bond is to be redeemed in part only, the notice of redemption shall also state that on or after the redemption date, upon surrender of such Series 2009 Bond, a new Series 2009 Bond in principal amount equal to the unredeemed portion of such Series 2009 Bond and of the same maturity and bearing the same interest rate will be issued. Any notice as provided herein shall be conclusively presumed to have been duly given, whether or not the owner of the Series 2009 Bond receives such notice. In addition to the foregoing notice, the City shall cause further notice to be given as set forth below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed: (i) Each further notice of redemption shall be sent at least 35 days before the redemption date by registered or certified mail or overnight delivery service to one or more registered securities depositaries then in the business of holding substantial amounts of obligations of types comparable to the Bonds and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds (such as Financial Information, Inc.'s Financial Daily Called Bond Service, Kenny Information Service's Called Bond Service, Moody's Municipal and Government Called Bond Service and Standard & Poor's Called Bond Record). (ii) Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. In the case of an optional redemption, any notice of redemption may state that (1) it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Bond Registrar, Paying Agent or a Fiduciary acting as escrow agent no later than the 6 redemption date or (2) the City retains the right to rescind such notice on or prior to the scheduled redemption date (in either case, a "Conditional Redemption"), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in the Resolution. On the date fixed for redemption, notice having been mailed in the manner and under the conditions herein above stated, provided that such notice of redemption has not been rescinded as permitted above, the Series 2009 Bonds or portions thereof called for redemption shall be due and payable at the redemption price provided therefor, plus accrued interest to such date. Book -Entry Only System THE FOLLOWING INFORMATION CONCERNING DTC AND DTC'S BOOK -ENTRY ONLY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT NEITHER THE CITY NOR THE UNDERWRITER TAKE ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Series 2009 Bonds. The Series 2009 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered certificate will be issued for each of the Series 2009 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instrument (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More infoiniation about DTC can be found at www.dtcc.com and ww'.dtc.org. Purchases of Series 2009 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2009 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2009 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation 7 from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2009 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2009 Bonds, except in the event that use of the book -entry system for the Series 2009 Bonds is discontinued. To facilitate subsequent transfers, all Series 2009 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2009 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2009 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2009 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2009 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2009 Bonds, such as defaults, and proposed amendments to the Bond Ordinance. For example, Beneficial Owners of Series 2009 Bonds may wish to ascertain that the nominee holding the Series 2009 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2009 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2009 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2009 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Series 2009 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Series 2009 Bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct 8 Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2009 Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2009 Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Series 2009 Bond certificates will be printed and delivered to DTC. THE CITY AND THE PAYING AGENT WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO THE BENEFICIAL OWNERS, DTC PARTICIPANTS OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2009 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2009 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL, OR INTEREST, OR ANY PREMIUM ON THE SERIES 2009 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2009 BONDS FOR REDEMPTION. Registration, Transfer and Exchange So long as the Series 2009 Bonds are registered in the name of DTC or its nominee, the following paragraphs relating to transfer and exchange of Series 2009 Bonds do not apply to the Series 2009 Bonds. The Bond Registrar shall keep books for the registration, exchange and registration of transfer of Series 2009 Bonds as provided in the Resolution. The Bond Registrar shall evidence acceptance of the duties, obligations and responsibilities of Bond Registrar by execution of the certificate of authentication on the Series 2009 Bonds. The transfer of any Series 2009 Bond may be registered only upon the books kept for the registration of transfer of Series 2009 Bonds upon surrender of such Series 2009 Bond to the Bond Registrar, together with an assignment duly executed by the Holder or such Holder's attorney or legal representative in such form as shall be satisfactory to the Bond Registrar. Upon any such exchange or registration of transfer, the City shall execute and the Bond Registrar shall authenticate and deliver in exchange for such Series 2009 Bond a new registered Series 2009 Bond or Series 2009 Bonds, registered in the name of the transferee, of any denomination or denominations authorized by the Resolution, in the aggregate principal amount equal to the principal amount of such Series 2009 Bond surrendered, of the same maturity and bearing interest at the same rate. All Series 2009 Bonds surrendered in any such exchange or registration of transfer shall forthwith be cancelled by the Bond Registrar. No service charge shall be made for any registration of transfer or exchange of Series 2009 Bonds, but the City and the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Series 2009 Bonds. The Bond Registrar shall not be required (i) to register the transfer of or to exchange Series 2009 Bonds during a period beginning at the opening of business fifteen (15) days before the day of mailing of a notice of redemption of Series 2009 Bonds and ending at the close of business on the day of such mailing or (ii) to register the transfer of or to exchange any Series 2009 Bond so selected for redemption in whole or in part. 9 The City, any Paying Agent and the Bond Registrar, and any other agent of the City, may treat the person in whose name any Series 2009 Bond is registered on the books of the City kept by the Bond Registrar as the Holder of such Series 2009 Bond for the purpose of receiving payment of principal of and redemption premium, if any, and interest on such Series 2009 Bond, and for all other purposes whatsoever, whether such Series 2009 Bond be overdue, and, to the extent permitted by law, neither the City, any Paying Agent, the Bond Registrar nor any such agent shall be affected by any notice to the contrary. Replacement of Bonds Mutilated, Destroyed, Stolen or Lost In case any Series 2009 Bond secured hereby shall become mutilated or be destroyed, stolen or lost, the City shall cause to be executed, and the Bond Registrar shall authenticate and deliver, a new Series 2009 Bond of like date and tenor in exchange and substitution for such mutilated Series 2009 Bond or in lieu of and in substitution for such Series 2009 Bond destroyed, stolen or lost, and the Holder shall pay the reasonable expenses and charges of the City and the Bond Registrar in connection therewith and, in case of a Series 2009 Bond destroyed, stolen or lost, the Holder shall file with the Bond Registrar evidence satisfactory to it and to the City that such Series 2009 Bond was destroyed, stolen or lost, and of such Holder's ownership thereof, and shall furnish the City and the Bond Registrar indemnity satisfactory to them. [MUNICIPAL BOND INSURANCE] [DEBT SERVICE RESERVE FUND SURETY BOND] [Application has been made to the (the " ") for a commitment to issue a debt service reserve surety policy (the "Debt Service Reserve Fund Surety Bond"). The Debt Service Reserve Fund Surety Bond will provide that upon notice from the Paying Agent to to the effect that insufficient amounts are on deposit in the Debt Service Fund to pay the principal of (at maturity or pursuant to mandatory redemption requirements) and interest on the Series 2009 Bonds, will promptly deposit with the Paying Agent an amount sufficient to pay the principal of and interest on the Series 2009 Bonds or the available amount of the Debt Service Reserve Fund Surety Bond, whichever is less. Upon the later of: (i) three (3) days after receipt by the Insurer of a Demand for Payment in the form attached to the Debt Service Reserve Fund Surety Bond, duly executed by the Paying Agent; or (ii) the payment date of the Series 2009 Bonds as specified in the Demand for Payment presented by the Paying Agent to will make a deposit of funds in an account with , or its successor, sufficient for the payment to the Paying Agent, of amounts which are then due to the Paying Agent (as specified in the Demand for Payment) subject to the Surety Bond Coverage. The available amount of the Debt Service Reserve Fund Surety Bond is the initial face amount of the Debt Service Reserve Fund Surety Bond less the amount of any previous deposits by the with the Paying Agent which have not been reimbursed by the City. The City and have entered into a Financial Guaranty Agreement dated , 2009 (the "Agreement"). Pursuant to the Agreement, the City is required to reimburse the , within one year of any deposit, the amount of such deposit made by the with the Paying Agent under the Debt Service Reserve Fund Surety Bond. Such reimbursement shall be made only after all required deposits to the Operation and Maintenance Fund and the Debt Service Fund have been made. 10 Under the terms of the Agreement, the Paying Agent is required to reimburse the , with interest, until the face amount of the Debt Service Reserve Fund Surety Bond is reinstated before any deposit is made to the General Fund. No optional redemption of Series 2009 Bonds may be made until the 's Debt Service Reserve Fund Surety Bond is reinstated. The Debt Service Reserve Fund Surety Bond will be held by the Paying Agent in the Debt Service Reserve Fund and is provided as an alternative to the City depositing funds equal to the Debt Service Requirement for outstanding Series 2009 Bonds. The Debt Service Reserve Fund Surety Bond will be issued in the face amount equal to 100% of Maximum Annual Debt Service for the Series 2009 Bonds and the premium therefor will be fully paid by the City at the time of delivery of the Series 2009 Bonds.] SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS General The principal of, redemption premium if any, and interest on the Series 2009 Bonds will be payable from and secured on a parity with the Prior Bonds solely by a lien upon and a pledge of (i) the City's portion of the proceeds of the Local Option Gas Taxes, (ii) eighty percent (80%) of the City's portion of the Transportation Surtax, (iii) twenty percent (20%) of the City's Parking Surcharge, (iv) such additional revenues designated by a Series Resolution as Designated Revenues under the Resolution, and (v) all investment income realized by reason of the investment of moneys on deposit or credited to the Debt Service Fund created by the Resolution, whether such investment income is deposited or credited to the Designated Revenues Fund or remains in the Account in the Debt Service Fund where earned (collectively, the "Designated Revenues"). The individual, Designated Revenues are described herein under "LOCAL OPTION GAS TAXES", "TRANSPORTATION SURTAX" and "PARKING SURCHARGE". Limited Obligations The Series 2009 Bonds shall not be deemed to constitute a pledge of the faith and credit of the State or of any political subdivision thereof, including the City. Neither the faith and credit of the State nor the faith and credit of the City are pledged to the payment of the principal of or redemption premium, if any, or interest on the Series 2009 Bonds, and the issuance of the Series 2009 Bonds shall not directly or indirectly or contingently obligate the State or the City to levy any taxes whatever therefor or to make any appropriation for their payment except from the Designated Revenues to the extent provided for under the Resolution. No Holder of any Series 2009 Bond or any Credit Bank [or any Insurer] shall ever have the right to compel the exercise of the ad valorem taxing power of the City to pay such Series 2009 Bond or be entitled to payment of such Series 2009 Bond from any moneys or property of the City except the Designated Revenues in the manner provided in the Resolution. Establishment of Funds and Accounts The Resolution establishes several funds and accounts, including the "City of Miami Special Obligation Bonds Debt Service Fund" (the "Debt Service Fund") and two accounts therein designated the "Principal and Interest Account" (the "Principal and Interest Account") and the "Expense Account" (the "Expense Account"), and the "City of Miami Special Obligation Bonds Reserve Fund" (the "Reserve Fund"), all of which funds and accounts shall be held in trust by the Paying Agent. There is also created and designated the "City of Miami Special Obligation Bonds Rebate Fund" (the "Rebate Fund"), which fund shall be held in trust by the City. There may also be established in the Reserve Fund additional separate Series Subaccounts with respect to and securing separate Series of Bonds. The Resolution also 11 establishes the "City of Miami Special Obligation Bonds Designated Revenues Fund" (the "Designated Revenues Fund"). The City has also established, pursuant to the Resolution, a Construction Fund, and will establish within the Construction Fund a separate account for the Series 2009 Project designated as the "Series 2009 Project Account" to be used for the purpose of paying the costs of the Series 2009 Project. Moneys in these funds and accounts, until applied in accordance with the provisions of the Resolution, shall be subject to a lien and charge in favor of the Holders of the Series 2009 Bonds [and the Insurer]. Application of Pledged Funds The Resolution requires the City to deposit all revenues generated from the Local Option Gas Taxes, Transportation Surtax and the Parking Surcharge, as the same are collected, to the credit of the City's general or special fund in which such revenues are received and thereafter promptly transfer the Designated Revenues to the Designated Revenues Fund. The City shall then transfer Designated Revenues from such Designated Revenues Fund to the Rebate Fund, the Principal and Interest Account, the Reserve Fund and the accounts established within said Fund and the Expense Account and apply the same to the payment of required arbitrage rebate payments, the interest on and the principal of the Bonds, Hedge Obligations, if any, the required deposits, if any, to the Reserve Fund and the fees and expenses payable from the Expense Account, all in accordance with the provisions of the Resolution. On or before the Business Day preceding any date on which arbitrage rebate payments under the Code are required to be made, the Finance Director shall withdraw moneys from the Designated Revenues Fund and deposit to the credit of the Rebate Fund such amounts as directed by the City to make such arbitrage rebate payments under the Resolution. Upon receipt, the Finance Director shall deposit any Hedge Receipts to the credit of the Principal and Interest Account. On or before the twenty-fifth (25th) day of each month, commencing in the month in which the Series 2009 Bonds are issued, the Finance Director shall withdraw from the Designated Revenues Fund an amount equal to the amount then held for the credit of the Designated Revenues Fund or such lesser amount as shall be required to fund the deposit requirements set forth in clauses (a), (b), (c) and (d) below, and apply the moneys so withdrawn to make the following payments and deposits in the following order: (a) Deposit to the credit of the Principal and Interest Account an amount equal to one -sixth (1/6th) of the interest becoming due on the Bonds on the next semiannual Interest Payment Date; provided, however, that the amount so deposited on account of interest in each month after the delivery of the Bonds of any Series up to and including the month immediately preceding the first Interest Payment Date thereafter of the Bonds of such Series shall be that amount that when multiplied by the number of such deposits will be equal to the amount of interest payable on such Bonds on such first Interest Payment Date less the amount of any accrued interest paid on such Bonds and deposited to the credit of the Principal and Interest Account; (b) Deposit to the credit of the Principal and Interest Account an amount equal to the sum of (i) one -twelfth (1/12th) of the principal of Serial Bonds that will mature and become due on the next annual maturity date and (ii) one -twelfth (1/12th) of the Amortization Requirements that will become due and payable within the next Fiscal Year, such deposits to commence in such month or to be adjusted in such amounts as will 12 ensure that on the dates such principal or Amortization Requirements are due and payable sufficient moneys will be on deposit in the Principal and Interest Account. Notwithstanding the foregoing provisions, moneys shall not be required to be deposited to the credit of the Principal and Interest Account (A) pursuant to clause (a) above if the amount then to the credit thereof is equal to the interest becoming due and payable on the Bonds on the next Interest Payment Date and (B) pursuant to clause (b) above if the amount then to the credit thereof is equal to the sum of (i) the principal of Serial Bonds maturing on the next maturity date and (ii) the Amortization Requirement for such Fiscal Year on account of the Term Bonds Outstanding. If the period between Interest Payment Dates is other than six (6) months or the period between principal payment dates is other than twelve (12) months, then such monthly deposits shall be increased or decreased, as appropriate, in sufficient amounts to provide the required interest amount coming due on the next Interest Payment Date or the principal amount maturing or Amortization Requirement due on the next principal payment date or redemption date, as applicable. Provided, further that such amounts to be deposited shall be adjusted to provide for any Hedge Obligations then due to a Hedge Counterparty (excluding any Hedge Termination Payment). (c) Deposit to the credit of the Reserve Fund (or each Account within the Reserve Fund to the extent that a Reserve Account has been established within the Reserve Fund for a particular Series of Bonds), without priority of one Account over another, if any, beginning with respect to each Series of Bonds for which a Series Reserve Fund Requirement has been established on the twenty-fifth (25th) day of the month in which such Series of Bonds are delivered to the purchasers thereof, such sums as shall be at Least sufficient to pay an amount equal to one -twelfth (1/12th) of the difference between the amount, if any, on deposit in the Reserve Fund or Account therein (including any Reserve Fund Insurance Policy or Reserve Fund Letter of Credit) on the date of issuance of the Series of Bonds and the increase in the amount required to be held therein due to such Series Reserve Fund Requirement, if any, for such Series of Bonds, and, provided, further, that no payments shall be required to be made into the Reserve Fund or any Account whenever and as long as the amount deposited therein (including any Reserve Fund Insurance Policy or Reserve Fund Letter of Credit) shall be equal to all of the Series Reserve Fund Requirements for all Series of Bonds to which such Reserve Fund or Account therein relates. Notwithstanding the foregoing provisions, in lieu of or in substitution for the required deposits, if any, hereunder (including existing deposits) into the Reserve Fund or any Account therein, the City may cause to be deposited into the Reserve Fund or any Account therein, for any Series of Bonds, a Reserve Fund Insurance Policy or a Reserve Fund Letter of Credit for the benefit of the holders of the Bonds of such Series in an amount equal to the difference between the applicable Series Reserve Fund Requirement and the sums to remain on deposit in the Reserve Fund or any Account therein, after the deposit of such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, if any, which Reserve Fund Insurance Policy or Reserve Fund Letter of Credit shall be payable or available to be drawn upon, as the case may be (upon the giving of notice as required thereunder), on any Interest Payment Date on which a deficiency exists with respect to the applicable Series of Bonds which cannot be cured by all moneys in any Fund or Account, including the applicable Account, if any, in the Reserve Fund under the 13 Resolution, held pursuant to the Resolution and available for such purpose. If a disbursement is made under a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, the City shall be obligated to either reinstate the maximum limits of such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit within twelve (12) months following such disbursement or to deposit into the Reserve Fund or applicable Account therein, as provided in the next paragraph, funds in the amount of the disbursements made under such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, or a combination of such alternatives. In the event that any moneys shall be withdrawn from the Reserve Fund or any Account therein for payments into the Principal and Interest Account, such withdrawals shall be subsequently restored in the manner described in the first paragraph of this clause (c) from the Designated Revenues available after all required payments have been made into the Principal and Interest Account, including any deficiencies for prior payments, unless restored by the reinstatement of the maximum limits of a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit (without priority of one Account over another Account, if any). In the event that a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit shall be drawn upon, the principal portion of the related payment obligations to the issuer of such Reserve Fund Insurance Policy or Reserve Fund Letter of Credit shall be paid, after all required payments have been made to the Principal and Interest Account, including any deficiencies for prior payments, in accordance with the terms of any agreement between the City and such issuer, on a parity and on a pro-rata basis with all other obligations payable under this clause (c) to other issuers of any Reserve Fund Letter of Credit or Reserve Fund Insurance Policy and cash funding requirements to the different Accounts established for each Series of Bonds but prior to making any cash deposit to the Account to which such insurance policy or Letter of Credit relates, if any, provided that such Insurance Policy or Letter of Credit is reinstated in the amount of such payment concurrently with the receipt of such payment by the issuer thereof. (d) Any balance remaining after satisfying the requirements of clauses (a), (b) and (c) above shall be deposited to the credit of the Expense Account in an amount sufficient to pay (i) the fees, interest and other amounts owing any issuer of a Reserve Fund Insurance Policy or Reserve Fund Letter of Credit, (ii) any fees and expenses of Fiduciaries or Hedge Counterparties coming due in such month and any other administrative fees and expenses coming due in such month with respect to Bonds, (iii) any costs of issuance of a Series of Bonds that remain to be paid, and (iv) any Hedge Termination Payment that is due. (e) Any such balance remaining in the Designated Revenues Fund after making the withdrawals and satisfying the requirements mentioned in clauses (a), (b), (c) and (d) above shall be deposited to pay principal and interest on Subordinated Indebtedness in the manner provided in the resolution authorizing such Subordinated Indebtedness. If the moneys withdrawn for deposits to the above funds and accounts and for making the other required payments as above set forth shall not be sufficient to make such deposits and payments, the requirements in each month thereafter for each of the above deposits and payments for which the required monthly deposit or payment has not been made shall be cumulative and the amount of any deficiency in any such monthly deposit or payment shall be added to the amount otherwise required to be deposited in 14 each month thereafter until such time as such deficiency shall have been made up. The balance, if any, remaining to the credit of the Designated Revenue Fund after making the withdrawals and satisfying the requirements mentioned in clauses (a), (b), (c), (d) and (e) above in any Fiscal Year shall be withdrawn and deposited to the general or special revenue fund in the same percentage in which such Designated Revenues were originally deposited to the Designated Revenues Fund. Reserve Fund Pursuant to the Resolution, the City has created and established the Reserve Fund, and has established a Series Reserve Fund Requirement for the Series 2009 Bonds. The City is permitted to establish additional subaccounts securing separate Series of Bonds designated to be secured thereby. Upon issuance of the Series 2009 Bonds, the City will fund the Series Reserve Fund Requirement in an amount equal to $ by [purchasing and crediting to the Reserve Fund a debt service reserve surety policy from a debt service reserve surety policy provider selected prior to the sale of the Series 2009 Bonds. See "DEBT SERVICE RESERVE FUND SURETY BOND" herein.] Hedge Agreements As of the date hereof, the City has not entered into and does not anticipate entering into any Hedge Agreement with respect to the Series 2007 Bonds or the Series 2009 Bonds. In the event that the City enters into a Hedge Agreement with respect to any Bonds issued under the Resolution, all Hedge Receipts received pursuant thereto shall be deposited to the credit of the Principal and Interest Account and all Hedge Obligations then due to such Hedge Counterparty under the Hedge Agreement (excluding any Hedge Termination Payment) shall be payable to such Hedge Counterparty on a parity with the payment of interest then due on the Bonds. Any Hedge Termination Payment due to a Hedge Counterparty shall be payable on a subordinate basis to the payment of principal and interest on the Bonds and any Hedge Obligations. Issuance of Additional Bonds The Resolution provides that one or more Series of Additional Bonds of the City may be issued under and secured by the Resolution, on a parity as to the pledge of the Designated Revenues with the Series 2009 Bonds and the Prior Bonds, subject to the conditions hereinafter provided, from time to time for the purpose of paying all or any part of the cost of any capital improvements for roadway or transportation purposes not inconsistent with the authorized use of the Designated Revenues. Before such Additional Bonds shall be delivered by the Bond Registrar, there shall be filed with the City Manager a certificate of the Finance Director demonstrating that the percentage derived by dividing the amount of the Designated Revenues received by the City during any twelve (12) consecutive months in the eighteen (18) months next preceding the date of delivery of the Additional Bonds then requested to be delivered, by the Maximum Principal and Interest Requirements, including the Principal and Interest Requirements with respect to the Additional Bonds then to be delivered, for any future Fiscal Year is not less than one hundred thirty-five per centum (135%). Refunding Bonds One or more Series of Refunding Bonds of the City may be issued from time to time under and secured by the Resolution, subject to the conditions hereinafter provided in this Section, for the purpose of providing funds for refunding all or any Bonds of any one or more Series of Bonds then Outstanding, 15 including the payment of any redemption premium thereon and interest that will accrue on such Bonds to the redemption date or stated maturity date or dates, funding any funds and accounts under the Resolution and paying any expenses in connection with such refunding and for any related lawful purpose. Except as to any Credit Facility or Insurance Policy and as to any difference in the maturities thereof or the rate or rates of interest or the provisions for redemption and except for such differences, if any, respecting the use of moneys in the various funds and accounts created in the Resolution, such Series of Refunding Bonds shall be on a parity with and shall be entitled to the same benefit and security of the Resolution as all other Bonds theretofore or thereafter issued under the Resolution. Prior to or simultaneously with the authentication and delivery of such Refunding Bonds by the Bond Registrar to or upon the order of the purchasers thereof or the designated representative, there shall be filed with the City Manager (A) a Certificate of the Finance Director showing that the aggregate Principal and Interest Requirements on account of all Bonds Outstanding (after the issuance of such Refunding Bonds and after the redemption or provision for payment of the Bonds to be refunded) following the Fiscal Year in which such Refunding Bonds are to be delivered shall not exceed the aggregate Principal and Interest Requirements on account of all the Bonds Outstanding (including the Bonds to be refunded) immediately prior to the issuance of such Refunding Bonds following the Fiscal Year in which such Refunding Bonds are to be delivered; (B) the net present value of the aggregate Principal and Interest Requirements on account of all Bonds Outstanding (after the issuance of such Refunding Bonds and after the redemption or provision for payment of the Bonds to be refunded) following the Fiscal Year in which such Refunding Bonds are to be delivered is less than the net present value of the aggregate Principal and Interest Requirements on account of all Bonds Outstanding (including the Bonds to be refunded) immediately prior to the issuance of such Refunding Bonds following the Fiscal Year in which such Refunding Bonds are to be delivered; or (C) assuming the Bonds to be refunded are not then Outstanding, a certificate of the Finance Director demonstrating that the percentage derived by dividing the amount of the Designated Revenues received by the City during any twelve (12) consecutive months in the eighteen (18) months next preceding the date of delivery of the Refunding Bonds then requested to be delivered, by the Maximum Principal and Interest Requirements on all Outstanding Bonds, including the Principal and Interest Requirements with respect to the Refunding Bonds then to be delivered (but not including the Bonds to be refunded), for any future Fiscal Year is not less than one hundred thirty-five per centum (135%); provided, however, that for purposes of the calculation required by this subclause (C) in connection with the issuance of Refunding Bonds pursuant to a forward refunding or forward delivery or other such similar arrangements, the "date of delivery" of the Refunding Bonds shall be deemed to be the date on which the contract or agreement providing for such forward refunding, forward delivery or other similar arrangement is executed and delivered (instead of the actual future date of delivery of the Refunding Bonds). Current Economic Environment Impacts on Designated Revenues Designated Revenues received from Local Option Gas Taxes, a Transportation Surtax, and the City's Parking Surcharge, fluctuate based on general economic conditions. A significant decline in the amount of Designated Revenues collected due to a sustained economic downturn could impair the ability of the City to pay principal of and interest on the Series 2009 Bonds. See "LOCAL OPTION GAS TAXES", "TRANSPORTATION SURTAX" and "PARKING SURCHARGE" herein for historical collections of the individual Designated Revenues. [On May 5, 2009 there was an attempt to repeal the Transportation Surtax which failed. The proposed ordinance included language which provided for continuing the collection of the Transportation Surtax until all outstanding contractual obligations secured by the Transportation Surtax were satisfied. There is no way to predict whether another attempt will be made to repeal the Transportation Surtax, 16 whether such attempt will include language enabling collection of the Transportation Surtax to fulfill existing contractual obligations secured by the Transportation Surtax, or how its repeal would impact the ability of the City to pay principal of and interest on the Series 2009 Bonds.] Covenant as to Designated Revenues The City covenants that while any of the Bonds issued under the provisions of the Resolution shall be Outstanding it will not take any action or fail to take any action which might result in a suspension or termination of the receipt of the Designated Revenues and it will take all appropriate action to keep and maintain the Designated Revenues at the highest possible level and that, subject to covenants with Credit Banks and Insurers, it will not create or permit to be created any charge or lien on the proceeds of the Designated Revenues ranking equally with or prior to the charge or lien on such proceeds of the Bonds issued under the provisions of the Resolution. LOCAL OPTION GAS TAXES General As a portion of the Designated Revenues, the City is pledging the Local Option Gas Taxes to secure the Series 2009 Bonds. The Local Option Gas Taxes is defined in the Resolution to mean collectively (i) the City's portion of a tax imposed by Ordinance No. 93-63 enacted by Miami -Dade County (the "County") on June 15, 1993, as may be amended, pursuant to Section 336.025(1)(a), Florida Statues, as amended and distributed pursuant to an Interlocal Agreement dated as of May 20, 1993, as amended, among the County, the City and the other municipalities located in the County (the "Gas Tax Interlocal"); and (ii) the City's portion of a tax imposed by Ordinance No. 93-91 enacted by the County on September 20, 1993, as amended by Ordinance No. 96-101 enacted on June 20, 1996, as may be amended, pursuant to Section 336.025(1)(b), Florida Statues, as amended and Section 336.025(4), Florida Statutes, as amended, and distributed pursuant to an Interlocal Agreement dated as of July 27, 1993 (the "Second Gas Tax Interlocal"). Each county in the State is authorized to levy a tax, of between one cent and eleven cents per net gallon on motor fuel sold in such county in the form of two separate levies. The first levy is a tax of one to six cents per gallon on motor fuel and diesel fuel and may be authorized in a county by an ordinance enacted by a majority vote of the governing body of a county or by referendum. [The County levies all six cents of the first levy which levy was approved by Ordinance No. 88-49, as amended and supplemented by Ordinance No. 93-63, as amended by Ordinance No. 97-156 (the "First Levy"). See "LOCAL OPTION GAS TAXES — First Levy" below. All of Florida's sixty-seven counties levy this portion of the Local Option Fuel Tax with sixty-five of the counties levying at the maximum rate of six cents. The second levy is a tax of one to five cents per gallon on motor fuel and may be authorized in a county by an ordinance enacted by a majority vote of the governing body of a county or by referendum. The County levies three cents of the second levy which levy was approved by Ordinance No. 93-91, as amended by Ordinance No. 96-101 (the "Second Levy").] See "LOCAL OPTION GAS TAXES — Second Levy" below. Collection and Distribution The Florida Department of Revenue ("FDOR") collects pursuant to Section 336.025(1)(a), Florida Statues, the local option fuel tax ("Local Option Fuel Tax") in each county and deposits the proceeds into the State's Local Option Fuel Tax Trust Fund. The Local Option Fuel Tax Trust Fund is subject to a 7% charge imposed by the State, representing a share of the cost of general government of the 17 State. This charge is deducted from the Local Option Fuel Tax Trust Fund and is deposited in the General Revenue Fund of the State. FDOR is authorized to deduct certain administrative costs incurred in collecting, administering, enforcing and distributing the proceeds of such tax to the counties in an amount not to exceed 2% of total collections from the Local Option Fuel Tax Trust Fund. The net proceeds collected from the Local Option Fuel Tax are distributed by FDOR to each eligible county and the eligible municipalities therein according to a distribution formula determined at the local level by interlocal agreement between the county and the municipalities within the county's boundaries representing a majority of the population of the incorporated area within the county. If no interlocal agreement is established, then the distribution is based on the relative transportation expenditures of the county and the municipalities therein for the preceding 5 years. After the initial levy, the distribution is recalculated every 10 years. Upon any newly incorporated municipality becoming eligible to receive the Local Option Fuel Tax, the distribution shall be equal to (i) the County's per lane mile expenditure in the previous year times the lane miles within the jurisdiction of the municipality, in which the County's share shall be reduced proportionally, or (ii) determined by the local act incorporating the municipality. However, such distribution shall not materially or adversely affect the rights of holders of outstanding bonds which are backed by taxes authorized pursuant to Section 336.025(1), Florida Statutes, and the amounts distributed to the County and each municipality shall not be reduced below the amount necessary for the payment of principal and interest and reserves for principal and interest as required under the covenants of any bond resolution outstanding on the date of the re -determination of the distribution formula. First Levy The County and the municipalities within the County, have entered into the Gas Tax Interlocal to provide for the distribution of the proceeds of the First Levy in accordance with a formula. Under the formula provided in the Gas Tax Interlocal, the County receives 70.40% of the proceeds and the municipalities receive 29.60% of the proceeds ("Municipal Portion"). 75% of the Municipal Portion is allocated based on the ratio of the population of each eligible incorporated municipality to the total population of all eligible incorporated municipalities in the County. The remaining 25% of the Municipal Portion is allocated based on the ratio of total centerline miles of roadway maintained by each eligible incorporated municipality compared to the total centerline miles maintained by all eligible incorporated municipalities in the County. In the event that an eligible municipality annexes an area of unincorporated area or a newly incorporated municipality becomes eligible for participation, the County's share will be reduced. During the term of the Gas Tax Interlocal, the County's share of the annual proceeds of the First Levy cannot be reduced below 80% of the original 74% share (which equates to approximately 59% of the total net proceeds of the First Levy), regardless of future incorporation. Pursuant to the Gas Tax Interlocal and Ordinance No. 88-49, as amended and supplemented, the First Levy is set to expire on August 31, 2023. There are 35 incorporated municipalities in the County. Pursuant to the formula provided in the current Gas Tax Interlocal, the percentage share of the fiscal year 2007-2008 proceeds distributed to the City was %. The County has estimated the Fiscal Year 2008-2009 distribution for the City to be %. Use of Revenue. Generally, county and municipal governments may only use monies received from the First Levy for transportation expenditures, defined as: 18 (a) public transportation operation and maintenance; (b) roadway and right-of-way maintenance and equipment and structures used primarily for the storage and maintenance of such equipment; (c) roadway and right-of-way drainage; (d) street lighting; (e) traffic signs, traffic engineering, signalization and pavement markings; (0 bridge maintenance and operation; and (g) debt service and current expenditures for transportation capital projects in the foregoing program areas including the construction and reconstruction of roads and sidewalks. Second Levy The County and the municipalities within the County have entered into the Second Gas Tax Interlocal to provide for the distribution of the proceeds of the Second Levy in accordance with a formula. Under the formula provided in the Second Gas Tax Interlocal, the County receives 74% of the proceeds and the municipalities receive 26% of the proceeds ("Second Municipal Portion"). 75% of the Second Municipal Portion is allocated based on the ratio of the population of each eligible incorporated municipality to the total population of all eligible incorporated municipalities in the County. The remaining 25% of the Second Municipal Portion is allocated based on the ratio of total centerline miles of roadway maintained by each eligible incorporated municipality compared to the total centerline miles maintained by all eligible incorporated municipalities in the County. The Second Levy does not have an expiration. There are 35 incorporated municipalities in the County. Pursuant to the formula provided in the Second Gas Tax Interlocal, the percentage share of the fiscal year 2007-2008 proceeds distributed to the City was %. The County has estimated the Fiscal Year 2008-2009 distribution for the City to be %. Use of Revenue. Generally, county and municipal governments may use monies received from the Second Levy only for transportation expenditures needed to meet the requirements of the capital improvements element of an adopted comprehensive plan or for expenditures needed to meet immediate local transportation problems and for other transportation -related expenditures that are critical for building comprehensive roadway networks by local governments. Expenditures shall not include routine maintenance of roads. Eligibility In order to be eligible to receive a distribution of funds from the Local Option Fuel Tax Trust Fund, each county or municipality must have: 19 (i) reported its finances for its most recently completed fiscal year to the Department of Financial Services pursuant to Section 218.32, Florida Statutes; (ii) made provisions for annual postaudits of financial accounts in accordance with provisions of law; (iii) levied, as shown on its most recent financial report, ad valorem taxes, exclusive of taxes levied for debt service or other special millages authorized by the voters, to produce the revenue equivalent to a millage rate of 3 mills on the dollar based upon 1973 taxable values or, in order to produce revenue equivalent to that which would otherwise be produced by such 3 mill ad valorem tax, to have received certain revenues from a county (in the case of a municipality), an occupational license tax, utility tax, or levied ad valorem tax, or any combination of those four sources; (iv) certified that persons in its employ as law enforcement officers meet certain qualifications for employment, and receive certain compensation; (v) certified that persons in its employ as firefighters meet certain employment qualifications are eligible for certain compensation; (vi) certified that each dependent special district that is budgeted separately from the general budget of such county or municipality has met the provisions for annual postaudit of its financial accounts in accordance with law; and (vii) certified to FDOR that it has complied with certain procedures regarding the establishment of the ad valorem tax millage of the county or municipality as required by law. Any funds otherwise undistributed because of ineligibility of a county or municipality shall be distributed to the eligible governments within the applicable county in proportion to other monies distributed pursuant to Section 336.025, Florida Statutes. The City represents that it has continuously been in compliance with the statutory eligibility requirements for the Local Option Fuel Tax in the past and that it has covenanted in the Resolution to do so in the future. Historical Gasoline Sales in the County The volume of motor and special fuel sold in the County is set forth below for the State fiscal years indicated: State Fiscal Year Ended June 30 MIAMI-DADE COUNTY, FLORIDA NUMBER OF TAXABLE GALLONS SOLD Gasoline & Gasohol Special Fuel Total Gallons 2004 999,068,325 143,208,456 1,142,276,781 2005 1,024,996,120 144,840,059 1,169,856,179 2006 1,020,652,912 182,791,886 1,203,444,778 2007 1,021,835,764 177,563,176 1,199,398,940 2008 987,042,316 162,333,848 1,149,376,165 Source: Florida Department of Revenue. 20 The amount of Local Option Fuel Tax received by the City from the County is dependent upon numerous factors, including the amount of motor fuel and diesel fuel sold in the County. Furthermore, incorporation of additional municipalities within the County could affect the amount of Local Option Fuel Tax Revenues distributable to the County and to each municipality. The amount of Local Option Fuel Tax Revenues received by the City from the County may be adversely impacted by changes in the supply or demand for or the price of motor fuel, special fuel or diesel fuel. Most of the factors that affect the amount of Local Option Fuel Tax Revenues distributable to the City are beyond the control of the County and the City. [Remainder of page intentionally left blank] 21 The following table sets forth the amount of historical Local Option Gas Taxes revenues received by the City for the fiscal years ended September 30, 2004 through 2008 and October 1, 2008 through June 30, 2009. CITY OF MIAMI, FLORIDA LOCAL OPTION GAS TAXES Local Percentage Fiscal Year Option Gas Taxes Increase Ended September 30 Received (Decrease) 2004 $7,041,490 (6.49)% 2005 7,275,062 3.31 2006 7,310,849 .49 2007 7,184,597 (1.73) 2008 6,929,876 (3.55) 2009* 5,044,734 NA Source: City of Miami, Florida Finance Dept. * October 1, 2008 — June 30, 2009. TRANSPORTATION SURTAX General As a portion of the Designated Revenues, the City is pledging eighty percent (80%) of the Transportation Surtax to the Series 2009 Bonds. The Transportation Surtax is defined in the Resolution to mean the City's portion of the Charter County Transit System Surtax approved by the electorate of the County on November 5, 2002, pursuant to Section 212.055(1), Florida Statutes and Ordinance No. 02-116 enacted by the County on July 9, 2002 (the "Transit System Surtax") and distributed to the City pursuant to an Interlocal Agreement between the County and the City approved pursuant to Resolution No. 07-638 adopted by the City on May 16, 2007 (the "Transit Interlocal"). Levy of Transit System Surtax Subject to the limitations and exemptions set forth in Chapter 212 of the Florida Statutes, the State imposes a tax on certain sales, use, services, rentals, admissions and other transactions occurring in the State, including, but not limited to, the rental of living quarters or sleeping or housekeeping accommodations for a period of six months or less, items or articles of tangible personal property sold at retail, the rental or lease of real property for purposes other than, among other things, agricultural uses or dwelling units, and the lease or rental of tangible personal property. Pursuant to Section 212.055(1) of the Florida Statutes, the County is authorized to impose the Transit System Surtax on all transactions occurring in the County that are subject to the State tax imposed on the above -referenced sales, use, services, rentals, admissions and other transactions. Pursuant to Section 212.055(1), Florida Statutes, the County is authorized to levy a discretionary sales surtax of up to 1 % to be used for the purposes of, among other things, planning, developing, constructing, operating and maintaining roads, bridges, bus systems and fixed guideway systems. The County elected to levy a one half of one percent discretionary sales tax, subject to the approval of the County's electorate at the time that Ordinance No. 02-116 of the County (the "Transit System Surtax Ordinance") was enacted. The Transit System Surtax was approved by a majority of the County's 22 electorate at a special election held on November 5, 2002. The County has imposed the Transit System Surtax on all transactions occurring in the County that are subject to the State tax imposed on sales, use, services, rentals, admissions, and other transactions pursuant to Chapter 212, Florida Statutes. The Transit System Surtax shall remain in effect until the Transit System Surtax Ordinance is repealed. Collection, Distribution and Uses The Florida Department of Revenue (the "Department") administers, collects and enforces the Transit System Surtax. The proceeds of the Transit System Surtax are transferred by the Depai tanent into a separate account established for the County in the Discretionary Sales Surtax Clearing Trust Fund. The Department distributes the proceeds of the Transit System Surtax less the cost of administration (the "Net Transit System Surtax Proceeds") to the County each month. Pursuant to the Transit System Surtax Ordinance, the Net Transit System Surtax Proceeds are deposited into a special fund set aside from other County funds in the custody of the Finance Director of the County (the "Transit System Sales Surtax Trust Fund"). Twenty percent of the Net Transit System Surtax Proceeds (the "Cities' Distribution") are distributed annually by the County to each city existing within the County as of November 5, 2002 (including the City), so long as each such city (i) continues to provide the same level of general fund support for transportation in subsequent fiscal years that is in each such city's fiscal year 2001-2002 budget; (ii) uses the Net Transit System Surtax Proceeds to supplement rather than replace each such city's general fund support for transportation; and (iii) applies 20% of any Net Transit System Surtax Proceeds received from the County to transit uses in the nature of circulator buses, bus shelters, bus pullout bays or other transit -related infrastructure (or, alternatively, contracts with the County for the County to apply such Net Transit System Surtax Proceeds to a County project that enhances traffic mobility within the city and immediately adjacent areas). The Net Transit System Surtax Proceeds are distributed among the municipalities on a pro-rata basis based on the ratio such city's population bears to the total population in all eligible cities. Newly incorporated municipalities shall have the right to negotiate with the County for a pro-rata share of the County's portion of Net Transit System Surtax Proceeds. See chart below for the percentage received by the City in relation to all eligible municipalities. The City is pledging 80% of the Transit System Surtax received by the City from the County to the Series 2009 Bonds and therefore the other 20% remains available for transit uses as provided above. The City is in compliance with all requirements to be eligible to receive the Net Transit System Surtax Proceeds. [Remainder of page intentionally left blank] 23 The following table sets forth the amount of historical Transit System Surtax revenues received by the City for the fiscal years ended September 30, 2004 through 2008 and October 1, 2008 through June 30, 2009. CITY OF MIAMI, FLORIDA HISTORICAL RECEIPTS OF TRANSIT SYSTEM SURTAX Fiscal Year Percentage Ended 80% of Transportation Increase September 30 Surtax Received (Decrease) 2004 $ 8,262,776 124.00% 2005 8,693,384 5.21 2006 10,005,773 15.07 2007 10,318,065 3.12 2008 10,063,088 (2.47) 2009m1m 7,135,696 NA Source: City of Miami, Florida Finance Dept. (1) October 1, 2008—May 31, 2009. PARICING SURCHARGE General As a portion of the Designated Revenues, the City is pledging twenty percent (20%) of the Parking Surcharge revenues to the Series 2009 Bonds. The Parking Surcharge is defined in the Resolution to mean a 15% parking surcharge to be charged at public parking facilities within the City approved by the electorate of the City on November 4, 2003, imposed pursuant to Section 166.271, Florida Statutes and pursuant to Ordinance No. 04-12563 enacted by the City Commission on July 22, 2004, as amended by Ordinance No. 09-13063 enacted by the City Commission on May 14, 2009. Levy of Parking Surcharge and Uses Pursuant to Section 166.271, Florida Statutes, the State authorized the City to impose and collect, subject to referendum approval by voters in the City, a discretionary per vehicle surcharge of up to fifteen percent (15%) of the amount charged for the sale, lease, or rental of space at parking facilities within the City which are open for use to the general public and which are not airports, seaports, county administration buildings, or other county projects. The Parking Surcharge was approved at an election on November 4, 2003. Notwithstanding the foregoing, pursuant to Section 218.503(6)(a), the City was authorized to impose a discretionary per -vehicle surcharge of up to twenty percent (20%) on the gross revenues of the sale, lease or rental or space at parking facilities within the City which are open for use to the general public. This provision only applied during the period of time in which the City was declared to be in a state of financial emergency and such provision expired on June 30, 2006. The 20% surcharge was collected by the City from Fiscal Years 2000-2004. 24 Not more than forty percent (40%) and not less than twenty percent (20%) of the Parking Surcharge proceeds shall be used to improve transportation, including, but not limited to, street, sidewalk, roadway, landscape, transit and streetscape beautification improvements and shall be used in downtown or urban core areas. Collection The Parking Surcharge amounts due shall be collected by the operator of a parking facility at the time of, and in addition to, collection of any other amounts for the parking of a motor vehicle in a parking facility, whether charge is made on an hourly, daily, weekly, monthly, yearly, event, validation programs, valet or any other basis. All operators shall be required to maintain a valid operational license. The occupational license of an operator shall be revoked upon the failure to remit the surcharge amounts for three consecutive months. No operator shall be permitted to operate the parking facility until all arrears are paid. No later than the twentieth (20th) day of each calendar month, the operator of every parking facility shall remit to the City the funds collected pursuant to the Parking Surcharge, net of refunds, for the preceding calendar month. The operator shall keep records of such funds collected. Whenever any operator fails to keep records from which the Parking Surcharge may be accurately computed, the City may make use of a factor developed by surveying other operators of a similar type parking facility, or otherwise compute the amount of Parking Surcharge due, and this computation shall be prima facie correct. Whenever any operator fails to collect or remit to the City the Parking Surcharge imposed within the time limit therefor, the City shall assess the operator the amount of Parking Surcharge due as determined by the City, plus interest at the rate of one percent (1%) per month or any fraction thereof, and a penalty of ten percent (10%) of the Parking Surcharge due on uncollected or unremitted amounts. The operator of a Parking Facility who: (1) fails, neglects or refuses to collect the Parking Surcharge; or (2) fails, neglects or refuses to remit the Parking Surcharge; or (3) fails, neglects or refuses to keep accurate records; or (4) submits any incomplete, false or fraudulent return; or (5) refuses to permit the City to examine books, records and papers relating to the Parking Surcharge; or (6) fails to fully comply with any or all rules or regulations promulgated by the City, or to keep complete and proper records as required, shall be subject to the following penalties for each offense: (i) have his or her occupational license revoked; and/or (ii) have a lien placed upon the parking facility for the sums owed plus interest pursuant to law; and/or (iii) be subject to an administrative fine in the amount of $500.00; and or (iv) be required to comply with stricter reporting requirements. [Remainder of page intentionally left blank] 25 The following table sets forth the amount of historical Parking Surcharge Designated Revenues collected by the City for the fiscal years ended September 30, 2004 through 2008 and October 1, 2008 through June 30, 2009. CITY OF MIAMI, FLORIDA HISTORICAL COLLECTION OF PARKING SURCHARGE Fiscal Year Parking Surcharge Ended September 30 Revenues Received" 2004 2,906,686 2005 2,297,904 2006 2,563,318 2007 2,769,254 2008 2,907,896 2009(2) 2,186,622 Percentage Increase jDecrease) 6.55% (20.94) 11.55 8.03 5.00 NA Source: City of Miami, Florida Finance Dept. m The Parking Surcharge was collected at 20% in Fiscal Year 2004 and collected at 15% from Fiscal Year 2005 - current. (2) October 1, 2008 — June 30, 2009. The following table sets forth the amount of historical Designated Revenues received by the City for the fiscal years ended September 30, 2004 through 2008 and October 1, 2008 through June 30, 2009. HISTORICAL DESIGNATED REVENUES AND PRO FORMA DEBT SERVICE COVERAGE Fiscal Year Ended September 30th Year 2004 2005 2006 2007 2008 2009(2) Local Option Gas Taxes 7,041,490 7,275,062 7,310,849 7,184,597 6,929,876 5,044,734 80% of Transportation Surtax 8,262,776 8,693,384 10,005,773 10,318,065 10,063,088 7,13 5,696 Total Parking Designated Surcharge Revenues 2,906,686 18,210,952 2,297,904 18,266,350 2,563,318 19,879,940 2,769,254 20,271,916 2,907,896 19,900,860 2,186,622 14,367,052 Proposed Annual Maximum Debt Service 5,215,625(1) 5,215,625(1) 5,215,625(1) 5,215,625(1) 5,215,625(1) Pro Forma Debt Service Coverage 3.49x 3.50x 3.81x 3.89x 3.82x Source: City of Miami, Florida Finance Dept. ("Annual Maximum Debt Service is based on debt service on the Series 2007 Bonds. and, with respect to the Series 2009 Bonds, assumes the issuance of $_million in Series 2009 Bonds, with a final maturity of January 1, 20 and an all -in True Interest Cost of %. (2) October 1, 2008 — June 30, 2009. 26 THE CITY OF MIAMI Background Now 113 years old, the City is part of the nation's eleventh largest metropolitan area. Incorporated in 1896, the City is the only municipality conceived and founded by a woman - Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity with more than 362,470 residents (as of the 2000 Census), 58.2% of them foreign born. In physical size, the City is not large, encompassing only 34.3 square miles. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. For additional information concerning the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI." City Government Since 1997, the City has been governed by a form of government known as the "Mayor - Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. The Mayor of the City is presently Manuel A. Diaz whose term expires November 2009. The current members of the City Commission and expiration of their current terms of office are: Commission Members Joe M. Sanchez, Chair Michelle Spence -Jones, Vice Chair Angel Gonzalez Marc D. Sarnoff Tomas P. Regalado Date Term Expires November 2009 November 2009 November 2011 November 2011 November 2011 The City Manager, Pedro G. Hernandez, is a full-time employee and is the chief administrative officer of the City. The City Manager is responsible for directing the administrative and operational aspects of the City in compliance with the policies set by the Commission and the Mayor. Mr. Hernandez has been City Manager since July 2006. He is responsible for an organization that has more than 3,954 employees and administers a budget of more than $523 million. Prior to his current position, he served as Deputy County Manager of Miami -Dade County and was charged with the oversight of the Departments of Aviation, Police, Corrections, Juvenile Services, Fire Rescue, Emergency Management, Homeland Security and the Office of the Medical Examiner. He also served as liaison to the Ethics Commission, Clerk of Courts, International Trade Consortium and the planning committee for the Super Bowl. He holds a Bachelors of Science Degree in Civil Engineering from the University of Miami and is a registered Professional Engineer in the State of Florida. The City's Chief Financial Officer is Larry Spring. His primary responsibilities include the oversight of the budget development process as well as developing and maintaining the performance indicator systems whereby department performance can be monitored and provide for budget accountability. He was appointed the interim Chief Financial Officer in July 2006 and appointed the Chief Financial Officer in February 2007. He served as Assistant City Manager for Strategic Planning, Budgeting and Performance from February 2003 to February 2007. Prior to that, Mr. Spring spent the bulk of his career in the commercial banking industry primarily in the areas of accounting and treasury management. His last position prior to joining the City was as Vice President and Controller of 27 TOTALBANK in Miami. He holds a Bachelor of Science degree in Accounting from the A.B. Freeman School of Business at Tulane University and is a member of the Government Finance Officers Association. The City's Finance Director is Diana M. Gomez. She reports to the Chief Financial Officer. She is responsible for managing and investing public funds, accounts payable, general ledger, grants monitoring, payroll, treasury management and preparation of routine accounting reports as well as the City's annual financial statement. Ms. Gomez was appointed as the Finance Director on February 11, 2006. Ms. Gomez has been Assistant Director of Finance/Comptroller since her employment with the City on August 27, 2001. Prior to joining the City, Ms. Gomez was a Supervising Senior Auditor/C.P.A. for five years with KPMG LLP, one of the "big four" accounting firms. Ms. Gomez received a Bachelor of Arts in Psychology from Rutgers College, N.J., and a Masters in Business Administration in Professional Accounting from the University of Baltimore, MD. She is a Certified Public Accountant. Adoption of Investment Policy and Debt Management Policy The City adopted a detailed written investment policy on May 10, 2001, that applies to all cash and investments held or controlled by the City and identified as "general operating funds" of the City with the exception of the City's Pension Funds, Deferred Compensation & Section 401(a) Plans, and such funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. Additionally, any future revenues, which have statutory investment requirements conflicting with the City's Investment Policy and funds held by state agencies (e.g. Department of Revenue), are not subject to the provisions of the policy. The primary objective of the investment program is the safety of the principal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a minimum, whether they are from securities defaults or erosion of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. The portfolios are required to be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Return on investment is of least importance compared to the safety and liquidity objectives described in the policy. In accordance with the City's Administrative Policies, the responsibility for providing oversight and direction in regard to the management of the investment program resides with the City's Finance Director. The Finance Director has established written procedures for the operation of the investment portfolio and a system of internal accounting and administrative controls. The City's investment policy may be modified from time to time by the City Commission. Subject to the exceptions in the City's investment policy, the City may invest in the following types of securities: (a) The Florida Local Government Surplus Funds Trust Fund, (b) United States Government Securities, (c) United States Government Agencies, (d) Federal Instrumentalities, (e) Interest Bearing Time Deposit or Savings Accounts, (f) Repurchase Agreements, (g) Commercial Paper, (h) Corporate Notes, (i) Bankers' Acceptances, (j) State and/or Local Government Taxable and/or Tax - Exempt Debt, (k) Registered Investment Companies (Money Market Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the City may invest in investment products that include the use of derivatives. As of September 30, 2008, approximately 80.44% of the City's investment portfolio was invested in United States Treasury Obligation and obligations of agencies of the United States Government. Approximately 19.56% of the City's investment portfolio was invested in commercial paper. All are rated in the highest rating category for each of the rating agencies. 28 The City adopted a Debt Management Policy on July 21, 1998 to provide guidance governing the issuance, management, continuing evaluation of and reporting on all debt obligations issued by the City and to provide for the preparation and implementation necessary to assure compliance and conformity with the policy. It is the responsibility of the City's finance committee to review and make recommendations regarding the issuance of debt obligations and the management of outstanding debt. The finance committee has approved the issuance of the Series 2009 Bonds and the negotiated sale to the Underwriters. The following policies concerning the issuance and management of debt were established in the Debt Management Policy: (a) the City will not issue debt obligations or use debt proceeds to finance current operations; (b) the City will utilize debt obligations only for acquisition, construction or remodeling of capital improvement projects that cannot be funded from current revenue sources or in such cases wherein it is more equitable to the users of the projects to finance the project over its useful life; and (c) the City will measure the impact of debt service requirements of outstanding and proposed debt obligations on single year, five, ten and twenty year periods. Capital Improvement Plan The City's fiscal year 2008-2009 six year Capital Improvement Plan (the "Capital Plan"), covering the period from October 1, 2008 through September 30, 2014, earmarked funding estimated at $737.2 million for 540 projects throughout the City. Streets and sidewalks projects account for the largest portion of the total Capital Plan funding at $191.9 million or 26%. Parks and recreation projects are the second largest, accounting for $156.7 million, or 21%, and public facilities projects are the third largest accounting for $105.1 million, or 14%, of the total Capital Plan. Bonds issued by the City represent the largest share of funding for the Capital Plan, accounting for 41.5% of the total. Capital project revenues (impact fees, storm water utilities, optional gas tax, etc.) account for 28.6%, funding derived from Miami -Dade County accounts for 13.1% and the remaining 16.8% of funding is from federal, State and other private donations. Fiscal and Accounting Procedures The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity in accordance with generally accepted accounting principles, as defined by the Governmental Accounting Standards Board ("GASB"). The operation of each fund is accounted for in a separate, self -balancing set of accounts which comprise its assets and other debits, liabilities, fund equities and other credits, revenues and expenditures. Individual funds that have similar characteristics are combined into fund types. For the past 8 years the City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada. For a complete description of the fund types and account groups, see "Notes to General Purpose Financial Statements of the City" in Appendix C herein. Indebtedness of the City Pursuant to the Debt Management Policy, the City's debt issuance is subject to the following constraints: (i) the Net Debt Per Capita and the Net Debt to Taxable Assessed Value percentages, which shall be determined by the finance committee by bench marking the City to current industry standards, 29 and (ii) the maximum maturity shall be the earlier of (a) the estimated useful life of the capital improvements being financed or (b) thirty years or (c) in the event debt was issued to refinance outstanding debt obligations the final maturity of the debt obligations being refinanced, unless a longer term is recommended by the finance committee. Pension Fund. The City's employees participate in two separate, single employer defined benefit contributory pension plans under the administration and management of separate Boards of Trustees: The City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIPO") and the City of Miami General Employees and Sanitation Employees' Retirement Trust ("GESE"). The plans cover substantially all City employees who contribute a percentage of their base salary or wage on a bi-weekly basis. The City's elected officials participate in a single employer defined benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all elected officials with 7 or more years of elected service. City employees are required to contribute 10% of their salary to GESE and no more than 7% to FIPO. The EORT is a non-contributory plan. Contributions from employees for FIPO and GESE are recorded in the period the City makes payroll deductions from participants. The City is annually required to contribute such amounts as necessary on an actuarial basis to provide FIPO and GESE with assets sufficient to meet the benefits to be paid. The ordinance covering the FIPO (the "Pension Ordinance") provides for actuarial methodology for evaluating assets to be a moving market value averaged over three years. The result cannot be greater than 100 percent of market value or less than 80 percent of market value. The Pension Ordinance also provides for the FIPO Board of Trustees' actuary to use the actuarial assumptions adopted the FIPO Board. Currently, the City and the FIPO are in discussions regarding the amount needed for contribution. However, if the City's actuary and the FIPO's actuary cannot agree, together they may appoint a third independent actuary. The third actuary is required to submit a funding recommendation to the FIPO Board and the City Commission. The City Commission is then required to fund the amount recommended by either the FIPO's actuary or the City's actuary, whichever recommendation is closer to the recommendation of the third actuary. The City's net pension obligation for each of the FIPO, the GESE and the EORT is $0. The annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2004, 2005, 2006, 2007 and 2008. Additionally, the City has established a qualified governmental excess benefit plan to continue to cover the difference between the allowable pension to be paid and the amount of the defined benefits, so the benefits for eligible members are not diminished by the changes in the Internal Revenue Code (the GESE Excess Plan"). Plan members are not required to contribute to the GESE Excess Plan. The payment of the City's contribution of the excess retirement benefit is funded from the City's General Fund and paid annually at the same time as the City's annual contribution to normal pension costs. The City's net pension obligation for the GESE Excess Plan as of September 30, 2008 was $4,265,603 and the annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2004, 2005, 2006, 2007 and 2008. Accrued Compensated Absences. Under terms of Civil Service regulations, labor contracts and administrative policy, City employees are granted vacation and sick leave in varying amounts. Additionally, certain overtime hours can be accrued and carried forward as earned time off. Unused vacation and sick time is payable upon separation from service, subject to various limitations depending 30 upon the employee's seniority and civil service classification. The amount accrued as of September 30, 2008 is $84,479,266 of which $5,430,784 is the current portion. Every three years the maximum number of hours which can be carried forward is renegotiated with FIPO and GESE. Other Postemployment Benefits. Pursuant to Section 112.0801 of the Florida Statutes, the City is required to permit participation in the health insurance program by retirees and their eligible dependents at a cost to the retiree that is no greater than the cost at which coverage is available for active employees. Retired Police Officers are offered coverage at a discounted premium. For Non -Police retirees (Fire Fighters, General Employees, Sanitation Employees and Elected Officials) and their dependents, the City has a stated policy of providing health coverage and life insurance at a discounted premium equal to 75% of the blended group rate. Based on Governmental Accounting Standard's Board approval of Statements 43 and 45 ("GASB 43" and "GASB 45") which set forth the guidelines and a future implementation timetable for reporting and disclosure of Other Post -Employment Benefits ("OPEB"), the City had an actuary calculate future funding requirements during fiscal year 2008. The valuation was performed as of October 1, 2006 and covers the subsidies for medical and life insurance benefits. GASB 45 allows flexibility to governmental employers in the use of various actuarial cost methods. Several such acceptable actuarial cost methods were investigated, including the Entry Age Normal Cost Method, the Frozen Entry Age Normal Cost Method, the Aggregate Cost Method, and the Projected Unit Credit Normal Cost Method. The goal was to recommend to the City an Actuarial cost method which is acceptable, appropriate, and commonly used. The City has elected to implement the provisions of GASB 45 prospectively. The OPEB liability was calculated using the Entry Age Normal Cost Method. See "APPENDIX C GENERAL PURPOSE FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 (Excerpt of the City of Miami Comprehensive Annual Financial Report)— NOTE 11. POST EMPLOYMENT HEALTH CARE BENEFITS." Recent Legislative and Constitutional Initiatives Concerning Ad Valorem Taxes The Florida Legislature during its special session which ended on June 14, 2007 passed legislation which would reduce ad valorem taxes that may be levied by local governments, other than school districts, in Fiscal Year 2007-08 to below the level of taxes levied in Fiscal Year 2006-07. The legislation limits the growth of ad valorem tax levies in future years (except those levied by school districts) to the growth in a jurisdiction's population as measured by new construction and the statewide growth in per capita personal income. However, local government governing bodies may increase ad valorem tax levies by extraordinary votes or by referenda. Any county or municipality that levies in excess of the amount permitted under the legislation will forfeit participation in the half -cent sales tax revenue sharing program for a twelve month period. Several amendments to the Florida Constitution affecting Ad Valorem Taxes have been approved by voters in the past including the following. Constitutional amendments related to ad valorem exemptions. On January 29, 2008, in a special election held for such purpose, the requisite number of voters approved amendments to the State Constitution exempting certain portions of a property's assessed value from taxation. The following is a brief summary of certain important provisions contained in such amendments: 1. Provides for an additional exemption for the assessed value of homestead property between $50,000 and $75,000, thus doubling the existing homestead exemption for property with an assessed value equal to or greater than $75,000. 31 2. Permits owners of homestead property to transfer their "Save Our Homes" benefit (up to $500,000) to a new homestead property purchased within two years of the sale of their previous homestead property to which such benefit applied if the just value of the new homestead is greater than or is equal to the just value of the prior homestead. If the just value of the new homestead is less than the just value of the prior homestead, then owners of homestead property may transfer a proportional amount of their "Save Our Homes" benefit, such proportional amount equaling the just value of the new homestead divided by the just value of the prior homestead multiplied by the assessed value of the prior homestead. 3. Exempts from ad valorem taxation $25,000 of the assessed value of property subject to tangible personal property tax. 4. Limits increases in the assessed value of non -homestead property to 10% per year, subject to certain adjustments. The cap on increases would be in effect for a 10 year period, subject to extension by an affirmative vote of electors. The amendments are effective for the 2008 tax year (2008-09 fiscal year for local governments). At this time, it is impossible to estimate with any certainty the level of impact that the constitutional amendments will have on the City, but the impact could be substantial. A lawsuit challenging the constitutionality of at least part of the amendments was filed prior to the referendum approval by the voters. In Bruner v. Hartsfield, filed in the Circuit Court in and for Leon County, Florida in November 2007, new Florida homestead owners (having paid ad valorem taxes for the past four years) filed a class action lawsuit challenging the constitutionality of the Save Our Homes assessment cap and the portability provision. The lawsuit charges that Save Our Homes constitutes an unlawful residency requirement for tax benefits on substantially similar property, in violation of the State Constitution's Equal Protection provisions and the Privileges and Immunities Clause of the Fourteenth Amendment to the United States Constitution. The lawsuit argues that the portability provision simply extends the unconstitutionality of the tax shelters granted to long-term homeowners by Save Our Homes. The lawsuit requests a declaration of the unconstitutionality of both provisions and injunctive action preventing continued application of those provisions. On October 29, 2008, the Circuit Court dismissed the plaintiffs complaint with prejudice. The plaintiffs have appealed the decision to the First District Court of Appeals. At the present time, it is impossible to predict the plaintiffs' chances of success in an appeal or the impact to the City's finances if an appeal is successful. On October 18, 2007, the same Court, in Lanning v. Pilcher, a case filed by out-of-state residents challenging the constitutionality of the Save Our Homes assessment cap, rejected the plaintiffs arguments that the Save Our Homes assessment cap violates either the Commerce Clause or the Privileges and Immunities Clause of the U.S. Constitution or the Equal Protection Clause of either the U.S. or Florida Constitutions and dismissed the plaintiffs' allegations with prejudice. The Lanning Court noted that its decision was limited to the plaintiffs' complaints regarding the Save Our Homes assessment cap. The case is currently on appeal. A lawsuit brought by out-of-state residents (DeLuccio v. Havill) challenging the constitutionality of the Save Our Homes assessment cap and the portability provision was filed with the same Court on May 2, 2008. The allegations and relief requested by the plaintiffs in each of these cases are very similar, except that the portability provision was not challenged in Lanning v. Pilcher since the case was filed prior to the approval of the amendments implementing portability. As noted above, this Court rejected such arguments in Lanning v Pilcher with similarly situated plaintiffs. On November 4, 2008, the Circuit Court in DeLuccio dismissed the plaintiffs' complaint with prejudice. The plaintiffs have appealed the decision to the First District Court of Appeals. At the present time, it is impossible to 32 predict the likelihood of the plaintiffs' success on appeal in any of these lawsuits or, if successful, the impact of these lawsuits on the City's finances. LEGAL MATTERS Certain legal matters incident to the validity of the Series 2009 Bonds are subject to the approval of Foley & Lardner LLP, Bond Counsel, Miami, Florida whose approving opinion in the form attached hereto as "APPENDIX D — FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2009 Bonds at the time of their delivery. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by KnoxSeaton, Miami, Florida, Disclosure Counsel to the City. Florida. Certain legal matters will be passed upon for the Underwriters by Akerman Senterfitt, Miami, LITIGATION There is no pending or, to the knowledge of the City, any threatened litigation against the City of any nature whatsoever which in any way questions or affects the validity of the Series 2009 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the adoption of the Resolution, or the levy of the ad valorem taxes. Neither the creation, organization or existence, nor the title of the present members of the City Commission or other officers of the City is being contested. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Rule 69W-400.003, Rules of Government Securities, promulgated by the Office of Financial Regulation of the Financial Services Commission, under Section 517.051(1), Florida Statutes ("Rule 69W- 400.003"), requires the City to disclose each and every default as to the payment of principal and interest with respect to obligations issued by the City after December 31, 1975. Rule 69W-400.003 further provides, however, that if the City in good faith believes that such disclosures would not be considered material by a reasonable investor, such disclosures may be omitted. The City has not defaulted on the payment of principal or interest with respect to obligations issued by the City after December 31, 1975. TAX MATTERS Federal Tax Matters In the opinion of Foley & Lardner LLP, Bond Counsel, based on existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, as described herein, interest on the Series 2009 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code (the "Code"). In the further opinion of Bond Counsel, interest on the Series 2009 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes and is not included in adjusted current earnings in determining federal alternative minimum taxable income of corporations. A copy of the proposed form of the opinion of Foley & Lardner LLP, as Bond Counsel, is set forth in APPENDIX D. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2009 Bonds. 33 The City has covenanted to comply with certain restrictions and requirements designed to assure that the interest on the Series 2009 Bonds will not be included in gross income for federal income tax purposes. Failure to comply with these covenants may result in such interest being included in gross income for federal income tax purposes, possibly from the original issuance date of the Series 2009 Bonds. The opinion of Foley & Lardner LLP, as Bond Counsel, assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the issuance of the Series 2009 Bonds may adversely affect the tax status of the interest on the Series 2009 Bonds. The opinion of Bond Counsel relies on factual representations, made by the City and other persons. These factual representations include but are not limited to certifications by the City regarding its reasonable expectations regarding the use and investment of bond proceeds. Bond Counsel has not verified these representations by independent investigation. Bond Counsel does not purport to be an expert in asset valuation and appraisal, financial analysis, financial projections or similar disciplines. Failure of any of these factual representations to be correct may result in interest on the Series 2009 Bonds being included in gross income for federal income tax purposes, possibly from the original issuance date of the Series 2009 Bonds. Certain requirements and procedures contained or referred to in the Resolution, the Tax Certificate relating to the Series 2009 Bonds and other relevant documents may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Foley & Lardner LLP. Although Bond Counsel is of the opinion that interest on the Series 2009 Bonds is excluded from gross income for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Series 2009 Bonds may otherwise affect a Beneficial Owner's federal tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Beneficial Owner or the Beneficial Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences except as expressly provided in the opinion of Bond Counsel. Bond Counsel gives no assurance that any future legislation or clarifications or amendments to the Code, if enacted into law, will not cause the interest on the Series 2009 Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent the Beneficial Owners from realizing the full current benefit of the tax status of the interest on the Series 2009 Bonds. Prospective purchasers of the Series 2009 Bonds are encouraged to consult their own tax advisors regarding any pending or proposed federal legislation, as to which Bond Counsel expresses no view. The opinion of Bond Counsel is based on current legal authorities, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment regarding the proper treatment of the Series 2009 Bonds for federal income tax purposes. It is not binding on the IRS or the courts, and it is not a guarantee of result. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City or about the effect of changes to the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the applicable requirements of the Code. Bond Counsel is not obligated to defend the City regarding the tax-exempt status of the Series 2009 Bonds in the event of an examination by the IRS. Under current IRS procedures, the Beneficial 34 Owners and other parties other than the City would have little, if any, right to participate in an IRS examination of the Series 2009 Bonds. Moreover, because obtaining judicial review in connection with an IRS examination of tax-exempt Series 2009 Bonds is difficult, obtaining independent review of IRS positions with which the City legitimately disagrees may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2009 Bonds for examination, or the course or result of such an examination, or an examination of Series 2009 Bonds presenting similar tax issues may affect the market price, or the marketability, of the Series 2009 Bonds, and may cause the City or the Beneficial Owners to incur significant expense. De Minimis Safe Harbor Exception For Tax -Exempt Interest Expense Of Financial Institutions In the case of a financial institution, the Code generally disallows that portion of the taxpayer's interest expense that is allocable to tax-exempt interest. The amount of interest that is disallowed is an amount which bears the same ratio to such interest expense as the taxpayer's average adjusted bases of tax-exempt obligations acquired after August 7, 1986 bears to the average adjusted bases of all assets of the taxpayer. The general rule of section 265(b) of the Code denying financial institutions' interest expense deductions allocable to tax-exempt obligations does not apply to "qualified tax-exempt obligations". The Series 2009 Bonds are not "qualified tax-exempt obligations" for this purpose. The American Recovery and Reinvestment Act of 2009 generally provides that tax-exempt obligations issued during 2009 and 2010 and held by a financial institution, in an amount not to exceed two percent of the adjusted basis of the financial institution's assets, are not taken into account for the purpose of determining the portion of the financial institution's interest expense subject to the pro rata interest disallowance rule of section 265(b). For the purposes of this rule, a refunding bond (whether a current or advance refunding) is treated as issued on the date of issuance of the refunded bond (or, in a case of a series of refundings, the original bond). The American Recovery and Reinvestment Act also amends section 291(e) of the Code to provide that tax-exempt obligations issued during 2009 and 2010, and not taken into account for purposes of calculation of a financial institution's interest expense subject to the pro rata interest disallowance rule, are treated as having been acquired on August 7, 1986. As a result, such obligations are financial institution preference items, and the amount allowable as a deduction by a financial institution with respect to interest incurred to carry such obligations is reduced by 20 percent. Bond Counsel is of the opinion that, for purposes of this new provision of the American Recovery and Reinvestment Act of 2009 (set forth in section 265(a)(7) of the Code), the Series 2009 Bonds are obligations issued in 2009 that are not refunding bonds. Original Issue Discount To the extent the issue price of any maturity of the Series 2009 Bonds is less than the amount to be paid at maturity of such Series 2009 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2009 Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2009 Bonds which is excluded from gross income for federal income tax purposes. For this purpose, the issue price of a particular maturity of the Series 2009 Bonds is the first price at which a substantial amount of such maturity of Series 2009 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2009 Bonds accrues daily over the term to maturity of such Series 2009 Bonds on the basis of a constant 35 rate compounded on periodic compounding (with straight-line interpolations between compounding dates). In general, the length of the interval between periodic compounding dates cannot exceed the interval between debt service payments on such Series 2009 Bonds and must begin or end on the date of such payments. The accruing original issue discount is added to the adjusted basis of such Series 2009 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2009 Bonds. Beneficial Owners of the Series 2009 Bonds should consult with their own tax advisors with respect to the tax consequences of ownership of Series 2009 Bonds with original issue discount, including the treatment of purchasers who do not purchase such Series 2009 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2009 Bonds are sold to the public. Original Issue Premium Series 2009 Bonds purchased, whether at original issuance or otherwise, for an amount greater than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. RATINGS has issued a commitment for the delivery of its municipal bond insurance policy with respect to the Series 2009 Bonds on the date of issuance and delivery thereof.] [The Series 2009 Bonds will be rated at the time of delivery thereof based upon 's Policy. Municipal bond insurance issued by currently results in bond issues being rated " " Moody's Investors Service, Inc. ("Moody's"), "" by Standard & Poors Ratings Services ("S&P") and " " by Fitch, Inc. ("Fitch).] Moody's, Fitch and S&P have assigned [underlying] ratings of "_," "" and "", respectively, [without giving any regard to a municipal bond insurance policy.] The ratings reflect only the views of said rating agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no assurance that such ratings will continue for any given period of time or that they will not be lowered or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward change in or withdrawal of any of such ratings, may have an adverse effect on the market price of the Series 2009 Bonds. FINANCIAL ADVISOR The City has retained First Southwest Company as Financial Advisor in connection with the City's financing plans and with respect to the authorization and issuance of the Series 2009 Bonds. The Financial Advisor did not participate in the underwriting of the Series 2009 Bonds. AUDITED FINANCIAL STATEMENTS The General Purpose Financial Statements of the City for the fiscal year ending September 30, 2008 (the "Audited Financial Statements"), and report thereon of McGladrey & Pullen LLP (the "Independent Certified Public Accountant") are attached hereto as "APPENDIX C — GENERAL 36 PURPOSE FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 (Excerpt of the City of Miami Comprehensive Annual Financial Report)." Such statements speak only as of September 30, 2008. The Audited Financial Statements have been included as a public document and the Independent Certified Public Accountant has not consented to the inclusion of such Audited Financial Statements in this Official Statement nor have they participated in the preparation of the Official Statement. UNDERWRITING The Series 2009 Bonds are being purchased by the underwriters shown on the cover of the Official Statement (collectively, the "Underwriters") at an aggregate purchase price of $ (the par amount of the Series 2009 Bonds, [plus/less net original issue premium/discount] of $ , less Underwriters' discount of $ . The Underwriters' obligations are subject to certain conditions precedent described in the Bond Purchase Contract entered into between the City and the Underwriters, and they will be obligated to purchase all of the Series 2009 Bonds if any Series 2009 Bonds are purchased. The Series 2009 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2009 Bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriters. J.P. Morgan Securities Inc., one of the underwriters of the Series 2009 Bonds, has entered into an agreement (the "Distribution Agreement") with UBS Financial Services Inc. for the retail distribution of certain municipal securities offerings, including the Series 2009 Bonds, at the original issue prices. Pursuant to the Distribution Agreement, J.P. Morgan Securities Inc. will share a portion of its underwriting compensation with respect to the Series 2009 Bonds with UBS Financial Services Inc. CONTINGENT FEES The City has retained Bond Counsel, Financial Advisor and Disclosure Counsel with respect to the authorization, sale, execution and delivery of the Series 2009 Bonds. Payment of the fees of such professionals and an underwriting discount to the Underwriters are each contingent upon the issuance of the Series 2009 Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2009 Bonds upon an event of default under the Resolution and the Policy are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the federal bankruptcy code, the remedies specified by the Indenture, the Series 2009 Bonds and the Policy may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2009 Bonds, including Bond Counsel's approving opinion, will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. CONTINUING DISCLOSURE [Update] The City will covenant for the benefit of the Series 2009 Bondholders to provide certain financial information and operating data relating to the City and the Series 2009 Bonds in each year, and to provide notices of the occurrence of certain enumerated material events. Annual financial information 37 and operating data and the City's audited financial statements will be filed by the City with the Electronic Municipal Market Access ("EMMA") system as required by the SEC Rule 15c2-12, as well as any state information depository that is subsequently established in the State (a "SID"). Notices of material events, when and if they occur, shall be timely filed by the City with EMMA and with the SID, if any. The obligation undertaken is an obligation to provide only limited information at limited times and may not include all information necessary to value the Series 2009 Bonds. The specific nature of the financial information, operating data, and of the type of events which trigger a disclosure obligation, and other details of the undertaking are described in "APPENDIX F - FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT" attached hereto. The Disclosure Dissemination Agent Agreement shall be executed by the City prior to the issuance of the Series 2009 Bonds. These covenants have been made in order to assist the Underwriters in complying with the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "Rule"). With respect to the Series 2009 Bonds, no party other than the City is obligated to provide, nor is expected to provide, any continuing disclosure information with respect to the Rule. The City has undertaken certain continuing disclosure obligations in prior continuing disclosure certificates in connection with its outstanding debt to provide certain financial and operating information and notices to each Nationally Recognized Municipal Securities Information Repository ("NRMSIR"), the State Repository, if and when one is established, and others. Due to an administrative oversight, certain required financial information and audited financial statements for fiscal years ending 2003, 2004, 2005, and 2007 were not timely filed with each NRMSIR. The City's official statements for 2002 through 2008 bond issuances mistakenly represented that the City was in compliance in all material respects with its prior continuing disclosure undertakings. All financial information has since been filed, as well as notices of late fling. As of the date hereof, the City is in compliance with all of its continuing disclosure obligations, in all material respects, and has implemented procedures to assure future compliance with all of its continuing disclosure obligations. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The references, excerpts, and summaries of all documents, statutes, and information concerning the City and certain reports and statistical data referred to herein do not purport to be complete, comprehensive and definitive and each such summary and reference is qualified in its entirety by reference to each such document for full and complete statements of all matters of fact relating to the Series 2009 Bonds, the security for the payment of the Series 2009 Bonds and the rights and obligations of the owners thereof and to each such statute, report or instrument. The appendices attached hereto are integral parts of this Official Statement and must be read in their entirety together with all foregoing statements. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the City from the date hereof. FORWARD -LOOKING STATEMENTS This Official Statement contains certain "forward -looking statements" concerning the City's operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a 38 number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the City. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions are meant to identify these forward - looking statements. Actual results may differ materially from those expressed or implied by these forward -looking statements. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the owners of the Series 2009 Bonds. [Remainder of page intentionally left blank] 39 AUTHORIZATION OF OFFICIAL STATEMENT The execution and delivery of this Official Statement has been duly authorized and approved by the City. At the time of delivery of the Series 2009 Bonds, the City will furnish a certificate to the effect that nothing has come to their attention which would lead it to believe that the Official Statement (other than information herein related to [the Insurer, the Municipal Bond Insurance Policy,] DTC, the book - entry only system of registration and the information contained under the caption "TAX MATTERS" as to which no opinion shall be expressed), as of its date and as of the date of delivery of the Series 2009 Bonds, contain an untrue statement of a material fact or omits to state a material fact which should be included therein for the purposes for which the Official Statement is intended to be used, or which is necessaryto make the statements contained therein, in the light of the circumstances under which they were made, not misleading. THE CITY OF MIAMI, FLORIDA By: City Manager 40 APPENDIX A GENERAL INFORMATION REGARDING THE CITY OF MIAMI 1 APPENDIX A GENERAL INFORMATION REGARDING THE CITY OF MIAMI General Now 113 years old, the City of Miami, Florida (the "City") is part of the nation's eleventh largest metropolitan area, Miami -Dade County. Incorporated in 1896, the City is the only major municipality conceived and founded by a woman, Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity with more than 362,470 residents (as of the 2000 Census), 58.2% of them foreign born. In physical size the City is not large, encompassing only 34.3 square miles. The City is situated at the mouth of the Miami River on the western shore of Biscayne Bay, the main port entry in Florida. The City is the southernmost major city and seaport in the continental United States. The nearest foreign territory is the Bahamian Island of Bimini, 50 miles from the City's coast. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. Population City of Percent Miami- Percent State of Percent Year Miami Change Dade Change Florida Change County 1960 291,688 935,047 4,951,560 -- 1970 331,553 13.6 1,267,792 35.6% 6,791,418 37.2% 1980 346,865 4.6 1,625,509 28.2 9,746,961 43.5 1990 358,648 3.4 1,937,194 19.2 12,938,071 32.7 2000 362,470 1.0 2,253,362 16.3 15,982,378 23.5 Source: University of Florida, Florida Statistical Abstract 2005, U.S. Census Bureau Government Since 1997, the City has been governed by a form of government known as the "Mayor - City Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. City elections are held in November every two years on a non -partisan basis. Candidates for Mayor must run as such and not for the Commission in general. At each election, two or three members of the Commission are elected for four-year terms. Thus, the terms are staggered so that there are always at least two experienced members of the Commission. The City Manager serves as the administrative head of the municipal government, charged with the responsibility of managing the City's financial operations and organizing and directing the administrative infrastructure. The City Manager also retains full authority in the appointment and supervision of department directors, preparation of the City's annual budget and initiation of the investigative procedures. In addition, the City Manager takes appropriate action on all administrative matters. Climate Miami's climate is sub -tropical -marine, characterized by long summers with abundant rain fall and mild, dry winters. The average temperature in the summer is 81.4 degrees Fahrenheit and 69.1 degrees Fahrenheit in the winter, with an average annual temperature of 75.4 degrees. Parks and Recreation Outdoor recreational activities like golf, tennis, running, bicycling, rollerblading, boating and fishing can be enjoyed year-round. Altogether, Miami -Dade County has over 300 parks and recreational areas totaling over one million acres, including Everglades and Biscayne National Parks. Eighteen public golf courses and 504 public tennis courts are available throughout the county. Miami -Dade County's area's 22 public beaches comprise 1,400 acres, which are freely accessible and are enjoyed year round by residents and tourists. Athletics for spectator sports fans are held at the Miami Convention Center and the Miami Arena. Dolphin Stadium, which is used by the Miami Dolphins and the Florida Marlins, is located in North Central Dade County. Sports competition includes professional and college football, basketball, baseball and championship boat races. Other athletic events include amateur football, basketball, soccer, baseball, motorcycle speedway racing and rowing events. Education Miami -Dade County's public school system, of which the City is a part, is the fourth largest in the United States. The countywide school district offers a wide variety of programs to meet the needs of its 365,784 students. For example, Miami-Dade's magnet schools provide intensive levels of instruction in subjects like science and technology, foreign languages, health care, architecture, the performing arts and marine sciences. Other public school programs serve students with different academic, physical or emotional needs, including gifted, advanced and remedial courses. Miami -Dade County is also noted for its high quality private schools, which include Gulliver Academy, Miami Country Day School and Ransom Everglades, as well as numerous schools affiliated with religious organizations. Overall, 80% of graduating seniors, accounting for over 282,000 students, continue their education in a post -secondary institution. Miami -Dade County is also home to Miami -Dade College, the largest comprehensive community college in the United States. Florida International University has two convenient and highly rated academic programs. The University of Miami, a private undergraduate and graduate institution, includes diversified research facilities and exceptional schools of law, music, medicine, and marine sciences. Barry University, St. Thomas University, and Florida Memorial University offer degrees in a variety of subjects. A-2 Medical Miami -Dade County has the largest concentration of medical facilities in Florida, with 32 hospitals and more than 32,000 licensed health care professionals. Nursing homes, adult congregate living facilities and home health care services also serve the region. The University of Miami Jackson Memorial Medical Center, the second-largest public hospital in the nation, forms the hub of the region's medical centers, which includes world- renowned specialized facilities like Bascom Palmer Eye Institute, the Mailman Center for Child Development and the Sylvester Comprehensive Cancer Center. Miami -Dade County has an extensive network of community hospitals, such as Mount Sinai Medical Center, Cedars Medical Center, Baptist Hospital, Mercy Hospital and Miami Children's Hospital. Nine area hospitals have formed the Miami Medical Alliance, a cooperative effort to serve patients from Latin America and the Caribbean. Transportation Miami -Dade County has a comprehensive transportation network designed to meet the needs of residents, travelers and area businesses. The county's internal transportation system includes Metrorail, a 22.1 mile above -ground system linking Kendall, South Miami, Coral Gables, Brickell Avenue, Downtown Miami, the Medical Center, Northwest Dade and Hialeah. Metromover, a 4.4 mile automated loop, carries passengers around downtown Miami, Brickell Avenue and the Omni shopping center areas. Miami -Dade County's Metrobus covers 38 million miles per year and over 100 passenger trips annually. The County also provides para-transit services to qualified riders in the amount of 1.4 million passenger trips annually. Cargo rail service is available from both the airport and seaport, and Amtrak has a passenger station in the City. Tri-Rail, a 72-mile train system, links West Palm Beach, Boca Raton, Fort Lauderdale, Hollywood and Miami International Airport. Miami International Airport. Miami International Airport is one of the busiest airports in the world for both passengers and cargo traffic. It ranks sixteenth in the nation and twenty eighth in the world in passenger traffic through the airport. The airport ranks fourth in the nation and eleventh in the world in tonnage of domestic and international cargo movement. In 2008 over 34 million air travelers were serviced by Miami International Airport, and approximately 2.08 million tons of cargo was handled. More than 85 airlines serve Miami International Airport, flying passengers non-stop to more than 100 destinations on four continents. Port of Miami. The Port of Miami, known as the "cruise capital of the world," is operated by the Seaport Department of the Miami -Dade County. In 2008, over 4 million passengers sailed from the Port aboard one of the 8 cruise companies who operate out of Miami. The Port of Miami is also a hub for Caribbean and Latin American commerce. These countries account for over half of the 7.43 million tons cargo transferred in the port in 2008. The Port of Miami is also reaching out to the global community where trade with Asian countries accounted for almost 23% of the total cargo handled at the Port. The Port is also important to the U.S. economy, contributing in excess of $17billion annually, which should increase after the completion of the Port's five year, $369 million capital improvement program. A-3 Economy The economic base of the City has diversified in recent years, shifting from reliance on the tourism industry to a combination of motion picture production, manufacturing, services industries and international trade. The area's advantages in• terms of climate, geography, low taxes and skilled labor have combined to make the Miami area a prime relocation area for major manufacturing firms and international corporate headquarters. The following major companies have their Latin American headquarters located in the City: ABN AMRO Bank AT&T Latin America Caterpillar Clorox Latin America ExxonMobil Inter - America IBM Corporation Olympus Latin America Stanley Latin America Terra Networks USA Source: Beacon Council Acer Latin America Black & Decker Latin America Group Chevron -Texaco Eastman Chemical Latin America Federal Express Corporation Johnson & Johnson Oracle Latin America Tech Data The Gap American Express Canon Latin America Cisco Systems Ericsson Hewlett Packard Co. Latin America Komatsu Latin America Sony Broadcast Export Corporation Telefonica USA United Parcel Service Distribution of Major Employment Classifications for Miami -Dade County, Florida Occupational Title Construction Manufacturing Mining and Natural Resources Transportation, Warehousing, and Utilities Wholesale Trade Retail Trade Information Finance Activities Professional and Business Education and Health Services Leisure and Hospitality Other Services Government Employees 43,400 49,600 400 61,300 75,100 115,800 28,400 69,900 163,400 137,700 101,700 45,400 154,400 Total Employed 1,046,500 Source: Miami -Dade County Annual Report to Bondholders Percentage of Totals 4.1 4.7 0 5.9 7.2 11.1 2.7 6.7 15.6 13.2 9.7 4.3 14.8 100.0 A-4 Labor Force and Employment Statistics City of Miami, Florida Civilian Unemployment Period Labor Force Employment Rate 2002 157,976 144,304 8.7% 2003 158,341 145,943 7.8 2004 159,530 147,913 7.3 2005 162,083 154,124 4.9 2006 172,449 165,073 4.3 2007 180,667 172,259 4.7 2008 183,555 172,126 6.2 2009* 180,900 166,685 7.9 Source: Bureau of Labor * Preliminary January 2009 - April 2009 City of Miami, Florida Principal Employers Percentage of Total Name Number of Employees county Employment Miami -Dade County Public Schools 50,000 4.19% Miami -Dade County 32,000 2.68 U.S. Federal Government 20,400 1.71 State of Florida 17,000 1.43 Publix Super Markets 11,000 0.92 Baptist Health Systems of South Florida 10,826 0.91 Public Health Trust/Jackson Health System 10,500 0.88 University of Miami 9,874 0.83 American Airlines 9,000 0.75 Miami -Dade College 6,500 0.55 Source: The Beacon Council/Miami-Dade County Florida A-5 Fiscal Year 2004 2005 2006 2007 2008 New Commercial Building Permits 141 175 125 98 80 Record of Building Permits, 2003 through 2008 City of Miami, Florida Estimated Cost $ 752,744,254 1,661,488,023 2,573,453,643 1,266,199,562 1,615,039,791 Other Commercial Building Permits 2369 2581 2582 2816 3218 Source: City of Miami, Florida Building Department Year 2003 2004 2005 2006 2007 2008 New Other Residential Residential Building Estimated Building Permits Cost Permits 420 $81,331,328 3996 404 94,411,620 4761 450 119,113,620 5208 349 110,732,621 5285 178 60,467,105 3759 Per Capita Personal Income Miami(') (dollars) $27,891 29,817 32,025 33,712 N/A N/A Source: Florida Research and Economic Database (1) Data is for Miami -Dade County Florida (dollars) $30,330 32,618 34,798 36,720 37,361 38,512 Millage Rates The City has reduced its millage rate each year beginning with Fiscal Year 2000. The reduction gives the City capacity to increase taxes for an emergency. The following table shows millage rates for the City for fiscal years ending September 30, 1999 through September 30, 2008. THE CITY OF MIAMI, FLORIDA PROPERTY TAX RATES General Fiscal Year Tax Roll Year Operations Debt Service Total City 1999 1998 10.0000 1.7900 11.7900 2000 1999 9.5000 1.4000 10.9000 2001 2000 8.9950 1.2800 10.2750 2002 2001 8.9950 1.2180 10.2130 2003 2002 8.8500 1.2180 10.0680 2004 2003 8.7625 1.0800 9.8425 2005 2004 8.7163 0.9500 9.6663 2006 2005 8.4995 0.7650 9.2645 2007 2006 8.3745 0.6210 8.9955 2008 2007 7.2999 0.5776 7.8775 2009 2008 7.6740 0.5803 8.2543 Source: City of Miami Comprehensive Annual Financial Report FY 2008 and Miami -Dade County Property Appraiser's Office. Note: All millage rates are based on $1 for every $1,000 of assessed value. The following table shows the millage rates for the general obligation debt, the Prior Bonds for Fiscal Years 2002- 2009. Figures for Fiscal Year 2009 are projected. THE CITY OF MIAMI, FLORIDA MILLAGE FOR VOTED DEBT SERVICE General Series Fiscal Obligation 2002 Series 2007A Series 2007B Year Debt Bonds Bonds Bonds Total 2002 1.2180 N/A N/A N/A 1.2180 2003 .8599 .3581 N/A N/A 1.2180 2004 .7941 .2859 N/A N/A 1.0800 2005 .6456 .3044 N/A N/A 0.9500 2006 .4496 .3154 N/A N/A 0.7650 2007 .2850 .3360 N/A N/A 0.6210 2008 .2196 .1577 .1345 .0658 0.5776 2009 .1983 .1753 .1400 .0668 0.5803 Source: City of Miami, Florida Finance Department Assessed Valuations The following table shows the assessed valuations for the City for fiscal years ending September 30, 1999 through September 30, 2008. THE CITY OF MIAMI, FLORIDA NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Fiscal Year Ended September 30, 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Real Property Residential Property $ 5,476,130,675 5,796,864,025 6,000,474,083 6,612,151,524 7,679,048,886 8,789,474,779 10,364,157,774 12,959,276,770 20,320,801,612 24,279,025,389 Commercial Property $ 5,564,886,455 5,835,981,002 6,113,340,757 6,730,517,606 7,380,571,799 8,369,950,851 9,870,433,741 12,341,927,389 11,038,460,135 11,727,240,945 Personal Property $1,334,992,653 1,480,211,283 1,657,551,519 1,770,392,311 1,878,266,085 1,711,697,688 1,695,110,542 1,676,173,129 1,673,647,599 1,749,572,760 Net Assessed Value $12,376,009,783 13,113,056,310 13,771,366,359 15,113,061,441 16,937,886,770 18,871,123,318 21,929,702,057 26,977,377,288 33,032,909,346 37,755,839,094 Total City Tax Millage 11.79 10.90 10.28 10.21 10.07 9.84 9.67 9.26 8.99 7.88 Estimated Actual Value $17,901,918,921 18,857,553,034 20,061,032,742 22,035,829,555 24,759,964,620 27,717,908,682 32,133,104,422 39,120,899,711 47,925,276,742 55,249,891,635 Source: Miami -Dade County Property Appraiser's Office Note: Property in the City is reassessed each year. State law requires the Property Appraiser to appraise property at 100% of market value. The Florida Constitution was amended, effective January 1, 1995, to limit annual increases in assessed value of property with homestead exemption to 3 percent per year or the amount of the Consumer Price Index, whichever is lower. The increase is not automatic since no assessed value shall exceed market value. Tax rates are per $1,000 of assessed value. Tax Collection It is the Miami -Dade County Tax Collector's duty on or before June 1 of each year to advertise and sell tax certificates on real property delinquencies extending from the previous April 1. The tax certificates must not be less than the amount of the taxes plus interest from April 1 to the date of sale, together with the cost of advertising and expense of sale. Delinquent real property taxes bear interest at the rate of 18% per year from April 1 until a certificate is sold at auction, at which time the interest rate is as bid by the buyer of the certificate not to exceed 18%. Delinquent taxes may be redeemed prior to sale of the tax certificates upon payment of all costs, delinquent taxes, and interest. The minimum interest for delinquent taxes paid prior to the sale of a certificate is 3%. A tax certificate may be redeemed by paying the Miami -Dade County Tax Collector the face value of the certificate, interest, costs, charges and omitted taxes, if any, plus a redemption fee of $5. The redeemer must pay the interest rate due on the certificate or 5% of the face amount of the certificate, whichever amount is greater, unless the certificate was bid at no interest. Florida law provides a different method for the collection of delinquent tangible personal property taxes, which includes the possible seizure and sale of the tangible personal property. After two years from April 1 of the year of issuance of the tax certificate and before seven years of the date of issuance, a private holder of any unredeemed tax certificate may apply for a tax deed to the property. Miami -Dade County, for tax certificates that it has acquired, also has a two-year minimum wait period for purchase of a tax deed, beginning April 1 of the year of issuance of the certificate. Such procedures are governed by State law applicable to all Florida counties. The request for a tax deed is referred to the Clerk of the Circuit Court of Miami -Dade County who will hold an auction after the proposed sale of the tax deed has been advertised for four consecutive weeks in a newspaper as prescribed by law. The following table shows tax levies and tax collections in the City for the last ten fiscal years. Fiscal Year Ended September 30, THE CITY OF MIAMI, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS Collected Within the Fiscal Year of the Levy Total Tax Levied for Percent Fiscal Year Amount of Levy 1999 145,913,155 143,515,000 98.36 2000 142,932,314 136,028,063 95.17 2001 141,425,410 134,535,715 95.13 2002 152, 339,301 146,185,141 95.96 2003 167,490,551 157,339,038 93.94 2004 186,253,134 183,845,937 98.71 2005 208,091,814 199,072,981 95.67 2006 242,077,783 234,361,909 96.82 2007 285,049,684 278,643,733 97.76 2008 304,540,649 292,307,274 95.98 Collections in Subsequent Years 1,405,841 6,174,244 5,959,373 4,079,641 7,735,274 1,640,252 2,379,977 3,801,414 7,111,337 NA Total Collections to Date Percent Amount of Levy 144,920,841 99.32% 142,202,307 99.49% 140,495,088 99.34% 150,264,782 98.64% 165,074,312 98.56% 185,486,189 99.59% 201,452,958 96.81% 238,163,323 96.38% 285,755,070 100.25% 292,307,274 95.98 Source: City of Miami, Finance Department and Miami -Dade County Tax Collector's Office [Remainder of page intentionally left blank.] As of 2008, the City's ten largest ad valorem taxpayers, the assessed values of their properties, and their relative percentage of total assessed property values in the City follows: TEN LARGEST TAX ASSESSMENTS 2008 ASSESSED VALUES Taxpayer Florida Power & Light SRI Miami Ventures, LP Teachers Ins. & Annuity Association of America Bellsouth Telecommunications Crescent Miami Center 1111 Brickell Office LLC Knight-Ridder Newspapers Terremark Brickell II Trustees of L&B Blue Capital US East Net Assessed Value $374,704,167 281,063,160 274,800,000 235,219,075 178,000,000 138,566,380 121,709,457 103,758,786 103,191,113 96,296,304 Total Source: City of Miami Comprehensive Annual Financial Report, September 2008 [Remainder of page intentionally left blank.] Percent of Total City Net Assessed Value 1.13% 0.85% 0.83% 0.71% 0.54% 0.42% 0.37% 0.31% 0.31% 0.29% 5.76% Budget The City's Fiscal Year 2008 Budget was adopted on September 27, 2007. The Fiscal Year 2008 Budget is approximately $523,713,803, a decrease of 6.78% ($38.1 million) from the Fiscal Year 2007 Budget. The millage rate increased from 7.2999 mills in Fiscal Year 2007 to 7.6740 mills in Fiscal Year 2008. 2008 APPROPRIATED BUDGET The chart below shows the City's Fiscal Year 2008 Budget versus the Fiscal Year 2007 Budget. Revenues Property Taxes Franchise Fees and Other Taxes Interest (Transfers) Fines and Forfeitures Intergovernmental Revenues Licenses and Permits Other Revenues (Inflows) Charges for Services Total Revenues (Inflows) Expenditures General Government Planning & Development Public Works Public Safety Public Facilities Parks & Recreation Risk Management Organizational Support - Group Benefits Pension Non -Departmental (Transfers) Total Expenditures (Outflows) FY 2007 Adopted Budget $255,850,418 39,631,617 16,101,000 61,411,040 4,885,500 53,847,248 28,497,592 14,263,997 87,287,917 $561,776,329 48,438,618 10,990,135 56,405,839 234,369,728 7,436,454 20,239,248 18,115,929 35,209,120 70,769,063 35,773,177 -49,052,224 $488,695,087 FY 2008 Adopted Budget $261,026,148 37,005,000 8,115,000 39,492,737 5,208,555 41,151,996 29,658,555 19,205,100 82,850,712 $523,713,803 48,865,050 11,771,871 56,080,488 215, 692,574 7,478,665 21,732,908 52,420,609 65,945,032 19,502,355 24,224,251 $523,713,803 Increase (Decrease) $ 5,175,730 -2,626,617 -7,986,000 -21,918,303 323,055 - 12,695,252 1,160,963 4,941,103 -4,437,205 $-38,062,526 426,432 781,736 -325,351 - 18,677,154 42,211 1,493,660 34,304,680 -35,209,120 -4,824,031 - 16,270,822 73,276,475 $35,018,716 FY 2008 Revised Budget $258,294,391 35,414,428 9,691,044 77,043,493 5,208,555 51,245,788 29,558,555 14,841,421 74,826,773 $556,124,448 47,769,740 10,788,225 54,858,769 249,881,480 6,248,557 24,276,993 56,548,550 65,116,477 9,755,731 30,879,926 $556,124,448 Direct Debt [Update] The City has met certain of its financial needs through debt financing. follows is a schedule of the outstanding debt of the City as of September 30, 200 which is payable from sources other than ad valorem taxes. Amount DESCRIPTION Issued General/Limited Ad Valorem Obligations: General Obligation Refunding Bonds, Series 1992 $ 70,100,000 Homeland Defense/Neighborhood CIP, Series 2002A 153,186,406 General Obligation Refunding Bonds, Series 2002A 32,510,000 General Obligations Bonds, Other Issues 23,190,000 General Obligation Refunding Bonds, Series 2003 18,680,000 General Obligation Refunding Bonds, Series 2003B 4,180,000 Homeland Defense/Neighborhood CIP Refunding Bonds, Series 2007A 103,060,000 Homeland Defense/Neighborhood CIP, Series 2007B 50,000,000 $454,906,406 Special Obligation and Revenue Bonds and Loans: Special Revenue Refunding Bonds, Series 1987 Community Entitlement Revenue Bonds, Series 1990 Special Obligation Non -Ad Valorem, Series 1995 Special Obligation Non -Ad Valorem Revenue, Series 1995 Special Revenue Refunding Bonds, Series 2002A Special Revenue Refunding Bonds, Series 2002B Special Revenue Refunding Bonds, Series 2002C Non Ad Valorem Var Rate Refunding Bonds, Series 2006 Sunshine State Governmental Financing Commission Loans Sunshine State Governmental Financing SEOPW - Section 108 HUD Loan Wynwood - Section 108 HUD Loan Wagner Square - Section 108 HUD Loan Sunshine State Governmental Financing Commission - Secondary Loan Parrot Jungle Special Revenue Bonds, Series 2007 Sunshine State Governmental Financing Commission Loans Sunshine State Governmental Financing Commission Loans Gran Central Corporation Loan Total Loans Total Debt Source: City of Miami Finance Department $ 65,271,325 11,500,000 22,000,000 72,000,000 27,895,000 13,170,000 28,390,000 30,615,000 27,630,900 The table which 8, including that Outstanding Balance $ 6,385,000 40,058,765 26,795,000 880,000 4,100,000 4,115,000 103,060,000 50,000,000 $235.393,765 $ 6,224,609 2,010,000 1,245,000 30,875,000 27,330,000 0 21,790,000 29,010,000 7,581,900 5,100,000 3,150,000 5,500,000 2,610,000 4,000,000 3,999,000 3,500,000 1,195,000 5,112,000 4,312,000 80,000,000 80,000,000 6,600,000 6,600,000 42,500,000 42,500,000 1,708,864 1,708 864 $453 493,089 $272.141,372 $908 399,495 $507,535,137 The following sets forth the aggregate debt service requirements for the City's unlimited general obligation debt as of September 30, 2008. This table does not include the Series 2009 Bonds. [Update] Fiscal Year Ended September 30 Principal Interest Total Debt Service APPENDIX B FORM OF TILE BOND RESOLUTION -77he, p2et Pg-tl 1 APPENDIX C GENERAL PURPOSE FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 (Excerpt of the City of Miami Comprehensive Annual Financial Report) 7-c be, Pg� 1 APPENDIX D FORM OF BOND COUNSEL OPINION T be�t,� �,,c [APPENDIX E SPECIMEN MUNICIPAL BOND INSURANCE POLICY] T be j L4 4, � � )�� 1�� 1