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HomeMy WebLinkAboutExhibit 1 - SUBTHIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. bafi: 76 86 aurripte.tati 4. Sat tt d -asnv THIS BOND IS SUBJECT TO TRANSFER RESTRICTIONS. THE INITIAL PURCHASER HEREOF AND ANY SUBSEQUENT TRANSFEREE, BY PURCHASING THIS BOND, AGREES FOR THE BENEFIT OF THE CITY OF MIAMI, FLORIDA, THAT THIS BOND MAY BE TRANSFERRED, RESOLD OR ASSIGNED ONLY TO ANOTHER QUALIFIED INSTITUTIONAL BUYER. NOTWITHSTANDING ANYTHING IN THE RESOLUTION OR THIS BOND TO THE CONTRARY, NO TRANSFER, RESALE OR ASSIGNMENT OF THIS BOND SHALL BE EFFECTIVE UNLESS THE TRANSFER, RESALE OR ASSIGNMENT OF THIS BOND IS TO ANY PURCHASER, TRANSFEREE, ASSIGNEE OR PARTICIPANT THAT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. ANY TRANSFER, RESALE, ASSIGNMENT OR OTHER DISPOSITION OF THIS BOND, OR ANY PARTICIPATION HEREIN, SHALL BE IN EACH CASE ONLY IN A MANNER THAT DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, AND ANY APPLICABLE STATE SECURITIES LAWS. THIS BOND SHALL BE ISSUED AND SOLD, AND MAY ONLY BE TRANSFERRED, IN DENOMINATIONS OF $100,000 OR ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS OF $100,000. (TO BE COMPLETED AT BOND CLOSING) EXHIBIT A FORM OF BOND No. R- $ UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION NON -AD VALOREM REVENUE REFUNDING BOND SERIES 2012 (PORT OF MIAMI TUNNEL PROJECT) Date of Interest Maturity Original Rate Rate Issuance REGISTERED OWNER: CUSIP PRINCIPAL AMOUNT: DOLLARS The City of Miami, Florida (the "City"), for value received, hereby promises to pay to the registered owner specified above, or registered assigns, but solely from the sources hereinafter mentioned, the principal amount specified above on the maturity date specified above (or earlier upon redemption as described below), upon presentation and surrender hereof at the designated corporate trust office of U.S. Bank National Association (the "Bond Registrar"), and A-1 I2 - OOcl 07 Ex rn014 - - 6 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, interest thereon, payable as described below, at the interest rate per annum specified above, on 1 and 1 of each year, commencing on 1, 20. Interest on this Bond is payable by check or draft of the Bond Registrar made payable to the registered owner as its name and address shall appear on the registration books maintained by the Bond Registrar at the close of business on the fifteenth day of the calendar month preceding each interest payment date (the "Regular Record Date"); provided, however, that (i) if ownership of the Bonds is maintained in a book -entry only system by a securities depository, such payment may be made by automatic funds transfer (wire) to such securities depository or its nominee or (ii) if such Bonds are not maintained in a book -entry only system by a securities depository, upon written request of the Holder of $1,000,000 or more in principal amount of Bonds, such payments may be made by wire transfer to the bank and bank account specified in writing by such Holder (such bank being a bank within the continental United States), if such Holder has advanced to the Bond Registrar the amount necessary to pay the cost of such wire transfer or authorized the Bond Registrar to deduct the cost of such wire transfer from the payment due such Holder. Any interest not punctually paid on a Regular Record Date shall forthwith cease to be payable to the registered owner on such Regular Record Date and may be paid at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Bond Registrar, notice whereof shall be given not less than 10 days prior to such special record date to such registered owner. Such interest shall be payable from the most recent interest payment date next preceding the date of authentication to which interest has been paid, unless the date of authentication is a 1 or 1 to which interest has been paid, in which case from the date of authentication, or unless the date of authentication is prior to , 2012, in which case from , 2012, or unless the date of authentication is between a Regular Record Date and the next succeeding interest payment date, in which case from such interest payment date. Principal of and interest on this Bond is payable in lawful money of the United States of America. This Bond is being issued in denominations of $100,000 and integral multiples of $5,000 in excess of $100,000, This Bond is one of an authorized series of bonds of the City designated as its "Special Obligation Non -Ad Valorem Revenue Refunding Bonds, Series 2012 (Port of Miami Tunnel Project)" (herein called the "Series 2012.Bonds"), in the aggregate principal amount of Dollars ($ ) of like date, tenor, and effect, except as to number, date of maturity and interest rate, issued for the purposes of, together with any other available moneys, (i) refinancing the Note, (ii) Funding a deposit to the Debt Service Reserve Account [or paying the premium for a Reserve Account Insurance Policy], and (Hi) paying certain costs of issuance of the Series 2012 Bonds, [including the premium for the Bond Insurance Policy and the Reserve Account Insurance Policy], The Bonds are being issued under the authority of and in full compliance with the Constitution of the State of Florida, Chapter 166, Florida Statutes, as amended, and the City Charter (collectively, the "Act") and a resolution duly adopted by the City Commission of the City on November 2012 (the "Resolution") and is subject to all the terms and conditions of the Resolution. All terms used in capitalized form and not defined herein are as defined in the Resolution. This Bond is secured by a lien on and pledge of the moneys held in the Bond Fund and certain Accounts (and subaccounts) established therein under the Resolution with respect to the Series 2012 Bonds, except for the Rebate Account (collectively, the "Pledged Funds") and is payable solely from such Pledged Funds and, solely to the extent provided in the second and third succeeding paragraphs, the Non -Ad Valorem Revenues (defined below), all in the manner provided in the Resolution. The City is not obligated to pay this Bond or the interest hereon except as provided above, and the full faith and credit of the City are not pledged for the A-2 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. payment of this Bond and this Bond does not constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation; and it is expressly agreed by the Holder of this Bond that such Holder shall never have the right to require or compel the exercise of the ad valorem taxing power of the City, the State of Florida or any political subdivision thereof or taxation in any form of any real or personal property therein, for the payment of the principal of and interest on this Bond or the making of any other payments provided for in the Resolution. It is further agreed between the City and the Holder of this Bond that this Bond and the obligation evidenced thereby shall not constitute a lien upon property of or in the City, but shall constitute a lien only on the Pledged Funds, ail in the manner provided in the Resolution. "Non -Ad Valorem Revenues" is defined in the Resolution as all revenues of the City derived from any source whatsoever, other than ad valorem taxation on real or personal property, which are legally available to make the payments required under the Resolution. The City covenants and agrees in the Resolution to budget and appropriate in its annual budget, by amendment, if necessary, from Non -Ad Valorem Revenues lawfully available in each Fiscal Year, amounts sufficient to satisfy (i) the Annual Debt Service Requirement for such Fiscal Year, (ii) any deposits required to be made into the Debt Service Reserve Account during such Fiscal Year, (iii) any other amounts due the Provider of a Bond Insurance Policy, the issuers of any other Reserve Account Insurance Policy and the Bond Registrar during such Fiscal Year and (iv) any Rebate Amount due during such Fiscal Year as provided in the Resolution. Such covenant and agreement on the part of the City to budget and appropriate such amounts of Non -Ad Valorem Revenues shall be cumulative to the extent not paid, and shall continue until such Non Ad Valorem Revenues or other legally available moneys in amounts sufficient to make all such required payments shall have been budgeted, appropriated and actually paid. Notwithstanding the foregoing covenant of the City, the City does not covenant to maintain any services or programs, now provided or maintained by the City, which generate Non -Ad Valorem Revenues, Such covenant to budget and appropriate does not create any lien upon or pledge of such Non -Ad Valorem Revenues, nor does it preclude the City from pledging in the future its Non -Ad Valorem Revenues, nor does it require the City to levy and collect any particular Non - Ad Valorem Revenues, nor does it give the Bondholders, the Provider of a Bond Insurance Policy, the issuers of any other Reserve Account Insurance Policy or the Bond Registrar a prior claim on the Non -Ad Valorem Revenues as opposed to claims of general creditors of the City. Such covenant to budget and appropriate Non -Ad Valorem Revenues is subject in all respects to the payment of obligations secured by a pledge of such Non -Ad Valorem Revenues heretofore or hereinafter entered into (including the payment of debt service on bonds and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated in the Resolution shall have the effect of making available in the manner described herein Non -Ad Valorem Revenues and placing on the City a positive duty to budget and appropriate, by amendment, if necessary, amounts sufficient to meet its obligations under the Resolution subject, however, in all respects to the restrictions of Section 166.241(3), Florida Statutes, which provides, in part, that the governing body of each municipality make appropriations for each fiscal year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources; and subject, further, to the payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law. A-3 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. [Insert Redemption Provisions] Reference is hereby made to the Resolution for the provisions, among others, relating to the term, lien and security of the Bonds, the custody and application of the proceeds of the Bonds, continuing disclosure obligations of the City, the rights and remedies of the Bondholder, the extent of and limitations on the City's rights, duties and obligations and the provisions permitting the issuance of additional indebtedness, to all of which provisions the Bondholder hereof for himself and his successors in interest assents by acceptance of this Bond. The City has previously issued and currently has outstanding other indebtedness payable from and secured by, in whole or in part, its legally available Non -Ad Valorem Revenues, The original registered owner, and each successive registered owner of this Bond shall be conclusively deemed to have agreed and consented to the following terms and conditions: 1. The Bond Registrar shall keep books for the registration of Bonds and for the registration of transfers of Bonds as provided in the Resolution. The. Bonds shall be transferable by the registered owner thereof in person or by his attorney duly authorized in writing only to a Qualified Institutional Buyer upon the books kept by the Bond Registrar and only upon surrender thereof together with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his duly authorized attorney. Upon the transfer of any such Bond, the City shall issue in the name of the transferee (which must be a Qualified Institutional Buyer) a new Bond or Bonds. 2. The City, the Bond Registrar and any other fiduciaries may deem and treat the person in whose name any Bond shall be registered upon the books kept by the Bond Registrar as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond as the same becomes due, and for all other purposes. All such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City, the Bond Registrar nor any other fiduciary shall be affected by any notice to the contrary. 3. At the option of the registered owner thereof and upon surrender thereof at the designated corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his duly authorized attorney and upon payment by such registered owner of any charges which the Bond Registrar or the City may make as provided in the Resolution, the Bonds may be exchanged for Bonds of the same maturity of any other Authorized Denominations, 4. In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City shall execute and the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Resolution. There shall be no charge for any such exchange or transfer of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Bond Registrar shall be required (a) to transfer or exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or next preceding any selection of Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption, A-4 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. It is hereby certified and recited that all acts, conditions and things required to exist, to happen, and to be performed, precedent to and in the issuance of this Bond exist, have happened and have been performed in regular and due form and time as required by the Act, and that the issuance of this Bond, and of the issue of Bonds of which this Bond is one, is in full compliance with all constitutional, statutory or charter limitations or provisions. IN WITNESS WHEREOF, the City of Miami, Florida, has issued this Bond and has caused the same to be signed by its City Manager and attested and countersigned by its City Clerk, either manually or with their facsimile signatures, and its seal to be affixed hereto or a facsimile of its seal to be reproduced hereon, all as of the day of , 2012. (SEAL) ATTESTED: CITY OF MIAMI, FLORIDA, a municipal corporation By: City Manager By: APPROVED AS TO FORM City Clerk AND CORRECTNESS By: City Attorney A-5 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds delivered pursuant to the within mentioned Resolution. Date of Authentication: A-6 By: Authorized Signatory THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with the right of survivorship and not as tenants in common UNIFORM GIFT MIN ACT - Custodian (Gust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list. ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond, and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the said Bond on the bond register, with full power of substitution in the premises. Dated: Please insert Social Security or other identifying number of transferee: Signature guaranteed: NOTICE: The transferor's signature to this Assignment must correspond with the name as it appears on the face of the within Bond in every particular without alteration or any change whatever. A-7 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. EXHIBIT B FORM OF BOND PURCHASE AGREEMENT (TO BE COMPLETED UPON BOND SALE) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. F `-; T . W PL i s (APa IN) 6 a t\/b �.. BOND PURCHASE AGREEMENT The City of Miami, Florida Special Obligation Non -Ad Valorem Revenue .Refunding Bonds Series 2012 November 2012 The City of Miami, Florida 444 Southwest 2nd Avenue Miami, FL 33130-1910 Attention: Johnny Martinez, City Manager Ladies and Gentlemen: The undersigned, Wells Fargo Bank, National Association (the "Under -writer"), offers to enter into the following agreement (this "Agreement") with the City of Miami, Florida (the "City") which, upon the City's written acceptance of this offer, will be binding upon the City and upon. the Underwriter, This offer is made subject to the City's written acceptance hereof on or before 11:59 pane Eastern time, on December 2012, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City, Terrns not otherwise defined hi this Agreement shall have the same meanings set forth in the Bond Resolution (as defined herein) or in the Limited Offering Memorandum (as defined herein). 1. Purchase and Sale of the Bonds. Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell and deliver to the Underwriter, all, but not less than all, of the City's $ Special Obligation Non -Ad Valorem Revenue Refunding Bonds, Series 2012 (the "Bonds"), Inasmuch as this purchase and sale represents a negotiated transaction, the City acknowledges and agrees that: (i) the transaction contemplated by this Agreement is an arrn's length, commercial transaction between the City and the Underwriter in which the Underwriter is acting solely as a principal and is not acting as a municipal advisor, financial advisor or fiduciary to the. City; (ii) the Underwriter has not assumed any advisory or fiduciary responsibility to the City with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the. Underwriter has provided other ;services or is currently providing other services to the City on other matters); (iii) the Underwriter is acting solely in its capacity as underwriter for its own account, (iv) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Agreement; and (v) the City has consulted its own legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate. .The principal amount of the Bonds to be issued, the dated date therefor, the maturities, sinking fund and optional redemption provisions and interest rates per annum are set 1 4840.4440.0697.2,,37183r0015 A3S rpm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. forth in Schedule I hereto. The Bonds shall be as described in, and shall be issued and secured under and pursuant to the provisions of Resolution No. adopted by the City on [November, 15, 2012] (the 'Bond Resolution"). The Reserve Account Requirement for the Bonds is $ , which is equal to the lesser of j(i) the Maximum Annual Debt Service on all of the Bonds Outstanding, (ii) 125% of the average Annual Debt Service Requirement on all Bonds Outstanding, or (iii) 10% of the proceeds of the Bonds.1 The aggregate purchase price for the Bonds shall be $ (the "Purchase Price"), which is the sum of $ original aggregate principal amount, plus/less net original issue premium/discount of $ and less Underwriter's discount of $ ). Subject to the terms and conditions, of this Agreement, the Purchase Price shall be paid by the Underwriter to the City at the Closing as described in Section 5 below, Upon the City's acceptance, execution, and delivery of this Agreement to the Underwriter, the Underwriter shall deliver to the City, as a good faith deposit, a wire transfer of funds in the amount of $ m, repr senth 0- I % of the ar _rat of the Bonds (the "Good .Faith. Deposit"). In the event the City accepts this offer, such Good Faith Deposit shall be held by the City -in a segregated account until the time of Closing, at which time such Good Faith Deposit shall be returned to the Underwriter. Should the City fail to deliver the Bonds at the Closing, or ,should the City be unable to satisfy the conditions of the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds, as set forth in this Agreement (unless waived .by the Underwriter), or should such obligations of the Underwriter be terminated for any reason permitted by this Agreement, such Good Faith Deposit shall immediately be returned to the Underwriter. In the event that the Underwriter fails (other than for a reason permitted hereunder) to purchase, accept delivery of and pay for the Bonds at the Closing as herein provided, such Good Faith Deposit shall be retained by the City as and for fully liquidated damages for such failure of the Underwriter, and, except as set forth in Sections 8 and. 10 hereof, no party shall have any further rights against the other hereunder. The Underwriter and the City understand that in such event the City's actual damages may be•greater or may be less than such amount of the Good Faith Deposit. Accordingly, the Underwriter hereby waives any right to claim that the City's actual damages are less than such amount of the Good Faith Deposit, and the City's acceptance of,thi.s offer shall constitute a waiver of any right the City may have to additional damages from the Underwriter. The Underwriter shallupon execution of this Agreement provide to the City the Disclosure Letter and Truth -In -Bonding Statement required by Section 218.385, Florida Statutes, attached hereto as Schedule II and made a part hereof. 2, Limited Offering. The Underwriter agrees to make a limited offering of all of the Bonds at a price not to exceed the offering prices (which may be expressed in terms of yield) set forth on the inside cover of the Limited Offering Memorandum and in compliance with the Bond Resolution and may subsequently change such offering price without any requirement of prior notice. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower 2 4B404440.0657 2_371.3/0015 rss tan THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. than the offering price stated on the inside cover of the Limited Offering Memorandum, The Underwriter agrees to limit the initial sale of the Bonds to no more .than thirty five L35) investors. all of_which must be (i) Qualified Institutional Buyers as such term is defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the "1933 Act") and (ii) Sophisticated Municipal Market Professionals as defined by the Municipal Securities Rulemaking Board ("MSRB"). The Underwriter shall cause the initial purchasers of the Bonds to execute and deliver and Investor Letter substantially in the form attached hereto as Schedule III, 3, The Limited Offering Memorandum, (a) At the time of or before acceptance of this Agreement, or at such later time as shall be agreeable to the Underwriter and the City, the City shall deliver to the Underwriter three copies of the Limited Offering Memorandum, dated the date hereof (which together with the cover page and appendices contained therein, is herein called the "Limited Offering Memorandum") executed on behalf of the City by its City Manager, (b) The Preliminary Limited Offering Memorandum has been prepared by the City for use by the Underwriter .in connection with the ,limited offering, sale and distribution of the Bonds, The City hereby represents and warrants that the Preliminary Limited Offering Memorandum was deemed final by the City as of its date, except for the omission of such information which is dependent upon the final pricing of the Bonds' for completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule"). (c) The City represents that the officials of the City as delegated by the Bond Resolution -have reviewed and approved the information in the Linuted Offering Memorandum and hereby authorizes the Limited Offering Memorandum to be used by the Underwriter in connection with the limited offering and the sale of the Bonds. The City shall provide, or cause to be provided, to the Underwriter as soon as practicable after the date of the City's acceptance of this Agreement (but, in any event, not later than within seven business days after the City's acceptance of this Agreement and in sufficient time to accompany any confirmation that requests payment from any customer) copies of the Limited Offering Memorandum which is complete as of the date of its delivery to the Underwriter in such quantity as the Underwriter shall request and an electronic version of the Limited Offering Memorandum in searchable PDF format within one day of delivery of the Limited Offering Memorandum and, in any event, no later than the date of Closing in order for the Underwriter to comply with Section (b)(4) of the Rule and the rules of the MSRB, The City hereby confirms that it does not object to the distribution of the Limited Offering Memorandum in "designated electronic format" (as defined in MSRB Rule G-32), (d) If, after the date of this Agreement to and including the date the Underwriter is no longer required to provide a Limited Offering Memorandum to potential 3 4540-0440.0657 37123ro015IBS tgm (e) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. customers who request the same pursuant to the Rule (the earlier of (i) 90 days from the "end of the underwriting period" (as defined in the Rule) and (ii) the time when the Limited Offering Memorandum is available to any person from the MSRB, but in no case less than 25 days after the "end of the underwriting period" for the Bonds), the City becomes aware of any fact or event which might or would cause the Limited Offering Memorandum, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary to amend or supplement the Limited Offering Memorandum to comply with law, the City will notify the Underwriter (and for the purposes of this clause provide the Underwriter with such information as it may from time to time 'request), and if, in the opinion of the Underwriter, such fact or event requires preparation and publication of a supplement or amendment to the Limited Offering Memorandum, the City Will forthwith prepare and furnish, at the City's own expense (in a form and manner approved by the Underwriter), a reasonable number of copies of either amendments or supplements to the Limited Offering Memorandum so that the statements in the Limited. Offering Memorandum as so amended and supplemented will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or so that the Limited Offering Memorandum will comply with law. If such notification shall be subsequent to the Closing, the City shall furnish such legal opinions, certificates, instruments and other documents as the Underwriter may deem necessary to evidence the truth and accuracy of such supplement or amendment to the Limited Offering Memorandum, The Underwriter hereby agrees to file the Limited Offering Memorandum with the MSRB's Electronic Municipal Market Access system ("EMMA") (accompanied by a complete Form G-32) by the date of Closing. The filing of the Limited Offering Memorandum with EMMA shall be in accordance with the terms and conditions applicable to EMMA andthe MSRB. Unless otherwise notified in writing by the Underwriter, the City can assume that the 'lend of the underwriting period" for purposes of the Rule is the date of the Closing, 4. Representations, Warranties, and Covenants of the City. The City hereby represents and waaants to and covenants with the Underwriter that, except as otherwise disclosed in the Preliminary Limited Offering Memorandum: (a) The City is a municipal corporation duly created, organized and existing pursuant to the Constitution, the Charter and Code of the. City, and under the laws of the State of Florida (the "State"), The City has full legal right, power and authority under the Constitution and laws of the State, including without limitation Florida Statutes, as mended, Chapter. 166, Part II, and the Charter and. Code of the City, as amended (collectively, the "Act") and the Bond Resolution and at the date of the Closing will have full legal right, power and authority under the Act and the Bond Resolution (i) to enter into, execute and deliver this Agreement, the Bond Resolution, the Continuing Disclosure Agreement (the "Undertaking ") as defined 4 4840.4440.0657 2_37129/0015JJDS tam THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. in Section 6(i)(3) hereof, and all documents required hereunder and thereunder to be executed and delivered by the City (this Agreement, the Bond Resolution, the Undertaking and the other documents referred to in this clause are hereinafter referred to as the "City Documents"), (ii),to sell, issue and deliver the Bonds to the Underwriter as provided herein, and (ili) to carry out and consummate the transactions contemplated by the City Documents and the Limited Offering Memorandum, and the City has complied, and will at the Closing be in compliance in all respects, with the terms of the. Act and the City Documents as they pertain to such transactions; (b) By all necessary official actions of the City prior to or concurrently with the acceptance hereof, the City has duly authorized all necessary action to be taken by it for (i) the adoption of the Bond Resolution and the issuance and sale of the Bonds, (ii) the approval, execution anddelivery of, and the performance by the City of the obligations on its part, contained in the Bonds and the City Documents and (iii) the consummation by it of all other transactions contemplated by the Limited Offering Memorandum, and the City Documents and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the City in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Limited Offering Memorandum; The City Documents constitute legal, valid and binding obligations of the City, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratoriumand other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; the Bonds, when issued, delivered and paid for, in accordance with the Bond Resolution and this Agreement, will constitute legal, valid and binding obligations of the City entitled to the benefits of the Bond Resolution and enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights; upon the issuance, authentication and delivery of the Bonds as aforesaid, the Bond Resolution will provide, for the benefit of the holders, from time to time, of the Bonds, the legally valid and binding pledge of and lien it purports to create as set forth in the Bond Resolution; (d) The City is not in breach of or default in any materialrespect under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which. the City is a party or to which the City is or any of its property or assets are otherwise subject, and no event has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would constitute a default or event of default by the City under any of the foregoing; and the execution and delivery of the Bonds, the City Documents and the adoption of the Bond Resolution and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a material breach of or Material default under any constitutional provision, administrative regulation, judgment, decree, (c) 5 48404440.0654 ._37123/0015 53S cgm (f) (g) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or to which the City is or to which any of its property or assets are otherwise subject nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City to be pledged to secure the Bonds or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Bond Resolution; (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the City of its obligations under the City Documents, and the Bonds have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any jurisdiction in connection with the offering and sale of the Bonds, as to which no representations are made concerning compliance with the Federal securities or Blue Sky laws of the various states; The Bonds and the Bond Resolution conform to the descriptions thereof contained in the Limited Offering Memorandum under the captions "INTRODUCTION," "DESCRIPTION OF THE SERIES 2012 BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS," and in APPENDIX C attached thereto; the proceeds of the sale of the Bonds will be applied generally as described in the Limited Offering Memorandum . under the captions "THE REFUNDING PLAN" and "ESTIMATED SOURCES AND USES OF FUNDS" and the Undertaking conforms to the description thereof contained in the Limited Offering Memorandum under the caption "CONTINUING DISCLOSURE" and "APPENDIX E" attached thereto; Except as otherwise disclosed in the Preliminary Limited Offering Memorandum and the Limited Offering Memorandum, there is no legislation, action, suit, proceeding, inquiry or investigation', at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the City after due inquiry, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the lien on and pledge of the Pledged Funds and the covenant to budget and appropriate Non -Ad Valorem Revenues pursuant to the Bond Resolution or in any way contesting or affecting the validity or enforceability of the Bonds, the City Documents or the Bond Resolution, or contesting the exclusion from gross income of interest on the Bands for federal income tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Limited Offering Memorandum or the Limited Offering Memorandum or any supplement or amendment thereto, or contesting the powers of the City or any authority for the issuance of the Bonds, the adoption of the Bond Resolution or the execution and 6 4840.4440.0657(231123/0015 JBS tgro (i) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. delivery of the City Documents, nor, to the best knowledge of the City, is there any basis therefor, wherein an unfavorable derision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds or the City Documents; (h) As of the date thereof (including the 'dates of any supplements thereto), the Preliminary .Limited Offering Memorandum (ot er than the information under the captions "DESCRIPTION OF THE S RIES 2 12 BON S - ook Er r it System." "MUNICIPAL BOND INSURANCE," and "UNDERWRITING")did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; At the time of the City's acceptance hereof and (unless the Limited Offering Memorandum is amended or supplemented pursuant to paragraph (d) of Section 3 of this Agreement) .at all times subsequent thereto during the period up to and including the date of Closing, the Limited Offering Memorandum (other than the information under the captions "DESCRIPTION OF THE SERIES 2012 BONDS -_Book Entr v-Only Syst.em." "MUNICIPAL BOND INSURANCE," and "UNDERWRITING") does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (j) If the Limited Offering Memorandum. is supplemented or amended pursuant to paragraph (d) of Section 3 of this Agreement, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including the date of Closing, the Limited Offering Memorandum as so supplemented or amended (other than the information under the captions "_DESCRIPTION OF THE SERIES 2012 BONDS - Book Entry -Only System," "MUNICIPAL BOND INSURANCE," and "UNDERWRITING") will not contain any untrue statement of a material fact or omit to state any material fact required to be statedtherein or necessary to make the .statements therein, in light of the circumstances under which made, not misleading; (k) The City will apply, or cause to be applied, the proceeds from the sale of the Bonds as provided in and subject to all of the terms and provisions of the Bond Resolution and not -to talk or omit to take 'any action Wiliell-Retielit-ei4-0.14141 . adversely --affect the exclusi frg fo fed ", e tag puoses of-t.e interest on the Bads; (1) The City will furnish such information and execute such instruments and take such action in cooperation with the Underwriter as the Underwriter may reasonably request (A) to (y) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions in the United States as the Underwriter may designate and (z) determine the 7 48404440-U637 2_37123/0015 JBS ,gm (m) (n) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. eligibility of the Bonds for investment under the laws of such states and other jurisdictions and (B) to continue such qualifications in effect so long as required for the distribution of the Bonds (provided, however, that the City will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of. any jurisdiction) and will advise the Underwriter immediately of receipt by the City of any notification with respect to the suspension of the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose; The financial statements of and other financial information regarding the City in the Limited Offering Memorandum.-, inc uding wj hou li ' atio the unaudited Fiscal Year Cap 2012 financial information. fairly present the financial position and results of the City as of the dates and for the periods therein set forth, Prior to the Closing, there will be no adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the City. Except as set fprth in the Preliminary Limited Offering Memorandum and the Limited Offering Memorandum, the City is not a party to any litigation or other proceeding pending or, to its knowledge, threatened which, if decided adversely to the City, would have a materially adverse effect on the financial condition of the City; Prior to the Closing the City will not offer or issue any bonds, notes or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by any of the revenues or assets which will secure or otherwise support the payment of the Bonds without the prior approval of the Underwriter; (o) Any certificate, signed by any official of the City authorized to do so in connection with the transactions contemplated by this Agreement, shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein; (p) Other than as described in the Preliminary Limited Offering Memorandum and in the Limited Offering Memorandum, since December 31, 1975, and at all times subsequent thereto up to and including the Date of Closing, the City has not been and will not be in default with respect to payment of the principal of, or interest on, any bonds or other debt obligations that it has issued or will issue or that it has guaranteed or will guarantee (including bonds or other' debt obligations for which it has served as a conduit issuer); (q) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon; • (r) The City will not take any action nor omit to take any action which would adversely affect the exclusion from gross income for federal income tax purposes of interest on the Note or the Bonds under the Code; and 8 4840 4440.0657 .,.371.3100151Y5 igm (s) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Except as described in the Preliminary Limited Offering Memorandum and in the Limited Offering Memorandum, the City is presently in compliance with its prior continuing disclosure undertakings entered into pursuant to the Rule over the past five years, 5. Closing. (a) At 12:00 p.m., Eastern time, on December 201.2, or at such other time and date as shall have been mutually agreed upon by the City and the Underwriter (the "Closing"); the City will, subject to the terms and conditions hereof, deliver the Bonds to the Underwriter duly executed and authenticated, together with the other documents hereinafter mentioned, and the Underwriter will, subject to the terms and conditions hereof, accept such delivery and pay the Purchase Price of the .Bonds as set forth in Section 1 of this Agreement by a wire transfer payable in immediately available funds to the order of the City., Payment for the Bonds as aforesaid shall be made at theoffices of Bond Counsel, or such other place as shall have been mutually agreed' upon by the City and the Underwriter. (b) Delivery of the Bonds shall be made to The Depository Trust Company, New York, New York, The Bonds shall be delivered in definitive fully registered form, bearing CUSIP numbers without coupons, with one Bond for each maturity of each ei -es-ef-the Bonds, registered in the name of Cede & Co., all as provided in the Bond Resolution, and shall be made available to the Underwriter at least one business day before the Closing for purposes of inspection, 6. Closing Conditions'. The Underwriter has entered into this Agreement in reliance upon the representations, warranties and agreements of the City contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the City of its obligations to be performed hereunder and' under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions, including the delivery by the City of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Underwriter: (a) The representations and warranties of the City contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing; (b) The City shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; ' (c) . At the time of the Closing, (i) the City Documents and the Bonds shall. be in full force and effect in the form heretofore approved by the Underwriter and shall not 9 45404440.0657, _37ta3/cols msipm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. have been amended, modified or supplemented, and the Limited Offering Memorandum shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter; and (ii)'all actions of the City required to be taken by the City shall be performed in order for Bond Counsel and Disclosure Counsel to deliver their respective opinions referred to hereafter; (d) At or prior to the Closing, the Bond Resolution shall have been duly adopted by the City and the City shall have duly executed and delivered and 'the Bond Registrar shall have duly authenticated the Bonds; (e) [At or prior to the Closing, the Bond Insurance Policy and Reserve Account Insurance Policy shall have been duly executed, issued and delivered by the Provider]; (t) At the time of the Closing, there shall not have occurred any change or any development involving a prospective change in, the condition, financial or otherwise, including without limitation, any change or development involving a prospective change or update relating to any investigation of the City by the United States Securities and Exchange Commission (the "SEC"), or 'in the revenues or operations of the City, from that set forth in the Limited Offering Memorandum that in the judgment of the Underwriter, is material and adverse and that makes it, in the judgment of the Underwriter, impracticable to market the Bonds on the terms and in the manner contemplated in the Limited Offering Memorandum; (g) The City shall not have failed to pay when due principal of or interest on any of its outstanding obligations for borrowed money; (h) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions contemplated by this Agreement shall bc reasonably satisfactory in legal form and effect to the Underwriter; (i) At or prior to the Closing, the Underwriter shall have received copies of each of the following documents; (1) The Limited Offering Memorandum, and each supplement or amendment thereto, if any, executed on behalf of the City by its City Manager, or such other official as may have been agreed to by the Underwriter, and the reports and audits referred to or appearing in the Limited Offering Memorandum; (2) A certified copy of the Bond Resolution with such supplements or amendments as may have been agreed to by the Underwriter; (3) A certified copy of the Interlocal Agreement; 10 4840.4440.0657.3„31123/00LS JBS tsin THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (4) The Undertaldng of the City which satisfies -the req.uirernents of se tier (e)(5)(i) „f• the R„le (the "Undertaking"); (5) the approving opinion of Bond Counsel with respect to the Bonds, in substantially the form attached to the Limited Offering Memorandum with a reliance letter addressed to the Underwriter; (6) . a supplemental opinion of Bond Counsel addressed to the Underwriter, substantially to the effect that: (7) (i) the Bonds are exempted from registration under the 1933 Act and the Bond Resolution is exempt from qualification under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"); and (ii) the statements contained in the Limited Offering Memorandum under the captions "DESCRIPTION OF THE SERIES 2012 BONDS" (other than the information relating to DTC and its book - entry only system, as to which no opinion shall. be given), "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS," and in "APPENDIX C - Form 'of the Resolution" insofar as such statements describe certain provisions of the Bond Resolution, the Bonds and the Statements under the caption "TAX MATTERS," are accurate and fairly present the information purported to be shown therein; the opinion of Disclosure Counsel addressed to the Underwriter, substantially to the effect that based on the examinations which they have rn.ade as Disclosure Counsel and their participation at conferences at which the Limited Offering Memorandum was discussed, but without having undertaken to determine independently' the accuracy or completeness of the statements in the Limited Offering Memorandum, such counsel has no reason to believe that the Limited Offering Memorandum as of its date and as of the date hereof contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and statistical data included in the Limited Offering Memorandum and except for information regarding DTC and its book- entry system and information regarding the Provider in each case as to which no view need be expressed); • (8) An opinion of the City Attorney of the City, addressed to the Underwriter, to the effect that: (i) 4840 4140.0657,2 37123/0015 MS igm The City is a municipal corporation duly created, organized and existing under the laws of the State, the Constitution, and the City's 11 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, Charter. The City has full legal right, power and authority under the Act and the Bond Resolution (A) to enter into, execute and deliver the City Documents and all documents required hereunder and thereunder to be executed and delivered by the City, (B) to sell, issue and deliver the Bonds to the Underwriter as provided herein, (C) to pledge the Pledged Funds and covenant to budget and appropriate Non -Ad Valorem Revenues as provided in the Bond Resolution and (D) to carry out and consummate the transactions contemplated. by the City Documents, and the Limited Offering Memorandum, and the City has complied, and will at the Closing be in compliance in all respects, with the terms of the Act and the City Documents as they pertain to such transactions; (ii) By all necessary official action of the City prior to or concurrently with the acceptance hereof, the City has duly authorized all necessary action to be taken by it for (A.) the adoption of the Bond Resolution and the issuance and sale of the Bonds, (B) the approval, execution and delivery of, and the .performance by the City of the obligations on its part, contained in the Bonds, the City Documents and the Bond Resolution, (C) the pledge of the Pledged Funds and the covenant to budget and appropriate Non -Ad Valorem Revenues as provided in the Bond Resolution and (D) the consummation by it of all other transactions contemplated by the Limited Offering lvlemorandum, the City Documents, the Bond Resolution and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the City in order to' carry out, give effect to, and consummate the transactions contemplated herein and in the Limited Offering Memorandum; (iii) The Bond Resolution has been duly and validly adopted by the City and is in full force and effect' the Bond Resolution and all other proceedings pertinent to the validity an.d enforceability of the Bonds have been duly and validly adopted or undertaken in compliance with all applicable procedural requirements of the City and in compliance with the Constitution andlaws of the State, including the Act; (iv) The City Documents have been duly authorized, executed and delivered by the City, and constitute legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except to the extent limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws and equitable principles of general application relating to or affecting the enforcement of creditors' rights; and the Bonds, when issued, delivered and paid for, in accordance with the Bond Resolution and this Agreement, will constitute legal, valid and 12 4840-0440.0637.3.3112310015 JBS tgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. binding obligations of the City entitled to the benefits of the Bond Resolution and enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, rnoratorium and other similar laws and principles of equity relating to or affecting 'the enforcement of creditors' rights; upon the issuance, authentication and delivery of the Bonds as aforesaid, the Bond Resolution will provide, for the benefit of the holders, from time to time, of the Bonds, the legally valid and binding pledge of and lien on the Pledged Funds and the covenant to budget and appropriate Non -Ad Valorem Revenues it purports to create as set: forth, in the Bond Resolution; (v) The distribution of the Preliminary Limited Offering Memorandum and the Limited Offering Memorandum has been duly authorized by the City; (vi) All, authorizations, approvals, licenses, permits, oonsents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the City of its obligations under the City Documents and the Bonds have been obtained; (vii) There is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the City, after due inquiry threatened against the City, affecting the corporate existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the lien on an pledge of the Pledged Funds and the covenant to budget and appropriate Non -Ad Valorem Revenues pursuant to the Bond Resolution or in any way contesting or affecting the validity or enforceability of the Bonds, the City Documents or the Bond Resolution, or contesting the exclusion from gross income of interest on the Bonds for federalincome tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Limited Offering Memorandum or the Limited Offering Memorandum or any supplement or amendment thereto, or contesting the powers of the City or any authority for the issuance of the Bonds, the adoption of the Bond Resolution or the execution and delivery of the City Documents, nor, to the best knowledge of the City, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds, or the City Documents; 13 454(4 40.0657 2_371 a3/OO I 5 Sus igm (9) 4840.4440.06573_37123/00151135 lg rn THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (viii) The adoption of the Bond Resolution and the execution and delivery of the other City Documents by the City and compliance by the City with the provisions hereof and thereof, under the circumstances contemplated herein andtherein, will not conflict with or constitute on the part of the City a material breach of or a default under any agreement or instrument to which the City is a party, or violate any existing law, administrative regulation, court order, or consent decree to which the City is subject; and (ix) Based on the examination which such counsel has caused to be made and its participation at conferences at which the Preliminary Limited Offering Memorandum and the Limited Offering Memorandum were discussed, such counsel has no reason to believe that the Preliminary Limited Offering Memorandum as of its date and the Limited Offering Memorandum as of the date hereof contains any untrue statement of a material fact or .omits to state a material fact relating to legal matters affecting the City necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect (except for any financial forecast, technical and statistical data included in the Limited Offering Memorandum and except for information regarding DTC and its book -entry system [and information regarding the Provider, the Bond Insurance Policy and the Reserve Account Insurance Policy, in each case] as to which no view need be expressed); A certificate, dated the date of Closing, of the City to the effect that (i) the representations and warranties of the City containedherein are true and correct in all material respects on and as of the date of Closing as if made on the date of Closing; (ii) no litigation of proceeding against it is pending or, to its knowledge, threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the members or officials of. the City to hold and exercise their respective positions, (b) contest the due organization and valid existence of the City, (c) contest the validity, due authorization and execution of the Bonds or the City Documents or (d) attempt to limit, enjoin or otherwise restrict or prevent the City from functioning or from collecting revenues, including payments on the Bonds, pursuant to the Bond Resolutions, and other income;; (iii) the Bond Resolution has been duly adopted by the City, is in full force and effect and has not been modified, amended or repealed, and (iv) to the best of its knowledge, no event affecting the City has occurred since the date of the Limited Offering Memorandum which' should be disclosed in- the Limited Offering Memorandum (other than the information under the captions "DESCRIP..TION OF THE -SERIES 2012 BONDS Book Entry/ -Only System," "MUNICIPAL BOND INSURANCE," and "UNDERWRITING") for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the 14 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of Closing, and the information contained in the Limited Offering Memorandum Other than the information under the c pitons "DESCRIPTION OF THE R S 2 2 BO D o k Entr -O S tem. " "M TICIPA ;BOND INSURANCE:" and "UNDERWRITING") is correct in all material respects and, as of the date of the Limited Offering Memorandum did not, and as of the date of the Closing does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (10) A certificate of the City in form and substance satisfactory to Bond Counsel and counsel to the Underwriter (a) setting forth the facts, estimates and circumstances in existence on the date of the Closing, which establish that it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the City there are no other facts, estimates • or circumstances that would materially change the conclusions, representations and expectations contained in such certificate; (11) Any other certificates and opinions required by the Bond Resolution for the issuance thereunder of the Bonds; (12) Evidence satisfactory to the Underwriter that the Bonds have been rated " "] and " " by Moody's[T-S-tiaid„"I'—and Fitch Ratings, respectively[, without regard to the Bond Insurance Policy, and that the Bonds have been rated {"_ _,"] " " and "_" by Moody's{; Standard & Poo.r's,] _and Fitch Ratings, respectively, with the understanding that, upon delivery of the Bonds, the Bond Insurance Policy will be issued by the Provider, and that all such ratings are in effect as of the date of Closing]; (13) [Copies of the Bond Insurance Policy and Reserve Account Insurance Policy together with an opinion of counsel to the Provider in form and substance satisfactory to the Underwriter]; (14) [A certificate of the Provider with respect to the accuracy of statements contained in the Limited Offering Memorandum regarding the Bond Insurance Policy, the Reserve Account Insurance Policy and the Provider and the due authorization execution 'issuance and delivery of the Bond Insurance Policy and the Reserve Account Insurance Policy]; 15 484•4410.0657 2_37123/OO15 18S'tgm (7) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (15) Evidence that the outstanding principal and accrued but unpaid interest on the Note has been paid in full at Closing; and (16) Such additional legal opinions, certificates, instruments and other documents as the Underwriter or counsel to the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the City's representations and warranties contained herein and of the statements and information contained in the Lirnited Offering Memorandum and the 'due performance or satisfaction by the City on or prior to the date of the Closing of all the respective agreements then to be performed and conditions then to be satisfied by the City, (17) [Rc;;erved fe ,elit , n;, ble ^"NitTIIY1Z<11TT2S"Z\�Cl�f[1Ti'�TIII�1>�Zl. it V N L Allof the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if,. they are in form and substance satisfactoryto the Underwriter,. If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for .the Bonds contained in this Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth in Sections 4 and 8(c) hereof shall continue in full force and effect. Termination, The Underwriter shall have the right to cancel its obligation to purchase the .Bonds if, between the date of this Agreement and the Closing, the market price or marketability of the Bonds shall be materially adversely affected, in the sole judgment of the Underwriter, by the occurrence of any of the following; (a) legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or any member of the Congress or the state legislature or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United, States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or state income taxation upon interest received on obligations of the general character of the Bonds, or other action or events shall have transpired which may have the purpose 16 4840-4440.0657 2_33123/0015 MS tgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. or effect, directly or indirectly, of changing the federal income tax consequences or state income tax consequences of any of the transactions contemplated herein; (b) legislation is introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction is issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed.), press release or other form of notice is issued or made by or on behalf of the SEC, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the 1933.Act, or that the Bond Resolution is not exempt from qualification under or other requirements of the Trust Indenture Act, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Limited Offering Memorandum or otherwise, is or would be in violation of the federal securities law as amended and then in effect; (c) any state Blue Sky or securities commission or other governmental agency or body shall have withheld registration, exemption or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto; (d) a general suspension of trading in securities on the New York Stock Exchange or the American Stock Exchange is imposed, minimum prices. on either such exohange are established, material restrictions (not in force as of the date hereof) upon trading securities .generally by any governmental authority or any national securities exchange are established, or a general banking moratorium is declared by federal, State of New York, or State officials authorized to do so; (e) the New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Bonds or as to obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, Underwriter; (f) any amendment is made to the federal or state Constitution or action by any federal or state court, legislative body, regulatory body, .or other authority is taken materially adversely affecting the tax status of the City, its property, income securities (or interest thereon); any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Limited Offering Memorandum, or has the effect that the Limited Offering Memorandum contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless tine L'nnited Offerine Memorandum can be (g) 17 4840440.0657,2_37123/0015 3AS ism Ci) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. a -icnded and sucrplemented to correct such .statement information or omission na d such amendment or supplement does not have a material adverse of ect on the market ce orketability of the Bonds; there shall have oecurrred any materially adverse change in the affairs or financial condition of the City, except for changes which the Limited Offering Memorandum discloses are expected to occur; the United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or there shall have occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise; any fact or event shall exist or have existed that, in the Underwriter's judgment, requires or has required an amendment of or supplement to the Limited Offering Memorandum and the Cit reuses to do AO or i the fat r event that causes the, need to amend or sialete Limited Offering, Memorandum is such that, when described in the amendment or supplement to the Limited Offering Memorandurn_will likely result in a material adverse effect on the tnarlcet price or marketability of the Bonds; (k) there shall have occurred or any notice shall have been given of any intended review, downgrading, suspension, withdrawal, or negative change in credit watch status by any national rating service to any of the City's obligations or any rating of the Provider,. which in the reasonable iudament of the Underwriter. Will have material adverse effect on the market,nrice or marketability of the Bonds; the purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; (m) any notice has bean given by the SEC regarding its investigation of the City, the effect of which, in the reasonable judgment of the Underwriter, could materially and adversely affect the market price or the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (n) the discovery by the Underwriter, during its due diligence and the due diligence of its counsel, any fact relating to, or arising from, the SEC's investigation of the City and the surrounding facts and circumstances which are the subject of the SEC's investigation, which, in the reasonable judgment of the Underwriter, could materially and adversely affect the market price or the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (o) there shall have occurred, after the signing hereof, either a financial crisis or a default with respect to the debt obligations of the City or proceedings under the federal or State of Florida bankruptcy laws shall have been instituted by the City, in either case the effect of which, in the reasonable judgment of the Underwriter, (1) 18 4640-0440.0657.2_37123/0015IBS Igm (p) (q) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. is such as to materially and adversely affect the market price or the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of. the Bonds; legalor regulatory action shall have been threatened or filed against the City wherein an adverse ruling would materially adversely affect the transactions contemplated hereby or by the Limited Offering Memorandum or the validity of the Bonds, the Bond Resolution, the Interlocal Agreement or this Bond Purchase Agreement; [negative information relating to the financial condition of the Provider, its parent or any subsidiary of it, is made available to the Underwriter, which, in the reasonable judgment of the Underwriter, could result in a downgrade of any of the ratings assigned to the Bonds, and which, in the opinion of the Underwriter materially adversely affects the market price of the Bonds]; or (r) [the Provider shall inform the Underwriter or the City that it will not insure the Bonds], (-r� -)— [Rse cretin-atiOn-•lrve.ntsj 8. Expenses. (a) The -Underwriter shall be under no obligation to pay, and the City shall pay all expenses incident to the performance of the City's obligations hereunder, including, but not limited to (i) the cost of preparation and printing of the Bonds, Preliminary Limited Offering Memorandum, Limited Offering Memorandum and any amendment or supplement thereto, (ii) the fees and disbursements of Bond Counsel, counsel to the City, and Disclosure Counsel, if any; (iii) the fees and disbursements of the Financial Advisor to the City; (iv) the fees and disbursements of any Bond Registrar, Paying Agent or engineers, accountants, and other experts, consultants or advisers retained by the City; (v) the cost of preparation and printing of this Agreement, (vi) all fees and expenses in connection with obtaining bond ratings and credit enhancement fees or premiums, and (vii) all other expenses incurred by the Underwriter in connection with the limited offering of the Bonds, including without limitation the fees and disbursements of counsel retained by the Underwriter and the fees and disbursements of the independent certified public accountant retained by •the Underwriter for purposes of reviewing materials relating to the SEC's investigation of the City. The City shall also pay for any expenses (included in the expense component of the Underwriter's discount) incurred by the Underwriter which are incidental to implementing this Agreement and the issuance of the Bonds, including, but not limited to, reasonable meals, transportation and lodging, if any, and any other miscellaneous closing costs. (b) The Underwriter shall pay all advertising expenses .in connection with the limited offering of the Bonds. 19 4040-4440.0657,2_37123100151AS tgm (c) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. If this Agreement shall be terminated by the,Underwriter because of any failure or refusal on the part of the City to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the City shall be unable to perform its obligations under this Agreement, the City will reimburse , the Underwriter for all out-of-pocket expenses (including without limitation the fees and disbursements of counsel to the Underwriter and the fees acid disbursements of the independent certified public 1 accountant retained by the Underwriter for purposes of reviewing materials relating to the SEC's investigation of the City) reasonably incurred by the Underwriter in connection with this Agreement or the offering contemplated hereunder. (d) The City acknowledges that it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred as part of the issuance of the Bonds, 9. Notices. Any notice or other communication to be given to the City under this Agreement may be given by delivering the same in writing at City of Miami, 444 Southwest rd Avenue, Miami, FL 33130-1910, Attention: City. Manager with a copy to the Finance Director, and any notice or other communication to be given to the Underwriter under this Agreement may be given by delivering the same in writing to the Underwriter at Wells Fargo Securities, 2363 Gulf -to -Bay Boulevard, Suite 200, Clearwater, Florida 33765, Attention: John Generalli, Managing Director, 10.- Parties in Interest, This Agreement as heretofore specified shall constitute the entire agreement between us, supersedes all prior agreements and understandings between us, and is made solely for the benefit of the City and the Underwriter (including successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by vique hereof. This Agreement may not be assigned by the City, All of the City's representations, warranties and agreements contained in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigations made by or on behalf of any of the Underwriter; (ii) delivery of and payment for the Bonds pursuant to this Agreement; and (iii) any termination of this Agreement. 11, Effectiveness. This Agreement shall become effective upon the acceptance hereof by the City and shall be valid and enforceable at the time of such acceptance. 12, Choice of Law. This Agreement shall be governed by and construed in accordance with the law of the State. 13. S'everability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any Constitution, statute, rule of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question ,invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever. 20 4840 4440.0A57,2_37123/00I5 JBStgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 14. Business Day, For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange is open for trading, 15. Section Headings, Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and will not be used in the interpretation of any provisions of this Agreement, 16. Counterparts, This Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. 21 4840414O.0657:_37123/OO15I13S tgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. [Signature Page to Bond Purchase Agreement for Series 2012 Bonds] If you agree with the foregoing, please sign the enclosed counterpart of this Agreement and return it to the TJnderwriter, This Agreement shall become a binding agreement between you and the Underwriter when at least the counterpart of this letter shall have been, signed by or on behalf of each of the parties hereto, Respectfully submitted, WELLS FARGO BANK, NATIONAL ASSOCIATION By Narne: John General Title: Managing Director Date: [December] 2012 22 4840-4740-06571_37123/00151ES tgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. [Signature Page to Bond Purchase Agreement for Series 2012 Bonds] ACCEPTANCE ACCEPTED at [am/p.m], Eastern time, this day of [December], 2012 By Name: Johnny Martinez Title: City Manager Seal/Attest: By Name: Dwight S. Danie Title: City Clerk Approved as to Insurance Requirements: By Name: Calvin Ellis • Title: Risk Management Director Approved as to Form and Correctness: By Name: Julie O. Bru Title: City Attorney 23 48404l40,0657,2_3712.3/0015 113S t gm c14w--r :-75— 6f, CeletPLI rgb V-PW SCHEDULE I THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS AND PRICES SCHEDULE I-1 48404440.0657,2_37123/0015 /BS Igrn THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. SCHEDULE II DISCLOSURE LETTER AND TRUTH -IN -BONDING STATEMENT [December] 2012 The City of Miami, Florida 444 Southwest 2nd Avenue Miami, FL 33130-1910 Attention: Johnny Martinez, City Manager RE; $ The City of Miami, Florida Special Obligation Non -Ad Valorem Revenue Refunding Bonds, Series 2012 Ladies and Gentlemen: In connection with the proposed issuance by the City of Miami, Florida (the "City") of its $ aggregate principal amount of City of Miami, Florida. Special Obligation Non - Ad Valorem Revenue Refunding Bonds, Series 2012 (the "Series 2012 Bonds"), Wells Fargo Bank, National Association (the "Underwriter") is underwriting a limited offering of the Series 2012 Bonds in accordance with the Bond Purchase Agreement dated as of [December], 2012 (the "Purchase Agreement"), All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement. The purpose of the following paragraphs of this letter is to furnish, pursuant to the provisions of Section 218.385, Florida Statutes, certain information in respect of the arrangements contemplated for the purchase and sale of the Series 2012 Bonds, as follows; 1, The nature and estimated amount of expenses to be incurred by the Underwriter in Connection with the purchase and offering of the Series 2012 Bonds are set forth in Schedule A attached hereto. 2, There are no "finders," as defined in Section 218.386, Florida Statutes, connected with the sale and purchase of the Series 2012 Bonds, 3. The underwriting spread, the difference between the price at which the Series 2012 Bonds will be initially offered by the Underwriter and the price to be paid to the City for the Series 2012 Bands, .exclusive of accrued interest, will be approximately $ per $1,000 of Series 2012 Bonds issued, 4, As part of the estimated underwriting spread set forth in paragraph (3) above, the Underwriter will charge a management fee of $. per $1,000 of Series 2012 Bonds issued, 5, No other fee, bonus or other compensation is estimated to be paid by the Underwriter in connection with the issuance of the Series 2012 Bonds to any person not regularly employed or retained by the Underwriter (including any "finder" as defined in Section SCHEDULE II-1 48404440.O637.2_37123/0015 JBS Igor THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 218.386, Florida Statutes), except as specifically enumerated as expenses to be incurred by the Underwriter, as set forth in paragraph (1) above. 6. The name and address of the Underwriter is: Wells Fargo Bank, National Association 375 Park Avenue, 2na Floor MAC r0127-060 New York, New York 10152 Attention: Municipal Syndicate Desk 7, Based on representations of the City, it is our understanding that the City is proposing to issue $ in aggregate principal amount of the Series 2012 Bonds for the purposes of refunding certain indebtedness, funding a reserve account and paying certain costs and expenses relating to the issuance of the Series 2012 Bonds. The Series 2012 Bonds are expected to be repaid over a period of approximately years. At a True Interest Cost of approximately. %, total interest paid over the life of the Series 2012 Bonds will be $ 8. Based on representations of the City, it is our understanding that the Series 2012 Bonds will be payable from the Pledged Funds and a covenant to budget and appropriate Non - Ad Valorem Revenues in the mariner provided in the Bond Resolution. The Series 2012 Bonds carry an average annual debt service of approximately $ , Assuming .the City pays debt service on the Series 2012 Bonds from the Non -Ad Valorem Revenues, such funds equal to an average of $ will not be available to finance the other services of the City each year that the Series 2012 Bonds will be outstanding, which is approximately years. Notwithstanding the foregoing, we are not accountants or actuaries, nor are we engaged in the practice of law. Accordingly, while we believe the above -described calculations to be correct, we do not warrant them to be so. Yours very truly, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Underwriter By: Managing Director SCHEDULE 11-2 4840.4440.0657,2�37I23I0015IBS igm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. /24-FT: 77 Si, c-p-rtge-rn k.poiv /*A.Lo SCHEDULE A UNDERWRXTER'S ESTIMATED EXPENSES SCHEDULE 11-3 4640.4440.0657 2_37123/0O15 7HS tgm Per $1.000 Amount THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. SCHEDULE III INVESTOR. LETTER [December] 2012 The City of Miami, Florida Miami, Florida • Wells Fargo Bank, National Association Clearwater, Florida The City of Miami, Florida Special Obligation Non -Ad Valorem Revenue Refunding Bonds Series 2012 Ladies and Gentlemen: This letter is being delivered in connection with the limited offering and sale by Wells Fargo Bank, National Association (the "Underwriter") of the above -referenced bonds (the "Bonds") issued by the City of Miami, Florida (the "City") pursuant to that certain Resolution No, adopted by the City on [November 15, 20121 (the "Bond Resolution) to the undersigned purchaser (the "Purchaser"), All capitalized terms used herein, but not defined herein, shall have the respective meanings set forth in the Bond Resolution, The undersigned, an authorized representative of the Purchaser, hereby represents to the Underwriter and the City that: 1. The Purchaser has sufficient knowledge and experience in financial and business 'natters, including purchase and ownership of municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the Bonds, The Purchaser is aware that: (a) investment in the Bonds involves various risks and may result in a complete and total loss of investment for the Purchaser; (b) the Bonds are not general obligations of the City; and (c) the payment of principal or premium, if any, and interest on the Bonds is payable solely from the Pledged Revenues as described in the B'ond Resolution and the Limited Offering Memorandum, SCHEDULE T12-1 4840.4440•0657.2_37123/0015 78S cgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 2, The Purchaser has authority to purchase the Bonds and to execute this letter and any other instruments and documents required to be executed by the Purchaser in connection with the purchase of the Bonds. 3. The undersigned is a duly appointed, qualified and acting representative of the Purchaser and is authorized to cause the Purchaser to make the certifications, representations and warranties contained herein by execution of this letter on behalf of the Purchaser. 4. The Purchaser is a "qualified institutional buyer" as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the "1933 Act"), The Purchaser is able to hold the Bonds for an indefinite period of time and is bear the economic risks of such investment without material injury, which risks may include a total and complete loss of such investment. 5. The Purchaser is a "sophisticated municipal market professional" as defined in the rules of the Municipal Securities Rulemaking Board, and attests to the following in connection with any transaction in municipal securities with the Underwriter: (a) as of the date of this letter, Purchaser owns; or manages for the account(s) of others, municipal securities (as defined in Section 3(a)(29) of the Securities Exchange Act of 1934, as amended) in excess of $100 million in par value; (b) Purchaser is capable of evaluating investment risks and market value independently, both in general and with regard to all transactions and investment strategies involving a municipal security or securities; and (c) Purchaser has exercised, and will exercise, independent judgment in evaluating the recommendations of the Underwriter or its associated persons, unless it has otherwise notified the Underwriter in writing. 6, The Purchaser acknowledges that it has been furnished with or has been given access, without •restriction or limitation, to all of the underlying documents in connection with this transaction, the Bonds and the City, as well as all other information that a reasonable, prudent, and knowledgeable investor would desire in evaluating the purchase of the Bonds, including a review of the Limited Offering Memorandum of the City dated November 2012 relating to the Bonds. The Purchaser acknowledges that the City and the Underwriter have made available to it and its representatives the opportunity to obtain any additional information that it may desire and the opportunity to ask any questions it may desire of and receive satisfactory answers from the City concerning the security and the source .of payment of the Bonds. The Purchaser has based its decision to invest in the Bonds solely on its own investigation, examination, and evaluation of the City, the Bonds and other relevant matters, and the Purchaser has not relied upon the Underwriter or Underwriter's counsel for any advice. 7. The Purchaser understands that the Bonds (i) are not registered under the 1933 Act and are not registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, and (ii) are not listed on any stock or other securities exchange. Additionally, the Purchaser understands that the Bond Resolution is not being qualified under the SCHEDULE III-2 4840-4440.06$7,^_,_37123/0015IDS tgm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Trust Indenture Act of 1939, as amended (the "1939 Act"), and that the City shall have no obligations to effect any such registration or qualification. 8, The Purchaser is not acting as a bond house, broker, or other intermediary, and is purchasing the Bonds as an investment for its own account and not with a present view to resale or other distribution to the public. The City and Underwriter may rely on this representation in their certificates regarding federal tax matters. Although the Purchaser retains the right to transfer the Bonds in the future, the Purchaser understands that the Bonds may not be readily tradable. The Bonds are being acquired by the Purchaser for investment for its own account and not with a present view toward resale or distribution; provided, however, that the Purchaser reserves the right to sell, transfer or redistribute the Bonds, but agrees that any such sale, transfer or distribution by the Purchaser shall be to a Person: (a) that is an affiliate of the Purchaser; (b) that is a trust or other custodial arrangement established by the Purchaser or one of its affiliates, the owners of any beneficial interest in which are limited to qualified institution buyers; (c) that the Purchaser reasonably believes to be a qualified institutional buyer as defined in Rule 144A promulgated under the 1933 Act; or (d) who executes an investor letter substantially in the form of this letter. Dated as of the day of [December], 2012. ,By, Name Title 4840.4440-0657. v. 4 SCHEDULE III-3 4840-4440.0657,237I27No157ES Igm THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. EXHIBIT C FORM OF PRELIMINARY LIMITED OFFERING MEMORANDUM ' (TO BE COMPLETED IN CONNECTION WITH BOND SALE) ,:bekpr: 7-i; 8e. dewitria U1t 9054.14 BIM Draft #8 11/12/2012 P:R.ELIMINARY LIMITED °OFFERING MEMORANDUM DATED NOVEMBER 19, 2012 NEW ISSUE — BOOK -ENTRY ONLY Moody's: 11 .,,._1' Fitch: (See "RATINGS" herein) In the opinion of Squire Sanders (US) LLP, Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2012 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) the Series 2012 Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198,. Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended, Interest on the Series 2012 Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see "TAX MATTERS" herein. $ TIDE CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION NON -AD VALOREM REVENUE REFUNDING BONDS SERIES 2012 (PORT OF MIAMI TUNNEL PROJECT) Dated: Date of Delivery Due: March 1, as shown on inside cover The Special Obligation Non -Ad Valorem Revenue Refunding Bonds, Series 2012 (Port of Miami Tunnel Project) (the "Series 2012 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 and the Charter of the City (collectively, the "Act") and pursuant to Resolution No, adopted by the City Commission of the City on November 15, 2012 (the "Resolution"), The Series 2012 Bonds are being issued for the purpose of, together with any other available moneys, (i) refinancing the City's Revenue Note, Series 2010 (Port of Miami Tunnel and Access Improvement Project) outstanding in the aggregate principal amount of$45,000,000, including the payment of accrued interest; (ii) funding a deposit to the Debt Service Reserve Account or paying the premium for a Reserve Account Insurance Policy for the Series 2012 Bonds and (iii) paying certain costs of issuance of the Series 2012.Bonds, including if necessary, the premium for a Bond Insurance Policy, The Series 2012 Bonds are being issued by the City as fully registered bonds, which initially will be registered in the naive of Cede & Co., as nominee of The Depository Trust Company, New York, New York ('DTC"). Interest on the Series 2012 Bonds will be payable semi-annually on March 1 and September 1, commencing March 1, 2013. Individual purchases will be made in book -entry form only through participants in authorized denominations in the amounts of $100,000 and integral multiples of $5,000 in excess of $100,000, Purchasers of the Series 2012 Bonds (the "Beneficial Owners") will not receive physical delivery of certificates. Transfers of ownership interests in the Series 2012 Bonds will be effected through 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 for subsequent disbursement to the Beneficial Owners, Principal of and interest on the Series 2012 Bonds will be payable by U,S, Bank, National Association, Miami, Florida, as Bond Registrar. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OE THIS DOCUMENT. Certain maturities of the Series 2012 Bonds are subject to optional redemption prior to their respective maturities, as described herein under "DESCRIPTION OF THE SERIES 2012 BONDS - Optional Redemption," The Series 2012 Bonds are payable from and secured by a lien upon and pledge of the Pledged Funds, which includes a covenant to budget and appropriate from Non -Ad Valorem Revenues. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS" and "INVESTMENT RISK FACTORS" herein. THE CITY IS NOT OBLIGATED TO PAY THE SERIES 2012 BONDS OR THE INTEREST THEREON EXCEPT FROM THE PLEDGED FUNDS, AS HEREAFTER DEFINED. THE ISSUANCE OF THE SERIES 2012 BONDS SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE CITY TO LEVY OR TO PLEDGE ANY TAXES WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT EXCEPT FROM THE PLEDGED FUNDS, NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, MIAMI-DADE COUNTY, FLORIDA, THE STATE OF FLORIDA OR ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO PAYMENT OF THE SERIES 2012 BONDS. THE SERIES 2012 BONDS INVOLVE A DEGREE OF RISK (SEE "INVESTMENT RISK FACTORS" HEREIN) AND ARE NOT SUITABLE FOR ALL INVESTORS (SEE "LIMITED OFFERING," "INVESTMENT RISK FACTORS" AND "RATINGS" HEREIN), THE CITY AND THE UNDERWRITER ARE OFFERING THE SERIES 2012 BONDS ONLY TO QUALIFIED INSTITUTIONAL BUYERS WITHIN THE MEANING OF SECURITIES AND EXCHANGE COMMISSION RULE 144A, ADDITIONALLY, THE UNDERWRITER INTENDS TO FURTHER LIMIT THE OFFERING OF THE SERIES 2012 BONDS TO LESS THAN THIRTY- FIVE INVESTORS, ALL OF WHICH SHALL BE SOPHISTICATED MUNICIPAL MARKET PROFESSIONALS WITHIN THE MEANING OIL THE MUNICIPAL SECURITIES RULEMAKING BOARD NOTICE 20,12-27, DATED MAY 29, 2012, SEE "DESCRIPTION OF THE SERIES 2012 BONDS —TRANSFER RESTRICTIONS" HEREIN, This cover .page contains certain information for quick reference only. It is not a summary of the issue. Investors ixiust read the entire Limited Offering Memorandum, including all appendices attached'hereto, to obtain information essential to making an in rived investment decision. See "INVESTMENT RISK FACTORS" herein, The City has applied to Assured Guaranty Municipal Corp. (the "Insurer") for a bond insurance policy to guarantee the scheduled payment of principal of and interest on the Series 2012 .Bonds. The City may choose to insure ail,:some,dr none of the Series 2012 Bonds. Such determination will be made by the City at the time the Series 2012 Bends are marketed. In the event the City :elects, to provide for suchinsurance, the scheduled payment of principal of and interestonthe Series'2012 Bonds wilI,be.guarariteed under a financial guaranty insurance policy to be issued concurrently with the delivery of the Series-2012 Bonds by Assured Guaranty Municipal Corp. See "INSURANCE RISK FACTORS" herein. The Series 2012 Bonds are offered when,' as, and if issued and received by the Undei rite; subject to the opinion on certain legal matters relating to their issuance by Squire Sanders (US) LI,P, Miami, Florida, Bond Counsel. Certain legal matters will be passed upon for the City by Julie 0. Bru, Esq., City Attorney and by Bryant Miller Olive P.A., Miami, Florida, Disclosure Counsel to the City, Public Financial Management, Inc., Coral Gables, Florida isserving as Financial Advisor to the City. Broad and Cassel, Miami, Florida is serving as Underwriter's Counsel. It is expected that the Series 2012 Bonds in definitive form will be available for delivery to the'Undenoriter in New York, New York at the facilities of DTC on or about December , 2012, WELLS FARGO SECURITIES Dated: , 2012 *Preliminary, subject to change. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. SERIES 2012 BONDS $ Serial Bonds MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND INITIAL CUSIP NUMBERS Maturity Principal Initial CUSIP (March 1) Amount Interest Rate Yield Price Number* Term Bond Due March 1, at % Yield % Price Initial CUSIP No. *Neither the City nor the Underwriter are responsible for the use of the CUSIP numbers, nor is a representation made as to their correctness. The CUSIP numbers are included solely for the convenience of the readers of the Limited Offering Memorandum and may be changed after the issuance of the Series 2012 Bonds. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. THE CITY OF MIAMI, FLORIDA MAYOR Tomas A. Regalado CITY COMMISSIONERS Francis X. Suarez, Chairman Marc D, Sarnoff, Vice Chairman Wifredo Gort Frank X. Carollo Michelle Spence -Jones CITY MANAGER Johnny Martinez ASSISTANT CITY MANAGER CHIEF FINANCIAL OFFICER Janice Lamed DIRECTOR OF MANAGEMENT AND BUDGET Daniel Alfonso CITY ATTORNEY Julie 0, Bru, Esq. 13OND COUNSEL Squire Sanders (US) LLP Miami, Florida DISCLOSURE COUNSEL Bryant Miller Olive P,A, Miami, Florida FINANCIAL ADVISOR Public Financial Management, Inc. Coral Gables, Florida THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. REGARDING USE OF THIS LIMITED OFFERING MEMORANDUM Prospective investors are invited to request from the City documents, instruments and information which may not necessarily be referred to, summarized or described herein. Additional information will be made available to each prospective investor as such prospective investor deems necessary in order to make art informed decision with respect to the Series 2012 Bonds, This Limited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2012 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, DTC and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the Underwriter, The Underwriter listed on the cover page hereof has reviewed the information in this Limited Offering Memorandum in accordance with and as part of its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion stated herein are subject to change. [THE INFORMATION RELATING TO THE INSURER CONTAINED HEREIN HAS BEEN FURNISHED BY THE INSURER. NO REPRESENTATION IS MADE BY THE CITY OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY OF SUCH INFORMATION OR THAT THERE HAS NOT BEEN ANY MATERIAL ADVERSE CHANGE IN SUCH INFORMATION SUBSEQUENT TO THE DATE OF SUCH INFORMATION. NEITHER THE CITY NOR THE UNDERWRITER HAS MADE ANY INVESTIGATION INTO THE FINANCIAL CONDITION OF THE INSURER, AND NO REPRESENTATION IS MADE AS TO THE ABILITY OF THE INSURER TO MEET ITS OBLIGATIONS UNDER THE MUNICIPAL BOND INSURANCE POLICY.] [The Insurer makes no representation regarding the Series 2012 Bonds or the advisability of investing in the Series 2012 Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Limited Offering Memorandum or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer, supplied by the Insurer, and presented under the heading "MUNICIPAL BOND INSURANCE" and in "APPENDIX F — SPECIMEN MUNICIPAL BOND INSURANCE POLICY" attached hereto.] IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2012 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, SUCH STABILIZING ACTIVITY, 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 2012 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements. NO REGISTRATION STATEMENT RELATING TO THE SERIES 2012 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR WITI I ANY STA I'd 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 2012 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES IIAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS LIMITED OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. RED HERRING LANGUAGE: This Limited Offering:Mex orandum and the information contained herein are subject to completion or amendment. The Series 2O].2 Bonds may not be sold, nor may any offer to buy be accepted prior to the time th.e Limited Offering Memorandum is delivered in final form. Under no c.i.rcumst:a.nces shall this Limited Offering Meniorand.u.r-n constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale, of the Series 2012 'Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of any such jurisdiction. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. TABLE OF CONTENTS Contents Page INTRODUCTION 1 LIMITED OFFERING 2 INVESTMENT .RISK FACTORS 3 THE REFUNDING PLAN 5 ESTIMATED SOURCES AND USES OF FUNDS 5 DEBT SERVICE SCHEDULE 6 DESCRIPTION OF THE SERIES 2012 BONDS 7 General 7 Book -Entry Only System 7 Optional Redemption 9 Mandatory Redemption 10 Notice of Redemption 10 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost 11 Negotiability, Registration and Cancellation 11 Transfer Restrictions 12 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS 13 General 13 Flow of Funds 14 Debt Service Reserve Account 16 DESCRIPTION OF NON -AD VALOREM REVENUES 17 Franchise Fees 17 Public Service Tax 17 Local Communications Services Tax 18 Licenses and Permits 20 Intergovernmental 21 Charges for Services 23 Other Revenue and Financing Sources 24 General Fund 29 Special Investment Considerations 31 Additional Debt Payable from Non -Ad Valorem Revenues 31 Pledge of Non -Ad Valorem Revenues 31 MANAGEMENT DISCUSSION OF BUDGET AND FINANCES 32 Fiscal Year 2012 Results 32 Fiscal Year 2013 Operations and Projections 34 OTHER DEBT CONSIDERATIONS 36 [MUNICIPAL BOND INSURANCE] 36 GENERAL INFORMATION REGARDING THE CITY OF MIAMI 36 Background 36 City Government 36 Adoption of Investment Policy and Debt Management Policy 38 Financial Integrity Ordinance 39 Fiscal and Accounting Procedures 40 Internal Auditor 40 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. LIABILITIES OF THE CITY 41 Insurance Considerations Affecting the City 41 Workers' Compensation 41 Health Insurance 42 Ability to be Sued, Judgments Enforceable 42 Direct Debt 43 Pension Plans 44 Accrued Compensated Absences 44 Other Post -Employment Benefits 44 Financial Urgency 45 THE OMNI COMMUNITY REDEVELOPMENT AGENCY 46 LEGAL MATTERS 46 LITIGATION 47 SECURITIES AND EXCHANGE COMMISSION INVESTIGATIONS 47 INTERNAL REVENUE SERVICE EXAMINATION 48 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS 49 TAX MATTERS 49 Original Issue Discount and Original Issue Premium 51 RATINGS 52 FINANCIAL ADVISOR 52 AUDITED FINANCIAL STATEMENTS 52 UNDERWRITING 52 ENFORCEABILITY OF REMEDIES 53 CONTINUING DISCLOSURE 53 ACCURACY AND COMPLETENESS OF LIMITED OFFERING MEMORANDUM 54 FORWARD -LOOKING STATEMENTS 54 MISCELLANEOUS 55 AUTHORIZATION OF LIMITED OFFERING MEMORANDUM 55 APPENDICES APPENDIX A: APPENDIX B: APPENDIX C; APPENDIX D: APPENDIX E: APPENDIX F; [APPENDIX G; APPENDIX H: APPENDIX I; GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI-DADE COUNTY PENSION PLANS AND OTHER POST-EMPLOYMENTBFNEFITS FORM OF THE RESOLUTION COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 FORM OF BOND COUNSEL OPINION FORM OF CONTINUING DISCLOSURE AGREEMENT SPECIMEN MUNICIPAL BOND INSURANCE POLICY] FORM OF INVESTOR LETTER LITIGATION ii THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. PRELIMINARY LIMITED OFFERING MEMORANDUM RELATING TO THE CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION NON -AD VALOREM REVENUE REFUNDING BONDS SERIES 2012 (PORT OF MIAMI TUNNEL PROJECT) INTRODUCTION The purpose of this Limited Offering Memorandum, including the cover page and appendices hereto, is to set forth information concerning the Special Obligation Non -Ad Valorem Revenue Refunding Bonds, Series 2012 (Port of Miami Tunnel Project) (the "Series 2012 Bonds"). The City of Miami, Florida (the "City") is situated at the mouth of the Miami River on the western shores of Biscayne Bay. It is the county seat of Miarni-Dade County, Florida, The City comprises 35.87 square miles of land and 19.5 square miles of water. The City's diversified economic base is comprised of, among other things, light manufacturing, commerce, wholesale and retail trade and tourism. For more information about the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI-DADE COUNTY, FLORIDA" attached hereto. The Series 2012 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes and the Charter of the City (collectively, the "Act") and pursuant to Resolution No. of the City adopted by the City Commission of the City on November 15, 2012 (the "Resolution"). The Series 2012 Bonds are being issued for the purpose of, together with any other available moneys, (i) refinancing the principal amount of the City's Revenue Note, Series 2010 (Port of Miami Tunnel and Access Improvement Project) outstanding in the aggregate principal amount of $45,000,000, plus the accrued but unpaid interest to the date of repayment (the "Note"); (ii) funding a deposit to the Debt Service Reserve Account or paying the premium for a Reserve Account Insurance Policy for the Series 2012 Bonds and (iii) paying certain costs of issuance of the Series 2012 Bonds, including, if necessary, the premium for a Bond Insurance Policy. See "THE REFUNDING PLAN" herein. The Series 2012 Bonds will be payable from the Pledged Funds, which primarily consists of moneys received from the City's covenant to budget and appropriate from Non -Ad Valorem Revenues, See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS" herein. The Series 2012 Bonds and any redemption premium with respect thereto and the interest thereon shall not be or constitute a general debt, liability or obligation of the City or the State of Florida or any political subdivision thereof, or a pledge of the faith and credit of the City or of the State of Florida or any political subdivision thereof, but shall be payable solely from and secured by a lien upon and a pledge of the Pledged Funds and the City is not obligated to pay the Series 2012 Bonds, the redemption premium, if any, related thereto or the interest thereon except from the Pledged Funds as provided in the Resolution. Neither the faith and credit nor the taxing power of the City or of the State of Florida or any political subdivision thereof is pledged to the payment of the Series 2012 Bonds. No Bondholder shall ever have the right to compel the exercise of the ad valorem taxing power of the City or taxation in any form on any property to pay such Series 2012 Bonds or the interest thereon, nor shall such Bondholder be entitled to payment of such principal and interest or premium thereon from any other funds of the City except the Pledged Funds as provided in the Resolution. * Preliminary, subject to change, THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. For discussion of various risks related to the purchase of the Series 2012 Bonds, see "INVESTMENT RISK FACTORS" herein. 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 Limited Offering Memorandum and not otherwise defined herein have the meanings set forth in the Resolution, unless the context would clearly indicate otherwise. A copy of the Resolution is attached hereto as "APPENDIX C - FORM OF THE RESOLUTION". LIMITED OFFERING Investment in the Series 2012 Bonds poses certain economic risks. Prospective investors in the Series 2012 Bonds are invited to request from the City documents, instruments and information which may not necessarily be referred to, summarized or described herein. Therefore, prospective investors should rely upon the information appearing in this Limited Offering Memorandum, including all appendices attached hereto, within the context of the availability of such additional information and the sources thereof. Prospective investors in the Series 2012 Bonds should have such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the Series 2012 Bonds and should have the ability to bear the economic risks of such prospective investment, including a complete loss of such investment. Additional information will be made available to each prospective investor as such prospective investor deems necessary in order to make an inforined decision with respect to the purchase of the Series 2012 Borids. Such requests should be made in writing and directed to both: With a copy to: John Generalli, Managing Director Wells Fargo Bank, N.A. 2363 Gulf to Bay Boulevard Clearwater, Florida'33765 Email: john.aeneralli@wellsfargo.com Janice Lamed, Chief Financial Officer 444 S.W. 2nd Avenue, 10th Floor Miami, Florida 33130 Email: jlarned@miatnigov.com While the Series 2012 Bonds are not subject to registration under the Securities Act of 1933, as amended (the "Securities Act"), the Issuer and the Underwriter have determined to restrict the sale of the Series 2012 Bonds to "qualified institutional buyers," as defined in Rule 144A of the Securities Act ("Qualified Institutional Buyers") and will offer the Series 2012 Bonds onlyto such Qualified Institutional Buyers. Additionally, the Underwriter intends to further limit the offering of the Series 2012 Bonds to less than thirty- five investors, all of which shall be "sophisticated municipal market professionals" as defined in Municipal Securities Rulemaking Board Notice 2012-27, dated May 29, 2012 ("SMMPs"). See "DESCRIPTION OF THE SERIES 2012 BONDS — Transfer Restrictions", "APPENDIX H — FORM OF INVESTOR LE FI ER" and "INVESTMENT RISK FACTORS," 2 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. INVESTMENT RISK FACTORS THE PURCHASE OF THE SERIES 2012 BONDS INVOLVES A DEGREE OF RISK, AS IS THE CASE WITH ALL INVESTMENTS, EXCEPT AS SPECIFICALLY DESCRIBED BELOW, FACTORS TFIAT COULD AFFECT THE CITY'S ABILITY TO PERFORM ITS OBLIGATIONS UNDER THE RESOLUTION, INCLUDING WITHOUT LIMITATION THE TIMELY PAYMENT OF PRINCIPAL OF AND INTEREST ON THE SERIES 2012 BONDS, INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING; 1. There is no assurance that any rating assigned to the Series 2012 Bonds by the rating agencies will continue for any given period of time or that such rating will not be lowered or withdrawn entirely by such rating agency, if in its judgment, circumstances warrant. A downgrade, change in or withdrawal of any rating may have an adverse effect on the market price of the Series 2012 Bonds. See "RATINGS" herein, 2. The City's covenant to budget and appropriate from Non -Ad Valorem Revenues for the payment of the Series 2012 Bonds is limited by a number of factors. As indicated under the caption "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS w- General" herein, the City is required to operate with a balanced budget In addition, the City is not required and does not covenant to maintain any services or programs which generate Non -Ad Valorem Revenues. Cancellation of any services or programs which are not essential services and that generate Non -Ad Valorem Revenues could have an adverse affect on the City fulfilling its covenant obligations under the Resolution. Certain Non -Ad Valorem Revenues, such as State revenue sharing, may be subject to modification or repeal by the Legislature. Certain matching Non -Ad Valorem Revenues, such as governmental, foundation or corporate grants to the City, also may be subject to modification or may be discontinued. See "NON -AD VALOREM REVENUES - Special Investment Considerations" herein, 3. The City has three separate, single employer defined benefit plans, in which its current and former employees may participate. The City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIFO") and the City of Miami General Employees' and Sanitation Employees' Retirement Trust ("GESE") are contributory plans that cover substantially all of the City's employees, The third plan is a non- contributory defined benefits plan, the City of Miami Elected Officers'. Retirement Trust ("EORT"), in which all elected officials with seven or more years of elected service to the City may participate. The City annually funds its FIPO, the GESE and the EORT pension obligations. The estimated aggregate budgeted pension costs for the FIFO, GESE and EORT is $66,287,700 for Fiscal Year 2013 and the City has allocated such expenditure in its Fiscal Year 2013 Budget. See "APPENDIX B- PENSION FUNDS AND OTHER POST -EMPLOYMENT BENEFITS" herein and also "APPENDIX D — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011— Note 10- Pensions," 4. The City has four separate collective bargaining units, the American Federation of State, County and Municipal Employees ("AFSCME") Local 1907 for general City employees, AFSCME Local 871 for the City's solid waste employees, the Fraternal Order of Police ("FOP") Lodge No, 20 for police and detention officers, and the International Association of Fire Fighters ("IAFF") Local 587 for the City's firefighters. In connection with the City's need to adopt a balanced budget in Fiscal Year 2011, the City declared a financial urgency under Section 447.4095, Florida Statutes, seeking modification of the collective bargaining agreements in 2010. Such declaration of financial urgency has been challenged and if such litigation is determined adverse to the City, such determination may have a material financial impact on the City's ability to meet its .obligations under the Resolution. See "'LIABILITIES OF THE CITY -Financial Urgency" and "APPENDIX I — LITIGATION-B. CIVIL LITIGATION -Labor Litigation related to "Financial Urgency"" herein. 3 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 5, The City has also experienced significant increases in its obligations for contributions for healthcare benefits for employees and retirees, and their dependents, and other post -employment benefit ("OPEB") obligations. The City has two separate OPEB plans, one for police officers and the other for all other employees. These obligations are projected to increase significantly if plan changes are not made to the current plans, In attempt to address this situation, the City has made major changes to its health care plan in the 2011 plan year and increased retiree contributions significantly beginning in the 2012 plan year, See "LIABILITIES OF THE CITY - Other Postemployment Benefits", "APPENDIX B — PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS" and "APPENDIX D — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 Note 11- Post -Employment Healthcare Benefits." 6. After informal requests for documents in December 2009, in February 2010 the SEC instituted a formal investigation of the City in connection with various bond offerings by the City In 2007 and 2009 to determine whether the City violated Section 1.0(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933, On July 26, 2012, the SEC staff notified the City of its intent to recommend that the SEC file civil fraud charges against the City based on transactions that occurred with respect to the City's fiscal years ending September 30, 2007 and September 30, 2008. Additionally, the SEC has requested documents in connection with the City's Special Obligation Parking Revenue Bonds, Series 2010A and Series 201.0B (Marlins Stadium Project). These investigations have temporarily diver. Led the attention of City officials and employees from the conduct of City operations, have caused the City to incur significant defense expenses, and could have a material effect on the City's financial condition and operations. See "SECURITIES AND EXCHANGE COMMISSION INVESTIGATIONS" herein, 7. In November 2011, the City received art examination request letter from the Department of Treasury, Internal Revenue Service, informing the City that its $153,060,000 City of Miami, Florida Limited Ad Valorem Tax Refunding Bonds, Series 2007A (Homeland Defense/Neighborhood Capital Improvement Projects) and City of Mimi, Florida Limited Ad Valorem Tax Bbiids, Series 2007B "(Homeland Defense/Neighborhood Capital Improvement Projects) dated July 10, 2007 have been selected for a routine exaiination fo determine compliance with federal tax requirements, This investigation has temporarily diverted the attention of the City employees from the conduct of City operations and has caused the City incur expenses, See "INTERNAL REVENUE SERVICE EXAMINATION" herein, 8, In the event of a default in the payment of principal of and interest on the Series 2012 Bonds, the remedies of the owners of the Series 2012 Bonds are limited under the Resolution. See "APPENDIX C — FORM OF THE RESOLUTION" herein, 9, The City has multiple litigation suits that it is defending at this time, The City cannot predict the outcome of such suits nor the economic effect on the City, See "APPENDIX I - LITIGATION" herein for a description of certain pending litigation. 10. Although the July 1, 2012 release of the office of the property appraiser of the County's estimated taxable value of the properties located in the City for Fiscal Year'201.3 to be $31,333,834,037 which is anincrease of 3,23% from Fiscal Year. 2012, the City cannot accurately predict that increases will continue in the future, Past publicized economic factors which created crises in many geographic areas also affected the City, as property values, property tax revenues, and sales tax revenues declined, In Fiscal Year 2011, the total net assessed value of property in the City declined 17;85% as cornpaxed to Fiscal Year 2010 and the estimated actual value of assessed property in the City declined 18,75% in Fiscal Year 2011 as compared to Fiscal Year 2010. See "APPENDIX A — GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI- DADE COUNTY — Assessed Valuations," Periodic adverse economic conditions have historically contributed significantly to the City's financial distress and there may be future declines in City property tax values, 4 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. property tax revenues and other revenues of the City. Additionally, the City's property tax revenues have been affected by various property tax reform measures. See "APPENDIX A — GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI-DADE COUNTY — Property Tax Reform," The City cannot accurately predict when, how or to what extent these conditions will change, and there is no assurance that they will improve in the foreseeable future, See "MANAGEMENT DISCUSSION OF BUDGET AND FINANCES" herein for the City's current and projected financial condition. THE REFUNDING PLAN The City expects to refinance the Note, proceeds of which were used to fund the City's required financial contribution to the acquisition and construction by the Florida Department of Transportation of the Port of Miami Tunnel and Access Improvement Project, located within the Omni Community Redevelopment Area (the "Redevelopment Area"), as provided in the Omni Community Redevelopment Agency's Community Redevelopment Plan. The refinancing of the Note will be accomplished through the issuance of the Series 2012 Bonds and the use of a portion of the proceeds thereof to prepay the full principal of and accrued interest on the Note. Upon delivery of the Series 2012 Bonds, the principal o.f and accrued interest on the Note, which matures on January 5, 2013, will be immediately paid to Wells Fargo Bank, National Association, the Lender. ESTIMATED SOURCES AND USES OF FUNDS The table that follows surnrnarizes the estimated sources and uses of fluids to be derived from the sale of the Series 2012 Bonds: SOURCES: • Principal Amount of Series 2012 Bonds [Plus/Minus Original Net Premium/Discount] TOTAL SOURCES USES: Payment of principal and accrued interest on Note $ Deposit to Debt Service Reserve Account $ Costs of Issuance(1) $ TOTAL USES (1) Includes underwriter's discount, financial advisory and legal fees and expenses, rating agencies'. fees, [bond insurance and Reserve Account Insurance Policy premiums] and miscellaneous other costs of issuance, 5 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. DEBT SERVICE SCHEDULE The following table sets forth the debt service schedule for the Series 2012 Bonds, Bond Year Principal Interest Total 2013 2014 2015 2016 2017 201,8 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total [Remainder of page intentionally left blank] DESCRIPTION OF THE SERIES 2012 BONDS General THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The Series 2012 Bonds will only be offered and sold to less than thirty-five Qualified Institutional Buyers, which are also SMMPs, as described under "LIMITED OFFERING" herein and may only be transferred in the secondary market to Qualified Institutional Buyers as describedunder the heading "- Transfer Restrictions", The Series 2012 Bonds shall be issued as fully registered, book -entry only bonds in the denomination of $100,000 and integral multiples of $5,000 in excess of $100,000 ("Authorized Denominations") through the book -entry only system maintained by The Depository Trust Company, New York, New York, The Series 2012 Bonds shall be numbered consecutively from 1 upward preceded by the letter. "R" prefixed to the number. The principal and redemption premium, if any, on the Series 2012 Bonds shall be payable upon presentation and surrender at the designated corporate trust office of U,S, Bank, National Association, Miami, Florida (the "Bond Registrar"), Interest on the Series 2012 Bonds (calculated on the basis of a 360 day year twelve 30-day months) is payable semi-annually on March 1 and September 1 of each year (each, an "Interest Payment Date"), commencing March 1, 2013 and shall be paid by check or draft drawn upon the Bond Registrar and mailed to the Holders of the Series 2012 Bonds .at the addresses as they appear on the registration books maintained by the Bond Registrar at the close of business on the 15th day (whether or not a business day) of the month next preceding the Interest Payment Date (the "Regular Record Date"); provided, however, that (i) if ownership of Series 2012 Bonds is maintained in a book -entry only system by a securities depository, such payment may be made by automatic funds transfer (wire) to such securities depository or its nominee or (ii) if such Series 2012 Bonds are not maintained in a book -entry only systern by a securities depository, upon written request of the holder of $1,000,000 or more in principal amount of Series 2012 Bonds, such payments may be made by wire transfer to the bank and bank account specifiedin writing by such Holder (such bank being a bank within the continental United States), .if .such Holder has advanced to the Bond Registrar the amount necessary to pay the cost of such wire transfer or authorized the Bond Registrar to deduct the cost of such wire transfer from the payment due such Holder Notwithstanding anything in this paragraph .to the contrary, any interest not punctually paid on a Regular. Record Date shall forthwith cease to be payable to. the Holder on such Regular Record Date and may be paid at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Bond. Registrar, notice of which shall be given not less than 10 days prior to such special record date to such Holder. 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 TAKES 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 2012 Bonds, The Series 2012 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 maturity of the Series 2012 Bonds, each in the aggregate principal amount of such maturity, 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 7 THIS DOCUMENT ISA SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 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 instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates, Direct Participants include both U.S. and non-U.S, securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both US, 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 a Standard & Poor's rating: "AA-w". The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www,dtcc.com. Purchases of Series 2012 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2012 Bonds on DTC's records, 'I'he ownership interest of each actual purchaser of each Series 2012 Bond ('Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC'of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2012 Bonds are to be accomplished by entries made on'the books of Direct and Indirect Participants acting on behalf of BeneficiaPOwners. Beneficial'Owners will not receive certificates representing their ownership interests in Series 2012 Bonds, except in the event that use of .the book -entry system for the Series 2012 Bonds is discontinued. To facilitate subsequent transfers, all Series 2012 Bonds deposited by Direct Participants with DTC are registered in the naive of DTC's partnership nominee, Cede & Co, or sixch other name as May berequested by an authorized representative of DTC. The deposit of Series 2012 Bonds vi/ith DTC and`their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2012 Bonds; DTC's records reflect only the ideihtzty of the Direct Participants to whose accounts such Series 2012 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 2012 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2012 Bonds, such as redemptions and proposed amendments to the Series 2012 Bond documents. For example, Beneficial Owners of Series 2012 Bonds may wish to ascertain that the nominee holding the Series 2012 Bonds for their benefit has agreed to obtain and 8 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the, Bond 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 2012.Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2012 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 2012 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2012 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 or Bond Registrar on the 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 2012 Bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Bond Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest 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 Bond Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants, DTC may discontinue providing its services as depository with respect to the Series 2012 Bonds at any time by giving reasonable notice to the City or Bond Registrar, Under such circumstances, in the event that a successor depository is not obtained, Series 2012 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 2012 Bond certificates will be printed and delivered to DTC, Thereafter, Series 2012 Bond certificates may be transferred and exchanged as described in the Resolution. See "-Negotiability, Registration and Cancellation" herein. THE CITY AND THE BOND REGISTRAR 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 2012 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2012 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL OR INTEREST ON THE SERIES 2012 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2012 BONDS FOR REDEMPTION. Optional Redemption The Series 2012 Bonds maturing on or prior to March 1, are not redeemable prior to their respective dates of maturity. The Series 2012.Bonds maturing on and after March 1, are subject to redemption at the option of the City on or after March 1, , in whole or in part at any time, in such 9 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. manner as shall be determined by the Bond Registrar, at a redemption price equal to the par amount thereof plus accrued interest to the date fixed for redemption, Mandatory Redemption The Series 2012 Bonds maturing on March 1, will be subject to mandatory redemption prior to maturity, by lot, in such manner as the Bond Registrar may deem appropriate, at a redemption price equal to par plus accrued interest to the redemption date, on March 1, and on each March 1 thereafter, from moneys deposited in the Debt Service Account, in the following Amortization Requirements in the years specified: Year Amortization Requirements »Maturity Notice of Redemption Notice of redemption for Series 2012 Bonds being redeemed shall be given by deposit in the U.S, mail of a copy of a redemption notice, postage prepaid, at least thirty (30) days before the redemption date, to all registered owners of the Seies'2012 Bonds or portions of the .Series 2012 Bonds to be redeemed at their addresses as they appear on the registration books to be maintained in accordance with the provisions of the Resolution. Failure to mail any such notice to a registered owner of a Series 2012 Bond, or any defect therein, shall not affect the validity of the proceedings for redemption of any Series 2012 Bond or portion thereof with respect to which no failure or defect occurred. Such notice shah set forth the date fixed for redemption, the rate of interest borne by each Series 2012 Bond being redeemed, the name and address of the Bond Registrar, the redemption price to be paid and, if less than all of the Series 2012 Bonds then Outstanding shall be called for redemption, the distinctive numbers and letters, including CUSIP numbers, if any, of such Series 2012 Bonds to be redeemed and, in the case of Series 2012 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. Tf any Series 2012 Bond is to be redeemed in part only, the notice of redemption which relates to such Series 2012 Bond shall also state that on or after the redemption date, upon surrender of such Series 2012.Bond, a new Series-2012 Bond or Series 2012 Bonds ina principal amount equal to the unredeemed portion of such Series:2012 Bond and in an Authorized Denon\ination will be issued, The optional redemption of the Series 2012 Bonds, if any, may be conditioned upon the receipt by the Bond Registrar of sufficient moneys to pay the redemption price of the Series 2012 Bond's to be redeemed. If the optionalredemption of any of the Series 2012 Bonds is conditioned upon the receipt of sufficient moneys as described above, the notice of redemption which relates to such Series 2012 Bonds shall also state that the redemption is so conditioned. Any notice mailed as provided in the Resolution shall be conclusively presumed to have been duly given, whether or not the owner of such Series 2012 Bond receives such notice. Notice having been given in the manner and under the conditions provided in the Resolution, the Series 2012 Bonds or portions of Series 20.12 Bonds so called for redemption shall, on the redemption date designated in such notice, become and be due and payable at the redemption price provided for redemption for such Series 2012 Bonds or portions of Series 2012 Bonds on such date; provided, however, that Series 2012 Bonds or portion of Series 2012 Bonds called for optional redemption and which redemption is conditioned 10 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. upon the receipt of sufficient moneys as described above, shall not become due and payable on the redemption date if sufficient moneys to pay the redemption price of such Series 2012 Bonds or portions of Series 2012 Bonds have not been received by the Bond Registrar on or prior to the redemption date. On the date so designated for redemption, moneys for payment of the redemption price being held in separate accounts by the Bond Registrar in trust for the registered owners of the Series 2012 Bonds or portions thereof to be redeemed, all as provided in the Resolution, interest on the Series 2012 Bonds or portions of Series 2012 Bonds so called for redemption shall cease to accrue, such Series 2012 Bonds and portions of Series 2012 Bonds shall cease to be entitled to any lien, benefit or security under the Resolution and shall be deemed paid hereunder, and the registered owners of such Series 2012 Bonds or portions of Series 2012 Bonds shall have no right in respect thereof except to receive payment of the redemption price thereof and, to the extent provided below, to receive Series 2012 Bonds in Authorized Denominations for any unredeemed portions of the Series 2012 Bonds. In part but not all of a Series 2012 Bond shall be selected for redemption, the registered owners thereof shall present and surrender such Series 2012 Bond to the Bond Registrar for payment of the principal amount thereof so called for redemption, and the City shall execute and deliver to or upon the order of such registered owner, without charge therefor, for the unredeemed balance of the principal amount of the Series 2012 Bonds so surrendered, a Series 2012 Bond or Series 2012 Bonds in Authorized Denominations fully registered as to principal and interest. Replacement of Bonds Mutilated, Destroyed, Stolen or Lost In case any Series 2012 Bond shall become mutilated, destroyed, stolen or lost, the City may execute and the Bond Registrar shall authenticate and deliver a new Series 2012 Bond, with such maturity, Authorized Denomination and interest rate as the Series 2012 Bond so mutilated, destroyed, stolen or lost; provided that, in the case of any mutilated Series 2012 Bond, such mutilated Series 2012 Bond shall first be surrendered to the City and, in the case of any lost, stolen or destroyed Series 2012 Bond, there shall first be furnished to the City and the Bond Registrar evidence of such loss, theft, or destruction satisfactory to the City and the Bond Registrar, together with indemnity satisfactory to them. In the event any such Series 2012 Bond shall be about to mature or has matured or has been called for redemption, instead of issuing a duplicate Series 2012 Bond, the City may direct the Bond Registrar to pay the same without surrender thereof, The City and Bond Registrar may charge the Holder of such Series 2012 Bonds their reasonable fees and expenses in connection with this transaction. Any Series 2012 Bond surrendered for replacement shall be canceled in the same manner as provided in the Resolution. Any such duplicate Series 2012 Bonds issued pursuant to the Resolution shall constitute additional contractual obligations on the part of the City, whether or not the lost, stolen or destroyed Series 2012 Bonds be at any time found by anyone, and such duplicate Series 2012 Bonds shall be entitled to equal and proportionate benefits and rights as to lien on and source and security for payment from the Pledged Funds, with all other Series 2012 Bonds issued under the Resolution. Negotiability, Registration and Cancellation At the option of the Holder thereof and upon surrender thereof at :the designated corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the Holder or his duly authorized attorney and upon payment by such Holder of any charges which the Bond Registrar or the City may make as provided in the Resolution, the Series 2012 Bonds may be exchanged for Series 2012 Bonds of the same series, aggregate principal amount of the same maturity of any other Authorized Denominations. 11 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The Bond Registrar shall keep books for the registration of Series 2012 Bonds and for the registration of transfers of Series 2012 Bonds, The Series 2012 Bonds shall be transferable by the Holder thereof in person or by his attorney duly authorized in writing only to a Qualified Institutional Buyer upon the books of the City kept by the Bond Registrar and only upon surrender thereof together with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the Holder or his duly authorized attorney. Upon the transfer of any such Series 2012 Bond, the City shall cause to be issued in the name of the transferee (which must be a Qualified Institutional Buyer) a new Series 2012 Bond or Series 2012 Bonds. The City, the Bond Registrar and any other fiduciaries :may deem and treat the person in whose name any Series 2012 Bond shall be registered upon the books kept by the Bond Registrar as the absolute Holder of such Series 2012 Bond, whether such Series 2012 Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, redemption premium, if any, and interest on such Series 2012 Bond as the same becomes due and for all other purposes. All such payments so made to any such Holder or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Series 2012 Bond to the extent of the sum or sums so paid, and neither the City, the Bond Registrar nor any other fiduciary shall be affected by any notice to the contrary. In allcases in which the privilege of exchanging Series 2012 Bonds or transferring Series 2012 Bonds is exercised, the City shall execute and the Bond Registrar shall authenticate and deliver Series 2012 Bonds in accordance with the provisions of the Resolution, All Series 2012 Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Bond Registrar and canceled' by the Bond Registrar in the manner provided in the Resolution. There shall be no charge for any such exchange or transfer of Series 2012 Bonds, but the City or. the Bond Registrar may require the payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchangeor transfer. Neither the City nor the Bond Registrar shal1.be required (a) to transfer or exchange Series 2012 Bonds for a period of 15 days next preceding any selection of Series 2012 Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Series 2012 Bonds called for redemption.. All Series 2012 Bonds paid or redeemed, either at or before maturity shall be delivered to the Bond Registrar when such payment or redemption is made, and such Series 2012 Bonds, together with all Series 2012 Bonds purchased by the City, shall thereupon be promptly canceled. Series 2012.Bonds so canceled may at any time be destroyed by the Bond Registrar, who shall execute a certification of destruction in duplicate by the signature of one of its authorized officers describing the Series 2012 Bonds so destroyed, and one executed certificate shall be filed with the City and the other executed certificate shall be retained by the Bond Registrar. Transfer Restrictions Every Series 2012 Bond authenticated and delivered under the Resolution, including any issued upon transfer, exchange or replacement of such Series 2012 Bond, shall be issued and delivered only to Qualified Institutional Buyers, and each Series 2012 Bond shall bear on its face a legend stating such restriction in substantially the following form: THIS BOND IS SUBJECT TO TRANSFER RESTRICTIONS, THE INITIAL PURCHASER HEREOF AND ANY SUBSEQUENT' TRANSFEREE, BY PURCHASING 'IBIS BOND, AGREES FOR THE BENEFIT OF THE CITY OF MIAMI, FLORIDA, THAT THIS BOND MAY BE TRANSFERRED, RESOLD OR ASSIGNED ONLY TO ANOTHER QUALIFIED .INSTITUTIONAL BUYER. NOTWITHSTANDING ANYTHING IN THE RESOLUTION OR THIS BOND TO THE CONTRARY, NO TRANSFER, RESALE OR ASSIGNMENT OF THIS BOND SHALL BE EFFECTIVE UNLESS THE TRANSFER, RESALE 12 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. OR ASSIGNMENT OF THIS BOND IS TO ANY PURCHASER, TRANSFEREE, ASSIGNEE OR PARTICIPANT THAT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. ANY TRANSFER, RESALE, ASSIGNMENT OR OTHER DISPOSITION OF THIS BOND, OR ANY PARTICIPATION HEREIN, SHALL BE 1N EACH CASE ONLY IN A MANNER THAT DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, OF ANY APPLICABLE STATE SECURITIES LAWS. THIS BOND SHALL BE ISSUED AND SOLD, AND MAY ONLY BE TRANSFERRED, IN DENOMINATIONS OF $100,000 OR ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS OF $100,000. SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS General Payment of the principal of, premium, if any, and interest on the Series 2012 Bonds shall be secured by a lien upon and pledge of the Pledged Funds, The "Pledged Funds" are defined In the Resolution to mean collectively, all moneys, securities and instruments held in the Bond Fund and the Accounts (and subaccounts) therein created and established under the Resolution for the Series 2012 Bonds, except the Rebate Account. As more particularly described in the following paragraph, the City has covenanted in the Resolution to budget and appropriate in its annual budget, by amendment, if necessary, and to deposit into the Accounts (and subaccounts) established within the Bond Fund under the Resolution, Non -Ad Valorem Revenues lawfully available in each Fiscal Year, in amounts sufficient to satisfy the (i) Annual Debt Service Requirement for such Fiscal Year, (ii) any deposits required to be made into the Debt Service Reserve Account during such Fiscal Year, .(iii) any other amounts due the Providers of any Bond Insurance Policy or Reserve Account Insurance Policy and the Bond Registrar during such Fiscal Year and (iv) any Rebate Amount due during such Fiscal Year as provided in the Resolution. "Non -Ad Valorem Revenues" are defined in the Resolution to mean all revenues of the City derived from any source whatsoever, other than ad valorem taxation on real or personal property, which are legally available to make the payments required under the Resolution. Such covenant to budget and appropriate does not create any lien upon or pledge of such Non -Ad Valorem Revenues, nor does it preclude the City from pledging in the future its Non -Ad Valorem Revenues, nor does it require the City to levy and collect any particular Non -Ad Valorem Revenues, nor does it give the Bondholders, the Providers of any Bond Insurance Policy or Reserve Account Insurance Policy or the Bond Registrar a prior claim on the Non -Ad Valorem Revenues as opposed to claims of general creditors of the City. Such covenant to budget and appropriate Non -Ad Valorem Revenues is subject in all respects to the payment of obligations secured by a pledge of such Non -Ad Valorem Revenues heretofore or hereinafter entered into (including the payment of debt service on bonds and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated in the Resolution shall have the effect of making available in the manner described in the Resolution Non -Ad Valorem Revenues and placing on the City a positive duty to budget and appropriate, by amendment, if necessary, amounts sufficient to meet its obligations under the Resolution; subject, however, in all respects to the restrictions of Section 166.241(2), Florida Statutes, which provides, in part, that the governing body of each municipality make appropriations for each Fiscal Year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources; and subject further, to the payment of services 13 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law. Flow of Funds The Resolution establishes a Bond Fund, and within the Bond Fund, the following separate accounts and subaccounts: (i) Debt Service Account which shall include three separate subaccounts therein designated as the Interest Subaccount, the Principal Subaccount, and the Bond Redemption Subaccount; (ii) the Debt Service Reserve Account; (iii) the Cost of Issuance Account; and (iv) the Rebate Account, Non -Ad Valorem Revenues appropriated in each Fiscal Year for the payment of the principal of, redemption premium, if any, and interest on the Series 2012 Bonds, shall be applied in the following manner: 1. To the full extent necessary, for deposit into the Interest Subaccount in the Debt Service Account, by no later than the fifth (5th) day preceding each Interest Payment Date, such sums as shall be sufficient to pay the interest becoming due on the Series 2012 Bonds on each such Interest Payment Date; provided, however, that such deposits for interest shall not be required to be made into the Interest Subaccount to the extent that money on deposit therein is sufficient for such purpose. The City shall, on each Interest Payment Date, transfer to the Bond Registrar moneys in an amount equal to the interest due on such Interest Payment Date or shall, prior to such Interest Payment Date, advise the Bond Registrar of the amount of any deficiency in the amount so to be transferred so that the Bond Registrar may give the appropriate notice required to provide for the payment of such deficiency on such Interest Payment Date from any Reserve Account Insurance Policy, if any, on deposit in the Debt Service Reserve Account or from the Bond Insurance Policy, as applicable. 2, (a) To the full extent necessary, for deposit into the Principal Subaccount in the Debt Service Account, by no later than the fifth (5th) day preceding each principal maturity date, the principal amount of Serial Bonds which will Mature arid becorne due on such maturity date; provided, however, that such deposits for principal shall not be required to be made into the Principal Subaccount to the extent that money on deposit therein is sufficient for such purpose. The City shall, on each principal payment date, transfer to the Bond Registrar moneys in an amount equal to the principal due on such principal payment date or shall, prior to such principal payment date, advise the Bond Registrar of the amouirt of any deficiency in the amount so to be transferred so thattheBend Registrar may give the appropriate notice required to provide for the payment of such deficiency on such principal payment date from :any Reserve Account insurance Policy/ if any, on deposit in the Debi Service Reserve Account or frorn the Bond Insurance Policy, if any, as applicable. (b) To the full extent necessary, for deposit into the Bond Redemption Subaccount, if applicable, in the Debt Service Account, by no later than the fifth (5th) day preceding each redemption or maturity date, the Amortization Requirements as may be necessary for the payment of any Term Bonds payable from the Bond Redemption Subaccount on such redemption or maturity date; provided, however, that such deposits for Amortization Installments shall not be required to be made into the Bond Redemption Subaccount to the extent that money on deposit therein is sufficient for such purpose. The moneys in the Bond Redemption Subaccount shall be used solely for the purchase or redemption of Term. Bonds payable therefrom, The City may at any time purchase any of said Term Bonds or portions thereof at prices not greater than the then redemption price of said Term Bonds, If the Term Bonds are not then redeemable, the City may purchase said Term Bonds at prices not greater than the redemption price of such Term Bonds on the next ensuing redemption date, The City is mandatorily obligated to use any moneys 14 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. in the Bond Redemption Subaccount for the redemption prior to maturity of such Term Bonds in such manner and at such times as the same are subject to mandatory redemption. If, by the application of moneys in the Bond Redemption Subaccount, the City shall purchase or call for redemption in any year Term Bonds in excess of the Amortization Requirements for such year, such excess of Term Bonds so purchased or redeemed shall be credited in such manner and at such times as the Director of Finance, upon consultation with the City Manager, shall determine over the remaining payment dates, The City shall, on each redemption or maturity date, transfer to the Bond Registrar moneys in an amount equal to the payments due on the Term Bonds on such redemption or maturity date or shall, prior to such redemption or maturity date, advise the Bond Registrar of the amount of any deficiency in the amount so to be transferred so that the Bond Registrar may give the appropriate notice required to provide for the payment of such deficiency on such redemption or maturity date from any Reserve Account Insurance Policy on deposit in the Debt Service Reserve Account or from the Bond Insurance Policy, if any, as applicable, 3, To the full extent necessary, for deposit into the Debt Service Reserve Account by no later than the fifteenth (15th) day of each month in each year, beginning with the fifteenth (15th) day of the first full calendar month following the date on which there is a deficiency in the amount required to be on deposit in the Debt Service Reserve Account, such sums as shall be at least sufficient to pay an amount equal to one - twelfth (1/12) of the difference between the amount on deposit in the Debt Service Reserve Account (including any Reserve Account Insurance Policy) and the Reserve Account Requirement; provided, however, that no payments shall be required to be made into the Debt Service Reserve Account whenever and as long as the amount on deposit therein (including any Reserve Account Insurance Policy) shall be equal to the Reserve Account Requirement for the Series 2012 Bonds, Moneys in the Debt Service Reserve Account shall be used only for the purpose of making payments of principal of and interest on the Series 2012 Bonds when the moneys in any Account held pursuant to the Resolution and available for such purpose are insufficient therefor, Any moneys in the Debt Service Reserve Account in excess of the Reserve Account Requirement for the Series 2012 Bonds may, in the discretion of the City, be transferred to and deposited into the Interest Subaccount, the Principal Subaccount or the Bond Redemption Subaccount as the City at its option may determine, 4. To the Providers, if any, and the Bond Registrar, as applicable, in payment of amounts payable to such parties during such Fiscal Year not paid pursuant to the above provisions. The Series 2012 Bonds shall not be and shall not constitute an indebtedness of the City, within the meaning of any constitutional, statutory or charter provisions or limitations, but shall be secured solely by and payable from, the Pledged Funds as provided in the Resolution,, No holder or holders of arty Series 2012 Bonds shall ever have the right to compel the exercise of the ad valorem taxing power of the City, the State, or any other political subdivision thereof or taxation in any form on any real or personal property therein or the application of any moneys of the City, except the Pledged Funds, and solely to the extent provided in the Resolution, the Non -Ad Valorem Revenues that have been budgeted and appropriated and deposited into the bond Fund to pay the Series 2012 Bonds or the interest thereon or the making of any debt service, reserve or other payments provided for in the Resolution. Enforcement of the City's obligation to budget and appropriate legally available Non -Ad Valorem Revenues shall be through appropriate judicial proceedings. The City has issued and may issue other bonds or debt obligations secured by a similar covenant, See "The City of Miami, Florida Schedule of Principal and 15 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Interest for Non -Ad Valorem Revenue Bonds" herein. In addition, various contracts of the City which do not constitute debt may be secured in a similar manner, The City has not covenanted to maintain any programs or other activities which generate Non -Ad Valorem Revenues. Furthermore, the obligation of the City to budget and appropriate Non -Ad Valorem Revenues is subject to a variety of factors, including the payment of essential governmental services of the City and the obligation of the City to have a balanced budget, For a description of additional limitations see "Special Investment Considerations" herein. Debt Service Reserve Account The Resolution requires the City to maintain on deposit in the Debt Service Reserve Account an amount equal to the Reserve Account Requirement for the Series 2012 Bonds. "Reserve Account Requirement" shall mean an amount up to the lesser of (i) the Maximum Annual Debt Service on all Series 2012 Bonds Outstanding, (ii) 125% of the average Annual Debt Service Requirement on all Series 2012 Bonds Outstanding, or (iii) 10% of the proceeds of the Series 2012 Bonds within the meaning of the Code. The Reserve Account Requirement for the Series 2012 Bonds is equal to $ . [The Debt Service Reserve Account shall be funded in the amount of Reserve Account Requirement froma portion of the proceeds of the Series 2012 Bonds simultaneously with the delivery of the Series 2012 Bonds,] See "ESTIMATED SOURCES AND USES OF FUNDS" herein. In lieu of or in substitute for the required deposits (including existing deposits therein) into the Debt Service Reserve Account, the City may cause to be deposited into the Debt Service Reserve Account a Reserve Account Insurance Policy for the benefit of the Holder's of the Series 2012 Bonds Out`sfanding,'wiiich Reserve Account insurance Policy shall be payable or available to be drawn upon, as the case maybe (uponthe giving of notice as required thereunder), on any Interest Payment Dateor principal payment date or mandatory :redemption date on which a deficiency exists which cannot be cured;by moneys in any other Account held pursuant to the Resolution and available for such purpose, If a disbursement is made under the Reserve Account. Insurance Policy, the City shall be obligated to either (i) reinstate the maximum limits of such Reserve Account Insurance Policy within twelve months by increasing the amount payable or available to be drawn thereunder in equal monthly amounts over such twelve month period, or (ii) deposit; on a monthly basis in accordance with the Resolution, into the Debt Service Reserve Account from the Non -Ad Valorem Revenues appropriated in accordance with the Resolution, moneys in the amount of the disbursements made tinder such Reserve Account Tn.stirance Policy, or a combination of such alternatives as shall cause the amount then on deposit to the credit of the Debt Service Reserve Account t6 equal the Reserve Account Requirement for the Series 2012 Bonds Outstanding. In the event that upon the occurrence of any deficiency in the Interest Subaccount, the Principal Subaccount or the Bond Redemption Subaccount, the Debt Service Reserve Account is then funded with a Reserve Account Insurance Policy, the City or the Bond Registrar, as applicable, shall, on an interest or principal payment date or mandatory redemption date to which such deficiency relates, draw upon or cause to be paid under such facilities, on a pro-rata basis thereunder, an amount sufficient to remedy such deficiency, in accordance with the terms and provisions of such facilities and any corresponding reimbursement or other agreement governing such facilities; provided however, that if at the time of such deficiency the Debt Service Reserve Account is only partially funded with a Reserve Account Insurance Policy, prior to drawing on such facilities or causing payments to be made thereunder, the City shall first apply any cash and securities on deposit in the Debt Service Reserve Account to remedy the deficiency and, if after such application a deficiency still exists, the City or the Bond Registrar, as applicable, shall make up the balance of the deficiency by drawing on such facilities or causing payments to be made thereunder, as 16 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. provided in this paragraph, Amounts drawn or paid under a Reserve Account Insurance Policy shall be applied as set forth in the Resolution. Any amounts drawn or paid under a Reserve Account Insurance Policy shall be reimbursed to the Provider thereof in accordance with the terins and provisions of the reimbursement or other agreement governing such facility, DESCRIPTION OF NON -AD VALOREM REVENUES The following describes the major sources of the City's Non -Ad Valorem Revenues: Franchise Fees Franchise fees are levied annually on utility companies by the City in return for granting a privilege, sanctioning a monopoly or permitting the use of public property, Such fees are currently levied against Florida Power and Light Co, Additionally, the City has granted non-exclusive commercial solid waste franchises and levies certain fees thereunder against commercial solid waste service ,providers, There is no guarantee that the services described above will continue to be provided by such franchisees in the future rather than by governmental entities, including the City, in which case no franchise fees would be received, Additionally, continued receipt of the franchise fees is dependent upon the continued financial viability of such franchise and the continued need by the City's citizens for the services provided. Public Service Tax The Public Service Tax is imposed, levied and collected by the City pursuant to Section 166.231, Florida Statutes, and other applicable provisions of law, on the purchase of electricity, fuel oil, metered or bottled gas (natural liquefied petroleum gas or manufactured), water service, and other services on which a tax may be imposed by law, Florida law authorizes any municipality in the State o.f Florida (the "State" ) to levy a Public Service Tax on the purchase within such municipality of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, manufactured gas either metered or bottled, water service and fuel oil as well as any services competitive with those specifically enumerated, This tax may not exceed 10% of the payments received by the sellers of such services from purchasers (except in the case of fuel oil, for which the maximum tax is four cents per gallon). The purchase of natural gas or fuel oil by a public or private utility either for resale or for use as fuel in the generation of electricity, or the purchase of fueloil or kerosene for use as an aircraft engine fuel or propellant or for use in internal combustion engines, is exempt from the levy of such tax, Pursuant to the Constitution of the State, Florida Statutes and a resolution of the City, the City levies a Public Service Tax, within the incorporated area of the City at the rate of 10%0 on sales of all services for which it is allowed to tax, and with the restriction that the tax on fuel oil cannot exceed four cents per gallon, Pursuant to the Section 166,231, Florida Statutes, a municipality is permitted to grant to any qualified business located within an enterprise zone an exemption equal to fifty percent (50%) of the Public Service Tax imposed, or one hundred percent (1:00%) in the case of the purchase of electricity, if no less than twenty percent (20%) of the employees of such business are residents of an enterprise zone, excluding temporary and part-time employees. The ability to authorize this exemption expires on December 31, 2015 pursuant to Chapter 290, Florida Statutes. A municipality is also permitted to exempt from the Public Service Tax up to and including the first 500 kilowatt hours of electricity purchased per month for residential use and to 17 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. exempt all or a portion of the purchase of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, or manufactured gas either metered or bottled, or reduce the rate of taxation thereon, when purchased by an industrial consumer which uses the electricity or gas directly in industrial manufacturing, processing, compounding or a production process of items of personal property for sale. The City has not provided any of the foregoing exemptions. Additionally, a.municipality may provide an exemption to the public service tax for any public body as defined in Section 1.01, Florida Statutes, and any non-profit corporation or cooperative association organized under Chapter 617, Florida Statutes, which provides water utility services to no more than 13,500 equivalent residential units, ownership of which will revert to a political subdivision upon retirement of all outstanding indebtedness, In addition to the other exemptions and exclusions described herein, a municipality may exempt from the Public Service Tax the purchase of metered or bottled gas (natural liquefied petroleum gas or manufactured) or fuel oil for agricultural purposes. "Agricultural purposes" means bona fide farming, pasture, grove or forestry operations including horticulture, floricultural, viticulture, dairy, livestock, poultry, bee and aquaculture, The City does exempt purchases by the United States Federal Government, the State, the county, .the school district, and any public bodies exempted by law or court order, The Public Service Tax must be collected by the seller from purchasers at the time of sale and remitted to the City, Such tax will appear on a periodic bill rendered to consumers for electricity, metered and bottled gas, water service and fuel oil. A failure by a consumer to pay that portion of the bill attributable to the Public Service Tax may result in a suspension of the service involved in the same fashion as the failure to pay that portion of the bill attributable to the particular utility service, The amount of Public Service Tax received by the City is subject to increase or decrease due to legislative changes. The amount of the Public Service Tax collected within the City may be adversely affected by changes in population within the City. Such changes in population could decrease the number of purchasers of electricity, water, metered natural gas, bottled natural gas and fuel oil within the City, Local Communications Services Tax The Communications Services Tax Simplification Act, enacted by Chapter 2000-260, Laws of Florida, as amended by Chapter 2001-140, Laws of Florida, and now codified in part as Chapter.202, Florida Statutes (the "Communications Services Tax Act") established, effective October 1, 2001, a communications services tax on the sale of communications 'services as defined in Section 202.11.,. Florida Statutes, and as of the same date repealed Section 166.231(9) Florida Statutes, which previously granted municipalities the authority to levy a utility services tax on the purchase of.telecorn.munication services. Florida Statutes, Section 202,19, as amended, provides that counties and municipalities may levy, by ordinance, a discretionary communications services tax (the "Local Communications Services Tax") on communications services, the revenues froth which may be pledged for the repayment of current or future bonded indebtedness. The City set the rates for its Local Communications Services Tax pursuant to Ordinance No, 12078 enacted on June 14, 2001, Communication services are defined as the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals, including video services, to a point, or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for such transmission or conveyance, The term does not include: (a) Information services; 18 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (b) Installation or maintenance of wiring or equipment on a customer's premises; (c) The sale or rental of tangible personal property; (d) The sale of advertising, including, but not limited to, directory advertising; (e) Bad check charges; (f) Late payment charges; (g) Billing and collection services; or (h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line services, Any sale of communications services charged to a service address in the City is subject to the City's local communications services tax at a rate of 5,62%, The Communications Services Tax Act further provides that, to the extent that a provider of communications services is required to pay to a local taxing jurisdiction a tax, charge, or other fee under any franchise agreement or ordinance with respect to the services or revenues that are also subject to the tax, such provider is entitled to a credit against the amount of such tax payable to the State in the amount of such tax, charge, or fee with respect to such service or revenues. The amount of such credit shall be deducted from the amount that the local taxing jurisdiction is entitled to receive, The Local Communications Services Tax must be collected by the provider from purchasers and remitted to the Florida Department of Revenue ("FDOR"), The proceeds of said Local Communications Services Tax less the FDOR's cost of administration is deposited in the Local Communications Services Tax clearing trust fund and distributed monthly to the appropriate jurisdictions and may be pledged for the repayment of current or future bonded indebtedness. The sale of communications services to (i) the federal government, or any instrumentality or agency thereof, or any entity that is exempt from state taxes under federal law, (ii) the state or any county, municipality or political subdivision of the state when payment is made directly to the dealer by, the governmental entity, and (iii) any home for the aged, educational institution (which includes state tax - supported and nonprofit private schools, colleges and universities and nonprofit libraries, art galleries and museums, among others) or religious institutions (which includes, but is not limited to, organizations having an established physical place for worship at which nonprofit religious services and activities are regularly conducted) that is exempt from federal income tax under Section. 501(c)(3) of the Code are exempt from the Local Communications Services Tax, Under the Communication Service Tax Act, local governments must work with the FDOR to properly identify service addresses to each municipality and county, If a jurisdiction fails to provide the FDOR with accurate service address information, the local government risks losing tax proceeds that it should properly receive. The City believes it has provided the FDOR with all information that the FDOR has requested as of the date hereof and that such information is accurate, The federal Internet Tax Freedom Act ("ITFA") imposes a moratorium on taxation of Internet access by states and political subdivisions. As amended by the Internet Tax Nondiscrimination Act ("ITNA"), the ITFA may have a material adverse effect upon future collections of the Local Communications Services Tax Revenues, Signed into law on December 3, 2004, the ITNA extended the ITFA until November 1, 2007, Federal legislation was enacted on October 31, 2007, to extend the moratorium, which was set to expire on November 1, 2007, on certain state and local government taxation on Internet access, to November 1, 2014. This legislation prohibits a state from reimposing a tax on Internet access which the state repealed more than twenty-four (24) months prior to this legislation's enactment. Additionally, a specific exemption was created 19 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. for certain state business taxes enacted between June 20, 2005 and before November 1, 2007 which do not discriminate against providers of communication services, Internet access or telecommunications, Effective November 1, 2003, "Internet access" was amended to include telecommunications services purchased, used or sold by a provider of Internet access to provide Internet access, "Internet access" now also includes related communication services, such as email and instant messaging, The definition of "Internet access" was revised, in part, to eliminate existing language which could be read to allow providers of communication services to exclude from taxation charges for Internet access services which are bundled for a single price with taxable communication services, "Telecommunications," as amended, includes un-regulated non -utility telecommunications, such as cable services. Application of the amended definition of "Internet access" was delayed until June 30, 2008 for state or local tax on Internet access that was: (1) generally imposed and actually enforced on telecommunication services, or (2) the subject of litigation instituted in a state court prior toJuly 1, 2007, Prior to December 3, 2004, under the Communication Services Tax Act, according to FDOR, when charges for Internet access services are not separately stated on a customer's bill, the entire charge is taxed, regardless of whether the charge includes Internet access or telecommunications services used to provide Internet access. The negative impact on future collections of Local Communications Services Tax because of the ITNA cannot be determined at this time, The amount of Local Communications Services Tax revenues received by the City is subject to increase or decrease due to (i) increases or decreases in the dollar volume of taxable sales within the City, (ii) legislative changes, and/or (iii) technological advances which could affect consumer preferences, such as Voice over Internet Protocol ("VoIP"). VoIP is a less expensive technology that allows telephone calls to be made in digital form using a broadband Internet connection, rather, than an analog phone line, and has the potential to supplant traditional telephone service. It is possible that VoIP,could either reduce the dollar volume of taxable sales within the City or will be a non-taxable service altogether. In 2012, the Florida Legislature passed House Bill 809 ("HB 809"), which. updates and modifies a number of provisions in which the communications services tax is levied I-IB 809 revises the definition of "sales price" to expand the existing provisions relating to what charges a communications services dealer may exclude from the taxable sales price of communications services, .HB 809 also modifies the requirements of section 202,22, Florida Statutes, relating to a dealer that does not use one of the three approved local tax. situsing methods, The liability of a communications services tax dealer in the cases of underpayment of the tax resulting from that dealer assigning a service address to the incorrect local taxing jurisdiction is limited to only those situation where the dealer did not use an approved situsing method and the FDOR has determined the amount underpaid by that dealer between all jurisdictions, HB 809 makes these revised definitions and liability provisions retroactive and remedial, The 2012 Revenue Estimating Conference estimates that the changes to dealer liability for incorrectly assigned service addresses will have a negative impact on local governments of $4,3 million in Fiscal Year 2013 and a recurring negative impact of $4,7 million, Other changes made by the bill will have a negative indeterminate effect on local government revenues; however, the Revenue Estimating Conference agreed that the provisions related to the taxation of items not separately stated would have a negative recurring impact of at least $21,3 million for local communications services tax, and the remedial and retroactive provisions will have at least a $2,2 million negative impact on local communications services tax, Although a negative impact on the City's local communication services tax is expected, at this time, the extent of I I8 809 on the City's finances cannot be accurately ascertained, ,Licenses and Permits These are revenues derived from the issuance of local licenses and permits, including professional and occupational licenses required for the privilege of engaging in certain trades, occupations and other activities. 20 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Intergovernmental This category includes federal, State and other local units' grants, and revenues shared by the State and other local units. The largest component is the half -cent sales tax, Half Cent Sales Tax, The State levies and collects a sales tax on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and dealer allowances. In 1982, the Florida legislature created the Local Government Half -Cent Sales Tax Program (the "Local Government Half -Cent Sales Tax Program") which distributes a portion of the sales tax revenue and money from the State's General Revenue Fund to counties and municipalities that meet strict eligibility requirements, In 1982, when the Local Government Half -Cent Sales Tax Program was created, the general rate of sales tax in the State was increased from 4% to 5%, and one-half of the fifth cent was devoted to the Local Government Half -Cent Sales Tax Program, thus giving rise to the name "Half -Cent Sales Tax/' Although the amount of sales tax revenue deposited into the Local Government Half -Cent Sales Tax Program is no longer one-half of the fifth cent of every dollar of the sales price of an item subject to sales tax, the name "Half -Cent Sales Tax" has continued to be utilized. Section 212,20, Florida Statutes, provides for the distribution of sales tax revenues collected by the State and further provides for the distribution of a portion of sales tax revenues to the Local Government Half -Cent Sales Tax Clearing. Trust Fund (the "Trust Fund"), after providing for transfers to the General Fund, The entire sales tax remitted to the State by each sales tax dealer located within a particular county (the "Local Government Half -Cent Sales Tax Revenues") is deposited in the Trust Fund and earmarked for distribution to the governing body of such county and each participating municipality within that county pursuant to a distribution formula, The percentage of Local Government Half -Cent Sales Tax Revenues deposited in the Trust Fund is 8,814%q, The general rate of sales tax in the State is currently 6.00%, After taking into account the distributions to the General Fund (historically 5% of taxes collected), for every dollar of taxable sales price of an item, approximately [0,501] cents is deposited into the Trust Fund, As of October 1, 2001, the Trust Fund began receiving a portion of certain taxes imposed by the State on the sales of communication services (the "CST Revenues") pursuant to Chapter 202, Florida Statutes, Accordingly, moneys distributed from the Trust Fund now consist of funds derived from both general sales tax proceeds and CST Revenues required to be deposited into the Trust Fund, The Half -Cent Sales Tax collected within a county and distributed to local government units is distributed among the county and the municipalities therein in accordance with the following formula: 21 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. County Share (percentage of total Half -Cent = unincorporated + 2/3 incorporated Sales Tax receipts) area population area population Municipality Share (percentage of total Half -Cent Sales Tax receipts) total county + 2/3 incorporated population area population municipality population total county + 2/3 incorporated population area, population For purposes of the foregoing formula, "population" is based upon the latest official State estimate of population certified prior to the beginning of the local government fiscal year, Should any unincorporated area of Miami -Dade County become incorporated as a municipality, the share of the Half -Cent Sales Tax received by Miami -Dade County and the City would be reduced. The Half -Cent Sales Tax is distributed from the Trust Fund on a monthly basis to participating units of local government in accordance with Part VI, Chapter 218, Florida Statutes (the "Sales Tax Act"), The Sales Tax Act permits the City to pledge its share of the Half -Cent Sales Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Half -Cent Sales Tax Program, each municipality and county is required to have: (i) reported its finances for its most recently completed fiscal year to the State Department of Financial Services as required by Florida .law; (ii) made provisions for annual post audits 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 f illages authorized by the voters, to produce the revenue equivalent to a miliege rate of three (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 three (3) mill acl valorem tax, to have received a remittance from the county pursuant to a municipal services benefit emit, collected, an occupational license tax, utility tax, or ad valorem tax, or have received revenue from 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 and 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 post audit of its financial accounts in accordance with law; and (vii) certified to the Florida Department of Revenue ("FDOR") that it has complied with 22 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. certain procedures regarding the establishment of the ad valorem tax millage of the county or municipality as required by law. Although the Sales Tax Act does not impose any limitation on the number of years during which the City can receive distributions of the Half -Cent Sales Tax from the Trust Fund, there may be future amendments to the Sales Tax Act in subsequent years imposing additional requirements of eligibility for counties and municipalities participating in the I-Ialf-Cent Sales Tax, or the distribution formulas in Sections 212,20(6)(d) or 218.62, Florida Statutes, may be revised. To be eligible to participate in the Trust Fund in future years, the City must comply with the financial reporting and other requirements of the Sales Tax Act. Otherwise, the City would lose its Trust Fund distributions for twelve (12) months following a "determination of noncompliance" by FDOR, The City has always maintained eligibility to receive the Half - Cent Sales Tax, State Revenue Sharing. A portion of the taxes levied and collected by the State is shared with local governments under the provisions of Chapter 218, Part II, Florida Statutes. The amount deposited by FDOR into the State Revenue Sharing Trust Fund for Municipalities is 1.3409% of available sales and use tax collections after certain required distributions, 12.5% of the Florida alternative fuel user decal fee collections, and the net collections from the one -cent municipal fuel tax. To be eligible for State Revenue Sharing funds, a local government must be audited, with certain exceptions; must have filed its annual financial report with the Florida Department of Financial Services; must certify certain requirements pertaining to the employment and compensation of law enforcement officers and the employment of firefighters; must levy an ad valorem tax of at least three (3) mills or collected equivalent alternative revenues from a combination of the following sources available to municipalities; a remittance from the county pursuant to Section 125.01(6)(a), Florida Statutes, occupational license taxes, utility taxes, and ad valorem taxes, Eligibility is retained if the local government has met eligibility requirements for the previous three years, even if the local government reduces its millage or utility taxes because of the receipt of the Half -Cent Sales Tax. The amount of the State Revenue Sharing Trust Fund for Municipalities distributed to any one municipality is the average of three factors: an adjusted population factor; a sales tax collection factor, which is the proportion of the local municipality's ordinary sales tax collected within the municipality to the total sales tax collected within all eligible municipalities in the State; and a relative revenue -raising ability factor, which measures the municipality's ability to raise revenue relative to other qualifying municipalities in the State. Each municipality is entitled to receive a minimum amount of State Revenue Sharing funds known as the "guaranteed entitlement" as defined in Section 218,21(6), Florida Statutes. A municipality is also eligible to receive distributions under Section 212.20(6)(d)5., Florida Statutes and Section 218.245(3), Florida Statutes, To be eligible to participate in State Revenue Sharing in future years, the City must comply with certain eligibility and reporting requirements, otherwise, the City will not be entitled to distributions for a period of tune, Fines and Forfeitures. These are revenues derived from fines and forfeitures imposed by local courts. Charges for Services Charges for various services provided by the City to residents, property owners, and grants received from other governments, including the following: 23 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (a) General Government: all money resulting from charges for current services; i.e., photographs, reports and ordinances; (b) Public Safety: fees for police services, fire protection services and emergency services; (c) Physical Environment: charges include cemetery fees; (d) Building and Zoning Inspections: fees for inspections such as plumbing, electrical, elevator and mechanical inspections; (e) Marina Fees: all fees associated with operations of the various City marinas; (f) Recreational and Special Events: fees for parks and recreation activities and events; and (g) Other; fees for services not specifically mentioned above, i.e,, engineering services, public hearing fees. Other Revenue and Financing Sources This category includes a variety of revenues and transfers from other funds, including the interest earnings on invested funds. [Remainder of page intentionally left blank] 24 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. As described herein, the obligation and the ability of the City to budget and appropriate Non -Ad Valorem Revenues is subject to a variety of factors, including the obligation of the City to provide essential governmental services and the obligation of the City to have a balanced budget, Essential governmental services provided by the City are generally considered to include police and fire services and governmental services which the City is obligated to provide for the health, welfare and safety of the people, However, the scope of essential governmental services is not precisely defined by State law. To the extent other City functions and programs are considered essential governmental services, a corresponding portion of the City's budget may be funded from Non -Ad Valorem Revenues prior to such Non -Ad Valorem Revenues being available for the City to budget and appropriate for the purpose of making payments on the Series 2012 Bonds. In the calculation of the Non -Ad Valorem Revenues available to make payments on the Series 2012. Bonds set forth herein, the City has treated the costs of police and fire services and general governmental services related to health, welfare and safety of the people as the costs of essential governmental services (other than pension costs, which are a separate line item). While these are the largest budget categories constituting essential governmental services, other specific functions and programs may constitute essential governmental services. The following table represents the City's audited determination of legally available Non -Ad Valorem Revenues for the Fiscal Years Ended September 30, 2007 through September 30, 2011, unaudited determination of legally available Non -Ad Valorem Revenues for Fiscal Year Ended September 30, 2012 and the budgeted and projected determination of legally available Non -Ad Valorem Revenues for Fiscal Year Ending September 30, 2013, The reader should note that the dollar amounts indicated in the line item captioned Net Non -Ad Valorem Revenues Available to be budgeted for Debt Service after the Payment of Essential Governmental Services does not represent an amount of available funds that are currently available for such purpose, As indicated under the caption "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS — General" herein, the City is required to operate with a balanced budget, The City generally budgets all of its Non -Ad Valorem Revenue for its essential and other services, including, without limitation, the payment of debt service on indebtedness payable from such Non -Ad Valorem Revenue, The City has not currently included the debt service payment for the Series 2012 Bonds in its Fiscal Year 2013 budget. Pursuant to the Resolution, the City will amend its Fiscal Year. 2013 budget in order to include such debt service in the Fiscal Year 2013 budget. See "GENERAL INFORMATION REGARDING THE CITY OF MIAMI — General Fund" herein. Currently the City intends to use funds allocated and received pursuant to an Interlocal and Grant Agreement between the City and the OMNI Community Redevelopment Agency to pay debt service on the Series 2012 Bonds, See "THE OMNI COMMUNITY REDEVELOPMENT AGENCY" HEREIN. [Remainder of page intentionally left blank] 25 THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM REVENUES FISCAL YEAR ENDED SEPTEMBER 30TH Revenues Franchise and Utility Taxes Licenses and Permits: Business Licenses and Permits Construction Permits Total Licenses and Permits Intergovernmental: State and Revenue Sharing Half -Cent Sales Tax Fine and Forfeitures Other Total Intergovernmental Charges for Services Engineering Services Public Safety Recreation Other Total Charges for Services Interest Income Other Operating: Transfers Inca Total Sources of Legally Available Non -Ad Valorem Revenues Essential Expenses Not Paid with Ad Valorem Taxes(3) Non -Ad Valorem Revenues Available to be budgeted after Payment of Essential Governmental Services(4) Debt Service Ratio of Net Non -Ad Valorem Revenues to Debt Service 2007 2008 2009 2010 Unaudited As of Sept_ 30, 2011 2012 Budget 2013 $ 42,257,282 $ 35,319,051 $ 36,228,332 $ 36,448,254 $104,277,344n) $ 92,868,890C4 $ 88,363,625 7,064,358 25,766,010 $ 32,830,368 $ 13,073,886 25,505,412 5,283,695 15.517.110 7,769,633 7,508,453 22,019,185 18524;028 $ 29,788,818 $ 26,032,481 $ 12,187,197 24,719,050 6,031,799 14,414,695 $ 10;791,455 22,566,791 6,396,471 13,875,682 $ 59,380,103 $ 57,352,741 $ 53,630,399 $ 46,587,956 22,952,364 3,488,492 4,145,343 $ 47,079,358 22,596,110 3,144,370 2,178,334 $ 47,715,500 25,009,184 2,541,056 1:242,353 $ 77,174,155 $ 74,998,172 $ 76;508,093 16,248,307 10,086,415 4,950,826 6,594,312 4;064,924 8196,844 61,411,040 76,817,851 47,785;001 $ 294,252,081 $ 290,957,360 $ 252,446,074 (52,246,5481 (49,012,560) (39,317,193) $ 242,005,533 $ 241' 944,800 $15,334,423 $37;323,086 Source: City of Miami, Financing Department 15.58x Note: Explanatory footnotes appear on next page 6.48x 7,680,315 17,469,460 $ 25,149,775 $ 10,516,183 22,665,743 4,298,283 18,177,138 $ 55,602,347 $ 51,781 383 21,763,551 3,085,270 1.496,625 $ 78,129,829 2,733,028 6,332,053 7,501,746 26,463,331 $ 33,965,077 $ 11,429,920 25,987,633 4,673,993 17,197,559 $ 59,214,105 $ 51,004,353 27,509,243 3,213,671 3,449,087 $ 85,226,353 7,987,435 7,825,000 27,805,289 32469.100 $ 35,792,724 $ 40,294,100 12,009,612 25,803,387 4,808,276 18,363,710 $ 60,984,985 46,247,906 31,238,075 3,669,433 9,386,145 $ 90,541,559 1,915,415 2,418,809 7,247,510 20,895,487 11,211,200 26,121,200 4,400,200 7,652,200 $ 49,384,800 46,402,300 29,006,300 4,344,900 8,243,500 $ 87,997,000 800,000 9,201,200 53,493,902 12,817,357 5 206.967 69,900 $ 257889,188 $ 304,663,161 $ 308,709,421 $ 276,110,625 (37,980,6231 (52,086,638) (29,653,741) (91,299,700))7 $ 213,128.881 $ 219 908 565 $37;'968,012 $39,992,035 5.61x 5.50x $ .252576,523 $ 279 055,680 $75,660,882(6) 875,660,882(6) 3.34x 3.69x $ 184 810 925) $75,660,800(6) 244x '1N3Wf1D04 D O = z p v, 70 p m O v7 n m z C Zr D D DzI N m C D m -0 o' z O c � � W O E -n z = C D � (7 z 26 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Footnotes to table titled "THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM REVENUES FISCAL YEAR ENDED SEPTEMBER 30T'{" follow: (J.) Amounts comprised primarily of Public Service Taxes, Local Option Gas Taxes and amounts from Public Works special revenue funds, Both Public Service Taxes and Local Option Gas Taxes are recurring each year although the amounts may differ from year to year. These amounts have been reclassed to Franchise and Utility Taxes in 2011 to comply with GASB 54. (2) Transfers In are net of debt service on other bond obligations. (3) Total ad valorem taxes minus General Fund government and public safety expenses. (4) This amount does not include a pro rata share of the pension costs associated with the General Fund and Public Safety expenses which maybe payable from Ad Valorem or Non -Ad Valorem Revenues. Such pension costs for Fiscal Year ended September 30, 2011, unaudited for Fiscal Year Ended September 30, 2012 and budgeted amounts for Fiscal Year ending September 30, 2013 are equal to $72,194,979, $72,956,094 and $66,287,700, respectively, (5) Retirement contribution, life and health and workers' compensation allocations are removed from the budget amount. (6) Assumes full repayment of Note being refinanced with the Series 2012 Bonds. 27 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following tablerepresents the City's debt service as of October 31, 2012, prior to refinancing the Note, on obligations payable from legally available Non -Ad Valorem Revenues. For a detailed listing of the City's outstanding debt see "LIABILITIES OF THE CITY— Direct Debt" herein, THE CITY OF MIAMI, FLORIDA SCHEDULE OF PRINCIPAL AND INTEREST FOR NON -AD VALOREM REVENUE BONDS Fiscal Year Principal Interest() Total 2013(1) $53,666,229 $21,994,653 $75,660,882 2014 10,201,160 19,511,110 29,712,270 2015 6,519,407 18,802,683 25,322,090 2016 6,540,000 13,944,890 20,484,890 2017 16,245,000 13,292,548 29,537,548 2018 16,730,000 12,321,760 29,051,760 2019 15,520,000 11,283,477 26,803,477 2020 15,105,000 10,319,882 25,424,882 2021 11,050,000 9,546,699 20,596,699 2022 7,575,000 9,003,674 16,578,674 2023 7,985,000 8,569,026 16,554,026 2024 8,430,000 8,104,362 16,534,362 2025 8,920,000 7,593,545 16,513,545 2026 12,015,000 6;919,125 18,934,125 2027 9,140,000 6,238,438 15,378,438 2028 9,715,000 5,663,513 15,378,513 2029 10,265,000 5,110,463 15,375,463 2030 10,850,000 4,525,813 15,375,813 2031 13,465,000 3,907,463 17,372,463 2032 7,350,000 3,353,438 10,703,438 2033 7,735,000 2,967,563 10,702,563 2034 8,140,000 2,561,475 10,701,475 2035 8,565,000 2,134,125 10,699,125 2036 9,015,000 1,684,463 10,699,463 2037 9,830,000 1,211,175 11,041,175 2038 10,350,000 695,1.00 11,045,100 2039 2,890,000 151,725 .3,041,725 Total $313 811,796 $211,412,484 $525,224,280 Source; City of Miami Finance Department (1) The interest rate on the Note which is being refinanced with the Series 2012 Bonds is assumed at 4.50%. If not refunded with the Series 2012 Bonds, such Note would come due in Fiscal Year 2013, (2) Net of capitalizedinterest on the Series 2010A Bonds and Series 2010E Bonds. 28 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. General Fund The General Fund is the general operating fund of the City, It accounts for all financial resources except for those required to be accounted for in another fund. The largest source of revenue in this fund is generated from ad valorem taxation. See "GENERAL, INFORMATION REGARDING TI-IE CITY OF MIAMI — Financial Integrity Ordinance" herein for a discussion of the general fund reserves, 29 CHIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following chart shows audited information regarding the General Fund for the Fiscal Years Ended September 30, 2007 through September 30, 2011 and unaudited information for Fiscal ended September 20, 2012, Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for the General Fund Unaudited as of 2007 2008 2009 2010 2011 Sept, 30,2012 Revenues Property Taxes $258,756,957 $258,294,391 $266,860,263 $247,646,519 $210,697,277 $209,126,414 Franchise Fees/Other Taxes 42,257,282 35,319,051 36,228,332 36,448,254 104,277,344 102,373,290 Licenses and Permits 32,830,368 29,788,818 26,032,481 25,149,775 33,965,077 35,792,724 Files and Forfeitures 5,283,695 6,031,799 6,396,471 4,298,283 4,673,959 4,808,276 Intergovernmental. 54,096,408 51,320,942 47,233,928 51,304,064 54,540,146 56,176,709 Charges for Services 78,676,199 74,998,172 76,508,093 78,129,829 85,226,353 90,541,558 Interest 16,248,307 10,086,415 4,064,924 2,733,028 1,915,415 2,418,809 Other 3,448,782 6,594,312 8,196;844 6332,053 7,247,510 11,307,598(2) Total Revenues $491,597,998 $472,433,900 $471,521 336 $452,041,805 $502,543,081 $512,545,379 Expenditures General Government 47,015,325 57,525,471 56,699,386 54,913,599 57,590,383 48,376,621. Planning & Development 10,814,727 10,788,224 10,843,924 8,974,853 8,309,065 7,703,911 Public Works 56,376,608 34,858,769 54,938,534 51,276,106 46,634,027 48,749,615 Public Safety 235,497,950 249,881,480 249,478,070 230,713,543 205,193,532 190,403,534 Public Facilities 7,419,797 6,248,557 5,003,138 4,389,912 4,334,995 4,144,955 Parks and Recreation 20,201,873 24,276,993 28,300,738 23,755,930 23,403,186 21,730,648 Risk Management 18,115,929 28,796,859 13,107,068 22,354,729 26,546,382 21,997,003 Pensions 70,708,285 65,116,477 66,906,558 89,975,265 72,194,979 72,956,094 Organizational Support/Group Benefits 35,122,459 27,751,691 41,314,516 32,218,742 30,523,550 26,544,574(2) Non -departmental 28,490, 230 Debt Service; Principal Interest and Other Charges Capital Outlay - - 166,365 Total Expenditures $529,763,183 $525,244,521 $526,591,932 $518,572,679 $474,896,464 $442,606,955 Excess (Deficiency) of .Revenues Over (Under) Expenditures (38,165,185) (52,810,621) (55,070,5.96) (66,530,874) 27,646,617 69,938,423 Other Financing Sources and (Uses): Operating Transfers .1n 61,411,040 76,817,851 47,785,001 53,493,902 12,817,357 5,206,967 Operating Transfers Out (49,052,224) (30,879,926) (46,319,266) (13,493,245) (38,293,085) (29,432,022) Total Other Financing Sources(Uses) 12,358,816 45,937,925 1,465,735. 40,000,657 (25,475,728) (24,225,055) Net Change In Fund Balance $(25,806,369) $(6,872,696) $(53,604,861)' $(26,530,2.17) $ 2,170,889 $ 45,713,368(3) Fund Balance - Beginnilg of Year $126,256,513 $100,450,144 $ 93,577,448 $ 39,972,587 $ 17,473,285(1) $ 19,644,174 Fund Balance - End of Year 1100,450,144 $ 93,577,448 $ 39,972,587 $ 13 442,37Q 419,644174 $ 65,357,542 Source: The City of Miami, Florida. (r) The beginning Fund Balance for Fiscal Year 2011 has been adjusted and restated due to GASI3 Statement No. 54 changes in reporting of classifications, (2) The number (revenue and expense) is net of amounts reimbursed by retirees for health costs, (3) This is an estimated number which does not include amounts that may be identified for 13,1, month adjustments of approximately $8 million, such adjustments could reduce the Net Change in Fund Balance to $37 million, 30 THIS DOCUMENT ISA SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Special Investment Considerations As described above, the City's covenant to budget and appropriate Non -Ad Valorem Revenues does not constitute a lien, either legal or equitable, on any of the City's revenues, The amount of such revenues available to make payments on the Series 2012 Bonds may be effectively limited by (i) the requirement for a balanced budget, (ii) funding requirements for essential governmental services of the City, (iii) a decrease in one or more of the sources of Non -Ad Valorem Revenues, for example, a fluctuation in the Half -Cent Sales Tax collections due to changes in economic activity and a decrease in the dollar volume of purchases in Miami -Dade County, (iv) legislative action and (v) the inability of the City to expend revenues not appropriated or in excess of funds actually available after the use of such funds to satisfy obligations having an express lien or pledge on such funds. Furthermore, except as provided in the Resolution (and described herein under the caption "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS — Additional Debt Payable From Non -Ad Valorem Revenues"), the City is not restricted in its ability (i) to pledge such revenues for other purposes or to issue additional debt specifically secured by such revenues or by a covenant similar to that securing the Series 2012 Bonds or (ii) to reduce or discontinue services that generate Non -Ad Valorem Revenues. All of these factors may limit the availability of Non -Ad Valorem Revenues to pay a portion of the debt service on the Series 2012 Bonds. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Additional Debt Payable from Non -Ad Valorem Revenues Pursuant to the Resolution, the City may incur additional debt (other than the Series 2012 Bonds) that is payable from all or a portion of the legally available Non -Ad Valorem Revenues only if the total amount of the Non -Ad Valorem Revenues for the prior Fiscal Year were (a) at least 2,00 times the aggregate Maximum Annual Debt Service of all debt (including all long-term financial obligations appearing on the City's most recent audited financial statements and the debt proposed to be incurred) to be paid from Non - Ad Valorem Revenues and not other moneys of the City (collectively, "Debt"), including any Debt payable from one or several specific sources of Non -Ad Valorem Revenue, but only to the extent such Non -Ad Valorem Revenues are legally available to pay debt service on the Series 2012 Bonds, and (b) so long as the Series 2012 Bonds are outstanding and if a Reserve Account Insurance Policy is in effect, at least 1,00 times the obligation of the City to repay any costs then due and owing to the Provider of a Reserve Account Insurance Policy, Pledge of Non -Ad Valorem Revenues No specific source of Non -Ad Valorem Revenues (which. includes, without limitation, Public Service Tax revenues, franchise revenues, occupational license tax revenues, the guaranteed entitlement portion of the State Revenue Sharing funds and fines and forfeitures) are pledged to the payment of the Series 2012 Bonds, Certain specific sources of Non -Ad Valorem Revenues are pledged for the payment of other indebtedness of the City. See "LIABILITIES OF THE CITY -Direct Debt" herein, Future issues of other indebtedness of the City may be secured by a pledge of Non -Ad Valorem Revenues as described above. See "OTHER DEBT CONSIDERATIONS" herein, 31 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. MANAGEMENT DISCUSSION OF BUDGET AND FINANCES The following discusses the City's current financial position and projected finances for Fiscal Years 2012 through 2013, Fiscal Year 2012 Results The City's Fiscal Year ended September 30, 2012 is expected to have a surplus of $45,71 million greater than the original budget based on the unaudited results as of September 30, 2012, Such surplus amount is estimated based on the most accurate information available at this time, it is possible that the surplus may decrease by $8,0 million after the City's year end close which is expected to be completed in February, 2013 because of additional year end adjustments. This budget surplus is attributable to the following revenues collected in excess of the budgeted amounts: Intergovernmental Revenues, Charges for Services and Franchise Fees and other Taxes. Revenues are expected to be $10,9 million greater than budgeted. Intergovernmental Revenues are expected to be $3,8 million greater than budgeted due to Charges for Services are expected to be $8.6 million greater than budgeted clue to , Interest income is expected to be $.7 million greater than budgeted, Franchise Fees and other Taxes are expected to be $1.6 million greater than budgeted, however due to the merging of the local option gas tax and public service tax special revenue funds into the general fund in order to comply with GASB Statement No. 54 such amount presents as $65 million greater. Although the consolidation of those funds increases the revenue for Franchise Fees and Other Taxes, the Transfers -in are reduced because the money being transferred from the Special Revenue Funds and Non -Departmental transfers -out decrease significantly also, It is anticipated that the following expenditures will be below the. budgeted amounts which will contribute to'the anticipated surplus: General Governrnent,.Public Works, Planning and Development and Risl< Management. However, the Solid Waste clepartmertt is expected to exceed its budget because trash collections are averaging 750 tons more per month than in the previous year which increases the tipping fees due -to the county, Also, the single stream recycling. program did not,begin operating as scheduled,.therefore the tonnage reduction which was taken into account when developing the budget did not materialize.. The Public Facilities and Parks and Recreations departments are also expected to exceed .their budgets due to an increase in utilities in the City's public facilities and the costs of summer program. See "Actual vs. Budgeted Revenues, Expenditures and Changes in Fund Balance for the General Fund through September 30, 2012" below, [Remainder of page intentionally left blank] 32 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following table provides the original Fiscal Year ended September 30, 2012 adopted budget, the mid -year amended Fiscal. Year ended September 30, 2012 budget and unaudited actual revenues and expenditures through September 30, 2012 to the original Fiscal Year ended September 30, 2012 adopted budget: Budgeted Revenues, Expenditures and Net Changes in Fund Balance for the General Fund for Fiscal Year ended September 30, 2012 and Actual Revenues and Expenditures Year to Date through September. 30, 2012 Unaudited Year to Date Budgeted Amounts Actual %ofActual to Original Amended as of 09/30/2012 Original Budget Revenues; Property Taxes $ 216,449,900 $ 215,449,900 $ 209,126,414 97,06% Franchise and Other Taxes •36,350,000 36,350,000 37,775.,438 103.92%'(1) LOGT and PST Revenues 64,422,922 64,597,852 n/e Occupational Licenses and Permits 36,177,500 36,616,500 35,792,724 98,94% Fines and Forfeitures 6,000,000 5,000,000 4,808,276 96.17% Intergovernmental 42,477,500 42,477,500 56,176,709 132,25% Charges for Services 82,645,800 81,897,400 90,541,558 109,55% Interest 1,500,000 1,500,000 2,418,809 161.25% Other 13,575,100 17,845,600 11,307,598 83,30% Total Revenues 433,175.,800 601,569,822 512,545,379 11.8.32% Expenditures; General Government 67,360,600 6.9,184,100 48,376,621 71,82% Planning and Development 8,152,600 8,317,600 7,703,911 94.50% Public Works 49,766;100 49,766,100 48,749,615 97,96% Public Safety 185,660,600 185,710,600 100,403,534 102,55% Pensions 76,808,800 76,808,800 72,966,094 94,98% Public Facilities 4,244,300 4,244,300 4,144,955 97,66% Parks and Recreation 21,562,300 21,894,700 21,730,648 100.78% Risk Management 58,413,200 58,413,200 21,997,003 37,66% Risk - Group Benefits - 26,544,574 n/a Total Expenditures 471,968,500 474,339,400 442,606,955 93.78% Excess (Deficiency) of Revenues Over (Under) Expenditures Operating transfers In Operating transfers out Total Other Financing Sources/(Uses) (38,792,700) 27,220,422 69,938,423 -180.29% 46,110,500 5,317,600 5,206,967 11,29% Y(1) (7,317,800) (32,537,922) (29,432,022) 402.20% r(1) 38,792,700 (27,220,422) (24,225,055)-62.45% Net Change In Fund Balance 4'5,713,368 Fund Balance Beginning FY 19,644,174 Fund Balance as of September 30, 2012 65,357,642 Source: City of Miami Finance Department 0) Amounts include Public Service Taxes, Local Option Gas Taxes and amounts from Public Works Special Revenue Funds, Both Public Service Taxes and Local Option Gas Taxes are recurring each year although the amounts may differ from year to year. These amounts have been reclassed from Operating Transfers in to Franchise and Utility Taxes in 2011 to comply with GASB Statement No, 54. Transfers In and net of debt service, on other bonds obligations. 33 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Fiscal Year 2013 Operations and Projections The City's original Fiscal Year 2013 budget was adopted on September 27, 2012. The original Fiscal Year 2013 general fund budget was approximately $503,25 million which reflected an overall increase of 4,14% ($20 million) from the original Fiscal Year 2012 general fund budget, including Transfers in as revenue and Transfers out as expenditures. Property tax revenue is budgeted at an increase of $2 million over the Fiscal Year 201.2 budget, Franchise Fees increased by $61,09 million over the Fiscal Year 2012 budget due to the implementation of GASB Statement No, 54. The revenue from Public Service Taxes and Local Option Gas Tax were reported under the Special Revenue Fund, but are now reported under the General Fund, The City is experiencing an increase in property values and turn around in the economy, Intergovernmental Revenue is budgeted at an increase of $7.5 million over the Fiscal Year 2012 based on the estimated increase in State Revenue Sharing and Half -Cent Sales Tax from the State. Fines and Forfeitures is reduced by $465,400 over the Fiscal Year 2012 budget due to a revised estimate from the City's Estimating Conference Committee based on current year collections. The City anticipates that the collections from Licenses and Permits will increase by $3,68 million or 10.02% over the Fiscal Year 2012 budget primarily due to increases in other licenses, mural fees and permits from planning and zoning and building, Charges for Services is budgeted at an increase of $5.5 million over the Fiscal Year 2012 budget. Other Revenues is reduced by $8.64 million over Fiscal Year 2012 budget primarily clue to retirees contributions for life and health insurance now being recorded under the Internal Service Fund and the elimination of $1,1 million from Other Non -Operating Revenue -Take Home Cars, On the expenditure side, the following expenditure categories, general government, planning and development, public safety, public facilities, parks and recreation, increased by an average of 37% mainly due to the cost allocation of pension, life, health insurance and worker's compensation included those categories. Conversely, Risk Management decreased by $44.84 or 76,78% and Pension decreased by $7645.million or 99.14% because the previous costs were centrally budgeted in the Risk Management deparLutent and pension category, respectively, and are now berrg`allocated iii 'the"individual departments. Further, this budget avoids service reductions and layoffs, ;[Remainder of page intentionally left blank] 34 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Budgeted and Projected Revenues, Expenditures for the General Fund for Fiscal Year ending September 30, 2013 Revenues Adopted Budget Property Taxes 217,631,200 Franchise Fees and Other Taxes 97,870,700 Interest 800,000 Transfers -IN 69,900 Fines and Forfeitures 4,400,200 Intergovernmental Revenues 44,984,600 Licenses and Permits 40,294,100 Other Revenues (Inflows) 9,201,200 Charges for Services 87,997,000 Total Revenues $503,248,900 Exp enditures General Government 53,568,100 Planning & Development 12,316,500 Public Works 64,280,100 Public Safety 255,362,800 Public Facilities 5,873,600 Parks & Recreation 29,002,100 Risk Management 13,565,500 Pensions 657,600 Non -Departmental 32,594,100 Transfers Out 36,02.8,500 Total Expenditures $503,248,900 City's Operations Despite the financial stress that the City. has experienced in the past, the City seems to be stabilizing again. The City Commission requested the City Manger find new revenue sources and the City Manager responded by taking. an assessment of all of the revenues and expenditures of the City and he has charged each member of the executive team to find new revenue sources and increase the existing revenue sources along with finding ways to further reduce expenditures. In reviewing the leases, the City was able to be more aggressive in collections and the delinquency rate on leases has decreased to 2%. In an effort to reduce expenditures, the City has been able to negotiate with the unions and achieve reductions in the approximate range of $75-$100 million over the last three years and kept costs from rising leaving expenditures relatively stable, Such reduction is primarily attributable to the decrease in contributions to health care and pension costs. See "LIABILITIES OF THE CITY -Financial Urgency' herein, It is not the intent of the City to declare financial urgency in preparation of the Fiscal Year 2014 budget. 35 THIS DOCUMENT IS A SUBS FIT U IION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. However, there is still work to be done, The City has experienced a number of resignations recently. The Finance Director resigned on October 30, 2012, Prior to that, the interim Treasurer and the Director of Capital Improvements resigned. Over the last six months, there have been 12 resignations and there exists 5vacancies in key positions. The City is recruiting fox those positions and expects to have them filled in the next 90-120 days, As part of the City's focus on finances, they have noted the comments in the Single Audit reports, as noted in the Single Audit Reports inaccordance with OMB Circulate A-133 and the Florida Single Audit Act for Fiscal Year ended Septernber 30, 2011, For example, (i) the financial statement close process was noted to be a material weakness due to quantity and dollar amount of the audit adjustments at year end, .timeliness of preparation of the financial statements, internal controls, process for review of timeliness of required arbitrage calculations and all debt agreement for debt covenants requirements; (ii) the recording of capital assets, the timely close out of projects; and (iii) timeliness of grant reimbursements. In response, the City is working on a business plan for the finance department which would include the review of the finance department's organizational structure for operations and structural improvements, as well as increasing the communication between departments to received timely information for the other departments to complete its financial processes. Such business plan has been approved and supported by the City Manager and the Mayor. Although it has not been formally approved by the City Commission, $900,00 has been approved in the Fiscal Year 2013 budget which will allow the finance department to move forward with the business plan, OTIIER DEBT CONSIDERATIONS The City expects to issue additional debt in the future which may include the refunding of its Special Revenue Refunding Bonds, Series 2002A and Special Revenue Refunding Bonds, Series 2002C in 2013. The Southeast Overtown Park West District Community Redevelopment Agency expects to issue debt in the amount of not to exeed $50 million, payable from the increment revenue of such community redevelopment area. However, such debt is not a debt of the City. MUNICIPAL BOND INSURANCE [To Come] GENERAL INFORMATION REGARDING THE CITY OF MIAMI Background Now 116 years old, the City is part of the nation's seventh largest metropolitan area. Incorporated in 1896, the City is the only municipality conceived and founded by a woman - Julia Tuttle, According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity of approximately 399,457 residents according to the 2010 U.S. Census, 58.9% of them foreign born. In physical size, the City is not large, encompassing only 35.87 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, FLORIDA AND MIAMI-DADE COUNTY". 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 every 36 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. four years 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 City Commission, however, the City Commission can override such veto with a 4/5 vote, The Mayor appoints the City Manager who functions as chief administrative officer. The Mayor of the City is Tomas P. Regalado whose term expires November 2013. The members of the City Commission and expiration of their current terms of office are: Commission Members Wifredo Gort Marc D. Sarnoff Francis X. Suarez Frank X. Carollo Michelle Spence -Jones Date Term Expires November 2015 November 2015 November 2014 November 2013 November 2013 The City Manager, Johnny Martinez, is a full-time employee and is the chief administrative officer of the City, He was appointed as City Manager by the Mayor on June 21, 2011, The City Manager is responsible for directing the administrative and operational aspects of the City in compliance with the policies set by the City Commission and the Mayor. He is responsible for an organization that has more than 4,309 employees and administers a budget of more than $503 million, Prior to his current position, he served as Deputy City Manager. Prior to being promoted to Deputy City Manager, he served as Assistant City Manager and Chief of Infrastructure, Mr. Martinez has a 30 year professional history which includes key private sector engineering positions in various consulting firms including the Florida Department of Transportation (FDOT) where he served from 1985 to 2003, He holds a Bachelor of Science in Civil Engineering from the University of Miami and is a registered State of Florida Professional Engineer (P,E.). The City's Assistant City Manager and Chief Financial Officer is Janice Larned, She is responsible for internal support functions of Finance, Procurement, Risl< Management, and union negotiations on behalf of the City Manager. Ms, Larned was appointed as the Assistant City Manager and Chief Financial Officer on December 5, 2011,.Ms. Larned had been the Vice President of Finance for District Offices/Moyer Group/Severn Trent Moyer where she directed the financial management of local governments, Prior to that, she was an executive on loan serving in various executive financial roles with Sarasota County, Florida, and the City of Arlington, Texas, She was employed by a private company in Kansas City, Missouri in the capacity of financial services, Ms, Larned received a Bachelor of Arts degree in Economics from Wichita State University and an Executive Master of Business Administration degree from the University of Missouri Kansas City, She has achieved certification as a Certified Cash Manager and is registered as a municipal advisor for both the Securities Exchange Commission and the Municipal Securities Rulemaking Board, She has completed continuing education from the University of Pennsylvania - Wharton Business School and Harvard University - Harvard Business School, The City's Director of Finance position is vacant, The City's Director of Management and Budget and Special Assistant to the City Manager is Daniel J. Alfonso. He reports directly to the City Manager. He is responsible for planning, organizing, directing and controlling the budgetary and related financial processes, developing, coordinating and publishing the City's budget document in accordance with legal and regulatory requirements, advising on financial matters, developing policies and procedures concerning budget activities, and other matters related to budgetary and financial issues. Mr. Alfonso was appointed as Director of Management and Budget and Special Assistant to the City Manager on August 8, 2011. Prior to that Mr, Alfonso served as the Assistant Director for Miami - Dade County, Florida's General Services Administration Department after working as Miami -Dade County's 37 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Operating Budget Coordinator in the Office of Management and Budget. Mr. Alfonso received a Bachelor of Arts degree in Business Administration and a Master of Science degree in Finance both from Florida International University, 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 Director of Finance, The Director of Finance has established written procedures for the operation of the •investment portfolio and a system of internal accounting and administrative controls, The City 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 Governin.ent Taxable and/or Tax-EXempf Debt, (1<) Registered Investinent Companies (Money Market Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the City may invest in investment products that include the use of derivatives, The City does not own any derivative `pro ducts. As of October 1, 2012, approximately 68.2%of the City's investment portfolio was invested in United States TreasuryObligations and obligations of agencies of the United States Government and approximately 31.8% of the City's investment portfolio was invested in commercial paper. 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 recoinmendations regarding the issuance of debt obligations and the management of outstanding debt, The finance committee approved the Series 2012 Bonds and their negotiated sale to the Underwriter on October 24, 2012, 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 38 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 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. Pursuant to the Debt Management Policy, the City's debt issuance is subject to the following constraints: (i) the Net Debt Per Capita and the Net Debt to Taxable Assessed Value percentages, which shall be determined by the finance committee by bench marking the City to current industry standards, and (ii) the maximum maturity shall be the earlier of (a) the estimated useful life of the capital improvements being financed or (b) thirty years or (c) in the event debt was issued to refinance outstanding debt obligations the final maturity of the debt obligations being refinanced, unless a longer term is recommended by the finance committee, The City is currently in compliance with its Investment Policy and Debt Management Policy, Financial Integrity Ordinance On February 10, 2000, the City enacted Ordinance No. 11890, as amended and supplemented (the "Financial Integrity Ordinance") establishing thirteen financial integrity principles, The Financial Integrity Ordinance was enacted as a preventative measure setting forth financial practices that would prevent the recurrence of a financial emergency, It also includes a self-governing provision whereby the City's Independent Auditor General is required to prepare an annual report on the City's adherence to these principles by July 1 of each year. The Financial Integrity Ordinance addresses the following integrity principles: (i) Structurally Balanced Budget, (ii) Estimating Conference Process, (iii) Interfund Borrowing, (iv) Budget Surpluses, (v) Reserve Policies, (vi) Proprietary Funds, (vii) Multi. -year Financial Plan, (vili) Multi - Year Capital Improvement Plan, (ix) Debt Management, (x) Financial Oversight and Reporting, (xi) Basic Financial Policies, (xii) Evaluation Committees and (xiii) Full Cost of Service, The Financial Integrity Ordinance requires the City to establish three reserves: (1) a "contingency" reserve of $5,000,000 to fund unanticipated budget issues which arise or potential expenditure overruns which cannot be offset through other sources or actions; (2) an "unassigned" fund balance reserve equal to ten percent (10%) of the prior three years average of general revenues (excluding transfers and including the contingency reserves in (1) above) to fund unexpected midyear revenue shortfalls or for an emergency such as a natural of man-made disaster, which threatens the health, safety and welfare of the City's residents, businesses or visitors; and (3) an "assigned" reserve equal to ten percent (10%) of the prior three years average of general revenues (excluding transfers) to fund long-term liabilities and commitments of the City, such as compensated absences, self-insurance plan deficits and anticipated adjustments in pension plan payment resulting from market losses, One of the principles established certain parameters for the reserve fund for the general operating fund of the City, including having general fund reserves equal to twenty percent (20%) of the prior three years average of general revenues, excluding transfers, Although, the City's general fund reserves increased at the end of September 30, 2011, the prior three years general fund reserves have been declining. See the table entitled "Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for the General Fund" herein. The City is not in compliance with the Financial Integrity Ordinance. As of September 30, 2011, the City had approximately $16,494,676 in its reserves, Pursuant to the Financial Integrity Ordinance, the amount should have been $93,066,470, Failure to comply with the Financial Integrity Ordinance is not an event of default under the Resolution, The City will strive to come into compliance with the Ordinance, However, there can be no assurance that the general fund reserves will reach or be maintained at the level required by the Financial Integrity Ordinance, 39 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. In addition to the reserve fund principle, the City is also not in compliance with principles (I), (ii), (Hi), (v), (vi), (viii), (x) and (xiii) above for Fiscal Year 2011, Please see Independent Auditor General's Report No. 13-005 dated October 30, 2012, However, in Fiscal Year 2012, the City expects to be in compliance with all principles, except the reserve fund principle. The full text of the Independent Auditor General's report may be reviewed at http://egov.ci.miami.fl.u:s/Office of Auditor General/in dex.aspx, 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. There are two new GASB pronouncements that will affect the City over the next two years. GASB Statement No. 67 dealing with pension funds and GASB Statement No. 68 dealing with financial statements, effective in 2014 and 201.5, respectively. These changes will effect the recording of unrecorded liabilities on the City's balance sheet, It is not expected that these changes will impact the City's cash expenditures. The City is assessing the impact ,on its accounting procedures. For the Fiscal Year 2013 Budget, the City created Internal Service Funds primarily to provide a mechanism that allows for both a cost allocation of, pension, health insurance and worker's compensation benefits it the,operating departments and a. centralized accountfrom which payments are made. The,Internal Service Funds are a financing mechanism and self-insurance reserve for those payments. Such funds are in accordance with general accepted accounting principles and are allowed by GASB, For the` past two years the City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Associationn of the United States and Canada, For complete description of the fund types and account groups, see"Notes to General Purpose Financial Statements of the City" in the City of Miami Coinprehensive Annual Financial Report fox Fiscal Year Ended September 30, 2011. Internal Auditor Pursuant to Section 48 of the City Charter, the Office of the Independent Auditor General performs internal audit functions including financial, operational, compliance, single audit, investigative, and performance audits of the City, its officials, and independent agencies; and examines accounting systems and provides legislative analysis, Its mission is to provide objective oversight through audits of all of the City's departments, agencies and programs. The City's Independent Auditor General is Theodore Cuba who began his service with the City on May 7, 2012. The full text of the Independent Auditor General's reports may be reviewed at http://egov.ci.miami.fl.us/Office of Auditor General/index.aspx, 40 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. LIABILITIES OF THE CITY Insurance Considerations Affecting the City Section 768,28, Florida Statutes, provides for waiver of sovereign immunity in tort actions or claims against the state and its agencies and subdivisions, The present limit of recovery in the absence of special relief granted by the Florida legislature is $200,000 per person per claim or judgment, The limit of recovery for all claims or judgments arising out of the same incident or occurrence is $300,000, See "Ability to be Sued, Judgments Enforceable" below. Under the protection of this sovereign immunity limit, Florida Statutes 768,28 and Chapter 440, :Florida Statutes covering Workers' Compensation, the City has established a self - insured program to provide coverage for almost all areas of liability including Workers' Compensation, General Liability, Automotive Liability, Police Professional Liability, Public Officials' Liability, and Employment Practices Liability, In addition, the City also purchases excess insurance coverage to limit catastrophic losses associated with its liability exposures. The excess liability insurance program provides for $20 million in combined limits, The excess insurance program currently has a self -insured retention of $750,000 per occurrence for Workers' Compensation, and $500,000 for all other liability coverages. The City also purchases dedicated commercial general liability policies for the Grapeland Waterpark, Bayfront Park, and the various various marinas that it operates. These policies typically carry a $1 million Iimit per occurrence and on an aggregate basis, with a $1,000 deductible, The City's master property insurance program provides for a total of $100 million in insurance limits for the City's $444 million property values. Included in this amount is $25 million for named windstorm and flood coverage, With the exception of earthquake, flood and named windstorm, the All -Other -Perils' deductible is $50,000 per occurrence. In regard to the named windstorm, flood, and earthquake exposures, the deductible is 5% of the location's value at the time of loss with a minimum of $250,000, The City also maintains separate property insurance programs for the James L, Knight Center and the Marlins Stadium parking garages. The James L, Knight Center property program provides $46,442,539 in limits for all perils including windstorm and flood. The James L. Knight Center property program has a $50,000 all other perils deductible, and a deductible of 5% of total insured values at time of loss, with a $1,000,000 minimum for named windstorm and flood perils, The Marlins Stadium parking garage program provides for $25 million in total limits for windstorm and flood, and for $81,200,000 for all other perils, The Marlins Stadium parking garage program has a $25,000 all other perils deductible, and a deductible of 5% of total insured values at time of loss, with a $100,000 minimum per location for named windstorm and flood perils, The funds to account for liability losses within the self -insured retention level are derived from the General Fund. Claims are being predominantly adjusted by an independent third party administrator, Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated based on an independent actuarial valuation, The budgeting process utilizes information developed in the previous year's actuarial report in addition to historical information and present/specific knowledge on the status of claims and litigations, Workers' Compensation The City has been working diligently with ifs third party claims administrator and the City's Attorney's Office to effectively mitigate indemnity and medical expenses resulting from Workers' Compensation related losses. The City has been successful in significantly reducing its Experience Modification Rate (EMR) from 1.89 to 1,33 in 2010 and up to 1,38 in 2011. As of October 1, 2012, open Worker's Compensation claims total about 1,180 claims, In 2012, the City paid approximately $12,525,176 in Worker's Compensation related claims compared to ;$13,460,891. in 2011. 41 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Health Insurance The City provides group health benefits for its active employees, retirees, and their dependents through a fully self -funded health insurance program, The City is currently contributing approximately 87%0 while the employees are contributing 13% to the cost of the group health insurance program, For the most part, retirees are almost fully funding their premium costs, and when compared to the total premium cost of the active employees, the non -Medicare retirees are paying 100% of the premium cost. To limit catastrophic losses, the City is currently purchasing specific stop loss coverage for claims in excess of $200,000, For the loss corridor between $200,000 to $300,000, the City and stop loss insurance carrier quota share the cost on a quota share basis, Loss expenses exceeding $300,000 are fully covered by the stop loss carrier. Ability to be Sued, Judgments Enforceable Notwithstanding the liability limits described below, the laws of the State provide that each city has waived sovereign immunity for liability in tort to the extent provided in Section 768.28, Florida Statutes.. Therefore, the City is liable for tort claims in the same manner and, subject to limits stated below, to the same extent as a private individual under like circumstances, except that the City is not liable' for punitive damages or interest for the period prior to judgment, Such statute also limits the liability of a city to pay a judgment in excess of $200,000 to any one person or in excess of $300,000 because of any single incident or occurrence. Judgments in excess of $200,000 per person and $300,000 per claim may be rendered, but may be paid from City funds only pursuant to further action of the Florida Legislature. See "LIABILITIES OF THE CITY - Insurance Considerations Affecting the City" herein. Notwithstanding the foregoing, the City may agree, within the limits of insurance coverage provided, to settle a claim made or a judgment rendered against it without further action by the Legislature, but the City shall not be deemed to have waived any defense or sovereign immunity or to have increased the limits of its .liability as a result of its obtaining insurance coverage for tortious acts inexcess of. the $200,000 per person or $300,000 per claim waiver, as provided by Florida Statutes. See "LITIGATION" herein, [Remainder of page intentionally left blank] 42 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Direct Debt The City has met certain of its financial needs through debt financing. The table which follows is a schedule of the outstanding debt of the City as of October 31, 2012, including that which is payable from sources other than ad valorem taxes, DESCRIPTION General Obligations Bonds: Homeland Defense/Neighborhood CIP, Series 2002 General Obligation Refunding Bonds, Series 2002A General Obligation Refunding Bonds, Series 2003 General Obligation Refunding Bonds, Series 2003B General Obligation Refunding Bonds, Series 2007A General Obligation Refunding Bonds, Series 2007B General Obligation Refunding Bonds, Series 2009 Total General Obligation Bonds Special Obligation and Revenue Bonds: Special Revenue Refunding Bonds, Series 1987 Community Entitlement Revenue Bonds, Series 1990 Special Obligation Non -Ad Valorem Revenue, Series 1995 Special Revenue Refunding Bonds, Series 2002A Special Revenue Refunding Bonds, Series 2002C Special Revenue Bonds, Series 2007 Special Revenue Bonds, Series 2009 Non -Ad Valorem Refunding Bonds, Series 2009 Special Revenue Bonds, Marlins Garage, Series 2010A Special Revenue Bonds, Marlins Retail, Series 2010E Revenue Note, Series 2010 (Port of Miami Tunnel) Special Obligation Refunding Bonds, Series 2011A Loans: SEOPW - Section 108 HUD Loan Wagner Square -Section 108 HUD Loan Gran Central Corporation Loan(1) Total Special Obligation and Revenue Bonds Total Debt Amount Issued $ 153,186,406 32,510,000 18,680,000 4,180,000 103,060,000 50,000,000 51,055,000 $ 412,671,406 65,271,325 11,500,000 72,000,000 27,895,000 28,390,000 80,000,000 65,000,000 37,435,000 84,540,000 16,830,000 50,000,000 70,645,000 5,100,000 4,000,000 1,708,863 $ 620,315,188 9i 1,032,986,594 Outstanding Balance $ 22,063,415 16,715,000 2,740,000 102,500,000 50,000,000 45,970,000 $ 239,988,415 2,161,796 26,885,000 18,330,000 14, 025, 000 74,225, 000 63,160,000 35,395,000 84,540,000 16,830,000 45,000,000 70,645,000 1,250,000 1,708,863 $ 454,155,659 694,144,074 Source: City of Miami, Finance Department (1) Prepayment of loan is based on revenue generated from the completed project. As of October 31, 2012, there has been no revenue generated by the project in the designated portion of the Southeast Overtown. Park West CRA to repay any portion of the loan, [Remainder of page intentionally left blank] 43 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Pension Plans 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 ("FIFO") 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 with the exception of executive level employees hired after October 2009, Those executive employees are required to participate in a defined contribution plan (401()), The Board of Trustees of GESE administers three defined pension plans: (i) City of Miami General Employees and Sanitation Employees Retirement Trust ("GESE Retirement Trust"), (ii) an Excess Benefit Plan for the City of Miami and (ii) City of Miami General Employees and Sanitation Employees Retirement Trust Staff Pension Plan ("GESE Staff Trust"). Each plan's assets maybe used only for the payment of benefits to the members of that plan, in accordance with the term of the plan. 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 ("FORT"), This plan covers all elected officials with 7 or more years of elected service. The EORT is a non-contributory plan, Due to an ordinance change in 2009, the plan has been closed to any new participants. The total pension costs budgeted for Fiscal Year 2013 were $66,287,700, See "APPENDIX B —PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS" herein for a full discussion of the City's pension plans. This discussion has been prepared as an appendix due to the length of the information being presented. Accrued Compensated Absences Under terms of Civil Service regulations, labor contracts and administrative policy, City employees are granted vacation and sick leave in varying arnounts Additionally, certain overtire hours can be accrued and carried forward as earned time off, Unused vacation and sick dine is payable upon separation from service, subject to various limitations'depending upon the employee's seniority acid civil service classification The amount accrued as of September 30, 2012 is $68,0 million of which $9.0 million is the current portion. Such amount only includes the primary government employees and does not include erployees of component units, The anloun:t for component units as of September 30, 2012 was $727;758, which is funded by other funding sources of such component units, Other Post -Employment Benefits Pursuant to Section 1.12,0801, Florida Statutes, the City is required to permit participation to the health insurance program by retirees and their eligible dependents at a cost to the retiree that is rio greater than the cost at which coverage is available for active employees, Retired police officers are offered coverage at a discounted premium under the FOP Health Trust that Is administered separately from the City's health care plan. For non -police retirees (fire fighters, general employees, sanitation employees and elected officials) and their dependents, the City has a stated policy of subsidizing health care coverage and life insurance at a discounted premium equal to 87% of the blended group rate, The total other post -employment benefits ("OPEB") costs budgeted for Fiscal Year 2013 were $9,6 million. See "APPENDIX B - PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS" herein for 44 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. a full discussion of OPEB, This discussion has been prepared as an appendix due to the length of the information being presented. Financial Urgency Pursuant to Section 447.4095 of the Florida Statutes, the City may declare a financial urgency, That statute, which requires declaration each year, provides that, in the event of a financial urgency requiring modification of a collective bargaining agreement, the City and the representative of the bargaining unit are required to meet as soon as possible to negotiate the impact of the financial urgency. If after a reasonable period which may not exceed 14 days the parties are in disagreement, then they must proceed under Section 447.403 of the Florida Statutes, which provides for the appointment of a mediator. The City Manager declared a financial urgency in 2010, 2011. and 2012. Pursuant to the statute and under the City's authority, in 2010 it imposed the following changes on the unions: a There was a tiered reduction in wages ranging from 0% for salaries less than $39,999.99 to 12% for salaries greater than $120,000 that applied to members of the International Association of Firefighters, AFL-CIO, Local 587, Fraternal Order of Police, Walter E, Headley, Jr., Miami, Miarni Lodge No, 20 and Miami General Employees, American Federation of State, County and Municipal Employees, Local 1907, AFL-CIO. There was also a freezing of step and longevity pay, Modification to supplemental pay items, whichincluded elimination of education pay supplements, among other things. Changes to the healthcare plan, such as increasing the co -pays for primary and specialist care physician visits, adding a deductible for the healthcare plan, adding an out-of-pocket maximum, lowering the coinsurance, increasing co -pays for prescriptions, increasing emergency room co -pays and adding a co -pay for urgent care facilities, Modifying the pension benefits by increasing the normal retirement date, changing the benefit formula, changing the maximum benefit, changing the average final compensation. Additionally, for the members of the Florida Public Employees' Council 79, AFSCME, AFL-CIO, Local 871, effective on • October 1, 2010, member contributions shall be made at the rate of 13%. The impact of these changes on the General Fund was $76,943,905 for Fiscal Year 2011 in savings. The financial urgency was challenged in 2010, See "APPENDIX I - LITIGATION-B, CIVIL LITIGATION - Labor Litigation related to "Financial Urgency"" herein regarding certain legal actions brought in connection therewith. Although Financial Urgency was declared in 2011 and 2012, the City was able to negotiate a one-year contract in 2011(no modifications were imposed) and a two-year contract in 2012 with the unions, In 2012, the City was able to reach agreements with the unions which included, among other things, changes to the pension plans, There may be a legal requirement that certain terms in the pension agreements which were modified in 2012 be approved by the Circuit Court. However, the City does not expect this to be an issue because all parties have jointly agreed to petition the Court for those terms, if legally necessary, See "APPENDIX B - PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS" herein, 45 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The City anticipates that the 2012 changes will reduce the City's pension costs by $17,391,300 and healthcare costs by $1,135,000 for the Fiscal Year 2013 General Fund budget. THE OMNI COMMUNITY REDEVELOPMENT AGENCY The Omni Community Redevelopment Agency (the "Omni CRA") was created in 1.986 and is responsible for implementing the redevelopment plan as adopted (the "Redevelopment Plan"). The Board of Directors for the Omni CRA is comprised of the members of the City Commissionand is separate, distinct and independent from the governing body of the City. The current members of the Board of Directors are; Marc D. Sarnoff, Board Chair Francis X. Suarez, Vice Chair Wifredo Gort Frank X. Carollo Michelle. Spence -Jones The mission of the Omni CRA is to improve the quality of life for residents and stakeholders within the Redevelopment Area through activities and programs that create new job opportunities, substantially improve the quality of housing stock and improve the physical appearance of the Redevelopment. Area. The current boundaries of the Redevelopment Area are N.B. 5th.Street, Biscayne Boulevard, 1-95 and 1- 395, N.E. 20th Street, then north to NW 22nd Street, with a section bounded by NW 23rd Street, 1-95, NW 22nd Street and NW 1" Court. The Redevelopment Area is immediately, north of the central business district in the City of Miami. Such boundaries may be expanded from time -to -time. Although the City intends to budget the Omni CRA.revenues pursuant to the.Interlocal and Grant Agreement between the City and the Omni CRA to pay the Series 2012 Bonds, tax inorernent revenues .of the Omni CRA are not pledged to the Series 2012 Bonds. Under certain circumstances they will become Non -Ad Valorem Revenues of the City. However, a Bondholder cannot compel the use of tax increment revenues by the City to pay the Series 2012 Bonds, LEGAL MATTERS Certain legal matters incident to. the validity of the Series 2012 Bonds are subject to the approval of Squire Sanders (US) LLP, Bond Counsel, Miami,; Florida whose approving, opinion in the feria attached hereto as "APPENDIX D - FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2012 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. The proposed legal opinion is set forth in APPENDIX E attached hereto. The actual legal opinion to be delivered may vary from that text as necessary to reflect facts and law on the date of delivery. The opinion will speak only as of its date and subsequent distribution thereof by recirculation of the Limited Offering Memorandum or otherwise shallcreate no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referenced in the opinion subsequent to its date, While Bond Counsel has participated in the preparation of certain portions of this Limited Offering Memorandum, it has not been engaged by the City to confirm or verify, and except as may be set forth In an opinion of Bond Counsel delivered to the Underwriter, Bond Counsel will express no opinion as to the accuracy, completeness or fairness of any statements in this Limited Offering Memorandum, or in any other 46 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. reports, financial information, offering or disclosure documents or other information pertaining to the City or the Series 2012 Bonds that may be prepared or made available by the City, the Underwriter or others to the holders of the Series 2012 Bonds or other parties, Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by Bryant Miller Olive P.A., Miami, Florida, Disclosure Counsel to the City, 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 2012 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the adoption of the Resolution, or the levy or collection of the Non -Ad Valorem Revenues, 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. See "APPENDIX I - LITIGATIO.N" for material litigation involving the City,' SECURITIES AND EXCHANGE COMMISSION INVESTIGATIONS On December 10, 2009, the City of Miami was notified by the .Miami Regional Office of the SEC that the staff of the SEC was conducting a non-public inquiry concerning certain City of Miami bond offerings to determine whether there had been any violations of federal securities laws. In letters dated December 10, 2009 and December 23, 2009, the SEC staff requested that the City voluntarily provide the SEC staff with documents concerning (a) City bond offerings in 2007 and 2009, (b) the transfer of approximately $13,1. million from the Capital Projects Fund to the General Fund in Fiscal Year 2007, (c) the transfer of approximately $13.3 million from the Capital Projects Fund to the General Fund in Fiscal Year 2008, and (d) Audit Report No, 010-005, Audit of Compliance with the Financial Integrity Principles, issued by the City of Miami Office of Independent Auditor General in November, 2009, In February 2010, the SEC issued a formal order directing a non-public investigation ("Formal Order"), stating that it had information tending to show possible violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933, According to the Formal Order, the SEC is investigating whether, since at least 2005, the City and others may have violated these provisions by, among other things, employing devices, schemes or artifices to defraud, engaging in transactions which operated or would operate as a fraud or deceit, or making false statements of material fact or failing to disclose material facts concerning, among other things, the state of the City's financial condition. The SEC has requested documents from the City, both voluntarily and by subpoena, and has also issued subpoenas for documents from and the testimony of current and former City officials and employees, and has taken the testimony of some individuals. The City has received multiple subpoenas from the SEC asking for additional documents concerning primarily the Auditor General's report referenced above, the fund transfers referenced above, City bond issues in 2007 and 2009, bond document disclosures, reports to bondholders, City pension plans and obligations under such plans, any policies, procedures and guidelines related to inter -fund transfers, any adverse conditions concerning the City's finances, any internal investigation, review or analysis conducted by the City and related to matters that have been identified as subjects of the SEC investigation and documents related to the use of certain revenue sources as recently mentioned in the Internal Auditor General Report No. 11-001, Documents requested include communications with and among City management, and elected officials, 47 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. On July 23, 2012, the SEC notified the City that the SEC's enforcement staff intends to recommend that the SEC file civil fraud charges against the City based on transactions that occurred with respect to the City's fiscal years ending September 30, 2007 and September 30, 2008, This notification from the SEC staff is commonly referred to as a "Wells Notice," and it contains the SEC staff's recommendations based upon its investigation. On August.6, 2012, the City filed its response to the Wells Notice which respectfully disagrees with the SEC staff's position and states the City's intent to present information to the SEC's Commissioners demonstrating that such charges are not warranted, The SEC investigation has temporarily diverted the attention of City officials and employees from the conduct of City operations, has caused the City to incur significant expenses, and could have a material effect on the City's financial condition and operations, The City cannot predict at this time the duration or the outcome of the final conclusion of this investigation, Additionally, the SEC has requested documents in connection with the City's Special Obligation Parking Revenue Bonds, Series 2010A and Series 2010B (Marlins Stadium Project), The City is cooperating fully with the SEC investigation and is providing information in response to the SEC's requests, The SEC has not advised the City when the investigation is expected to be concluded or of any potential outcome of the investigation, and the City cannot predict either the duration of the investigation or its outcome, The SEC investigation may temporarily divert the attention of City officials and employees from the conduct of City operations, could cause the City to incur significant expenses, and could have a material effect on the City's financial condition and operations. The City cannot predict the outcome of this investigation or the ultimate consequences resulting from any action, on the part of the SEC, See also; "LITIGATION -• Certain Legal Proceedings" discussed below and "INVESTMENT RISK FACTORS" discussed. herein, In a prior action, the SEC ordered•the. City to cease and desist from committing •or causing any further violations or future violations of •Section 17•(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10l/b)(5) thereunder on March 21, 2003 This action was taken in connection with three bond offerings, all of which occurred in 1995 for failure to disclose that the City's cash positionhad materially declined since the close of Fiscal Year 1994. INTERNAL REVENUE. SERVICE EXAMINATION On November 18, 2011, the. City was notified by an examination request letter from the Department of Treasury, Internal Revenue; Service ("IRS"), informing the City that its $153,000,00.0 City of Miami, Florida Limited Ad Valorem Tax Refunding- Bonds,, Series 2007A (Homeland, Defense/Neighborhood Capital Improvement Projects) and City of Miami, Florida Limited:Ad Valorem Tax Bonds, Series 2007B.(Homeland Defense/Neighborhood Capital Improvement Projects) dated July10, 2007 (collectively, the "2007 Homeland Defense/Neighborhood Capital Improvement Bonds) have been selected for a routine examination to determine compliance with federal tax requirements regarding arbitrage under sections 148 and 149 of the Internal Revenue Code. The City is cooperating fully with the IRS examination and is providing information in response to the IRS's requests, The IRS has not advised the City when the examination is expected to be concluded or of any potential outcome of the examination, The IRS examination' has temporarily diverted the attention of City officials and employees from the conduct of City operations, could cause the City to incur significant expense, and could have a material effect on the City's future financial condition and operations, The City cannot predict the duration or the outcome of this examination or the ultimate consequences resulting from any action on the part of the IRS. 48 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 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 In the opinion of Squire Sanders (US) LLP, Bond Counsel, under existing law: (i) interest on the Series 2012 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not anitem of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) the Series 2012 Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended, Bond Counsel expresses no opinion as to any other tax consequences regarding the Series 2012 Bonds. The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the City contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Series 2012 Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of the City's certifications and representations or the continuing compliance with the City's covenants. The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly addressed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Series 2012 Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the internal Revenue Service ("IRS") or any court. Bond Counsel expresses no opinion about (i) the effect of future changes In the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS. The Code prescribes a number of qualifications andconditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued complianceafterissuance of the obligations, Noncompliance with these requirements by the City may cause loss of such status and result .in the interest on the Series 2012 Bonds being included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2012 Bonds. The City has covenanted to take the actions required of it for the interest on the Series 2012 Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Series 2012 Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or any other matters conning to Bond Counsel's attention, may adversely affect the exclusionfrom gross income for federal income tax purposes of interest on the Series 2012 Bonds or the market value of the Series 2012 Bonds, 49 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. A portion of the interest on the Series 2012 Bonds earned by certain corporations may subject to a federal corporate alternative minimum tax. In addition, interest on the Series 2012 Bonds maybe subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations, Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Series 2012 Bonds, Bond Counsel will express no opinion regarding those consequences. Payments of interest on tax-exempt obligations, including the Series 2012 Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. l.f a Series 2012 Bond owner is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes. Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature, Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Series 2012 Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Series 2012 Bonds will not have an adverse effect on the taxstatus of interest on the Series 2012 Bonds or the market value or marketability of the Series 2012 Bonds These adverse effects could result, for example, from changes to federal or-"statee incorie tax rates, changes in' the structure of federal dr "state 'incorime taxes '(including replacement with another type of tax), or. repeal (or reduction in the benefit) of the exclusion of interest oh the Series 2012 Bonds from gross income for federal br state income tax purposes for all or certain taxpayers, For example, both the American Jobs Act of 2011 proposed by President Obama on September 12, 2011, and introduced into the Senate on September 13, 2011, and the federal budget for fiscal year 201.3 as • proposed by President Obama on February 13, 2012, contain provisions that could, among other things, result in additional federal income tax for tax years beginning after 2012 on taxpayers that own tax-exempt obligations, including the Series 2012 Bonds, if they have if conies above certain thresholds, Prospective purchasers of the Series 201.2 Bonds should consult their own tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of the Series 2012 Bonds at other than their oxiginal issuance at the respective prices fndicated on the inside cover of this Limited Offering Memorandum should also consult their own tax adviser's regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion, Bond Counsel's engagement with respect to the Series 2012 Bonds ends with the issuance of the Series 2012 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the owners of the Series 2012 Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes, If the IRS does audit the Series 2012 Bonds, under current IRS procedures, the IRS will treat the City as the taxpayer and the beneficial owners of the Series 2012 Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit, Any action of the IRS, including but not limited to selection of the Series 2012 Bonds for audit, or the course or 50 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Series 2012 Bonds. Original Issue Discount and Original Issue Premium Certain of the Series 2012 Bonds ("Discount Series 2012 Bonds") as indicated on the inside cover of this Limited Offering Memorandum were offered and sold to the public at an original issue discount ("DID"). OID is the excess of the stated redemption price at maturity (the principal amount) over the "issue price" of a Discount Series 2012 Bond, The issue price of a Discount Series 2012 Bond is the initial offering price to the public (other than to bond :houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Series 2012 Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Series 2012 Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Series 2012 Bond (I) is interest excluded from the owner's gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Series 2012 Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Series 2012 Bond. The amount of OID that accrues each year to a corporate owner of a Discount Series 2012Bond is taken into account in computing the corporation's liability for federal alternative minimum tax. A purchaser of a Discount Series 2012 Bond in the initial public offering at the price for that Discount Series 2012 Bond stated on the inside cover of this Limited Offering Memorandum who holds that Discount Series 2012 Bond to maturity will realize no gain or loss upon the retirement of that Discount Series 2012 Bond. Certain of the Series 2012 Bonds ("Premium Series 2012 Bonds") as indicated on the inside cover of this Limited Offering Memorandum were offered and sold to the public at a price in excess of their stated redemption price at maturity (the principal. amount). That excess constitutes bond premium, For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Series 2012 Bond, based on the yield to maturity of that Premium Series 2012 Bond (or, in the case of a Premium Series 2012 Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Series 2012 Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Series 2012 Bond, For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Series 2012 Bond, the owner's tax basis in the Premium Series 2012 Bond is reduced by the amount of bond premium that is amortized during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Series 2012 Bond for an amount equal to or less than the amount paid by the owner for that Premium Series 2012 Bond. A purchaser of a Premium Series 2012 Bond in the initial public offering at the price for that Premium Series 2012 Bond stated on the inside cover of this 'Limited Offering Memorandum who holds that Premium Series 2012 Bond to maturity (or, in the case of a callable Premium Series 2012 Bond, to its earlier call date that results in the lowest yield on that Premium Series 2012 Bond) will realize no gain or loss upon the retirement of that Premium Series 2012 Bond. Owners of Discount Series 2012 Bonds and Premium Series 2012 Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID or bond premium properly accruable or amortizable in any period with respect to the Discount Series 2012 Bonds or Premium Series 2012 Bonds and as to other federal tax consequences and the treatment of OID and bond premium for purposes of state and local taxes on, or based on, income, 51 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. RATINGS Moody's Investor's Service ("Moody's") and Fitch Ratings ("Fitch") have assigned underlying ratings of " " and " ", respectively, to the Series 2012 Bonds[, without any regard to the 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 2012 Bonds. An explanation of the significance of the ratings can be received from the rating agencies, at the following addresses; Fitch Ratings, One State Street Plaza, New Yorl<, New York 10004, and Moody's Investor Service, 250 Greenwich Street, New York, New York 10007. FINANCIAL ADVISOR The City has retained Public Financial Management, Inc., Cora]. Gables, Florida, as Financial Advisor in connection with the authorization and issuance of the Series 2012 Bonds, The Financial Advisor has assisted the City in the preparation of this Limited Offering Memorandum and has advised the City as to other matters relating to the planning, structuring and issuance of the Series 2012 Bonds, The Financial Advisor is not obligated to undertake and has not undertaken to make an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in;this Limited Offering Memorandum, Public Financial, Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. Prior to the retention of Public Financial Management, Inc., First Southwest Company, Aventura, Florida ("First Southwest") had been the financial advisor in connection with the proposed issuance of Series 2012 .Bonds. AUDITED FINANCIAL STATEMENTS The Comprehensive Annual Financial Report of the City for the Fiscal Year ended September 30, 2011 (the "Audited Financial Statements"), report thereon of Ernst & Young LLP, as independent certified public accountants, arid the SuPple.inent to the Comprehensive Annual Financial Report for the Fiscal Year ended September 30, 2011 are attached hereto as "APPENDIX D COMPREI-IENSIVE ANNUAL, FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011" as a part of this Limited Offering Memorandum. The Audited Financial Statements have been included as a public document and no consent was requested or received from Ernst & Young, LLP. UNDERWRITING The Series 2012 Bonds are being purchased by Wells Fargo Bank, National Association (the "Underwriter") at an aggregate purchase price of $ (the par amount of the Series 2012 Bonds, less Underwriter's discount of $ , [plus/minus net original issue premium/discount of $. ). The 52 THIS D0CUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, Underwriter's obligations are subject to certain conditions precedent described in the Bond Purchase Agreement entered into between the City and the Underwriter, and they will be obligated to purchase all of the Series 2012 Bonds if any Series 2012 Bonds are purchased. The Series 2012 Bonds maybe offered and sold to certain dealers (including dealers depositing such Series 2012 Bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriter, Wells Fargo Securities is the trade name for certain capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association, the lender on the Note to be repaid with the proceeds of the Series 2012 Bonds. The Underwriter and its respective affiliates arefull service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriter and their respective affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the City, for which they receive or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriter and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in suchsecurities and instruments, Such investment and securities activities may involve securities and instruments of the City. Prior to the retention of Wells Fargo Bank, National Association, RBC Capital Markets, LL,C, Miami, Florida ("RBC") had been the underwriter in connection with the proposed issuance of Series 2012 Bonds, ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2012 Bonds upon an event of default under the Resolution 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 Resolution and the Series 2012 Bonds may not be readily available or may be limited, 'The various legal opinions to be delivered concurrently with the delivery of the Series 2012 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 While not subject to Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Rule"), the City has covenanted for the benefit of the holders of the Series 2012 Bonds to provide certain financial information and operating data relating to the City and the Series 2012 Bonds in each year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated material events. Such covenant will only apply so long as the Series 2012 Bonds remain outstanding. The Annual Report and any notices of material events will be filed by the 53 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. City with. the Municipal Securities Rulem.aking Board's Electronic Municipal Market Access ("EMMA") system for municipal securities disclosures as described in the proposed form of Continuing Disclosure Agreement attached hereto as APPENDIX F, The specific nature of the information to be contained in the Annual Report and the notices of material events are described in "APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT" attached hereto, which will be executed by the City at the time of issuance of the Series 2012 Bonds. Failure of the City to comply with the provisions of the Continuing Disclosure Agreement will not constitute an event of default under the Resolution. It is the position of the City that the sole and exclusive remedy of any holder of a Series 2012 Bond for enforcement of the provisions of the Continuing Disclosure Agreement will be an action of mandamus or specific performance to cause the City to comply with its obligations thereunder. The City's dissemination agent for such undertakings is Digital Assurance Certification, L.L.C. With respect to the Series 2012 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 continuingdisclosure obligations in prior continuing disclosure certificates in connection with its outstanding debt and its outstanding bonds to provide certain financial and operating information and notices to EMMA. Due to a change in auditors and financial management system (which was changed to an Enterprise Resource Planning System), the City did not timely file its 2007 annual report. Such report has been filed, and as of the date hereof, the City is 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. On August 30, 2012„ the City filed a supplement to its annual report which.included supplementing its Comprehensive Annual Financial Report for Fiscal Year ended September 30, 2011 and its.Supplemental Report to Bondholders as of September 30, 2011, Such supplements provide additional and/or clarifying detail to the information previously provided. ACCURACY AND COMPLETENESS OF LIMITED OFFERING MEMORANDUM The references, excerpts, and summaries of all documents, statutes, and information concerning the City and certain reports and statistical data referred to herein do riot 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 2012 Bonds, ihe•security for the payment of the Series 2012 Bonds and the rights and obligations of the owners thereof and to each such Statute, report or instilment. The appendices attached hereto areintegral parts of this Limited Offering Memorandum 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 Limited Offering Memorandum 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 Limited Offering Memorandum contains certain "forward -looking statements" concerning the City's operations, performance and financial condition, including its future economic performance, plans and objectives. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the City. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions are 54 TI-IIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 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 Limited Offering Memorandum 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 Limited Offering Memorandum 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 2012 Bonds, AUTHORIZATION OF LIMITED OFFERING MEMORANDUM The execution and delivery of this Limited Offering Memorandumhas been duly authorized and approved by the City. At the time of delivery of the Series 2012 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 Limited Offering Memorandum (other than information herein related to DTC, the book -entry only system of registration, information relating to the Bond Insurer or provider of a Reserve account Insurance Policy, and the information contained under the captions ["MUNICIPAL BOND INSURANCE"], "TAX MATTERS" and "UNDERWRITING" as to which no opinion shall be expressed), as of its date and as of the date of delivery of the Series 2012 Bonds, contains 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 Limited Offering Memorandum is intended to be used, or which is necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. THE CITY OF MIAMI, FLORIDA By: City Manager By; Chief Financial Officer 55 JiR rr 703e. emir 44, 1 N tWe Gi' x- Li APPENDIX A GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI-DADE COUNTY G eneral Now 116 years old, the City of Miami, Florida (the "City") is part of the nation's seventh largest metropolitan area, Incorporated in 1896, the City is the only major municipality conceived and founded by a woman, Julia Tuttle, According to the U,S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a City rich in cultural and ethnic diversity with 399,457 residents according to the 2010 U.S. Census, 58.9% of them foreign born, In physical size the City is not large, encompassing only 35,87 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 (the "County" or "Miami - Dade County") and is the County seat, Population City of Percent Miami -Dade Percent State of Percent Year Miami Change -County Change Florida Change 1960 291,688 935,047 4,951,560 1970 331,553 13.6%0 1,267,792 35.6% 6,791,418 372% • 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 2010 399;457 10.2 2,563,885 13.7 18,801,310 17,6 Source: Bureau of Economic and Business Research, University of Florida, US Census Bureau, Miami -Dade County, Annual Report to Bondholders 2010 Government Since 1997, the City has been governed by a form of government known as the "Mayor -City Commissioner plan," 'There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years, As official head of the City, the Mayor has veto authority over actions of the Commission, The Mayor appoints the City Manager who functions as chief administrative officer, City elections are held in November every two years on a non -partisan basis. Candidates for Mayor must run as such and not for the Commission in general, At each election, two or three members of the Commission are elected for four-year terms, Thus, the terms are staggered so that there are always at least two experienced members of the Commission. The City Manager serves as the administrative head of the municipal government, charged with the responsibility of managing the City's financial operations and organizing and directing the administrative infrastructure, The City Manager also retains full authority in the appointment and supervision of department directors, preparation of the City's annual budget and initiation of the investigative procedures. In addition, the City Manager takes appropriate action on all administrative matters. THIS DOCUMENT IS A SUBSTITUTION A 1 TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Climate The City'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 22 miles of public beach 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 American Airlines Arena. Land Shark Stadium, which is used by the Miami Dolphins and the Miami Hurricanes, is located in North Central Miami -Dade County. The City and County jointly constructed a new stadium and parking garage for the Florida Marlins baseball franchise, Sports competition includes professional and college football, basketball, baseball, tennis, golf, sailing and championship boat races, Other athletic events include amateur football, basketball, soccer, baseball, motorcycle speedway racing and rowing events. Education Miami -Dade County's public school system is the fourth largest in the United States,as measured by student enrollment. The countywide school district offers a wide variety of programs to meet the needs of its 398,000-plus students, For example, The School Board of Miami -Dade County'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 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 is one of the 25 largest universities in the nation and offers more than 200 bachelor's, master's and doctoral programs in 21 colleges. 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 and programs, Medical Miami -Dade County has the largest concentration of medical facilities in Florida, with 32 hospitals and more than 32,0001icensed health care professionals. Nursing homes, adult congregate living facilities and home health care services also serve the region, A-2 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 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 22,6 mile above -ground system connecting South Miami -Dade and the City of Hialeah with the Downtown and Civic Center areas providing 18,1 million passenger trips annually. Metromover, a 4.4 mile automated loop, carries approximately 9.2 million passenger trips annually around downtown Miami, Brickell Avenue and the Omni shopping center areas. Miami -Dade County's Metrobus operates over 29,8 million miles per year and over 75.7 million passenger trips annually. The County also provides para-transit services to qualified riders in the amount of 1.59 million passenger trips annually. Cargo rail service is available from both Miami International Airport and the Port of Miami, 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 Air poet. Miami International Airport is one of the busiest airports in the world for both passengers and cargo traffic: It ranks twelfth in the nation and twenty-eighth in the World in passenger traffic through the airport. The airport tanks third in the nation and eleventh in the world in tonnage of doinestic and international cargo Movement, In Fiscal Year 2011, over 37.63 million air travelers were serviced by Miami International Airport, and -approximately 2.0 million tons of domestic and international cargo was handled. As of April 2011, 93 airlines serve Miami International .Airport, flying passengers to more than 130 destinatioris around the globe. Port of Miami. The Port of Miami, known as the "cruise capital of the world," is operated by the Seaport Department of Miami -Dade County. In Fiscal Year 2011, more than 4:0 million passengers sailed from the Port of Miami aboard one of the eight 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 8.2 million tons of cargo transferred through the Port of Miami in Fiscal Year 2011. The Port of Miami is also reaching out to the global community where trade with. the Far East, Asia and the Pacific accounted for almost 32% of the total cargo handled at the Port of Miami. The Port. of Miami is also important to the U.S. economy, contributing in excess of $17 billion annually, which should increase after the completion of the Port of Miami's five year, $346 million capital improvement program. Economy The economic base of the City has diversified in recent years, shifting from reliance on the tourism industry to a combination of motion picture production, manufacturing, service 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. A-3 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following major companies have their Latin American headquarters located in the City: The Gap, Inc. Federal Express Corporation ABN AMRO Bank Sony Broadcast Export Corporation Olympus America ExxonMobil Inter -America Black & Decker Latin America Group Hewlett Packard Co. Latin America Eastman Chemical Latin America Telefonica International USA, Inc, Source: Beacon Council Caterpillar Americas Co. Ericsson, Inc, Terra Networks USA IBM Corporation Canon Latin America Acer Latin America Komatsu Latin America Tech Data Chevron -Texaco Johnson & Johnson Lucent Technologies Barclays Bank PLC Oracle Latin America Cisco Systems AT&T Latin America Olympus Latin America Clorox Latin America American Express Stanley Latin America Distribution of Major Employment Classifications for Miami -Dade County September 2011 Occupational Title Construction Manufacturing Mining and Natural Resources Transportation, Warehousing, and Utilities Wholesale Trade Retail Trade Information Finance Activities Professional and Business Education and Health Services Leisure and Hospitality Other Services Government Total Employed Employees 31,100 33,900 300 58,800 68,900 125,100 16,700 61,400 134,900 165,200 107,200 39,000 151,600 994,10E Source: Miami -Dade County Department of Planning/Zoning Research Section, February 2012 Labor Force and Employment Statistics Greater Miami Metropolitan Area Year 2007 2008 2009 2010 2011* Employment 1,143,548 1,142,665 1,093,000 1,117,000 1,046,110 Civilian. Labor Force 1,196,086 1,212,446 1,232,500 1,281,900 1,103,895 Source: City of Miami, Florida *Source: US Department of Labor, Bureau Labor Statistics A-4 Unemployment Rate 4.1 6,1 11.3 12.8 8.9 Percentage of Totals 3.2 % 3,4 0,0 5.9 6,9 12.6 1.7 6,2 13.6 16,6 10,8 3.9 15,2 100.0% Florida Unemployment Rate 4,1 6,2 10,8 11.7 10.5 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Top Ten Major Employers in Miami -Dade County 2011 Public Employers: Name Number of Employees Miami -Dade County Public Schools 44,132 Miami -Dade County 26,351 U.S, Federal Government 19,400 Florida State Government 17,600 Jackson Health System 10,809 Florida International University 8,000 Miami -Dade College 6,200 City of Miami 4,309 Homestead Airforce Base 2,700 VA Healthcare System 2,487 Source: The Beacon Council/ Miami -Dade County, Florida- Miami Business Profile & Relocation Guide 2012 Private Employers: Name Number of Employees Baptist Health Systems of South Florida 14,865 University of Miami 13,233 Publix Supermarkeis 10,800 American Airlines 9,000 Precision ResponSe Corp 5,000 Florida Power &:Light 3,840 Carnival Cruise tines 3,500 Winn Dixie Store rs 3,400 Mount Sinai Medical Center 3,400 AT&T 3,100 Source: The Beacon Council/ Miami -Dade County, Florida -Miami Business Profile & Relocation Guide 2012 A - 5 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, Record of Building Permits, 2005 through 2011 City of Miami, Florida New Commercial Fiscal Building Year Permits Estimated Cost 2005-2006 125 2006-2007 98 2007-2008 80 2008-2009 264 2009-2010 236 2010-2011 217 $ 2,573,453,643 1,266,199,562 1,615,039,791 128,192,793 592,111,103 $ 421,757,347 Source: City of Miami, Florida Building Department Year 2006 2007 2008 2009 2010 2011 Other New Commercial Residential Building Building Permits Permits 2,582 450 2,816 349 3,218 178 3,640 259 5,277 220 6,458 194 Per Capita Personal Income Miami 33,712 36,701 35,887 36,357 N/A N/A Source: (1) City of Miami, Florida (2) Bureau of Economic and Business Research, University of Florida The City of Miami, Florida Property Tax Rates Fiscal Year Tax Roll Year General Operations Debt Service 2002 2001 8,99500 1,2180 2003 2002 8,85000 1,2180 2004 2003 8.76250 1.0800 2005 2004 8.71625 0,9500 2006 2005 8,49950 0,7650 2007 2006 8,37450 0.6210 2008 2007 7,29990 0,5776 2009 2008 7.67400 0.6595 2010 2009 7.67400 0.9701 2011 2010 7.57100 0.9300 Other Residential Building Estimated Cost Permits $ 119,113,620 5,208 110,732, 621 5,285 60,467,105 3,759 12,484,788 3,346 16,477,268 2,794 $ 50,244,764 2,555 Florida 37,992 39,078 39,572 38,572 39,230 39,563 Total City 10.21,30 10,0680 9,8425 9,6663 9.2645 8,9955 7,8775 8,3335 8,6441 8.5010 Source: City of Miami Comprehensive Annual Financial Report Fiscal Year 2011 and Miami. Dade County Properly Appraiser's Office. Note: All millage rates are based on $1 for every $1,000 of assessed value, A-6 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Property Tax Reform During recent years, various legislative proposals and constitutional amendments relating to ad valorem taxation and revenue limitation have been introduced in Florida. Many of these proposals sought to provide for new or increased exemptions to ad valorem taxation, limit the amount of revenues that local governments could generate or otherwise restrict the ability of local governments in Florida to levy ad valorem taxes at recent, historical levels. There can be no assurance that similar or additional legislative or other proposals will not be introduced or enacted in the future that would, or might apply to, or have a material adverse effect upon the City or its finances. Several constitutional and legislative amendments affecting ad valorem taxes have been approved by voters in the past including the following: Save Our Homes Amendment. By voter referendum held on November 3,1992, Article Vli, Section 4 of the State Constitution was amended by adding thereto a subsection which, in effect, limits the increases in assessed just value of homestead property to the lesser of (1) three percent of the assessment for the prior year or (2) the percentage change in the Consumer Price Index for all urban consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics. Further, the amendment provides that (1) no assessment shall exceed just value, (2) after any change of ownership of homestead property or upon termination of homestead status, such property shall be reassessed at just value as of January 1 of the year following the year of sale or change of status, (3) new homestead property shall be assessed at just value as of January 1 of the year following the, establishment of the homestead, and (4) changes, additions, reductions or improvements to homestead shall initially be assessed as provided for by general law, and thereafter as provided in the amendment, This ainendmenL is known as the "Save Our Homes Amendment." The effective date of the amendment was January 5, 1993 and, pursuant to'a ruling by the Florida Supreme Court, it began to affect homestead property valuations commencing January 1,1995, with 1994 assessed values being the base year for determining compliance. Limitations on State Revenue Amendment, In the 1994 general election, Florida voters approved an amendment to the State Constitution which is commonly referred to as the "Limitation On State Revenues Amendment." This amendment provides that stat'e'revenues collected for any fiscal year shall be limited to state revenues allowed under the amendment For the 'prior fiscal year plus an adjustment for growth. Growth is defined as an amount equal to the average annual rate of growth in state personal income over the most recent twenty quarters tirnes the state revenues allowed under the amendment for the prior fiscal year, Stale revenues collected for any fiscal year in excess of this Irinitation are required10 be transferred to a budget stabilization fund until the fund reaches the maximum balance specified in the amendment to the State Constitution, and thereafter is required to be refunded to taxpayers as provided by general law. The limitation on state revenues imposed by the amendment may be increased by the State Legislature, by a two- thirds vote in each house. The term "state revenues," as used in the amendment, means taxes, fees, licenses, and charges for services imposed. by the State Legislature on individuals, businesses, or agencies outside state government. However, the term "state revenues" does not include: (1) revenues that are necessary to meet the requirements set forth in documents authorizing the issuance of bonds by the State; (2) revenues that are used to provide matching funds for the federal Medicaid program with the exception of the revenues used to support the Public Medical Assistance Trust Fund or its successor program and with the exception of State matching funds used to fund elective expansions made after July 1, 1994; (3) proceeds from the State lottery returned as prizes; (4) receipts of the Florida Hurricane Catastrophe Fund; (5) balances carried forward from prior fiscal A-7 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, years; (6) taxes, licenses, fees and charges for services imposed by local, regional, or schooldistrict governing bodies, or (7) revenue from taxes, licenses, fees and charges for services required to be imposed by any amendment or revision to the State Constitution after July 1,1994, This amendment took effect on January 1, 1995, and was first applicable to Florida's fiscal year 1995-1996. In its 2011 Regular Session, the Florida Legislature enacted SJR 958 which amends Article VII, Section 1 of the Florida Constitution (which is the Limitation on State Revenues Amendment) and creates Article VII, Section 19 and Article XII, Section 32 of the Florida Constitution, SJR 958 (1) replaces the existing state revenue limitation based on Florida personal income growth (as described above) with a new state revenue limitation based on changes in population and inflation; (2) requires excess revenues to be deposited into the Budget Stabilization Fund to support public education or returned to taxpayers; (3) adds fines and revenues used to pay debt service on bonds issued after July 1, 2012 to the state revenues subject to the limitation; (4) authorizes the Florida Legislature to increase the revenue limitation by a supermajority vote; and (5) authorizes the Florida Legislature to place a proposed increase before the voters, which would require approval of 60% of the voters. SJR 958 will be on the ballot in the 2012 general election or at an earlier election authorized by law. If approved by 60% of the voters, the new state revenue limitation will be phased in starting in Florida fiscal year 2014-2015. Over time, the new state revenue limitation is more likely to constrain state revenues than the current state revenue limitation; however, the potential impact on the City or ils finances cannot be ascertained at this time, Millage Rollback Legislation, In 2007, the Florida Legislature adopted Chapter 2007-321, Laws of Florida, a property tax plan which significantly impacted ad valorem tax collections for State local governments. One component of the adopted legislation required counties, cities and special districts to rollback their millage rates for the 2007-2008 fiscal year to a level that, with certain adjustments .and exceptions, would generate the same level of ad valorem tax revenue as in fiscal year 2006.2007; provided, however, depending upon the relative growth of each local government's own ad valorem tax revenues from 2001 to 2006, such rolled back millage rates were determined after first reducing 2006-2007 ad valorem tax revenues by zero to nine percent (0% to 9%). In addition, the legislation limits how much the aggregate amount of ad valorem tax revenues may increase in future fiscal years. A local government may override certain portions of these requirements by a supermajority, and for certain requirements, a unanimous vote of its governing body. The City fell under the 7% ad valorem tax revenue reduction category. As a result, the City's general millage rate was reduced from 4,4253 mills in fiscal year 2006-07 to 4.0934 mills in fiscal, year 2007-08, The millage rate was decreased further in the fiscal year 2008-09 to 3,5597 mills, where the millage rate has remained through fiscal year 2011-12, Constitutional Amendments Related to Ad Valorem Exemptions, On January 29, 2008, in a special election held in conjunction with the State's presidential primary, the requisite number of voters approved amendments to the Florida 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, 2, Permits owners of homestead property to transfer their "Save Our Homes Amendment" 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 A THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. value of the prior homestead, then owners of homestead property may transfer a proportional amount of their Save Our Homes Amendment 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, As discussed above, the Save Our Homes Amendment generally limits annual increases in ad valorem tax assessments for those properties with homestead exemptions to the lesser of three percent (3%) or the arinual rate of inflation. 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 were effective for the 2008 tax year (fiscal year 2008-2009 for local governments), Over the last few years, the Save Our Homes Amendment assessment cap and portability provisions described above have been subject to legal challenge. The plaintiffs in such cases have argued that the Save Our Homes Amendment assessment cap constitutes an unlawful residency requirement for tax benefits on substantially similar property in violation of the equal protection provisions of the Florida Constitution and the Privileges and Immunities Clause of the Fourteenth Amendment to the United States Constitution. The plaintiffs also argued that the portability provision simply extends the unconstitutionality of the tax shelters granted to long-terrri homeowners by Save Our homes Amendment. The courts in each case have rejected such'ccif fitixtidrial arguments and upheld the constitutionality of such.provisioris; however.; there is .do ass ranee that''an . Libre challenges to such provisions will not be success -fill. In addition to the legislative activity described above, the constitutionally mandated Florida Taxation and 'Budget Reform Comrnission (required, to be convened every 20 years) (the "TBRC") completed its meetings on April 25, 2008 and placed several constitutional amendments on the November 4, 2008 General Election ballot, Three of such amendments were approved by the voters of Florida, which, among other things, do the following: (a) allow the Florida Legislature, by general law, to exempt from assessed value of residential homes, improvements made to protect property from wind damage and installation of a new renewable energy source device; (b) assess specified working waterfront properties based on current use rather than highest and best use; (c) provide property tax exemption for real property thatis perpetually used fox conservation (begiui in 2010); and, for land nbt perpetually encurdbered, regiiire the Florida LegiSlat ire'to provide classification and assessment of land use' for conservation purposes solely on the basis of aharaeter or use, Recently Approved Constitutional Amendments Relating' to Ad Valorem Taxation, 1, Additionally, during its 2009 session, the Florida Legislature passed House Bill 833, which provides an additional homestead exemption for deployed military personnel. The exemption equals the percentage of days during the prior calendar year that the military homeowner was deployed outside of the United States in support of military operations designated by the Legislature. The measure was approved by the voters at the November 2010 General election and took effect January 1, 2011. 2. Senate joint Resolution 592, proposed an amendment to Article VII, Section 6 of the Florida Constitution and the creation of Article VII, Section 32 of the Florida Constitution which would allow the Florida Legislature by general law, to allow counties and municipalities to grant a homestead property tax discount for veterans who became disabled as the result of a combat injury. A-- 9 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 3.) House Joint Resolution 93, proposed an amendment to Article VII, Section 6 of the Florida Constitution, which would authorize the Florida Legislature, by general law, to allow counties and municipalities to grant an additional homestead tax exemption for surviving spouses of first responders who die in the line of duty and for surviving spouses of a veteran who died from service -connected causes while on active duty as a member of the United States Armed Forces, 4, House Joint Resolution 169, proposed an amendment to Article VII, Section 6 of the Florida Constitution which would authorize the Florida Legislature, by general law, to allow counties and municipalities to grant an additional homestead tax exemption equal to the assessed value of the property, if the property has a just value below a certain amount, to an owner who has maintained residency for at least 25 years and who is at least 65 years of age. Amendments 2, though 4, were approved by a vote of the electors on November 6, 2012. The impact of these amendments on the City's finances cannot be accurately ascertained. There can be no assurance that similar or additional legislative or other proposals will not be introduced or enacted in the future that would, or might apply to, or have a material adverse effect upon, the City or its finances. [Remainder of page intentionally left blank] A-1.0 Assessed Valuations Fiscal Year Ended September 30, 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, CITY OF MIAMI, FLORIDA NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Real Property Residential Property $6,612,151,524 7,679,048,886 8,789,474,779 1:0,364,157,774 12,959,276,770 20,320,801,612 24,279,025,389 23,572,178,928 23,341,894,079 18,536,983,090 Commercial Property $6,730,51.7,606 7,380,571,799 8,3.69,950,851 9,870,433,741 12,341,927,389 11,038,460,135 11,727,240,945 11,890,691,413 11,921,087,043 10,078,997,005 Total Net Direct Personal Assessed Tax Property Value Rate $1,770,392,311 $15,113,061,441 10,21 1,878,266,085 16, 937,886, 770 10.07 1,711,697,688 18,871,123,318 9.84. 1,695,110,542 21,929,702,057 9,67 1,676,173,129 26,977,377,288 9.26 1,673,647,599 33,032,909,346 9,00 1,749,572,760 37,755,839,094 7.88 1,686,320,651 37,149,190,992 8.33 1,686,540,244 36,949,521,366 8.64 1,736,766,113 30,352,746,208 8.50 Estimated Actual Value $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 52,185,972,858 52,146,883,603 42,365,151,484 Net Assessed Value as a Percentage of Estimated Actual 68.58% 68,41% 68.08% 68,25% 68.96% 68,93% 68.34% 71.19% 70;86% 71,65% 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, (1) Includes tax-exempt property. Property Tax Levies and Collections CITY OF MIAMI, FLORIDA. PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Total Taxes Collections in Ended Levied for Percent Subsequent Percent September 30 Fiscal Year Amount of Levy Years Amount of Levy 2002 154,349,696 145,506,737 94.27% 4,079,641 149,586,378 96,91% 2003 170,530,644 161,197,051 94,53% 7,735,274 168,932,325 99.06% 2004 185,739,031 178,766,680 96.25% 1,640,252 180,406,932 97.13% 2005 211,977,983 206,451,562 97.39% 2,379,977 208,831,539 98.52% 2006 249,931,912 243,957,356 96.82% 3,801,414 247,758,770 99.13% 2007 297,147,536 290,449,738 97.76% 7,111,337 297,561,075 100.14% 2008 297,421,622 284,001,962 95.49% 8,489,434 292,491,396 98.34% 2009 309,582,783 296,404,297 95,74% 9,200,940 305,605,237 98,72% 2010 319,395,358 278,010,020 87.04% 278,010,020 87.04% 2011 258,028,695 263,361,953 102,07%0) 263,361,953 102.07% Source: City of Miami, Finance Department and Miami -Dade County Tax Collector's Office (u A-11 Ten Largest Tax Assessments Taxpayer Florida Power & Light 200 5 Biscayne TIC 1 LLC Crescent Miami Center T C 701 Brickell LLC Bellsouth Communications 1111 Brickell Office LLC Trustees of L&B Opera Tower LLC Estoril Incorporated Teachers Insurance Total Net Assessed Value Source: City of Miami, Florida Overlapping Debt THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. CITY OF MIA.MI, FLORIDA PRINCIPAL PROPERTY TAXPAYERS 2011 Net Assessed Value $437,878,458 270,000,000 178,400,000 172,000,000 158,961,503 138,500,000 124,100,000 112,499,679 107,436,953 91,260,906 $ 1,791,037,481 $ 30,352,746,208 Rank Percent of Total City Net Assessed Value 1 1;44% 2 0,89% 3 0,59% 4 0.57% 5 0.52% 6 0.46% 7 0.41% 8 0.37% 9 0,35% 10 0.30% 5.90% CITY OF MIAMI, FLORIDA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2011 Government Unit Debt Repaid With Property Taxes Miami -Dade County Miami -Dade County School Board Subtotal, Overlapping Debt City of Miami, Florida Direct Debt (excludes special obligation, revenue bonds, loans and capital leases) Total Direct and Overlapping Debt Net Debt Outstanding $1,000,133,355 290,998,000 Percentage Applicable to the City of Miami(1) 19.00% 19,00% 100% Amount Applicable to the City of Miami $190,025,337 55,289,620 245,314,957 265,804,455 $ 511,119,412 Sources: Data provided by the Miami -Dade County Finance Department and the Miami -Dade County School Board. Note; Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of theeoutstanding debt of those overlapping governments that is borneby the residents and businesses of the City of Miami. This process recognizes that, when considering the City's ability to issue and repay Long-term debt, the entire debt burden borne by the residents and businesses should be into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. A-12 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (I) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values, Value that is within the City's boundaries and dividing it by the County's and School Board's total taxable assessed value, This approach was also used for the other debt, CITY OF MIAMI, FLORIDA FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 SUMMARY OF DEBT RATIOS, MEASUREMENTS AND DEBT CONSTRAINTS CRITERIA Debt Ratios General Obligation & Limited Ad Valorem Debt Per Capita 628.93 General Obligation & 'Limited Ad Valorem Debt as a Percentage of Taxable value 0.83% Non -Self Supporting Revenue Debt Per Capita 1,108.28 Non -Self Supporting Revenue Debt as a Percentage of Taxable Assessed value 1,46% General Governmental Debt Service (non -self-supporting) as a Percentage of Non -Ad Valorem. General Fund Expenditures 8.08% General Government Debt Service as a Percentage of Non -Ad Valorem General Fund Revenues 8.02% Source: City of Miami Finance Department A-13 DaFT : -r e, comeolijeL katd, APPENDIX B PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS PENSION PLANS The information relating to the Plans (defined herein) relies on information produced by the Plans and their independent accountants and actuaries. The actuarial assessments are forward -looking information that reflects the judgment of the fiduciaries of the Plans. Actuarial assessments are based upon a variety of assumption, one or more of which may prove to be inaccurate or be changed in the future, and will change with future experience of the Plans. General The City sponsors separate single -employer, defined benefit pension plans under the administration and management of separate Boards of Trustees: the City of Miami Fire Fighters and Police Officers RetirementTrust ("FIFO"), the City of Miami General Employees and Sanitation Employees Retirement Trust ("GESE") and Other Managed. Trusts, and the City of Miami Elected Officers Retirement Trust ("EORT" and, together with FIFO and GESE, the "Plans"). Basis of Accounting. The financial statements for the Plans are prepared using the accrual basis of accounting. All Plans are reported as pension trust funds in the City's financial statements, Plan member contributions are recognized in the period which the contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions, Benefits and refunds are recognized when due and payable in accordance with the terms of the Plans, Method Used to Value Investments. Investments of the Plans are recorded at fair market value. Securities traded on a national exchange are valued at the last reported sales price on the last business day of the fiscal year. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the last reported bid price. Commercial paper, time deposits, and short- term investment pools are valued at fair market value and mortgages are valued based on current market yield which approximate fair value, Net appreciation (depreciation) in fair value of investments includes realized and unrealized gains and losses, Interest and dividends are reported as investment earnings, Realized gains and losses on the sale of investments are based on average cost. FIPO Plan Description. FIFO is a single -employer, defined benefit plan established by the City pursuant to the provisions and requirements of Ordinance No, 10002 as amended. Participants are contributing police officers and fire fighters with full-time employment status in the Police or Fire Department of the City. As of October 1, 2011, the date of the most recent actuarial valuation, membership in the FIFO consisted of 2,089 retired members and beneficiaries and 178 disabled members currently receiving benefits and 18 terminated vested members entitled to benefits but not yet receiving them, current active employees equaled 1,196 as of .that date. Pension Benefits. Members may elect to retire after attaining 50 years of age and ten or more years of creditable service or, under certain circumstances, Rule of 64 Retirement, Rule of 68 Retirement or Rule of 70 Retirement (each as defined herein). B-1 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. "Rule of 64 Retirement" means service retirement on the basis of combined age and creditable service equaling 64 or more, Rule of 64 Retirement applies to fire fighters who had obtained 64 points by September 30, 2010, and police officers who had 64 points by September 30, 2011, Rule of 64 Retirement also applies to the accrued benefit as of September 30, 2011, of police officers who were active members as of September 29, 2011, "Rule of 68 Retirement" means service retirement on the basis of combined age and creditable service equaling 68 or more. Rule of 68 Retirement applies to fire fighters who had not attained 64 points by September 30, 2010 and had attained 68 points by September 30, 2011. Rule of 68 Retirement also applies to the accrued benefit as of September. 30, 2011, of fire fighters who were active members as of September 29, 2011, "Rule of 70 Retirement" means service retirement on the basis of combined age and creditable service equaling 70 or more. Rule of 70 applies to all new members hired on or after October 1, 2011, as well as to all benefits accrued after September 30, 2011 by fire fighters who had not attained 68 points on September 30, 2011 and police officers who had not attained 64 points on September 30, 2011. Police officers who have reached Rule of 64 Retirement by September 30, 2011, fire fighters who had reached Rule of 64 Retirement by September 30, 2010, and fire fighters who have reached Rule of 68 Retirement by September 30, .2011, are entitled to a normal retirement benefit equal to 3% of average final compensation' for each of the first 15 years ofcreditable service plus 3.5% of average final compensation for each year of creditable service after the 15th year, The maximum benefit for these members is 100% of average final compensation, All other police officers and firefighters, for service prior to October 1, 2011, are entitled to a normal retirementbenefit'equal to 3% of average final cbmpensation for each of the first 15 years of creditable service plus 3.5% of average final compensation. for each creditableservice after the 15th year, and for service after September 30, 2011, are entitled to a normal: retirement benefit equal to 3% of average final compensation for each year of creditable service. The combined percentage for service before October 1, 2011 and service after September 30, 2011 may not exceed 100% of average final compensation. Early retirement, disability, death and other benefits are also provided as follows: Early Service Retirement, Mefnbers are'entitled to early service refireinent after 20 years of creditable service, Benefits are based ort average final compensation and creditable service at the retirement date... 1 Average Final Compensation means for members who retire or terminate employment with ten or more years of creditable service prior to October 1, 2010, the annual earnable compensation of a member during either the last one year or the highest year of membership service, whichever is greater. Effective September 30, 2010, for members who retire on or after October 1, 2011, average final compensation shall mean the average of the highest five years of service, to be phased in over the next four years as follows: for members who retire on or after October 1, 2011, and on or before September 30, 2012, the average of the highest two years of membership service; for members who retire on or after October 1, 2011, and on or before September 30, 2012, the average of the highest three years of membership service; for members who retire on or after October 1, 2012, and on or before September 30, 2013, the average of the highest four years of membership service; and for members who retire on or after Oetober 1, 2013, the average of the highest five years of membership service. Provided, in no event shall the average final compensation of any member who was employed as a police officer or fire fighter on September 30, 2011, and retires on or after October 1, 2011, be less than the highest year of membership service prior to September 30, 2011, B-2 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Disability, Members not eligible for service retirement are entitled to ordinary disability benefits after 10 or more years of creditable service, For accidents not incurred in the performance of duties eligible members are entitled to 90% of benefit ratetimes average finalcompensation times creditable service, with a minimum benefit of 30% of average final compensation. The ordinary disability benefits are payable for life, except that in the event the member dies before such allowance has been received for a period of ten years, the member's beneficiary or beneficiaries shall be paid the same allowance for the remainder of the 10-year period, For accidents incurred in performance of duties, members are entitled to accidental disability benefits equal to 66 2/3% of average final compensation, or 66 2/3% of final compensation, whichever is great, Upon the death of any member who has received accidental disability benefits, the spouse of the member who has been designated as the member's beneficiary may receive the payment of an amount equal to 40% of the member's monthly retirement allowance during the spouse's lifetime, with a minimum of 10 years, Death, A member with three to 10 years of creditable service, and whose death is not accidentally incurred in the performance of their duties is entitled to the ordinary death benefits of a lump sum payment equal to 50% of compensation received in the year preceding death, After 10 years of creditable service and before eligibility for early service retirement or Rule of 64 Retirement, a member whose death is not accidentally incurred in the performance of their duties is entitled to an accrued ordinary death benefit deferred to the earlier of the member's 50th birthday or Rule of 64 Retirement eligibility, paying for 10 years, If the member is eligible for service retirement, early service retirement or Rule of 64 Retirement, the member is considered to have retired on the date of their death, The surviving spouse is entitled to receive 40% of the member's monthly retirement allowance. An accidental death incurred in the performance of a members duties is entitled to accidental death benefits equal to: (i) pension of 50% of average final compensation to spouse until death or remarriage, or if there is no spouse, or if spouse dies or remarries before youngest child is 18, then payable until attainment of age 18, or if no spouse or no children under 18, payable to dependent parents; (ii) after 10 years of creditable service and before eligibility for early service retirement or Rule of 64 Retirement, accrued benefit deferred to earlier of member's 50th birthday or Rule of 64 Retirement eligibility, payable for 10 years. The beneficiary does not have to survive deferral period or 10 years' certain period, Cost of Living Adjustment, Effective January 1, 1994, the FIFO Trust entered into an agreement with the City with regards to the funding methods, employee benefits, employee contributions and retiree cost of living adjustment ("COLA"). Pursuant to the agreement, members no longer contribute to the original COLA account ("COLA I".) and a new COLA account ("COLA II") was established. The agreement included the following: (a) the funding method was changed to an aggregate cost method; (b) all accounts were combined for investment purposes (membership and benefits, COLA 1, and COLA II); (c) retirees receive additional COLA benefits; and (d) active members no longer contribute 2% if pretax earnings to fund the original retiree COLA I account, The COLA LI account is funded annually by a percentage of the excess investment return from the COLA I account assets (75% of first 2,5%, 50% of next 2,5%, and 25% of next 2.5%), The excess earnings contributed to the COLA II account are used to fund a minimum annual payment of $2.5 million, .increasing by 4% compounded annually. To the extent necessary, the City will fund the portion of the minimum annual payment not funded by the annual excess earnings no later than January 1 of the following year, There will not be a COLA transfer as of January 1, 2012; however, there could be a transfer on January 1, 2013 of $5,683,400, but only if there is a favorable cumulative experience position as of September 30, 2012. The City's minimum COLA contributions without the transfer will be $5,064,541 on January 1, 2012.and $5,267,123 on January 1, 2013, B-3 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, Historical Funding Progress COLA Fund (in $ millions) (1) (2) (3) (4) (5) Unfunded PBO as Pension Percentage Net Assets Benefit Unfunded Annual of Covered Available for Obligation Percent PBO Covered Payroll Fiscal Year Benefits(1) (PBO)(2) Funded (2)-(1) Payroll (4)/(51 2001 $195.0 $158.4 123% $(36.6) $89.7 (41)% 2002 174.1 164,5 106 (9,6) 96,9 (10) 2003 194.8 165.1 118 (29,7) 98.9 (30) 2004 210.3 185.7 113 (24,7) 89,2 (28) 2005 231,6 195.0 119 (36,6) 91.5 (40) 2006 249.0 216,8 115 (32.2) 90.4 (36) 2007 300,2 242,9 124 (57,3) 103,6 (55) 2008 305.8 279.4 109 (26.4) 129.4 (20) 2009 296.3 290,0 102 (6,3) 122.2 (5) 2010 311,8 315.6 99 3,8 80,2 5 2011 310.0 303.6 102 (6,4) 82,2 (8). Source: City of Miami Fire Fighters' and Police Officers' Retirement Trust October 1, 2011 Actuarial Report. prepared by The Nyhart Company, Inc. (1) Excl idirig future" City' minimum contributions, (2) EXcluciing new increment, contingency' reserves and reserves for future actives, Benefits payable from the COLA accounts are computed in accordance with an actuarially based formula as defined in Section 40.204 of the City Code, with $1,312 monthly benefit for 25 years of creditable ) service arid 22 completedyears eaa rs of retiree ( ment after age 9:6' ,The $1,312 arricunf is reduced by 5%.for each year of retirement ids than 22 and each year of creditable service less than 25 and increase similarly for years of retirerierit greater than 22 and years of creditable service greater than 25, Benefits are subject to review and rnodificatlon in accordance with Section 40:204 of the City' Code, which prow des thatall other matters regarding' the COLA accounts shall be deteimir ed by negotiatlons between the City, the Boaid bf Trustees ailed the bargaining representatives of the International Assoeratzon of Firefighters and the Praterral'Order of Police, Deferred Retirement Option Plan. Men-tbers who are eligible for service retirement or Rule of 64 Retirement after September 1998 may elect to enfer the deferred retirement option plan (the "DROP"). Upon election of participation, a :n'iernber's creditable service, accrued benefits, and compensation calculation are frozen and the DROP payment is based on the member's average final compensation. The member's contribution and the City contribution to the retirement plan for that member ceases as no further .service credit is earned, The member does not acquire additional pension credit for the purposes of the pension plan, but may continue City employment for a maximum of 36 months prior to October 1, 2001, Effective October 1, 2001, maximum participation in the DROP for firefighters shall be 48 full months an.d for; police officers who elect the DROP on October 1, 2003, or thereafter, maximum participation in the DROP shall be 48 full months. Effective July 24, 2008, firefighter DROP participants may also continue City employment for up to 54 full months (48 full months prior to July 24, 2008 and 36 full months prior to October 1, 2001), Police B-4 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. officers who elect the DROP on or after May 8, 2008, may continue City employment for up to 84 full months (48 full months prior to May 8, 2008 and 36 full months prior to October 1, 2003), Once the maximum participation has been achieved, the participant must terminate employment. There are two DROP programs: the Forward DROP and the Benefit Actuarially Calculated DROP ("BACDROP"). A member can participate in both programs simultaneously. The Forward DROP is a DROP benefit equal to the regular retirement benefit the member would have received had the member separated from service and commenced the receipt of benefits from the plan. The BACDROP is a DROP benefit actuarially calculated. A member may elect to BACDROP to a date, no further back than the date of the member's requirement eligibility date, 'The BACDROP period must be in 12 month increments, beginning at the start of a pay period, not to exceed 48 full months for firefighters (36 months prior to October 1, 2001) and for police officers who elected BACDROP on October 1, 2003 (36 months prior to October 1, 2003). The benefits of the BACDROP will then be actuarially calculated to be the equivalent to the benefit earned at the date of retirement. An individual account is created for each participant. A series of investment vehicles, as established by PIPO's Board of Trustees, are made available to. DROP participants to choose from. Any losses incurred on account of the option selected by the participant will not be made up by the City or the FIPO Trust, and will be borne by the participant only. All interest will be credited to the member's account. Upon termination of employment, a participant may receive payment from the DROP account in a lump sum distribution; or periodic payments, A participant may elect to rollover the balance to another qualified retirement plan, individual retirement account, an Internal Revenue Code Section 457 Plan, or an annuity, A participant may defer payment until the latest date authorized by Section 401(a)(9) of the Internal Revenue Code, DROP participation will not affect any other death or disability benefit provided under law or applicable collective bargaining agreement. If a participant dies before the account balances are paid out in full, the beneficiary will receive the remaining balance, Participants in the DROP are not entitled to receive an ordinary or service disability retirement and in the event of death of a DROP participant, there is no accidental death benefit for pension purposes. Participation in the DROP does not affect any other death or disability benefit provided to a member under federal law, state law, City ordinance, or any rights or benefits under any applicable collective bargaining agreement. Contributions and Funding Policies, Police officer members of FIFO are required to contribute 10% of their salary on a bi-weekly basis (7% prior to October 1, 201:1), Firefighter members are also required to contribute 10% (9% prior to October 1, 2010) of their salary on a bi-weekly basis, The City is required to contribute such amounts annually as necessary to maintain the actuarial soundness of FIPO and to provide FIPO with assets sufficient to meet the benefits to be paid to participants. Contributions to FIPO are authorized pursuant to Sections 40,196(a) and (b) of the City Code, Contributions to the FIPO COLA accounts are authorized pursuant to Section 40,204 of the City Code, The Ci.ty's contributions to FIFO provide for non -investment expenses and normal costs, The yield on investments on FIPO serves to reduce future contributions that would otherwise be required to provide for the defined level of benefits under the FIPO Trust. The payroll for employees covered by FIPO for the year ended September 30, 2011 was approximately $73.7 million; the City's total payroll was approximately $268.2 million. ,Annual Pension Cost, The City's current year contribution was determined through an actuarial valuation performed as of October 1, 2010. Significant actuarial assumptions used to compute the annual requirement are as follows: B-5 Valuation date: Actuarial cost method: Amortization method: Amortization method; Asset valuation method: Investment rate of return: Projected salary increases due to inflation; Seniority/merit: Promotion/other Mortality table; Mortality, disability, retirement and turnover; THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. October 1, 2010 Aggregate Cost Method Not Applicable Not Applicable 20% Write -Up Method: expected value is based on the interest discount/investment return rate applied to the actuarial asset value as of previous valuation date and cash flow during the year. 20% of the difference between expected value and the market value (net of pending transfers to the COLA accounts) is added to the expected value. The result cannot be greater than 120% of market value or less than 80% of market value (net of pending COLA transfers). 7.50%, compounded annually 3.25°/a 5,00% to 0% reducing by attained age 1.50% RP 2000 Mortality Table Projected to 2020 RP 2000 Disabled Mortality Table Projected to 2020 Source: City of Miami Fire Fighters' and Police Officers' Retirement Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc, FIPO contributions are determined using the aggregate cost method. The aggregate cost method does not identify and separately amortize the unfunded actuarial liabilities. The aruzual pension cost is equal to the annual required contribution each year. Fiscal Year 2002 2003 2004 2005 2006 '2007 2008 2009 2010 2011 2012 2013 Annual Employer Contributions Excluding COLA Fund Annual PenSion Cost $ 1,051;629 18,163,588 36,341,515 45;545,130` 50,635;213 40,54;078 36, 040,251 36,993,395 55,095,791 42,287,046* 42,353,775 45,516,941 Percentage Contributed 100% 100 100 100 100 100 100 100 99 95 Net Pension Obligation $ 752,865 3,037,485 * After. September.30, 2010 impact statement changes, Source: City of Miami Fire Fighters' and Police Officers' Retirement Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc. The funding policy provides for periodic employer contributions at actuarially determined rates that are sufficient to pay benefits when due, Contributions for normal costs are determined using the aggregate actuarial cost method, This cost method does not provide for an unfunded actuarial accrued liability, .Since B-6 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. the FIPO uses the aggregate cost method, technically no schedule of funding progress is required, However, such schedule may be preparedusing another acceptable cost method, The schedule of funding progress for the FIPO is prepared using the Entry Age Normal Actuarial Accrued Liability, Contributions totaling $47,196,715 ($40,058,891 employer contribution and $7,137,824 employee contribution) were made for the year ending September 30, 2011. These contributions consisted of $47,196,175 normal cost, (b) $0 amortization of unfunded actuarial accrued liability and (c) $0 noninvestment expenses, As of October 1, 2011, the entry age reserve ("EAR") is $1,590.5 million. This compares to assets of $1,150,3 million for a funded ratio of 72%. Last year the funded ratio was 75%, Historical Funding Progress Excluding COLA Fund (in $ millions) (1) (2) (3) (4) (5) Unfunded EAR as Percentage Unfunded Annual of Covered Actuarial Percent EAR Covered Payroll Fiscal Year Asset Value EAR Funded (2)-(1) Payroll (4)/(51 2001 $ 941.8 $ 932.7 101% $ (9,1) $ 89,7 (10)% 2002 865.5 999.8 87 134,3 96,9 139 2003 865,8 1,067.9 81 202.1 98.9 204 2004 894.6 1,152,8 78 258,2 89.2 289 2005 1,064,9 1,221.6 87 156.7 91.5 171 2006 1,133,0 1,260.5 '90 127.5 90.4 141 2007 1,208,8 1,318,4 92 109.6 103.6 106 2008 1,219,6 1,452,5 85 222.9 129.4 172 2009 1,165,0 1,539.3 76 374,4 122.2 306 2010 1,180,6 1,568,3 75 387.7 80.2 483 2011 1,150,3 1,590.5 72 440,2 82.2 536 Source: City of Miami Pire Fighters' and Police Officers' Retire'ment Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc, The rate of return on the mean market value for the period ending September 30, 2011 was 3.6%, as compared to the 7.75% assumption, The asset valuation method results in an actuarial asset value of $1.150 billion as of October 1, 2011, as compared to the market value of $987 million. The market value of assets on October 1, 2011 is $987,110,729, as compared to the value of accrued benefits of $1,568,323,110 for a ratio of 62,9%0. The ratio as of October 1, 2010 was 66,5%, The following is a table of revenues and expenses of the FIFO (excluding COLA Fund): Fiscal Employee Employer Year Contributions Contributions 2001 $ 6,336,918 $ 5,481,599 2002 6,721,236 5,400,784 2003 7,193,936 15,024,366 2004 24,415,150 32,959,003 2005 18,607,681 45, 545,130 2006 7,698,594 50,635,213 2007 14,702,629 40,542,078 2008 9,719,896 36,040,251 2009 9,769,139 36,993,395 2010 10,436,367 54,342,926 2011 7,137,824 40,058,891 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Investment Income $ 17,717,791 (27,704,711) 30,466,098 53,963,150 71,904,910 71,669,124 82,937,630 62,728,078 (58,111,291) 62,459,916 83,951,919 Total $ 29,536,308 (15,582,691) 52,684,400 111,337,303 136, 057,721 130,002,931 138,182,337 108,488,225 (11,348,757) 127,239,209 131,148,634 Source: City of Miami Fire Fighters' and Police Officers' Retirement Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc. The following changes were made to FIPO pursuant to the negotiations with the union in 2012. Member contributions, Effective the first full pay period following October 1, 2012, the member contribution for police officers hired prior to October 1, 2012 shall be 1.0% of earnable compensation; and effective September 30, 2014, the member contribution for police officers hired prior to October 1, 2012 shall be 7% of earnable compensation. The member contribution for police officers hired on or after October 1, 2012 shall be 3% of ear`hable compensation greater than the member contribution £orFsolice officer members hired prior to October 1, 2012. Effective the first full pay period following October 1, 2012, the member contribution for firefighters shall be 10% of earnable compensation; and effective September 30, 2014, the member contribution for firefighters hired prior to October 1, 2014 shall be 7% of earnable compensation, The member contribution for firefighters hired on or after October 1., 2014 shall be 10% of earnable compensation. Actuarial funding method. The City's contribution to the retirement system shall be determined by applying the individual entry age actuarial funding method (changed from the aggregate actuarial cost method), as such method is defined by the American Academy of Actuaries, to the projected liabilities of the system as' Of October 1, 2011, rising an assumed system payroll growth rate of 3% and using' an unfunded liability amortization period of 25 years, or such other reasonable payroll growth rate and amortization period as agreed by the retirement system's actuary and the City's actuary. Backdrop option, A Backdrop benefit option shall be implemented on January 1, 2013, and shall replace the existing deferred retirement option program ("DROP"). Employees who have not attained normal retirement eligibility as of January 1, 2013, and all employees hired on or after that date, will be eligible for the Backdrop option, but will not be eligible for the DROP. Employees who have attained normal retirement eligibility as of january 1, 2013 and are thus eligible to elect the forward DROP as of January '1, 2013, shall remain eligible to elect the forward DROP as it presently exists, and employees who are eligible to elect the forward DROP as of january 1, 2013 who choose not to enter the forward DROP shall also remain B-8 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. eligible for the Backdrop, Any employee with accrued pension benefits vested prior to October 1, 2010 will remain eligible to exercise the existing DROP program option for those accrued benefits, GESE The Board of Trustees of the GESE administers three defined benefit pension plans: (a) the GESE; (ID) an Excess Benefit Plan for the City of Miami (the "EBP"); and (c) General Employees and Sanitation Employees Retirement Trust Staff Pension Plan (the "Staff Trust"), Each plan's assets may be used only for the payment of benefits to the members of that plan, in accordance with the terms of the plan. GESE. Plan Description. The GESE is a single -employer defined benefit plan. The GESE was established pursuant to the City Ordinance No. 10002 and subsequently revised under City Ordinance No. 12111, The GESE covers all City general and sanitation employees except certain employees eligible to decline membership, Participation in the GESE is a mandatory condition of employment for all regular and permanent employees other than fire fighters, police officers and executive level employees hired after October 1, 2009, Those executive employees are required to participate in a defined contribution plan (401(a)) At October 1, 2011, the date of the most recent actuarial report, membership in the GESE consisted of 1,727 retired members, 381 beneficiaries and 54 disabled members currently receiving benefits and 155 terminated vested and inactive members entitled to benefits but not yet receiving them; current active employees equaled 1,241 as of that date. Pension Benefits. The minimum normal retirement age is 55. Any member in service who has 10 or more years of continuous creditable service may elect to retire upon attainment of normal retirement age. A member who has cornpleted a combination of at least 10 or more years of creditable service plus attained an age equaling 70 points may elect a Rule of 70 Retirement, For members not eligible to retire as of September 30, 2010, the retirement age and service willbe age 55 and 30 years of creditable service or age 60 and 10 years of continuous creditable service or a combination of at least 10 years of creditable service plus attained age equaling 80 points (the "Rule of 80 Retirement"), Retirement benefits are generally based on 3% of the average final compensation2 multiplied by years of creditable service, which is paid annually in monthly installments, For service after September 30, 2010, for members not eligible to retire as of that date, benefits are based on 2,25% of average final compensation multiplied by creditable service up to 15 years, 2,5% of average final compensation for 15 to 20 years of service and 2,75% far service over 20 years. Effective September 30, 2010, for members not eligible to retire an 2 For members eligible for retirement as of September 30, 2010, Average Final Compensation means the average annual compensation during the highest two years of membership service, For members employed before May 24, :1984, Average Final Compensation is the average annual compensation during the highest year of membership, For all other members, Average Final Compensation means the average annual compensation during the highest five years of the last 10 years of service. Members retiring between October 1, 2010 and on or before September 30, 2011, will be based on the average of the highest three years of membership service; for members who retire on or after October 1, 2011, and or before September 20, 2012, it will be based on the average highest four years of membership service; and for members who retire on or after October 1, 2012, the average of the highest five years of the last 10 years of service, In no event shall the Average Final Compensation of any member who is employed on September 20, 2010, and retires on or after October 1, 2010 be less than the member's final average compensation as of September 30, 2010. B-9 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. that date, member retirement allowances shall not exceed the lesser of 100% of the member's average final compensation or an annual retirement allowance of $100,000. Members eligible to receive accumulated sick and vacation leave from the City are able to transfer the amount to an eligible retirement plan. The GESE facilitates the transfer of accumulated sick and vacation leave to any eligible retirement plan and is .pursuant to Section 40-266 of the City Code. Early retirement, disability, death and other benefits are also provided as follows: Early Service Retirement. Members are entitled to early service retirement after 20 years of creditable service. Benefits are based on the actuarial equivalent of the basic service retirement benefit that otherwise would have commenced at age 55., For members not eligible for retirement on October 1, 2010, the amount is the actuarial equivalent of the basic service retirement benefit payable at the earliest of the retirement eligibility dates for normal retirement. Disability. For an ordinary disability, a member with 10 or more years of creditable service will receive 90% of their benefit rate times their average final compensation times creditable service, with a minimum benefit of 30% of their average final compensation. For an accidental service incurred disability, a member is entitled to 66 2/3% of their average final compensation or final compensation, whichever is greater. For a service incurred disability, a .member is entitled to the greater of 90% of the product of the benefit multiplier in effect at the time the service .is earned multiplied by the number of years of credited service or 40% of the member's final average compensation. Death. For an ordinary death a member is entitled to a lump sum payment of accumulated contributions plus 50% of compensation during the year immediately preceding death, if the member has completed three years of creditable service, For an accidental, death while in the performance of his or her duties a member is entitled to 50% ,qf averagey,final compensation plus a lump sum payment equal to accumulated contributions. Any member who Is_eligible for normal, early or Rule of 70 Retirement who dies prior to actual retirement and whose spouse elects, not to receive a payment of the. member's accumulate contributions, if the member is eligible for retirement on September 30, 2010, the spouse will receive 40% of the sum of the member's basic retirement benefit calculated as if the member had attained age 55 and retired on the date of .death. Additionally, the spouse will receive 50% of the member's compensation during the year immediately preceding death. If the member is not eligible for: retirement .on September 30, 2010, the spousal benefit will be based on the optional form of payment elected by the member, If the member has not elected.an optional allowance, the spouse will receive the 40% surviyoVbenefit.actuarially reduced. A retired member who dies prior to having received 12 monthly retirement payments and prior; to having an optional allowance becoming effective will have a lump sum equal to the excess, if any, of 12 times the monthly payments over the -actual payments received paid to his designated beneficiary. Cost of Living Adjustment. Effective October 1, 1998, the GESE was amended to provide for an increase in the COLA paid to retirees to 4% with a $400 annual maxim -tun increase, provided the retiree's first anniversary of retirement has been reached. The amendment also provided for retirees electing the return of their contribution option to receive a minimum COLA benefit of $27 per year and a maximum COLA benefit of $200 added to the previous COLA benefit, provided the retiree's first anniversary of retirement has been reached. Deferred Retirement Option Plan. The GESE made the DROP available to all GESE members effective May 1, 2002, Any employee who is eligible for regular retirement or Rule of 70 Retirement is eligible to participate in the DROP. Upon election of participation, a member's creditable service, accrued benefits, and compensation calculations are frozen and the DROP payment is based on the member's average final B-10 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. compensation. The member's contribution and the City contribution to the retirement planfor that member ceases as no further service credit is earned, The member does not acquire additional pension credit for the purposes of the pension plan, but may continue City employment for a maximum of 48 months, Once the maximum participation has been achieved, the participant must terminate employment, There are two DROP programs: the Forward DROP and the BACDROP, A member can participate in both programs simultaneously. The Forward DROP is a DROP benefit equal td the regular retirement benefit the member would have received had the member separated from service and commenced the receipt of benefits from the plan. The BACDROP is a DROP benefit actuarially calculated. A member may elect to BACDROP to a date, no further back than the date of the member's requirement eligibility date. The BACDR.OP period inust be in 12 month increments, beginning at the start of a pay period, not to exceed 48 months. The benefits for the BACDROP will then be actuarially calculated to be the equivalent to the benefit earned at the date of retirement, An individual account is created for each participant, A series of investment vehicles, as established by GESE's Board of Trustees, are made available to DROP participants to choose from. Any losses incurred on account of the option selected by the participant will not be made up by the City or the GESE, and will be borne by the participant only, All interest will be credited to the member's account, Upon termination of employment, a participant may receive payment from the DROP account in a lump sum distribution; or periodic payments, A participant may elect to rollover the balance to another qualified retirement plan, individual retirement account, an Internal Revenue Code Section 457 Plan, or an annuity, A participant may defer payment until the latest date authorized by Section 401(a)(9) of the Internal Revenue Code. DROP participation will not affect any other death or disability benefit provided under law or applicable collective bargaining agreement. If a participant dies before the account balances are paid out in full, the beneficiary will receive the remaining balance, Contributions and Funding Policies, Members of the GESE are required to contribute 13% of their salary on a bi-weekly basis. The GESE's funding policies provide for periodic contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are sufficient to maintain the actuarial soundness of the GESE and to accumulate sufficient assets to pay benefits when due. The City is required to contribute an actuarially determined amount that, when combined with participants' contributions,will fully provide all benefits as they become payable, Contributions to the GESE are authorized pursuant to Sections 40-241(a) and (b) of the City Code, Contributions from the City are designed to fund the GESE's non -investment expenses and normal costs and to fund the unfunded actuarial accrued liability. The yield (interest, dividends and net realized and unrealized gains and losses) on investment of the GESE serves to reduce or increase future contributions that would otherwise be required to provide for the defined level of benefits under the GESE, The payroll for employees covered by the GESE for the year ended September 30, 2011 was approximately $68,4 million; the City's total payroll was approximately $268.2 million, After taking into account expected member contributions, the total required minimum contribution from. the City is $27,504,507 or 41,99% of covered payroll, for Fiscal Year 2012-2013 payable on October 1., 2012. In comparison, the required minimum contribution for the Fiscal Year 2011-2012 was $25,724,977, or 36.32% of covered payroll, There was a large investment loss during the year and an actuarial loss due to the actuarial experience being less favorable compared to the assumed experience for the Trust, All fiscal year contributions made by the City to the GESE will be made quarterly, in equal payments on the first day of each quarter, On this basis, the total recommended City contribution for Fiscal Year 2012-2013 is $28,303,314, and the City is required to make minimum quarterly contributions of $7,075,829 beginning on October 1, 2012, B-11 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Annual Pension Cost. The City's current year contribution was determined through an actuarial valuation performed as of October 1, 2011, Significant actuarial assumptions used to compute the annual contribution requirement are as follows: Valuation date: October 1, 2010 Actuarial cost method: Modified Entry Age Normal Amortization method: Level percent, closed Amortization method: 7 to 18 years Asset valuation method: 5-Year Smooth Market Investment rate of return: 8.10% Projected salary increases: 5.25% Payroll Growth: 3.00% Includes inflation at 3,50% Cost of living adjustments: 4% per year, with $54 per year minimum and $400 per year maximum Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LL,C. GESE contributions are determined using the entry age normal cost method with frozen actuarial accrued liability. The annual pension cost is equal to the annual required contribution each year, B-12 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Annual Employer Contributions Fiscal Year Annual Pension Cost Percentage Contributed Net Pension Obligation 2004 $10,669,846 100% 2005 19,003,415 100 2006 22,018,443 100 2007 24,229,028 100 2008 22,762,902 100 2009 23,191,828 100 2010 24,037,093 100 2011. 20,232,513 100 2012 25,724,977 Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC `llhe GF,SE's unfunded liability was projected to be $177,363,801 as of October 1, 2011, taking into account expected contributions from the City of $25,724,977 based on the October 1, 2010 valuation, The actual unfunded liability is $243,102,598. The increase of $65,738,797 in the unfunded liability is primarily due to an actuarial asset return of (1.11%) compared to the expected 8.10% return, compounded by losses due to more retirements than expected. The total increase in City contribution to amortize the unfunded liability is $1,779,530 per year. Historical Funding Progress (in $ millions) (a) (b) (b) -: (a) (a)/(b) (c) [(b) - (a)]/(c) Actuarial Actuarial UAAL as Valuation Actuarial Accrued Unfunded Percent of Date Value of Liability AAL Funded Annual Annual f October 1) .Assets (AAL) (UAAL) Ratio Payroll Payroll 2003 $ 555.5 $ 682.4 $ 126,9 81;41% $ 70,7 179.42% 2004 564.6 709.9 145.4 79.53 72.5 200.43 2005 588.5 746.3 157,8 78.85 71.5 220,79 2006 618.5 732.0 113.5 84,49 75.6 150.16 2007 664.1 770,2 106.1 86,23 82,1 129,28 2008 691.8 808.6 116.8 85.55 91.0 128.42 2009 645.6 780.6 135,0 82.70 90,0 149,94 2010 653,0 840.9 187,9 77,66 68.8 273.22 2011 600.7 843.8 243,1 71,19 63.6 382,23 Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC, B-13 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Present Value of Accrued Benefits and Market Value of Assets Interest Rate Fiscal Year Assumption 2001 8.10% 2002 8.10 2003 8.10 2004 8,10 2005 8.10 2006 8.10 2007 8,10 2008 8.10 2009 8.10 2010 8,10 2011(2) 8.00 Present Value of Accrued Benefits(1) $ 496,990,860 516,434,721 578,712,725 605,934,834 647,824,031 650,607,217 683,690,757 714,893,783 742,076,105 800,285,084 804,294,009 Market Value of Assets $ 551,197,253 467,725,075 516,813,945 546,454,226 586,943,151 623,992,356 694,302,333 576,492,500 538,012,201 553,797,518 517,904,877 Funded Ratio 110,90% 90.60 89.30 90.20 90.60 95.90 101.60 80.64 72.50 69.20 64.39 Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC, (1) The cost method used for determining the present value of accrued benefits is unit credit, Calculations are based on current service and current salaries as of the valuation date. The present value of accrued benefits is defined by participants' accumulated plan benefits as those fixture benefit payments that are attributable under the plan's provisions to employees' service rendered to the benefit information date. Their measurement is primarily based on employees' history of pay and service and other appropriate factors as of that date. Future salary changes are not considered. Future years of service are considered only in deterniin3ng employees' expected eligibility for particular types of benefits, for example, early retirement, death and disability benefits. To measure their actuarial present value, assumptions are used to adjust those aectunulated plan benefits to reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements such as £or death, disability, withdrawal or retirement) between the benefit information date and the expected date of payment. An assumption of an ongoing plan underlies those assumptions. (2) The calculations were performed by using the plan's discount rate of 8,0% whichwas adopted in May 2012 and first used in the October 1, 2011 valuation, B-14 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The rate of return on the market value for the period ending September 30, 2011 was 1,78%, as compared to the 8.10% assumption. The asset valuation method results in an actuarial asset value of $653.0 million as of September 30, 2011, as compared to the market value of $5538 million. The following is a table of the GESE revenues for the past ten years: Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011. City Contributions $ 2,090,701 3,602,457 10,669,846 19,003,415 22,018,443 24,229,028 22,762,902 23,191, 828 24,037,093 20,232,513 Member Contributions $ 7,147,651 7,605,397 7,937,387 7,858,302 8,021,488 8,819,536 9,517,052 11,791,902 12,728,711 9,183,073 Investment Income $ (53,892,226) 79,765,973 55,410,170 63,303,292 59,921,495 91,851,585 (94,751,747) (16,473,559) 45,195,934 11,660,396 Total $ (44,653,874) 90,973,827 74,017,403 90,165,009 88,961,426 124,900,149 (62,471,793) 18,510,171 81,961,738 41,075,982 Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC. Recent Benefit and Member Contribution Changes. Below is a summary of the benefit and member contribution changes adopted by the City effective September 30, 2010 and reflect in the prior and current valuation. (a) Benefit multiplier: 3% for current service plus service graded for future service— 2,25% first 15 years; 2.5% for years 16-20; 2,75% for service over 20 years. Current members enter graded formula at current service level. The revised benefit multiplier schedule is used in the calculation of the normal, early, deferred and disability retirement benefits, where applicable. (b) Average final compensation: Five year average p.ay for all years of service. Phase in from two to five year average pay over the next 3 years, The average final compensation shall not be less than the average final compensation as of the date of the plan change. (c) Normal retirement date: Unr educed retirement at earlier of age 55 and 30 years of service, age 60 and 10 years of service, or Rule of 80, (d) No benefit changes for current members who are eligible to retire (that. is, meet the Rule of 70 or age 55 and 10 years of service) as of the effective date of the plan changes. (e) Maximum benefit: maximum annual benefit at retirement is lesser of average final compensation and $100,000, Cost -of -living increases are applied to the benefit after retirement. Normal benefit form: life annuity as normal form of payment. Other actuarial equivalent options will be available. In no event will the revised benefits be less than the member's accrued benefit as of the effective date of the plan changes, that is, September 30, 2010. In addition to the member contributions to the GESE will increase from the current 10% of pay to 13% of pay. B-15 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following changes were made to GESE in 2012 pursuant to negotiations with the union. Member contributions, Effective the first full pay period following October 1, 2012, regular contributions of each member of the plan shall be made each pay period at the rate of 10% (instead of 13%) of each member's earnable compensation, Amortization period of unfunded actuarial accrued liability. As of October 1, 2011, the unfunded actuarial. accrued liability shall be amortized as a level percentage of the projected payroll of active plan members, The unfunded actuarial accrued liability as of October 1, 2011 shall be amortized by adding 5 years to the remaining years (instead of over the remaining years) of each unfunded actuarial accrued liability base. As of October 1, 2011, benefit improvements for actives shall be amortized over 20 years (instead of 15 years), Benefit improvements for retirees shall be amortized over 15 years. Actuarial gains and losses sha11 be amortized over 20 years (instead of 15 years). Changes in actuarial assumptions and methods shall be amortized over 20 years (instead of 15 years), Backdrop option. A Backdrop benefit option shall be implemented on January 1, 2013, The Backdrop option shall replace the existing DROP program, Employees who have not attained normal .retirement eligibility as of January 1, 2013 or were not vested by October 1, 2010, and all employees hired on or after January 1, 2013, will be eligible for the Backdrop option, but will not be eligible for the DROP, Anyone eligible for the forward DROP as of January 1, 2013, remains eligible for the forward DROP as it presently exists and anyone eligible for the forward DROP as of January 1, 2013 or vested prior to October 1, 2010, who chooses not to enter the forward DROP remains eligible for the Backdrop. Limitation on benefits. Effective September 30, 2012, member retirement allowances shall not exceed an annual retirement allowance of $80,000 as of retirement or DROP entry based on the normal form of benefit in effect on the date of retirement; provided, any employee who has an accrued benefit in excess of $80,000 annually onthe effective date shall retain that benefit, but sha11 not accrue arty additional benefits after that date. GESE EBP Plan Description, In July 2000, the City, pursuant to applicable Internal Revenue Code provisions, 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 benefit so the benefits for ,eligible members are not diminished by changes in the Internal Revenue Code, The GESE Board of Trustees adxnirtisters the excess benefit plan. GESE members are not required to contribute to the EBP. Mernbers of the GESE pattrcipate in this plan. At October 1, 2010, the date of the most recent actuarial report, membership in the EBP consisted of 35 retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them. There are no current employees in the plan, Contributions and Funding Policies, The payment of the City's contribution of excess retirement benefits for eligible members of the GESE above the limits permitted by the Internal Revenue Code is: (a) funded from the City's General Fund; (b) paid annually concurrently with the City's annual contribution to normal pension costs which causes the City to realize a reduction in normal pension costs in the same amount; and (c) deposited in a separate account established specifically for the GESE to receive the City's excess retirement benefit contributions. This account is separate and apart from the accounts established to receive the City's normal pension contributions for the GESE. The City is required to contribute as benefits become payable. B-16 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The payroll for employees covered by the EBP for, the year ended September 30, 2011 was approximately $68.4 million; the City's payroll was approximately $268,2 million. Annual Pension Cost and Net Pension Obligation, The EBP is an unfunded plan; however if the City were to fund the EBP on the same actuarial basis as the GESE, the annual contribution for October 1, 2011 is $585,357. This contribution represents 0,85% of the active members' payroll of $68,762,827 as of October 1, 2010. The unfunded actuarial accrued liability of 5,704,602 as of October 1., 2010 is amortized over 20 years fromthat date. Note that the illustrative annual contribution determined as of October 1, 2009 is $625,539 or 0.69% of payroll, The City's current year contribution was determined through an actuarial valuation performed as of October 1., 2010. Significant actuarial assumptions used to compute the annual contribution requirement are as follows: Valuation date: Actuarial cost method: Amortization method: Remaining amortization period: Asset valuation method: Investment rate of return: Projected salary increases: Payroll Growth: Includes inflation at October 1, 2010 Modified Entry Age Normal Level dollar, closed 20 years Not applicable 8,10% 5,25% 3,00% 3,50% Source: City of Miami General Employees' and. Sanitation Employees' Excess Benefit Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC, EBP contributions are determined using the entry age normal cost method with frozen actuarial accrued liability. Fiscal Year 2005 2006 2007 2008 2009 2010 2011 Annual Required Contribution $818,446 824,766 823,371 898,149 566,046 625,539 585,357 Annual Employer Contributions Contribution Made $475,076 463,126 476,252 446,916 464,325 339,602 403,896 Percentage Contributed 58.05% 56,15 57.84 49.76 82,03 54,29 69,00 1.Excess)/Deficiency $343,370 361,640 347,119 451,233 101,721 285,937 181,461 Source: City of Miami General Employees' and Sanitation Employees' Excess Benefit Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC, Fiscal Year 2011 numbers based on City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2011, Actuarial (a) Historical Funding Progress (in $ millions) (b) (b) —(a) (a)/(b) (c) [(b) " (a)]/(c) B-17 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Valuation Actuarial UAAL as Date Actuarial Accrued Unfunded Percent of (October 1) Value of Liability AAL Funded Annual Annual Assets (AAL) (UAAL) Ratio Payroll Payroll 2001 $ 0,0 $ 9,3 $ 9.3 0.00% $ 66,7 13.93% 2002 0,0 8,6 8.6 0,00 70,4 12,28 2003 0.0 9.9 9,9 0.00 70,7 14,04 2004 0,0 8.4 8,4 0.00 72,5 11,63 2005 0,0 8.4 8,4 0.00 71,5 11,75 2006 0,0 8.0 8,0 0.00 75,6 10.58 2007 0,0 8.6 8,6 0.00 82,1 10.48 2008 0,0 5,2 .5.2 0,00 91.0 5,66 2009 0.0 5.8 5,8 0.00 90.0 6,48 2010 0,0 5,7 5.7 0.00 68,8 8,30 Source: For valuation dates 2001-2003, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2007, For valuation dates 2004-2010, City of Miami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1 2010 prepared by Cavanaugh Macdonald Consulting, LLC, B-18 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The City's annual pension cost and net pension obligation to the ESP is as follows: Annual required contribution (ARC) Interest on net pension obligation (NPO) Adjustment to ARC Annual Pension Cost Contributions made Increase in NPO NPO, beginning of year NPO, end of year Fiscal Year 2010 $ 625,539 347,600 (431,711). $ 541,428 (339,602) $ 201,826 4,291,360 $ 4,493,186 Fiscal Year 2011 $ 585,357 363,948 (461,052) $ 488,253 (406,243) $82,010 4,493,18.6 $ 4,575,196 Source: City of Miami General Employees' and Sanitation Employees' Excess Benefit Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC. Staff Trust Plan Description, The Staff Trust is a single -employer, defined benefit plan. The Staff Trust was established by the rule -making authority of the GESE, pursuant to Chapter 40 of the City Code. The Staff Trust covers all administrative full-time employees and other positions as may be named by the Board of. Trustees. Participation in the Staff Trust is a mandatory condition of employment for all full-time employees, other than those eligible to decline membership. At October 1, 2010, the date of the most recent actuarial report, membership in the Staff Trust had no retirees and beneficiaries currently receiving benefits; one terminated employee entitled to benefits, but not yet receiving them and 11 current employees. Pension Benefits, The minimum normal retirement age is 55. Any member in service who has 10 or more years of continuous creditable service may elect to retire upon attainment of normal retirement age. A member who has completed a combination of at least 10 or more years of creditable service plus attained an age equaling 70 points may elect a Rule of 70 Retirement. However, a member is entitled to early retirement at any age with at least 10 years of creditable service. Retirement benefits are generally based on 3% of the average final compensation during the highest two years of membership service multiplied by years of creditable service, which is paid annually in monthly installments. A retired member who dies prior to having received 12 monthly retirement payments and prior to having an optional allowance becoming effective will have a lurnp sum equal to the excess, if any, of 12 times the monthly payments over the actual payments received paid to his designated beneficiary. Deferred Retirement Option Plan, The Staff Trust implemented a DROP for employees eligible for Rule of 70 Retirement on March 26, 2010. Any employee who is eligible for a Rule of 70 Retirement is eligible to participate in the DROP. Upon election of participation, a member's creditable service, accrued benefits, and compensation calculation are frozen and the DROP payment is based on the member's average final compensation. The member's contribution and the City contribution to the retirement plan for that member ceases as no further service credit is earned. The member does not acquire additional pension credit for the purposes of the pension plan, but may continue City employment for up to a maximum of 48 months. Once the maximum participation has been achieved, the participant must terminate employment. Upon termination of employment, a participant may receive payment from the DROP account in a lump sum distribution; or periodic payments. A participant may elect to rollover the balance to another B-19 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. qualified retirement plan, individual retirement account, an Internal Revenue Code Section 457 Plan, or an annuity, A participant may defer payment until the latest date authorized by Section 401(a)(9) of the Internal Revenue Code, DROP participation will not affect any other death or disability benefit provided under law or applicable collective bargaining agreement. If a participant dies before the account balances are paid out in full, the beneficiary will receive the remaining balance, Contributions and Funding Policies, Members of the Staff Trust are required to contribute 10% of their salary on a bi-weekly basis. The funding policies of the Staff Trust provide for periodic contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are sufficient to maintain the actuarial soundness of the Staff Trust and to accumulate sufficient assets to pay benefits when due, The City is required to contribute an actuarially determined amount that, when combined with member contributions, will fully. provide all benefits as they become payable. The yield (interest, dividends and net realized and unrealized gains and losses) on investments of the Staff Trust serves to reduce or increase future contributions that would otherwise be required to provide for the defined level of benefits under the Staff Trust. The payroll for employees covered by the Staff Trust for the year ended September 30, 2011 was approximately $843,000; the City's total payroll was approximately $268.2 million, Annual Pension Cost. The City's current year contribution was determined through an actuarial valuation performed as of October 1, 2010, Significant actuarial assumptions used to compute the contribution requires are as follows: Valuation date: Actuarial cost. method: Amortization method: Amortization method: Asset valuation method: Investment late of return*: Projected salary increases*: *Includes inflation at Cost of living adjustments: October 1, 2009 Modified Entry Age Normal Level dollar amounts, closed 6 to 20 years '3='i'ear'SrnoSt1i Market 8.10% 6:00% 3.50% None Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC, The Staff Trust contributions are determined using the entry age normal cost .method with frozen actuarial accrued liability. The annual pension cost is equal to the annual required contribution each year. B-20 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Annual Employer Contributions Fiscal Year Annual Pension Cost Percentage Contributed Net Pension Obligation 2004 $ 98,044 100,00 % 2005 99,779 100,00 2006 72,380 100,00 2007 57,995 100.00 2008 109,163 100.00 2009 159,837 100,00 2010 132,542 100,71 $(945) 2011 164,490 100.00 Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC. For fiscal year 2011, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2011, After taking into account expected member contributions, the total required contribution from the City is $226,793, or 26.90% of covered payroll for the 2012 fiscal year payable on October 1,, 2011, IN comparison, the required contribution for the 2011 fiscal year was $164,490, or 22.26% of cover payroll. There was an experience loss during the year, The implementation of 4-Year DROP provision increased the required contribution by $2,483 for fiscal year 2012. The Staff Trust's unfunded liability was projected to be $539,335 as of October 1, 2010, taking into account expected contributions from the City of $164,490 based on the October 1, 2009 valuation. The actual unfunded liability is $992,369. The increase of $453,034 in the unfunded liability is mainly due to the return on the actuarial value of assets of 1,37% compared to the expected retune of 8.10% and greater than expected pay increases. The total increase in City contribution to amortize the unfunded liability is $53,070 per year. Historical Funding Progress (a) (b) (b) - (a) (a)/(b) (c) [(b) - (a)]/(c) Actuarial Actuarial UAAL as Valuation Market Actuarial Accrued Percent of Date Value of Value of Liability Unfunded Funded Covered Annual ,(October 1), Assets ,Assets (AAL) AAL (UAAL) Ratio Payroll Payroll 2001 -- $ 206,578 $ 714,036 $ 507,458 28.93% $ 363,176 139.73% 2002 -- 303,728 900,721 596,993 33,72 411,278 145.16 2003 $ 267,345 446,666 1,057,295 610,629 42.25 448,457 136.16 2004 437,306 615,132 1,005,846 390,714 61,16 487,639 80.12 2005 587,697 768,336 1,084,275 215,939 70.86 455,220 69.40 2006 746,102 939,698 1,129,276 189,578 83.21 643,770 29.45 2007 913,769 1,138,655 1,622,719 484,064 70,17 734,116 65,94 2008 1,141,279 1,313,407 1,748,147 434,740 75.13 632,259 68,76 2009 1,140,033 1,556,718 2,121,806 565,088 73,37 738,898 76.48 2010 1,413,563 1,834,613 2,826,982 992,369 64,90 842,955 117.72 Source; For valuation dates 2001-2002, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2007, For valuation dates 2003-2010, City of Miami General Employees' and Sanitation Employees' Retirement Trust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC. B-21 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The City's annual pension cost and net pension obligation to the Staff Trust is as follows, Fiscal Year 2010 Fiscal Year 2011 Annual required contribution (ARC) $ 132,542 $ 164,490 Interest on net pension obligation (NPO) 0 0 Adjustment to ARC 0 0 Annual Pension Cost $ 132,542 $ 164,490 Contributions made 133,487 164,490 Decrease in NPO $ (945) $ 0 NPO, beginning of year 0 0 NPO, end of year $ 0 $ 0 Source: City of Miami General Employees' and Sanitation Employees' Retirement Trust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC, The rate of return on the market value fox the period ending September 30, 2010 was 9,67, as compared to the 8.10% assumption. The asset valuation method results in an actuarial asset value of $1.6 million as of September 30, 2010; .as compared to the market value of $1,4 million. Recent Benefit and Member Contribution Changes, Effective October 1, 2010 the retirement rates were updated to reflect the adoption of the DROP. Rates were changed from 50% to 65% for the pension administrator Upon reaching Rule of 70 eligibility; 20% was added to the current rates upon reaching Rule of 70 eligibility for other members. The marriage assumption,was also changed from 80% for all members to 0%0 for the pension administrator and 40% for all other members. EORT Plan Description. Prior to October 22, 2009, the City's elected officials participated in a single - employer, non-contributory defined benefit pension plan Under the administration and management of a separate Board of Trustees, Under the EORT, eligibility requires 7 years of total service if elected between October 1, 2001 and October 22, 2009, or 10 years of total service if elected prior to October 1, 2001as an elected official of the City to be vested without ;requiring that such service be continuous, Any official elected after 10/22/2009 is not eligible to participate in the plan. The City, ,pursuant to applicable Internal Revenue Code provisions, ,,also established qualified governinental`excess benefit plans to continue to cover the difference between the allowable pensiop fo be paid,` and the,amount of the defined benefit, so that the benef t`s for eligible ixiembers are not diminished by changes in the Internal Revenue Code. At the most recent preliminary actuarial valuation dated November 5, 2012, membership in the EORT consisted of 7 retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them. and 4 active officers with the future range of service from 2 to 4 years, Pension Benefits. Benefits accrue for City Commissioners at the rate of 50% of the highest annual W-2 wages in the last three years of employment after 7 years of service as an elected official of the City plus 5% for each additional year up to 100% at 17 or more years of service. Benefits axe payable on the later of age 55 or on the first day of the month following an officer's termination. An active participant will be fully vested upon death and a single sum death benefit is payable. The .EORT was frozen to new entrants effective October 22, 2009. Only participants who were accruing benefits and had not yet become vested in their B-22 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. benefits as of that date continue to accrue benefits under the EORT. Benefit accruals for all other participants were frozen, Contributions and Funding Policies. The funding methodology recently changed from the individual aggregate cost method to the Projected Unit Credit (PUC) method, Assets are allocated first to the non -active participants, then to the active participants based on their accrued liability, The unfunded present value of future benefits is determined for each individual and spread over their expected future working lifetime with the City. As EORT is a non-contributory defined benefit plan, all funding is provided by the City, The payroll for employees covered by the FORT for the year ended September 30, 2011 was approximately ,$336,000; the City's total payroll was approximately $268.2 million, Annual Pension Costs, The City's current year contribution was determined through an actuarial valuation determined as of December 31, 2010,.Significant actuarial assumptions used to computer the annual contribution requirement are as follows: Valuation date: December 31, 2011 Actuarial cost method: Projected Unit Credit Amortization method: Not Applicable Amortization method: Not Applicable Asset valuation method: December 31 market values Investment rate of return: 3,75% Projected salary increases: Not Applicable Inflation: Not Applicable Merit, longevity, etc.: Not Applicable Mortality table: RP-2000 White Collar Active/Retiree, Healthy Mortality table without setback Disability, turnover and retirements: No disability or turnover assumed. Retirement is assumed at end of the current term of 100% vested, Source; City of Miami Elected Officers' Retirement Trust Preliminary Actuarial Valuation Report as of December 1, 2011 prepared by Cowden Associates, Inc„ EORT contributions are determined using the Projected Unit Credit funding method. This method separates and develops funding components for annual contributions into 1) normal costs and 2) an amortization payment toward the unfunded liability for past service benefits. Revising the actuarial funding method allows the City to fund the payment liability over a longer period of time. While the 2011 EORT cost and necessary contribution amounted to $545,785 as of December 31, 2010, the City's annual required contribution for the 2012 plan year, if paid on December 31, 2012, will be $488,713, This amount includes interest at an annual rate of 3,775% from December 31, 2011 to the actual contribution date, The following contributions were made to EORT in accordance with actuarially determined contribution requirements, based on the actuarial valuation performed for each respective year. The annual pension cost is equal to the annual required contribution each year, B-23 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Annual Employer Contributions Fiscal Year Annual Pension Cost Percentage Contributed Net Pension Obligation 2006 $1,043,209 100% 2007 285,408 100 2008 711,209 100 -- 2009 412,588 100 2010 1,275,242 100 2011 432,170 100 -- 2012 545,785 100 Source: For valuation dates 2011-2009, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2011. For valuation dates 2006-2008, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2008, For FY 2012, City of Miami Preliminary 2012 Valuation Results for FORT by Cowden Associates, Inc, dated November 5, 2012, Special Benefit Plans Certain executive employees of the City are allowed to join the ICMA Retirement Trust's 401(a) plan (the "SBP"), This defined contribution deferred compensation plan, which covers governmental employees throughout the country, is governed by a Board of Directors responsible for carrying out the overall management of the organization, including investment administration and regulatory compliance. Membership for the City employees is limited by the City Code tg.specific members of the City Clerk, City Manager, City Attorney's offices, Department Directors, Assistant Directors, and other executives. To participate in the plan a written trust agreement must be executed, which requires the City to contribute 8% of the'individuai's earnable compensation, and the employee to contribute 10% of their salary. Participants may withdraw funds at retirement or upon separation based on a variety of payout options, The City does not have any fiduciary responsibility relating' to the plan, consequently the amount accrued for benefits are not recorded in the fiduciary funds. The following information relates to the City participation in the SBP; Total current year's payroll for all employees $268,215,510 Current year's payroll for participating employees 3,427,824 Current year employer contributions 289,634 Source; City of Miami, Florida Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2011, In addition to coverage under the FIPO, the firefighters and police officers are members of two separate non-contributory money purchase benefit plans established under the provisions of Chapters 175 artd 185, Florida: Statutes, respectively. These two plans are funded solely from proceeds of certain excise taxes levied by the City and imposed upon property and casualty insurance coverage within the City limits. This tax, which is collected from insurers by the State of Florida, is remitted directly to the plans' Boards of Trustees, The City is entitled to levy such excise taxes solely for the use of the money purchase benefit plans as long as the minimum benefit provisions of Chapter 175 and 185, Florida Statutes, are met by the FIPO. The City does not have any fiduciary responsibility relating to the SBP, consequently amount accrued benefits are not recorded in the fiduciary funds. The total of such excise taxes received from the state of Florida and remitted to the plans was $9,375,374 for the year ended September 30, 2011..Accordingly, these monies are B-24 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. recorded as pass through funds in the City's financial statements. Benefits are allocated to the participants based upon their service during the year and the level of funding received during said year. Participants are fully vested after nine years of service. Upon termination of service, a participant may elect to receive one of the three options (1) a lump sum payment; (2) five substantially equal payments, or (3) 10% or more in the first year and the remainder in any way over the next four years. The total must be paid out within five years. Legislative Proposals Affecting Pension Plans Senate Bill 1128 ("SB 1128"), which impacts government pension systems, including police and firefighter systems, became effective on July 1, 2011, SB 1128 provides that up to 300 hours of overtime may be included as compensation for pension purposes, but excludes payments for accrued unused sick or annual leave. The use of an actuarial or cash surplus in a local government's pension plan for any expenses outside the plan is also prohibited under SB 1128. SB 1128 also prevents a local government's contributions to be reduced below the normal cost of its pension plan. Specifically to police and firefighter pensions, SB 1128 eliminates the requirement to increase pension benefits whenever member contributions are increased. SB 1127 also allows cities with a local law plan in existence on or before June 30,1986, to change the representation of their pension boards, if such change does not reduce the percentage of police and firefighter members on such boards, S13 1128 also provides for the Department of Management Services ("DMS") to provide certain disclosures defined benefit pension plans of cities, including information on the plan's actuarial data, minimum funding requirements, and five year history of funded ratios, Under SB 1128, DMS is responsible for developing. a standardized rating system for local government defined benefit pension plans. Finally, SB 1128 creates a Task Force on Public Employee Disability Presumptions. The task force will study and make recommendations concerning the inclusion of certain disabilities to be job related. The task force's report and recommendations must be submitted to the Florida Legislature by January 1, 2012, At present, it is uncertain how SB 1128 will impact the City's finances, OTHER POST -EMPLOYMENT BENEFITS Pursuant to Section 112,0801., Florida Statutes,, the City is required to permit participation to 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 under the FOP Health Trust that is administered separately from the City's health care plan. For non -police retirees (fire fighters, general employees, sanitation employees and elected officials) and their dependents, the City has a stated policy of subsidizing health care coverage and life insurance at a discounted premium equal to 87% of the blended group rate. GASB Statement No, 45 allows flexibility to governmental employers in the use of various actuarial cost methods. Several such acceptable actuarial cost methods were evaluated, 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 for the City to adopt an actuarial cost method which is acceptable, appropriate, and commonly used. The City's annual Other Post Employment Benefit ("OPEB") liability was calculated using the entry age normal cost method, Plan Description. The City has two separate single -employer. OPEB plans for its retirees. One plan is for retiring police officers and the other plan is for all other retiring employees (the "Non -Police Retirees"). The benefits afforded to all retirees include lifetime medical, prescription, vision, dental andcertain life B -25 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. insurance coverage for retiree and dependents. Non -Police Retirees receive the same benefits as similarly situated active employees of the City, while retired police officers receive the same benefits as provided through the Fraternal Order of Police(the `TOP") Health Trust, The City offers to its retirees comprehensive medical coverage and life insurance benefits through its self-insurance plan. This plan was established in accordance with Section 112,0801, Florida Statutes. Substantially all of the City's general employees, sanitation employees and firefighters may become eligible for these benefits when they reach normal retirement age while working for the City. There are approximately 6,483 covered participants (including spouses and dependents), of which approximately 2,164 are active employees and 870 are retirees. Funding Policy. The City is authorized to establish benefit levels and approve the actuarial assumptions used in the determination of contributions levels. Beginning with the 2012 plan year, the retirees are contributing the majority of their premium costs each month. Spouses and other dependents are also eligible for coverage, although the retiree pays the premium cost. The FOP sponsors a Health Insurance Trust (the "HIT") that is partially self -insured, which provides life, heath, and accidental death and dismemberment insurance to substantially all full-time sworn members of the City's Police department, eligible retirees, their families and beneficiaries, The HIT receives a significant source of its funding from the City, pursuant to the terms of a collective bargaining agreement. The agreement requires the City to reimburse the HIT an amount that is required to -bring the HIT's minimum fund balance to $2,35 million annually. Currently, the City's subsidy to.OPEB benefits is unfunded. There areno separate trust funds or equivalent arrangements into which the City makes contributronsto advance -fund the OPEB obligations, as it does for its retiree pension ,plans. The Crty4s, cost of the OPEB benefits is funded on a .pay-as-you-go basis, The City contributed $14,114,241 for the fiscal,y„ear ended September 30, 2011,. The ultimate implicit subsidies which are provided over time are financed directly by general assets of the City, which are invested in short-term fixed income instruments according to its current investment policy. The City selected an interest discount rate of 4.25%, which is the long-range expected return on such short-term fixed income instruments, to calculate the present values and costs of the OPEB. Actuarial Methods, Actuarial valuations an ongoing plan involve estimates of the value of reported amounts and assumptions about the, probability of occurrence of events far into the. future. Actuarially determined amounts are subject to continual`revisiorias actual die compared to past expectations and new estimates afe made about the future. Although the .valuatior resuits are based on -Values the actuarial consultant believes are reasonable assumptions, the valuation result is only an estimate of what future costs may actually be and reflect a long-term perspective. Deviations in any of the several factors, suchas future interest rates, discounts, medical cost inflation, Medicare coverage risk and changes in marital status could result in actual costs being greater or less than estimated, Projection of benefits for financial reporting purposes are based on the substantive OPEB plan (the OPEB plan as understood by the employer and the members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short -terra volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of calculations. B-26 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Significant actuarial assumptions and methods used to estimate the OPEB liability are as follows: Valuation date: October 1, 2008 Actuarial cost method: Entry Age Normal Cost Method Amortization method: Level Percent of Payroll Amortization Period: 28 years Assumed rate of return on investments: 4,25% Assumed health care cost trend rates: 2009--10.0% 2010 — 6.8% 2011— 8.5% 2012 — 8.0% 2013 — 7,5% 2014 - Thereafter — 7,0% - 5.0% Source: City of Miami Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2011. Annual OPEB Cost and Net OPEB Obligation. The City's annual OPEB cost is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize the actuarial liabilities over a period not to exceed 30 years. The City's annual OPEB cost for the fiscal year ended September 30, 2011 was $36,016,664 for police retirees and $12,543,951 for non -police retirees. The City's annual OPEB cost and net OPEB obligation for the fiscal year ended September 30, 2011 for both non -police and police retirees are as follows: Non -Police Police Total Annual required contribution (ARC) $ 12,464,535 $ 35,732,002 $ 48,196,537 Interest on Net OPEB Obligation (NOO) 785,767 2,816,540 3,602,307 Adjustment to ARC (706,351) (2,531,878) (3,238,229) Annual OPEB Cost 12,543,951 36,016,664 48,560,615 Contributions made (4,931,874) (9,182,3671 (14,114,241) Increase in Net OPEB Obligation (NOO) 7,612,077 26,834,297 34,446,374 NOO, beginning of year 18,488,637 66,271,536 84,760,173 NOO, end of year $ 26,100,714 $..�._ 93,105,833 $ 119,206,547 Source: City of Miami Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2011. B-27 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The City's percentage of annual OPEB cost contributed to the plans, and the net OPEB obligations for the fiscal year ended September.30, 2011 are as follows: Non -Police OPEB Employer Percentage of Annual OPEB Fiscal Year Annual OPEB Cost Contribution Cost Contributed Nat OPBB Obligation 2008 810,786,386 $5,261,988 48.78% $5,524,398 2009 10,926,498 5,220,141 47.78 11,230,755 2010 12,540,416 5,282,534 42.12 18,488,637 2011 12,543,951 4,931,874 39.32 26,100,714 Source: City of Miami Other Post -Employment Benefits for City Employees Other Than Police Officers GASB Statement No. 45 Impact Study prepared by Gabriel Roeder Smith & Company on March 9, 2012, Police OPEB Annual Employer Percentage of Annual Net Fiscal Year OPEB Cost Contribution OPEB Cost Contributed OPEB Obligation 2008 $26,578,385 $4,910,046 18.47% $21,668,339 2009 26,959,115 6,314,600 23',42 42,312,854 2010 31,572,155 7,613,473 2411 66/271,536 2011 36,01.6,664 9,182,367 .25.49 93,105 833 Source: City of Miami Other Post -Employment Benefits for Police Officers GASB Statement No, 45 Impact Study prepared by Gabriel Roeder Smith & Corripany on March 9, 2012, The 2011 contributions for Police and Non -Police Retiree plans represented 25.49% and 39.32%, respectively, .of the annual required contributions. B-28 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following table illustrates how the Net OPEB Obligation and the Annual OPEB Cost are expected to grow over the next 10 years assuming no advance -funding, The projections in the table are made in a manner so as to simulate an open group forecast, that is, they approximate what forecast would produce if it included the effect of new hires after the valuation date. Non -Police OPEB (in millions) Current Net Annual Net Net OPEB Fiscal Year Annual OPEB Cost Employer Subsidy OPEB Shortfall Obligation 2011 $ 13.2 $ 5,0 $ 8.2 $ 26.7 2012 14.1 5.2 8,8 35.5 2013 14.7 5,9 8,8 44.4 2014 15,9 6,4 9.5 55.9 2015 16.6 6,9 9,7 63,6 2016 17.9 7,3 10,6 74.2 2017 18,6 7.7 10,9 85.1 2018 20.2 8.1 12.1 97.2 2019 20,8 8,5 12.3 109.4 2020 22,6 8.9 1.3.7 123.2 Source: City of Miami Other Post -Employment Benefits for City Employees Other Than Police Officers Actuarial Valuation Report for Year Ending September 30, 2010 prepared by Gabriel Roeder Smith & Company. Police OPEB (in millions) Annual Current Net Annual Net Net Fiscal Year OPEB Cost Employer Subsidy OPEB Shortfall OPEB Obligation 2011 $ 33.1 $ 8.8 $ 24.3 .$ 90,6 2012 35.8 10.0 25.8 116.4 2013 37.4 11.3 26.1 142.5 2014 40,8 12.5 28.3 170.7 2015 42.4 13,7 28.6 199.4 2016 46,1 15.0 31,2 230.6 2017 47.7 16.2 31,6 262,1 2018 52,1 17.6 34,5 296,6 2019 53.5 19,0 34.5 331.1 2020 58,6 20,5 38.1 369,3 Source: City of Miami Other Post -Employment Benefits for Police Officers Actuarial Valuation Report for Year Ending September 30, 2010 prepared by Gabriel Roeder Smith &Company. B-29 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The following tables are the OPEB funding progress, Non -Police OPEB (in millions) Actuarial UAAL as Actual Actuarial Accrued Unfunded Percent of Valuation Value of Liability AAL Covered Annual Date Assets (AAL) (UAAL) Funded Ratio Payroll Payroll (October 1) (a) •(b)_ (b) - (a) (a)/(b) (c) [(b) - (a)1/(c)1 2006 $ 0 $ 146,8 $ 146,8 0.00% $ 129.9 113.02% 2008(2) 0 148,7 148.7 0,00 170,8 87.08 2008(1) 0 146.6 146,6 0.00 185,1 79.19 Source: City of Miami Other Post -Employment Benefits for City Employees Other Than Police Officers GASB Statement No. 45 Impact Study prepared by Gabriel Roeder Smith & Company on March 9, 2012, () After reflecting changes in assumptions and retirement eligibility provisions. (2) Before reflecting changes. Police OPEB (in millions) Actuarial UAAL, as Actual Actuarial Accrued Unfunded Percent of Valuation Value of Liability AAL . Funded Covered Annual Date Assets (AAL) (UAAL) Ration Payroll Payroll ,October 1) (a) (b) '(1)‘):- (a) (a)/(b) (c) [(b) - (a)1/(c)1 2006 $ 0 $ 333.5 $333.5 0.00$ $57.6 579.06% 2008(2) 0 373,1 373.1 0.00 71.8 519.76 2008(1) 0 394.1 394,1 0.00 72,7 .542,03 Source: City of .Miami Other Post -Employment Benefits for. Police Officers GASB Statement No, 45 Impact Study prepared by Gabriel Roeder Smith & Company on March 9, 2012, (1) Afterreflecting changes in assumptions and retirement eligibility provisions, (2) Before reflecting changes. B-30 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, APPENDIX C FORM OF THE RESOLUTION Be. A NC-1,14S, THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. APPENDIX D COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 C ,o Be GL ,4weAsYlivedArm tt45,11L, Avg. %.5 , r� Websr /a.. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. APPENDIX E FORM OF BOND COUNSEL OPINION (-t )°e'er 0- yLC, i.an W:A erw.dt THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. [APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT] (76 be enitplafel 44-t abs-9 4-0 d. IN tilded W. CANWee.)/bk, tA1k, 5)A. Zoae) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. [APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY] 0-0 be a e,nt. i rased. lei 4 3te.. 6eltd 0544-1e;) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, APPENDIX H FORM OF INVESTOR LETTER (76 be uNt. -la ;14 eArn4LeViti;e7t, Srttel 0"-# 1) DRAFT: 76 be. enywed, Lnr 18041 APPENDIX I 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 2012 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the adoption of the Resolution, or the levy or collection of the non -Ad Valorem Revenues, 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. Certain Legal Proceedings and Asserted Claims The following are summaries of pending litigation or asserted claims, of which the City is aware, having an exposure either (a) not capped by the limitations of s. 768,28(5), F.S. (2012), Le., $200,000 per person/$300,000 per incident; and (b) not covered by the availability of excess insurance purchased by the. City to cover certain liabilities in excess of a $500,000 self insured retention. A. CIVIL LITIGATION - General 1. Jose Acuna v. City of Miami; Miami -Dade County Circuit Court, Case No.: 07-6321 CA 06. Plaintiff is a police officer who alleges that he was forced to either resign or face termination as a result of his involvement in a shooting in Coconut Grove where a gun was allegedly planted on the scene to substantiate the shooting, Although the Plaintiff was indicted, he was not convicted. The Plaintiff was acquitted on some charges and drew a hung jury on others. The federal prosecutors declined to continue their prosecution of the Plaintiff, but the Miami Police found just cause to terminate. Plaintiff seeks reinstatement, back pay and emoluments under the Whistle Blower statute, The City prevailed on summary judgment, and the Plaintiff has appealed. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 2, Armando Aguilar, on behalf of all Bargaining Unit Members; Fraternal Order of Police, Class Action Grievance No.: 12-08. This is a class action grievance filed by the Fraternal Order of Police ("FOP") alleging that the Collective Bargaining Agreement ("CBA") ending September 30, 2012, provides that if, during the term of the contract the TAFF Local 58.7 receives an increase in wages or benefits higher than the FOP, the FOP would automatically be entitled to the same additional wages and benefits, and that the TAFF received a retroactive increase in wages and benefits higher than the FOP, including but not limited to anniversary and longevity payments that had been frozen in 2010 and 2011. Specifically, the FOP claims that the failure to give the FOP the same compensation is a violation of past practice, and Articles 1, 4, 23 & 45 of the CBA. The FOP is seeking to be make whole by being provided with the compensation to all bargaining unit members, retroactive to October 1, 2010, equal to the higher wages and benefits provided to TAFF Local 587, including, but not limited to step and longevity raises from October 1, 2010 with interest, in excess of one million dollars. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 3, APAC Group, Inc. v. City of Miami; Miami -Dade County Circuit Court, Case No.:12-35085 CA 04. Plaintiff alleges that on May 23, 2005, it entered into a Horizontal Construction A contract with the City to perform work on several projects over the course of several years, including the US-1 Wall Replacement Project and the Belle Meade Storm Sewer Project Phase TT, Plaintiff further alleges that it fully performed its contractual obligations, but the City failed, despite prior demand, to pay the Plaintiff $351,965.58 for its work on the US-1 Wall Replacement Project and $2,215,080.33 for its work on the Belle Meade Storm Sewer Project, for a total of $2,567,04591. This lawsuit is relatively new and is in the pleadings stage, At this time, the City cannot predict with certainty the final outcome of this lawsuit. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. I -1 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 4. Chalks Airlines, Inc. v. Miami Sports and Exhibition Authority and the City of Miami Miami -Dade County Circuit Court, Case No,: 07-30071 CA 25. Plaintiff, a MSEA sub -tenant on Watson Island (the City owns the property and leases it to MSEA), claims that MSEA and the City have improperly terminated its sub -lease, and is requesting a declaratory judgment to that effect, MSEA was granted summary judgment by Judge Adrian on the issue of a breach of the sub -lease based on unpaid federal tax liens, and later, in December 2010, Final judgment, judge Adrian was replaced in the Division by Judge Butchko, who reconsidered the "finality" of the order and set the Final Judgment aside, MSEA appealed the successor judge's reconsideration, but the 3rd DCA affirmed. A second successor judge has now been assigned to the Division (Judge Cueto), and, accordingly, MSEA will again be moving for entry of Final Judgment, based on the earlier summary judgment on the issue of the non-payment of federal tax liens, which order remains in place, The case is set for trial in February, 2013, The City has an exposure for attorney's fees. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 5. forge Fernandez v. City of Miami; Miami -Dade County Circuit Court, Case No. 08-17486 CA 13. The former City Attorney brought suit in State Court alleging breach of contract, seeking payment of severance benefits and accuinulated leave balances (sick and vacation), which were denied upon his forced resignation as part of a plea deal, The City asserted a counterclaim requesting damages for excessive travel and reimbursements for meals unrelated to City business, The City's potential exposure exceeded $200,000, This case was assigned to outside conflict counsel, The case was tried to the Court which resulted in a finding against the former City Attorney, and in favor of the City on its counterclaim, in the amount of not less than $3,000, which may entitle the City to an award of its attorney's fees, The Plaintiff has appealed. At this time, the City cannot predict with certainty the final outcome of this. lawsuit. 6, Fraternal Order of. Police, Miami Lodge .No. 20, and Alfredo Vega v. City .oflj4iami, et al.; Miami Dade County Circuit Court, Case No.: 98-7760 CA27, L'his lawsuit,,broughtby. the police union, seeks promotions to the rank of sergeant for certain of its membership retroactive to 1994, with' back pay and emoluments. The testing, company,;who administered the promotional.: examination, has beep joined as a party but severed from the present proceedings, so the court could first address only liability. A prior action (Manning, et al, v, City of Miami), involving the same examination, but a different group of Plaintiffs, resulted in a judgment being entered against the City, The Manning jury determined that the exam did not comply with the requirernentsof the Civil Service Rules. This case was tried to the Cotirt in 2007, with the `same result. The parties are now in the damages phrase. The Court has ruled in the City's favor regarding the identity of the Plaintiffs and found that FOP did not have standing'to seek relief for back pay, thereby leaving seven (7)'individuals as Plaintiffs I-Iowever, another individual has now been allowed to intervene'creating the potential for other' FOP xi:tembers :f'o intervene; The Court ha's ordered the .pa ties back to mediation. The City's erasure exceeds $1 million: At this time; the City cannot predict with certainty the final outco'm.e of this lawsuit. 7, Fraternal Order of Police (FOP) v. City Of .Miami; Federal Mediation and Conciliation Service, Case No.: 090902-60467-3 Cl'aim No,: NDA, This is a labor arbitration, filed as a grievance, by the Fraternal Order of Police ("FOP"). The Union alleges the City failed to pay police officers wage increases due under collective bargaining agreement ("CBA'). The City faces potential _exposure for back wages, At this time, the City cannot predict with certainty the final outcome of this lawsuit, 8, In re The Fraternal Order of Police v. The City of Miami FMCS; Arbitration Case No,: 12- 50509-3, On March 5, 2010, the FOP brought a class action grievance on behalf of five (5) police officers who were involved in off -duty injuries or illnesses and were denied Light duty work after July 17, 2007, These officers had previously been included in a grievance filed by Officer Andrew Markowitz, but were denied any remedies by the Circuit Court who ruled that a class action had not been properly certified and they were 1-2 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. not parties to the Markowitz grievance. The Judge's ruling was affirmed by the Third District Court of Appeals. The officers are seeking the remedies that were previously denied by the Court. One of the officers in this grievance resigned from the City over three (3) years ago; if she were to be reinstated as a result of this arbitration, the City faces a potential exposure for back wages. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 9, Barbara Gomez v. City of Miami; Miami -Dade County Circuit Court, Case No,: 08-24348CA 27, This is a breach of contract claim filed by the former Director of Community Development, She is seeking reinstatement and back pay for the remaining time she needs to qualify for her pension, The City has exposure for back wages, At this time, the City cannot predict with certainty the final outcome of this lawsuit. 10. Cheryl K. Haigley v. City of Miami; Miami -Dade County Circuit Court, Case No,: 11-01364 CA 05, Plaintiff, on behalf of herself and the class of all others similarly situated, challenges the constitutionality of City of Miami Ordinance No, 11007, which, since January 1,1993, imposes a $100,00 "non- resident surcharge" upon all non -City of Miami residents who receive emergency medical services. Plaintiff seeks a refund of all amounts collected from 2008 forward, and the entry of an order requiring the City to cease the collection of the surcharge, costs and attorney's fees, The City's motion to dismiss was denied, The case is currently in discovery, The City's exposure currently approximates $120,000, and increases by approximately another $30,000 per year. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 11. In the matter of Miguel A. Hervis v, City of Miami; United States District Court -Southern District of Florida, Case No.: 12-22418 CV Scola/Bandstra (12-1564), Miguel Hervis, a former police lieutenant, has filed a Complaint for Damages before the Southern District Court of Florida alleging the City has violated the Americans with Disabilities Act (ADA) and the Florida Civil Rights Act, Mr. Hervis claims the City and former Chief of Police, John Timoney failed to protect him based on his disability (Parkinson's disease).. Specifically, Mr, Hervis argues constructive discharge based on the City's failure to promote him to the position of Police Commander, Mr, Hervis seeks compensatory, declaratory, injunctive relief, back pay, front pay, punitive damages, costs and attorney's fees, 12, Victor Igwe vs. City of Miami; Miami -Dade County Circuit Court, Case No.: 11-35238 CA 05. Plaintiff, the former Independent Auditor of the City, claims that he suffered "adverse employment action", i.e., that his four (4) year contract was not renewed, as a result of his "protectedbehavior" under s. 112.3187(7), F.S., to wit: issuing audit reports critical of the City financial decisions, his cooperation with an SEC in an investigation of the City, and in other respects, resulting in lost wages, employee benefits and other damages, The Plaintiff seeks a judgment for back wages and compensatory damages, an injunction requiring the City to reinstate him, and his attorney's fees and costs. The City answered the Complaint with discovery ongoing. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 13, Bernard Johnson v. City of Miami; Miami -Dade County Circuit Court, Case No.: 12-21565 CA 25. Plaintiff, a fourteen (14) year veteran of the Miami Police Department alleges that in November of 2009, when Miguel Exposito became the Chief of Police, and who was the final decision -maker regarding any employment decision within the MPD, he was demoted from a Commander position to a Lieutenant position, and was not considered for reassignment because of his race, i.e,, Black. Plaintiff further alleges retaliation, and an unlawful pattern and practice of discrimination by refusing to consider Black officers for so-called "White" Positions. Plaintiff is proceeding under the Florida Civil Rights Act, s, 760.01. et seq., F,S, At this time, the City cannot predict with certainty the final outcome of this lawsuit, I - 3 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 14, Kwaku Designs International, Inc., Harlan Woodard and Nathaniel Styles v. Michelle Spence -Jones, Leroy Jones, and Lillian Blondet; Miami -Dade County Circuit Court, Case No.: 11-34073 CA 05. Plaintiffs allege that they created a project called Osun's Village, which was a part of a larger initiative called the African Caribbean Cultural Arts Corridor, Plaintiffs further allege that they were able to obtain an allocation of funding in excess of $500,000 from the City of Miami for the project. In addition, Plaintiffs allege that Michelle Spence -Jones, Leroy Jones and Lillian Blondet, interfered with the plaintiffs' contractual arrangements thereby committing a tortuous interference with Plaintiffs' rights. Plaintiffs seek damages of in excess of $100,000. The case is in the pleading stage, At this time, the City cannot predict with certainty the final outcome of this lawsuit. 15, City of Miami v. Little River Club; Miami -Dade County Circuit Court, Case No.: 11-24889 CA 15. The City filed suit seeking injunctive relief based on two Code Enforcement Board orders finding the Little River Club ("LRC") guilty of using two properties as a parking lot in violation of the City's Zoning Ordinance, Miami 21, The LRC asserted a counterclaim against the City for inverse condemnation, alleging that. Miami 21 has denied the LRC of all beneficial and productive use of its properties and the prohibited use of the properties has caused a loss of income to the LRC's business. As part of its counterclaim, the LRC also seeks attorney's fees. The alleged loss of value and income, as well as the claim of attorney's fees, presents an exposure to the City, At this time, the City cannot predict with certainty the final outcome of this lawsuit, At this time, the City cannot predict with certainty the final outcome of this lawsuit, 16, Jeffrey Locke, et al. v. City of Miami; Miami -Dade County Circuit Court, Case No.: 00-10487 CA 09, This is an action initially brought by numerous Plaintiffs challenging the City's decision to declare the Plaintiffs ineligible'to sit for a. promotional examination, Since--fhen,!the Court struck the claims of most of the Plaintiffs,°'Hoyt leaving' Only fdr (4), The' Judge ias denied :the City's`Motion for'Sttrnrnaty Judgment argument, however the only remaining count is for breach of'Civil Service Rulers. The potential exposure in this case exceeds $200000,.for back wages and benefits. At this time, the City cannot predict With certainty the final o'titcoine of this. lawsuit . ,. 17. In the matter of Glenn Marcos; Civil Service .Board, Case No:10721G, Mr. Marcos was terminated from his position as Purchasing Manager for the City on August 5, 2010 He alleges that he was terminated because he voiced oral and written complaints 'regarding unlawful financial practices by the Finance Department, specifically the distribution and/or. ailocatibri of funds from restricted accounts to the General :Hind, lvla', Marcos amended his complaint. on.May15, 2012, to include a varietyof other allegations. Mr, Marcos requested a hearing tinder Section 40-128(b) of the City'Code, and the hearing was coriducted.on October 30, 2012 The Board Mist -id -that facts did hot warrant a whistlebiower remedy .Mr; Marcos Can now proceed Ito:::iedefal° court, 18, Milan Investrnent Group, Inc, v, City of Miami, et al. (Milan I); Miami -Dade County Circuit Court, Case No.: 08-77800 CA 08. This is a putative class action lawsuit to invalidate the Downtown Development Authority and obtain refunds of all ad valorem taxes paid to the DDA on behalf of the named Plaintiff and the putative class dating back to 1965. The City filed a Motion to :Dismiss and/or Strike. The Mo.tidn challenged, inter .alia, the P:laintiff's ability to bring this case as a class action given:the state's jurisdictional requirements for ad valorem tax suits which were not followed by the putative class members. The other Defendants joined in the City's Motion. The trial court granted the Motions to Dismiss, and the case was appealed. The Court of Appeal affirmed in part and reservedin part. The appellate court ruled that the all Plaintiff's claims were barred except to the extent that they present a challenge to the current years' tax assessment. The Plaintiff filed an amended Complaint seeking a refund of the tax assessments for 2009 & 2010, The City filed another Motion to Dismiss, challenging the merits of the amended Complaint and the Plaintiff's ability to bring this case as a class action given the state's jurisdictional requirements for ad valorem I - 4 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. tax suits where were not followed by the putative class members, The Court denied the City's Motion Dismiss the amended Complaint. The City has filed an Answer to the Amended Complaint and Affirmative Defenses, At this time, the City cannot predict with certainty the final outcome of this lawsuit. 19. Milan Investment Group, Inc, v. City of Miami, et al, (Milan II); Miami -Dade County Circuit Court, Case No.: 11-40596 CA 25. Milan filed this second suit as a putative class action lawsuit to obtain refunds of ad valorem taxes paid to the DDA on behalf of itself as the named Plaintiff and the putative class for the tax year 2011, The City filed a Motion to Dismiss, The lawsuit is also directed against the City, the DDA, the tax collector, and the property appraiser, seeking declaratory judgment, challenging the authority to levy and collect a half -mill ad valorem tax on property within the DDA, seeking refunds, and claiming damages under 42 U.S,C, s. 1983 for violations of equal protection, deprivations of due process, and unconstitutional takings. The Motion challenged, inter alia, the merits and Plaintiff's ability to bring this case as a class action given the state's jurisdictional requirements for ad valorem tax suits which were not followed by the putative class members. The other Defendants joined in the City's Motion. Due to the denial of the City's Motion to Dismiss the Amended Complaint in Milan I, the City abandoned the Motion to Dismiss in this case, and filed its Answer and Affirmative Defenses, At this time, the City cannot predict with certainty the final outcome of this lawsuit, 20. Scotty's Landing, LLC., and Grove Key Marina, LLC vs. Fernando; Casamayor., as Tax Collector of Miami -Dade County vs. City of Miami; Miami -Dade County Circuit Court, Case No.: 12-37171 CA 10, This is a dispute between Grove Key Marina, LLC (a tenant of the City and the operator of a marina on City -owned land), its manager, Scotty's Landing LLC (a restaurant operator)(collectively the "Plaintiffs"), and the County Tax Collector concerning the alleged wrongful attempt by the Tax Collector to collect ad valorem real property taxes, assessed against the property since 1995, but to date unpaid and delinquent, by threatening to revoke their occupational licenses and corporate charters, Plaintiffs contend that since the property is not owned by the them, ad valorem real property taxes have never been assessed against them, the property is not on the tax rolls in either of their names, and the tax notice has never been sent to them, the Tax Collector does not have the legal authority to collect the delinquent ad valorem real property taxes from the Plaintiffs, They further allege that the Grove Key Marina's lease with the City does not contain a "pass - through" with respect to ad valorem taxes, and thus, as between Grove Key Marina and the City, Grove Key Marina does not have the contractual obligation to pay the ad valorem taxes assessed against the property. The alleged amount of ad valorem taxes in dispute is $3,041,214.51, Plaintiffs are seeking a declaratory judgment that the Tax Collector has no authority to collect the ad valorem taxes from them, and that the taxpayer who actually owes the delinquent taxes is the City, They further seek injunctive relief to prohibit the Tax Collector from taking the actions threatened. In turn, the Tax Collector has sued the City via a Third Party Complaint, seeking a determination as to which party, the City, the Lessee or both, is/are responsible for payment of the ad valorem taxes for tax years 1995 through 2011, and an order requiring such party or parties to pay the taxes due and owing. If the Court were to find the City responsible, approximately 1/3 of the tax due (or $1 million) would be returned to the City as the municipal portion. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 21, Marie Severe v. City of Miami; Miami -Dade County Circuit Court, Case No.: 10-49932 CA 10. Plaintiff was an employee of the City, assigned to the Auditor General's Office, with the position of Senior Staff Auditor, under the supervision of Victor Igwe, Auditor General. Plaintiff allegedly filed a workers' compensation claim on November 2, 2006, and then advised her supervisor of her anxiety and depression diagnosis, Shortly thereafter, she alleges that her employment was terminated by her supervisor. Thereafter, Plaintiff filed a charge of discrimination with the FCHR and the EEOC, and was not hired for a position in the Budget Department as an Accountant/Budget Analyst. Plaintiff alleges violations of the FCRA because of an alleged disability discrimination termination, perceived disability discrimination, retaliation, failure to hire, I - 5 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. and violation of the Workers Compensation Law. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 22. The Sieger Suarez Architectural Partnership, Inc, v. Flagstone Island Gardens, LLC, and the City of Miami; Miami -Dade County Circuit Court, Case No.; 10-17467 CA 08. The Sieger -Suarez Architectural Partnership, Inc. ("Sieger Suarez") alleges that it was hired by developer. Flagstone Island Gardens, LLC ("Flagstone") to render architectural services for the Island Gardens Project on City -owned property on Watson Island. Plaintiff further alleges that it has not been paid $1,777,990,79 for services provided. Plaintiff is requesting declaratory relief that the "Agreement to Enter Into Ground Lease" between the City and Flagstone, without conditions precedent having been met for a ground lease but with an unexecuted "form of Ground lease" attached thereto, nonetheless constitutes a valid ground lease and interest in real property upon which it's claim can be enforced, that Flagstone is an "owner" as that term is defined in s. 713.01(23), F.S,, and that its claim of lien does not apply to the City's fee simple interest in the Property, and is therefore not invalid, Plaintiff also asserts claims for breach of contract and foreclosure of construction lien against Flagstone; unjust enrichment against both Flagstone and the City; and an equitable lien against both Flagstone and the City. The parties have selected a mediator, but no mediation date has been scheduled yet, At this time, the City cannot predict with certainty the final outcome of this lawsuit. 23. Robert Suarez, et al, v. City of Miami; Miami -Dade County Circuit Court, Case No.: 06- 06973 CA 20. Four Police employees assigned as detectives to the Economic Crimes Unit have brought suit in State Court alleging violation of the Florida Public Sector Whistleblower Act, s. 112.3187. The detectives allege that they were requested to Investigate an alleged identity theft outside the City. The detectives allege that they vgiced an pblection,tocq; .cluctirig,the znvestxgations.ia1d tl en close,d,the:icase approximately 9;0 months later. They were subsequently transferred out of the unit, and they,claim the transfer was retaliatory due�to their asserted objection:. The detectives are seeking, to be reinstated to,,their, prey anus position, reimbursement of .fringe benefits and lost wages, and ;seniority rights, ,compensatory damages for non- econom.icAamages, aid :attorney's fees The case is irk the, dis couery phase The. City's potential exposure could exceed $500,000. At this time, the City cannot predict With certainty the final outcome of this lawsuit. B. CIVIL LITIGATION Labor Litigation related to "Financial Urgency The legal challenges listed below relate to modifications made to the various union contracts by the City'Commission's invocation of the 'financial urgency" pr'ovisionss of State` law. Such modificationsresulted In. budgetary redractions for wages, pensions, and health care costs in a total aggi.egate amount'of approximately $76;903,905 The FOP and .TAF are requesting the return of their respective budgetary reduction amounts tesii'lting frorrithe modifications The City cantrot with certainty the"outcofne of these Iegal'c11a1.lenges`. See "'LIABILITIES OF TfiE CITY -Financial Urgency" Herein, 1, In the matter of Armando Aguilar on behalf of himself and ail Bargaining Unit Members; Fraternal Order of Police, Class Action, Grievance No. 10-012, This is a labor arbitration filed as a grievance filed by Police Union, Fraternal Order of Police, claiming that the City violated the Collective Bargaining Agreement ("CBA") and past practice. Armando Aguilar claims the City breached the CBA by reducing wages, suspending benefits, altering supplemental pays, freezing 'step and longevity raises, and altering pension benefits. The Union seeks reinstatement of modifications to pension, wages, and health benefits pursuant to the City's financial urgency under s. 447,4095, Ali arbitration hearing date is pending. At this time, the City cannot predict with certainty the final outcome of this matter, 2. Fraternal Order of Police, Walter E. Headley, Jr,, Miami Lodge No. 20 v. City of Miami, Florida; Miami -Dade County Circuit Court, Case No.; 10-48397 CA 02. This is an action for declaratory judgment and injunctive relief claiming that an executive session held on August 31, 2010, was conducted in I - 6 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. violation of the Sunshine law, s, 286,011, F.S,, and seeking to declare as void ab initio any decisions made or predicted on the shade meeting, including modifications to the collective bargaining agreement, The fiscal impact to the City is in the millions of dollars. The case is set for trial beginning November 5, 2012, At this time, the City cannot predict with certainty the final outcome of this lawsuit. 3. Fraternal Order of Police (POP) v. City of Miami and State of Florida; Miami -Dade County Circuit Court, Case No,: 10-47918 CA 01. The Union sued the City .based on the City's invocation of the Financial Urgency Statute, section 447.4095, F,S, The Second Amended Complaint challenges the facial constitutionality of s, 447.4095, F.S,, by claiming that the statute unconstitutionally impairs the right to collectively bargain; that the statute is unconstitutionally vague; that the statute unconstitutionally impairs the obligation of contract; that the statute violates due. process; and that the statute denied equal protection. The City has answered the Second Amended Complaint. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 4. Fraternal Order of Police, WaIier E. Headley, Jr., Miami Lodge No, 20 v, City of Miami; Florida District Court of Appeal, 1st District, Case No.: 1D12-2116. This is an appeal from a decision of the Public Employees Relations Commission ("PERC") by the FOP Miami Lodge 20 (hereinafter "FOP or the "Union") claiming that the City committed an unfair labor practice as a result of its invocation of a financial urgency pursuant to s, 447,4095, F.S. The Union alleged that it has a Collective Bargaining Agreement ("CBA") with the City, effective through September 30, 2010, that the parties exchanged initial proposals for a successor, agreement, and that the parties held several bargaining sessions. The Union further alleged that during the several bargaining sessions, the City never advised it that there was a need to reach settlement on economic items expeditiously, or that the City intended to declare a "financial urgency" and invoke the process set forth in s. 447.4095, F,S. The Union contends that s. 447,4095, F.S,, may only be invoked to modify the terms of an existing agreement. The Union further alleged that although the parties continued to bargain for a successor collective bargaining agreement, on August 9 and 12, 2010, the parties never discussed wages or pensions, but on August 16, 2010, the City advised the PERC that it had engaged in negotiations on the impact of the financial urgency, and any action necessitated by the financial urgency, and that a dispute existed. The Union then alleged that on August 31, 2010, the City unilaterally took action to alter the terms and conditions of employment before reaching impasse, in violation of ss. 447.501(1)(a) and (1)(c), F,S. Further, the Union alleged that, although the changes were not discussed with them, they were discussed in a closed door unnoticed "shade" meeting conducted in violation of s. 447,605, F.S. The Union contended that the failure of the City to have any discussions with the Union on these matters constituted bad faith or surface bargaining in violation of s. 447,501(1)(a), F.S. It also asserted that by unilaterally altering terms and conditions of employment before completion of the impasse procedure set forth in s, 447.403, .F.S,, and by not responding to a request for records, the City violated ss, 447.501(1)(a) and (1)(c), F,S, The Hearing Officer below submitted a recommended order on July 1, 2011, finding that the City was in compliance with s. 447.4095, F.S., and that the City did not commit an unfair labor practice, The Commission issued its Final Order affirming the Recommended Order and finding that a financial urgency actually existed and that the City correctly invoked s. 447,4095, demonstrating a compelling government interest requiring immediate modification of the agreement with the FOP. The Union has appealed to the First District Court of Appeals. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 5. International Association of Firefighters, Local 587 v. City of Miami; Florida District Court of Appeal, 3rd Dist,, Case No.: 3D12-1256. This is an appeal of a decision of the Public Employees Relations Commission ("PERC")(Case No.: CA-2010-119), by the IAF'Local 587 (hereinafter "Union") claiming the City committed an unfair labor practice. Specifically, the union asserts that it had a Collective Bargaining Agreement ("CBA") with the City, effective through October 1, 2010, that in 2010, in exchange for concessions by the Union, the CBA was extended through September 30, 2011, and that the City expressly waived its right I - 7 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. not to fund any year of the CBA except in the case of "true fiscal emergency", defined in the CBA (Article 18) as, "the City must demonstrate that there is no other reasonable alternative means of appropriating monies to fund the agreement for that year or years". The Union further alleged that less than six (6) months after agreeing to the extension, on April 30, 2010, the City invoked the process under s. 447.4095, F.S., claiming "financial urgency," and on August 31, 2010, unilaterally took action to modify wages, insurance and pension benefits, The Union asserts that the invocation of s. 447,4095, F.S., was improper and was waived by the City in the CBA. Further, the Union alleges that, prior to their enactment, the modifications to the CBA were discussed in a closed door, unnoticed shade meeting in violation of s. 447.605, F.S. Finally, the Union asserted that the City failed to bargain collectively and in good faith by enacting the changes of August 31, 2010, by not providing the Union with notice in advance, and by failing to discuss, bargain over, impact bargain, or complete the process set forth in ss. 447.403 and/or 447.4095, F.S. The Union seeks reinstatement of all benefits (pension and wages) modified by the City Commission. A Recommended Order was received on July 7, 2011 and the City was found in compliance with s, 447.4095, F,S, The Hearing Officer found that the City did not commit an unfair labor practice. On April 20, 2012, PERC affirmed the Recommended Order and entered its Final Order in favor of the City. PERC found that a financial urgency actually existed and that the City correctly invoked s. 447,4095, P.S., demonstrating a compelling governmental interest requiring immediate modification of the agreement with the Union, The Union has filed an appeal with the Third District Court of Appeal. At this time, the City cannot predict with certainty the final outcome of this lawsuit, 6. Miami Association of Firefighters Local 587 of the International Association of Firefighters, of Miami, Florida v. City of Miami; Miami -Dade County Circuit Court, Case No.:11-28302CA 06, ,The"Firefighters Union alleges that'it is a signatory to a Collective Bargaining Agreement ('CBA") with the City, effective October 1; 2009; though junk 30, 2012, which,contains a'provisioit'for final"and binding arbitration '° A grievance concerning. the City's alleged:;failure'to' abide by the terms of the`"'true Fiscal emergency.` funding provision of: the CBA, found in Section 18:18, was submitted- toaibitration (.American Arbitration Association;. Case No '32 390100428-10), ,resulting in an awa d on June 6, 2011, in favor of the City: 'I`l e Union.alieges that_:the sibitratoi. e ce"ededhis power'defined ar d limited by.the'CBA, by amending and.ix:bdifying the CBA by nullifying a provision of the contract in violation of Section 15.7 of the CBA, which provides, "The Arbitrator shall have no authority to change, amend, add to, subtract from or otherwise alter or supplement this Agreement or any part thereof or any amendme'nt`thereto ." Accordingly; the Union seeks to vacate the arbitration award and seeks to have the contract enforced as written. At this time, the City cannot predict with certainty the final outcome of this lawsuit, C. WORKERS' COMPENSATION Only those Workers' Compensation claims which are not covered by the availability of excess insurance purchased by the City to cover certain liabilities in excess of a $500,000 self -insured retention are included herein: 1. Claimant: Randall Cason, v. City of Miami OJCC'Case No.: 83-0001666AMK Cl ain%' No,: 000757-001087-W C-01 Claimant is a former City police officer who was involved in on -the job accidents on May 2,1982 and May 18, 1983, He is receiving permanent total disability benefits and has filed a recent petition for benefits seeking medical benefits. Those benefits will be provided but there is a claim for attorney's fees and costs, The potential exposure for both the benefits and the attorney's fees and costs may exceed be substantial if the City does not prevail. At this time, the City cannot predict with certainty' the final outcome of this lawsuit, I - 8 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 2, Claimant: Calvin Cleave v. City of Miami OJCC Case No,: 07-017368HHH & 11-019913HHH Claim No.: 000757-055151-WC-01 The claimant is a solid waste collector for the City of Miami since November 24,1999, who alleged he was injured on on-the-job on July 18, 2002, March 31, 2005, June 14, 2006, May 31, 2007, July 7, 2008, June 1, 2009, and November 9, 2010, inter alla, as a consequence of multiple accidents of various kinds, The accidents have been accepted as compensable and benefits have been provided. In the past numerous petitions for benefits have been filed for numerous accidents and all have been resolved. Recently, a petition for benefits had been filed on the accident of November 9, 2010, and this office filed a motion to dismiss which was granted but the claimant, through his attorney, has filed a motion to re -address the petition for benefits under the May 31, 2007 date of accident. The PFB seeks authorization of additional medical care for injuries sustained to similar body parts under both dates of accident. The combination all the various accidents constitute a significant possible future exposure for the City of Miami, This is a complex claim and the City may have significant exposure. At this time, the City cannot predict with certainty the final outcome of this lawsuit 3. Claimant: Alma Cortes v. City of Miami OJCC Case No,: 07-029688GCC Claim No,:.000757-001.421-WC-01 Claimant is a 63 year old former police officer who alleged she was injured on or about August 18, 1984, when she was arresting a subject, and a resulting scuffle led to on-the-job injuries that were accepted as compensable. Presently, all petitions for benefits have been dismissed but the claim remains open because the parties are considering global settlement. The claimant is receiving permanent total disability and, with very recent medical developments, the future exposure could be substantial, At this time, the City cannot predict with certainty the final outcome of this lawsuit, 4, Claimant: Leonard Linardos v, City of Miami OJCC Case No,: 11-029646SMS Claim No,: 000757-059576-WC-01 Claimant is a City police officer who suffered an occupational disease under s.112.18(1),.F,S., on or about May 26, 2010. The claim was accepted as compensable and the claimant did receive workers' compensation benefits. Recently, the claimant filed a petition for benefits seeking medical and indemnity benefits, The potential exposure may be substantial regardless of whether the City prevails on the instant litigation, At this time, the City cannot predict with certainty the final outcome of this lawsuit 5, Claimant: Alberto Pena v. City of Miami OJCC Case No,: 03-014420SM9 Claim No,: 000757-043237-WC-01 Claimant is a former City police officer who suffered a condition covered under F.S. Section 112.18(1) on or about November 1, 2000, The occupational disease involved hypertension at the time of the initial report of claim, The claim was accepted as compensable and the claimant did receive workers' compensation benefits. Recently, the claimant filed a claim for permanent total disability benefits, among other things, and the City has accepted the claimant's entitlement to said benefits; however, there are still issues concerning attorneys' fees and costs, as well as a possible contribution claim against the State of Florida under s. 440.42, F.S. The potential exposure may be substantial if the City does not prevail, At this time, the City cannot predict with certainty the final outcome of this lawsuit. T-9 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. D, ASSERTED CLAIMS - General Except as noted herein, claims not yet in litigation, and currently being investigated by the Risk Management Department, are not included herein. 1. In re Petroleum Products Corporation; Claim No.: 001721-EO-01.. An environmental claim is presently being asserted by the United States of America involving an alleged disposal by the City of Miami Fire Department's service garage of 83,055 gallons of waste oil to Petroleum Products Corporation ("PPC") on November 25, 1972. PPC allegedly operated as a processor and broker of waste oil at a site located in Hollywood, Florida, and, during its period of operation, disposed of sludges generated from the oil refining process in unlined pits on the site, Contamination assessment and initial remedial activities undertaken by the United States Environmental Protection Agency ("EPA) and the State Department of Environmental Regulation ("DER") during the past ten (10) years indicate that the soils and groundwater at the site are significantly contaminated by waste oil and other hazardous wastes. Based on an invoice, allegedly documenting the City's involvement in this matter, the EPA has advised that it considers the City a generator of hazardous wastes at the site and, therefore, jointly and severally liable for the cleanup and recovery costs at the site. EPA's preliminary estimate for the collective costs of remedial activities at the site is approximately $26 million dollars, It should be noted that in April, 1999, the EPA offered the City a de minimus settlement offer of $344,109, however, the City rejected the offer, Outside counsel has re-evaluated this matter for the City and estir fated the City's potential exposure for soil cleanup activities to be $154,960. This sum was calculated by multiplyingthe City's allocated share of liability within the Cooperating: Parties Group ("Cl?G") - 0.596% - against what counsel for, the CPG ("Common Counsel") has advised is one, possible worst case cost scenario to„the Cl'G - $29 million. The City has joined the group of Potentially Responsible Parties ("PRP"s); and has entered into a Consent Decree with EPA on the first phase of a three -phased appfroacho to cleanup of tls e sit e, generally known as Operable Unit .1, 2 and 3. Following the execution of the Consent'Decree by all settling PRPs, and completion of the remedial design at the site, and after further negotrations,;with EPA, the group of settling PRPs has taken a very aggressive technical posture at the site...The remedial design addresses not only free product recovery (OU-3), but also aims to achieve significant flushing of impacted soils (OU-2). At this time, the City,cannot predict with certainty the final outcome of this matter. E. ASSERTED CLAIMS - Burt J Harris Act Claims Except noted herein all chit is listed below were presented under the 13urt J. Harris Act, ss. 70.001, et seq., F.S. The Burt J. Harris .Act hasbeeninterpreted to have both a pre -suit notice requirement, and a four (4) year statute of limitation, See Russo Assoc., Inc. v. City ofDctnua Beach Code W. Bd 920 So,2d.716 (Fla, 4th DCA 2006). Except for those claims listed below not involving the adoption and: implementation of Miami 21, at the earliest, all claims arguably accrued for statute of linutatroris purposes on October 22, 2009, upon the date of adoption of Ordinance 13114, also known as Miami 21, the Miaini Zoning Ordinance; and, at the latest, arguably accrued. on January 28, 2010, the date of adoption of Ordinance 13138, which extended date of implementation of Miami 21. Whether involving Miami 21 or not, the City has investigated each of these claims, and formally deniedeach. 1. In re The Most Reverend Thomas G. Wenski, Archbishop of the Archdiocese of Miami, Inc. The claimant is the legal title holder of the property located Folio #01-4114-005-0061, commonly known as the "Genesis Parcel", located at 3675 South Miami Avenue, Miami, Florida. The claimant presents a claim under Section 70,001, F.S. (the "Bert Jr, Harris Act"), alleging that it has suffered a loss in fair market value of I-10 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. the property due to the City's enacting of Miami 21 Zoning Code, which, because it is allegedly so confusing and ambiguous, purportedly directly restricts or limits the use of the property such that the owner is unable to attain the reasonable investment -backed expectation for the existing use of the property. The claimant seeks compensation for the actual .loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $6,600,000.00, At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 2, In re The Most Reverend Thomas G, Wenski, Archbishop of the Archdiocese of Miami, Inc. The claimant is the legal title holder of the property located Folio #01- 4114-005-0051, commonly known as the "LaSalle Parcel", located at 3601 South Miami Avenue, Miami, Florida. The claimant presents a claim under Section 70.001, F.S, (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Miami 21 Zoning Code, which, because it is allegedly so confusing and ambiguous, purportedly directly restricts or limits the use of the property such that the owner is unable to attain the reasonable investment -backed expectation for the existing use of the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $63,300,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 3. In re The Most Reverend Thomas G. Wenski, Archbishop of the Archdiocese of Miarni, Inc. The claimant is the legal title holder of the property located Folio #01- 4114-005- 0050, commonly known as the "Youth Center Parcel", located at 3333 South Miami Avenue, Miami, Florida, The claimant presents a claim under Section 70,001, F.S. (the "Bert J, Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Miami 21 Zoning Code, which, because it is allegedly so confusing and ambiguous, purportedly directly restricts or limits the use of the property such that the owner is unable to attain the reasonable investment -backed expectation for the existing use of the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $45,900,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 4. In re The Most Reverend Thomas G. Wenski, Archbishop of the Archdiocese of Miami, Inc, The claimant is the legal title holder of the property located Folio #01- 4114-005-0063, commonly known as the "Carroll Manor Parcel", located at 3667 South Miami Avenue, Miami, Florida. The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris .Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Miami. 21. Zoning Code, which, because it is allegedly so confusing and ambiguous, purportedly directly restricts or limits the use of the property such that the owner is unable to attain the reasonable investment -backed expectation for the existing use of the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $22,500,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 5. In re Aqua -Vista Holding, Inc, The claimant is the legal title holder of the property located at 7610 Biscayne Boulevard, Miami, Florida, The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishing a 35 foot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $828,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation, THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 6: In re Charles N. Alien and Susan D. Allen, The claimants are the legal title holder of the property located at 7111 Biscayne Boulevard, Miami, Florida, The claimants present a claim under Section 70.001, F,S, (the "Bert J, Harris Act"), alleging that they have suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishing a 35 foot height limitation, and thus inordinately burdening the property. The claimants seek compensation for the actual loss to fair market value of the real property caused by the government action, which they claim is a loss appraised at $660,000,00, At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 7, In re Biscayne Inn and Apartments, LLC, The claimant is the legal title holder of the property located at 6730 Biscayne Boulevard, Miami, Florida, The claimant presents a claim under Section 70,001, F,S, (the "Bert J, Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishing a 35 foot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $1,122,000. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. ) 8, .In re Brickell. Village Land Company. The claimant is the legal title holder of the property located at 302 SW 7th,S.treet, 327 SW 8tt' Street, 324 SW 7'h Street, 330 SW 7th Street, 337 SW 8th Street, 319 SW Sth Street, 31.1 SW 8th Street, and 301 SW 8th Street, Miarni, ylorida, The claimant. presents. a claim under Section 70,001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered. a loss .infair market value of the propy di: e to the Citys:enacting,of Ordinance 1311.4 also known as tiMiami 21, which purportedly Imposed heightertand developable square footage limitations on the property :fhe claimant seeks compensation. for the actual loss to faix_market value of the real property caused by the government action, which they claim is a loss appraised at $6,660,000. No appraisal, of value was submitted with the claim, however, the claimant subsequently submitted r4s .appraisal k M.this time, Lhe City cannot predict with: certainty either.the final outcome of this claim, or whether it will ripen into litigation, ,.. 9. ; In re Charles_Tavares/13ricketl Cornmerce. Plaza, Inc The ;claimant is the legal title holder of the property at 1995 NW 11th Street, 1142 NW 21" S greet, 2000NM, 11th Street,1975 NW 11th Street, and 2051 NW 11th Street, Miami, Florida, The claimant presents a claim under Section 70.001, F.S. (the "Burt f Harris Act"), .alleging that it has suffered a loss in fair market vailieof the property due to the City's enacting of Ordinance 13114, also known as Miami 21 The claimant seeks compensation for the actual loss to fair market value of the real property caused by the goveinrnent action. No appraisal Of value was'submrfted with the claim. At this time, the City cannot predict With certainty either the final outcome of this claim, or whether it will ripen into litigation. 10. In re'Chirav Corporation. The Claimant is the legal title holder of the property at 6150 Biscayne Boulevard, Miami, Florida. The`claimant presents a claim under'Section 70.001, F.S. (the "Bert J. Harris. Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116,Section 2, which purportedly imposed a height lir .itation on the property by establishing a 35 foot height limitation, and thus inordinately burdened the property, The claimant seeks compensation for the actual loss, to fair market value of the real property caused by the government action, which it claims is a loss appraised at $888,420.00. At this time, the City cannot,predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 11, In re Chocron, LLC. The claimant is the legal title holder of the property located at 5445 et 5501 Biscayne Boulevard, Miami, Florida. The claimant presents a claim under Section 70.001, P.S. (the "Bert I 12 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. J, Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishinga.35 foot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $2,328,000,00, At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 12, In re Elisa Diaz, Victor A. Diaz and Shirley .Diaz, The claimants are the legal title holders of the properties located at 6500 Biscayne Boulevard, 6580 Biscayne Boulevard, 570 N.E. 66th Street, and 589 N,E, 65th Street, Miami, Florida. The claimants present a claim under Section 70,001, F.S. (the "Burt J, Harris Act"), alleging that they have suffered a loss in fair market value of the properties due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the properties by establishing a 35 foot height limitation, and thus inordinately burdening the properties. The claimants seek compensation for the actual loss to fair market value of the real properties caused by the government action, which they assert is a loss appraised at $2,212,140.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 13. In re Empire Plaza, LLC. The claimant is the legal title holder of the property located at Lots 1, 2 & 3, Block 2, Aqua Marine, Miami, Florida, The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishing a 35 foot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $576,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 14, In re Fiftystreet Investment, LLC, The claimant is the legal title holder of the properties located at Lot 1, Block 6, Bayshore Plaza Unit No, 4, and Lot 19, Block 6, Bayshore Plaza Unit No, 5, Miami, Florida, The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the properties due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the properties by establishing a 35 foot height limitation, and thus inordinately burdens the properties, The claimant seeks compensation for the actual loss to fair market value of the real properties caused by the government action, which it claims is a loss appraised at $1,723,680. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation, 15, In re God Bless Investment and Enterprises, Inc. The claimant is the legal title holder of the property located at 7150 Biscayne Boulevard, Miami, Florida. The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), alleging that it hassuffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishing a 35 foot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $855,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 16. In re Infinite Race, Inc. The claimant is the legal title holder of the property located 5201 and 5212 Biscayne Boulevard, Miami, Florida, The claimant presents a claim under Section 70,001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by I-13 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL, BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. establishing a 35 foot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $1,676,400,00, At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation, 17. In re Milano, Inc. The claimant is the legal title holder of the property located at 7500 Biscayne Boulevard, Miami, Florida. The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the property due .to the City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the property by establishing a 35 foot height limitation, and thus inordinately burdening the property, The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $2,801,700,00, At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. 18., In re Morningside Development LLC, Morningside Development LLC has filed a claim in regard to the property located at 5301-5501 Biscayne Blvd., Miami, Florida, The claim arises from a height reduction by the City for an approved land development permit that was granted but with a reduced height from what was requested for the structure. The Applicant did not prevail in appellate. litigation contesting the height decision. The. appraisal letter servedwith the claim alleges a fair .market value reduction of the • property by 80% or $6,380,000, At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation, 19. In re liIornirigside Properties, a Florida geheral partnership The claimant is the legal tittle E i F'! Fr 1� Heider of the property located at Lots 3 & 4, Block 12, Baysflore1.1nit Two, Miaixti, Florida .l'fte clairxiant i. . . tl 1 .. I r d .1 fA .,a,+ . re}. presents a claim tinder Section 70.001., F S (the Bert J Harris Act ), alleging that ;t has suffered a loss in fair f lPY; .1 a .. � tpy� ,. a "(I ifil . ,, market value of the property due to the City's.enacting of Ordinance 1316, Section2,'Wheeh pu rpoitedly impos d, height limitation on tthe prroperty,by establishing a 35 foot height 14n . ioin, aid budthusinoridinately rdening t ie property m } The.clanant seeks compensation, for the actual loss to ai 41.ar et value of 'the real property,catis'ed by the government action, which it claims is a loss appraised atf$920,280.00 At this time, the City, Canna predict With certainty either the final outcome of this claim, or whether it Wi11 ripen into litigation. 20. In re Shima V., Ltd. The claimant is•the legal title holder of the property located at Lots 1 & 2, Acadia, Miami, Florida The claimant presents a clam under Section 70.601, F.S. (the "Bert J Harris ..t li ,i}i;r,-• 1 �ci..n. .r a �'.;.�.:T •v. .•Ak��i alleging that it has sitffelecl i loss in tair market "value of the'propeity due to tide Cxty's en.achng of Or�clii?pi�ce 13116, Sect'zon 2, which purportedly imposed a height limitation on the' property by'e'stablisfiing'a 35 toot height limitation, and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to fair market value of the real property caused by the government action, which it claims is a loss appraised at $547,140,00... At this time, the City cannot predict with certainty either the final outcome of this claim, or whether it will ripen into litigation. I •• 14 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. EXHIBIT D FORM OF CONTINUING DISCLOSURE AGREEMENT (TO BE COMPLETED AT BOND CLOSING) THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. cb7 woow a (A/6- CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of , 2012, is executed and delivered by the City of Miami, Florida (the "Issuer") and•Digital Assurance Certification, L.i C., as the exclusive Disclosure Dissemination Agent (the "Disclosure Dissemination Agent" or "DAC") for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds. The services provided under this Disclosure Agreement relate to the execution of instructions received from the Issuer through use of the DAC system and do not' constitute "advice" within the meaning of the Dodd -Frank Wall Street Reform and Consumer Protection Act (the "Act"). DAC will not provide any advice or recommendation to the Issuer or anyone on the Issuer's behalf regarding the "issuance of municipal securities" or any "municipal financial product" as defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary. SECTION 1, Definitions, Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict virith the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings: "Annual Report" means an Annual Report described in and consistent with Section 3 of this Disclosure Agreement. "Annual Filing Date" means the date, set in Sections 2(a) and 2(f), by which the Annual Report is to be filed with the MSRB, "Annual Financial Information" means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement, "Audited Financial Statements" means the financial statements (if any) of the Issuer for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b) of this Disclosure Agreement. "Bonds" means the bonds as listed on the,attached Exhibit A, with the 9-digit CUSIP numbers relating thereto, "Certification" means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to the Disclosure Dissemination Agent is the Annual Report, .Audited Financial Statements, Notice Event notice, Failure to File Event, notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies. "Disclosure Representative" means the [Finance Director] of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information ,to the Disclosure Dissemination Agent, THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, "Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C, acting in ifs capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof. "Failure to File Event" means the Issuer's failure to file an Annual Report on or before the Annual Filing Date, • "Force Majeure Event" means: (i) acts of God, war, or terrorist action; (ii) failure or shut -down of the Electronic Municipal Market Access system maintained by the MSRB; or .(iii) to the extent beyond the Disclosure 'Dissemination Agent's reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in Internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect Internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement. "Holder" means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. "Information" means the Annual Reports, the Audited Financial Statements (if any), the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures, "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934. "Notice Event" means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed in Section 4(a) of this Disclosure Agreement. "Obligated Person" means ;any person, including the Issuer, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the Bonds (other than providers of municipal bond, insurance, letter of credit, or other liquidity facilities), as shown on Exhibit A. "Official Statement" means that Limited Offering Memorandum prepared by the Issuer in connection with the Bonds, as listed on Exhibit A. "Rule" means Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Trustee" means the institution, if any, identified as such in the document under which the Bonds were issued, "Voluntary Event Disclosure" means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(11) of Section 2 of this Disclosure Agreement that is accompanied by a THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of this Disclosure Agreement. "Voluntary Financial Disclosure" means information of the category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of this Disclosure Agreement. SECTION 2. Provision of Annual Reports, (a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than 30 days prior to the Annual Filing Date, Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an .Annual Report to the MSRB not later than June 30 of each year, commencing with the fiscal year ending September 30, 2012. Such date and each anniversary thereof is the Annual Filing Date, The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement. (b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may 'be by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification no latex than two • (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent that a Failure to File Event as has occurred and to immediately send a notice to the MSRB in substantially the fora attached as Exhibit B, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1. (c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 12:00 noon on the first business day following the Annual Filing Date for the Annual Report, shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to the MSRB in substantially the form attached as Exhibit B. (d) If Audited Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, for filing with the MSRB, (e) The Disclosure Dissemination Agent shall: (i) verify the filing specification of the MSRB each year prior to the Annual Filing Date; (ii) upon receipt, promptly file each Annual Report received under.Sections 2(a) and 2(b) with the MSRB; THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. (iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with the MSRB; (iv) upon receipt, promptly file the text of each Notice Event received under Section 4(a) and 4(b)(ii) with the MSRB, identifying the Notice Event as instructed by the Issuer pursuant to Section 4(a) or 4(b).(ii) (being any of the categories set forth below) when filing pursuant to Section 4(c) of this Disclosure Agreement: 1. "Principal and interest payment delinquencies;" 2. "Non -Payment related defaults, if material;" 3. "Unscheduled draws on debt service reserves reflecting financial difficulties;" 4. "Unscheduled draws on credit enhancements reflecting financial difficulties;" 5. "Substitution of credit or liquidity providers, or their failure to perform;" 6, "Adverse tax opinions or events affecting the tax-exempt status of the security;" 7. "Modifications to rights of securities holders, if material;" 8, 'Bond calls, if material;" 9. "Defeasances;" 10. "Release, substitution, or sale of property securing repayment of the securities, if material;" 11. "Ratings changes;" 12, "Tender offers;" 13, `Bankruptcy, insolvency, receivership or similar event of the obligated persons;" 14. "Merger, consolidation, or acquisition of the obligated person, if material;" and 15. "Appointment of a successor or additional trustee, or the change of name of a trustee, if material;" (v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB, identifying the filing as "Failure to provide annual financial information as required" when filing pursuant to Section 2(b)(ii) or Section 2(c) of this Disclosure Agreement; (vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received , under Section. 7(a) with the MSRB, identifying the Voluntary .Event Disclosure as instructed by the Issuer pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement: 1. "amendment to continuing disclosure undertaking;" THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 2, "change to obligated person;" 3. "notice to investors pursuant to bond documents;" 4. "certain communications from the Internal Revenue Service;" 5. "secondary market purchases;" 6. "bid for auction rate or other securities;" 7. "capital or other financing. plan;" 8, "litigation/enforcement action;" 9. "change of tender agent, remarketing agent, or other on -going party;" 10, "derivative or similar transactions;' and 11. "other event -based disclosures;" (vii) upon receipt, promptly file the text of each Voluntary Financial Disclosure received under Section 7(b) with the MSRB, identifying the Voluntary Financial Disclosure as instructed by the Issuer pursuant to Section 7(b) (being any of the categories set forth below) when filing pursuant to Section 7(b) of this Disclosure Agreement: 1. "quarterly/monthly financial information;" 2. "change in fiscal year/timing of annual disclosure;" 3. "change in accounting standard;" 4, "interim/additional financial information/operating data;" 5. "budget;" 6. "investment/debt/financial policy;" 7, "information provided to rating agency, credit/liquidity provider or other third party;" 8. "consultant reports;" and 9, "other financial/operating data;" (viii) provide the Issuer evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement. (f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. (g) Any Information received by the Disclosure Dissemination Agent before 6.00 p.m. Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this Disclosure Agreement and that it is accompanies by a Certification and all other information required by the terms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with the MSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Dissemination Agent shall have no liability for any delay in filing with the MSRB is such delay is caused by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to make any such filing as soon as possible. SECTION 3. Content of Annual Reports. (a) Each Annual Report shall contain Annual Financial Information with respect to the Issuer including the information in the tables provided in (b) Audited Financial Statements prepared 'in accordance with generally accepted accounting principles ("GAAP") as described in the Official Statement will be included in the Annual. Report. If such Audited Financial Statements are 'unavailable at the Annual Filing Date, unaudited financial staternents, prepared in accordance with GAAP as described in the Official Statement will be included in the Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d), Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined by the Rule), which have been previously filed With each of the National Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB• The Issuer will clearly identify each such document so incorporated by reference. Any Annual Financial Information containing modified operating data or financial information is required to explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. SECTION 4. .Reporting of Notice Events. (a) • The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws .on credit enhancements relating to the Bonds reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6, Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determination of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; 7, Modifications to rights of Bond holders, if material; 8. Bond calls, if material and tender offers; 9, Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds, if material; THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the Obligated Persons; 13. The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material, and 14, Appointment of a successor or additional trustee or the change of name of trustee, if material. 15. Notice of any failure on the part of the Issuer to meet the requirements of Section 2 hereof, The Issuer shall, in a timely manner not in excess of ten business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrence of .a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall be accompanied by a Certification, Such notice or Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the' Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event), (b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the Disclosure Representative of an event that may constitute a Notice Event, In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within five business days of receipt of such notice but in any event not later than the tenth business day after the occurrence of the Notice .Event, of the Issuer determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in subsection .(a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with the MSRB in accordance with Section 2 (e)(lv) hereof. SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, Notice Event notices, Failure to File Event notices, 0 THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, Voluntary Event Disclosures and Voluntary Financial Disclosures, the Issuer shall indicate the full name of the Bonds and the 9-digit CIISIP numbers for the Bonds as to which the provided information relates. SECTION 6, Additional Disclosure Obligations. The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the failure of duties and responsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend to providing legal advice regarding such laws, The Issuer acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement. SECTION 7. Voluntary Filintr. (a) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Event Disclosure with the MSRB from time to time pursuant to a 'Certification of the Disclosure Representative. Such Certification shall indentify the Voluntary Event Disclosure (which shall be any of the categories set forth in Section 2(e)(vi) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate the information and indentify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate.the information. If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordance with Section 2(e)(vi) hereof. This notice will be filed with a cover sheet completed by. the Disclosure Dissemination Agent in the form set forth in Exhibit C-2. (b) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Financial Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative, • Such Certification shall indentify the Voluntary Financial. Disclosure (which shall be any of the categories set forth in Section 2(e)(vii) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and indentify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Section 7(b) to file a Voluntary Financial Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRB in accordance with Section 2(e)(vii) hereof, This notice xrill be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-2. (c) The parties hereto acknowledge that the Issuer is not obligated pursuant to the terms of this Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any Voluntary Financial Disclosure pursuant to Section 7(b) hereof. (d) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in. any Annual Report, Audited Financial Statements,.Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or 'Voluntary Financial Disclosure in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure, SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the . Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the Issuer is no longer an obligated person with respect to the Bonds, or' upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of counsel expert in federal securities laws to the effect that continuing disclosure is no longer required. SECTION 9. Disclosure Dissemination Agent, The Issuer has appointed Digital Assurance Certification, L,L,C, as exclusive Disclosure Dissemination Agent under this Disclosure Agreement, The Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds, Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days' prior written notice to the Issuer. SECTION 10, Remedies in Event of Default. In the event of a failure of the Issuer or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders' rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be lim.ited•to those expressly stated herein. SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent. (a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Issuer has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement, The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any information or any other information, disclosures or notices provided to it by the Issuer and shall not be deemed to be acting in arty fiduciary capacity for the Issuer, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the Issuer's failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof, The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the Issuer has complied with this Disclosure Agreement, The Disclosure Dissemination Agent may conclusively rely upon certifications of the Issuer at all times. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The obligations of the Issuer under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b). The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and the Disclosure Dissemination Agent shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The fees and reasonable expenses of such counsel shall be payable by the Issuer. (c) All documents, reports, notice, statements, information and other materials provided to the MSRB under this Agreement shall be provided in an electronic format and accompanies by indentifying information as prescribed by the MSRB. SECTION 12. Amendment Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and the Disclosure Dissemination Agent to the effect that such amendment or waiver does. not materially impair the interests of Molders .of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Issuer nor. the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. SECTION 13, Beneficiaries, This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee of the Bonds, the Disclosure Dissemination Agent, the Underwriters, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of New York (other than with respect to conflicts of Iaws), SECTION 15, Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. The Disclosure Dissemination Agent and , the Issuer have caused this Continuing Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized, DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent By: Name: Title: THE CITY OF MIAMI, FLORIDA as Issuer By: Name: Johnny Martinez Title: City Manager ATTEST: Dwight S. Danie City Clerk APPROVED AS TO FORM AND CORRECTNESS: Julie 0, Bru, Esq. City Attorney APPROVED AS TO INSURANCE REQUIREMENTS: Calvin Ellis Risk Management Director THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT. Um:7 0,071. pt yr J wPa eV i A/� -- EXHIBIT A NAME AND CUSIP NUMBERS OP BONDS Name of Issuer: City of Miami, Florida Obligated Person(s): City of Miami, Florida Name of Bond Issue: Special Obligation Non -Ad Valorem Revenue Refunding Bonds Series 2012 (Port of Miami Tunnel Project) Date of Issuance: , 2012 Date of Official Statement: , 2012 Maturity Principal Initial CUSIP .(March 1) Amount Number THIS DOCUMENT IS A SUBSTITUTION TO ORIGINAL. BACKUP ORIGINAL CAN BE SEEN AT THE END OF THIS DOCUMENT, !4 � • l D ei- C- 1. P 7` 0 A) EXHIBIT E NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: . City of Miami, Florida Obligated Person(s): City of Miami, Florida Name of Bond Issue: Special Obligation Non -Ad Valorem Revenue Refunding Bonds Series 2012 (Port of Miami Tunnel Project) Date of Issuance: , 2012 NOTICE' IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above -named Bonds as required by the Disclosure Agreement, dated as. of , 2012, between the Issuer and Digital Assurance Certification, L,L,C,, as Disclosure Dissemination Agent, The Issuer has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by Dated: Digital Assurance Certification, L,L,C., as Disclosure Dissemination Agent, on behalf of the Issuer cc: Issuer Obligated Person SUBSTITUTED THIS BOND IS SUBJECT TO TRANSFER RESTRICTIONS, THE INITIAL PURCHASER HEREOF AND ANY SUBSEQUENT TRANSFEREE, BY PURCHASING THIS BOND, AGREES FOR THE BENEFIT OF THE CITY OF MIAMI, FLORIDA, THAT THIS BOND MAY BE TRANSFERRED, RESOLD OR ASSIGNED ONLY TO ANOTHER QUALIFIED INSTITUTIONAL BUYER. NOTWITHSTANDING ANYTHING IN THE RESOLUTION OR THIS BOND TO THE CONTRARY, NO TRANSFER, RESALE OR ASSIGNMENT OF THIS BON SHALL BE EFFECTIVE UNLESS THE TRANSFER, RESALE OR ASSIGNMENT OF T'S BOND IS TO ANY PURCHASER, TRANSFEREE, ASSIGNEE OR PARTICIPANT THA S A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A PROMULGATED NDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS BOND HAS NP° BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, CR a' Y STATE SECURITIES LAWS. ANY TRANSFER, RESALE, ASSIGNMENT OR OTHER, +ISPOSITION OF THIS BOND, OR ANY PARTICIPATION HEREIN, SHALL BE IN EACH SE ONLY IN A MANNER THAT DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, 0ANY APPLICABLE. STATE SECURITIES LAWS. THIS BOND SHALL BE ISSUED AND 'LLD, AND MAY ONLY BE TRANSFERRED, IN DENOMINATIONS OF $100,000 OR ANY I EGRAL MULTIPLE OF $5,000 IN EXCESS OF $100,000. No. R- (TO BE COMPLETED AT BOND CL ING) EXHIBIT A FORM OF BO i D UNITED STAT`'S OF AMERICA STAT MF FLORIDA CITY OIMIAMI, FLORIDA SPECIAL OB ATION NON -AD VALOREM REV. UE REFUNDING BOND SERIES 2012. ''ORT OF MIAMI TUNNEL PROJECT) Interest Maturity Rate Rate REGISTERED 0 ' NER: PRINCIPAL OUNT: Date of Original Issuance CUSIP DOLLARS The City of Miami, Florida (the "City"), for value received, hereby promises to pay to the re•'tered owner specified above, or registered assigns, but solely from the sources hereinafter. ntioned, the principal amount specified above on the maturity date specified above (or earlier upon redemption as described below), upon presentation and surrender hereof at the designated corporate trust office of U.S. Bank National Association (the "Bond Registrar"), and interest thereon, payable as described below, at the interest rate per annum specified above, on 1 and 1 of each year, commencing on 1, 20_. A-1 SUBSTITUTED the d by p -ceding nership story, such ository or its y a securities cipal amount of count specified in ited States), if such the cost of such wire wire transfer from the gular Record Date shall r Record Date and may be ent of such, defaulted interest not less than 10 days prior to erect shall be payable from the of authentication to which interest 1 or 1 to e of authentication, or unless the date which case from een a Regular Record Date and the next succeeding interest payment date, in which case fr•m such interest payment date, Principal of and interest on this Bond is payable in lawfmoney of the United States of America. This Bond is being issued in denominati•ns of $100,000 and integral multiples of $5,000 in excess of $100,000. This Bond is one of an authorized eries of bonds of the City designated as its "Special Obligation Non -Ad Valorem Revenue refunding Bonds, Series 2012 (Port of Miami Tunnel Project)" (herein called the "Series 012 Bonds"), in the aggregate principal amount of Dolla($ ) of like date, tenor, and effect, except as to number, date of matu y and interest rate, issued for the purposes of, together with any other available moneys, (i) r 'financing the Note, (ii) Funding a deposit to the Debt Service Reserve Account [or paying tre premium for a Reserve Account Insurance Policy], and (iii) paying certain costs of issue e of the Series 2012 Bonds, [including the premium for the Bond Insurance Policy and the R- erve Account Insurance Policy]. The Series 2012 Bonds are being issued under the authorit of and in full compliance with the Constitution of the State of Florida, Chapter 166, Florida St.:tutes, as amended, and the City Charter (collectively, the "Act") and a resolution duly adop - d by the City Commission of the City on November , 2012 (the "Resolution") and ar subject to all the terms and conditions of the Resolution. All terms used .in capitalized form a not defined herein are as defined in the Resolution. This Bo- d is secured by a lien on and pledge of the moneys held in the Bond Fund and certain Acco is (and subaccounts) established therein under the Resolution with respect to the Series 201 Bands, except for the Rebate Account (collectively, the "Pledged Funds") and is payable ylely from such Pledged Funds and, solely to the extent provided.in the second and third succeeding paragraphs, the Non -Ad Valorem Revenues (defined below), all in the manner provi+ F d in the Resolution, The City is not obligated to pay this Bond or the interest hereon exc..t as provided above, and the full faith and credit of the City are not pledged for the p 'ment of this Bond and this Bond does not constitute an indebtedness of the City within the eaning of any constitutional, statutory or charter provision or limitation; and it is expressly Interest on this Bond is payable by check or draft of the Bond Registrar made payable registered owner as its name and address shall appear on the registration books maintai the Bond Registrar at the close of business on the fifteenth day of the calendar month each interest payment date (the "Regular Record Date"); provided, however, that (I) if of the Bonds is maintained in a book -entry only system by a securities depo. payment may be made by automatic funds transfer (wire) to such securities de nominee or (ii) if such Bonds are not maintained in a book -entry only system depository, upon written request of the Holder of $1,000,000 or more in pr Bonds, such payments may be made by wire transfer to the bank and bank writing by such Holder (such bank being a bank within the continental U Holder has advanced to the Bond Registrar the amount necessary to p transfer or authorized the Bond Registrar to deduct the cost of suc payment due such Holder. Any interest not punctually paid on a forthwith cease to be payable to the registered owner on such Reg paid at the close of business on a special record date for the pay to be fixed by the Bond Registrar, notice whereof shall be give such special record date to such registered owner. Such i most recent interest payment date next preceding the dat has been paid, unless the date of authentication is a which interest has been paid, in which case from the d of authentication is prior to , 2012, i 2012, or unless the date of authentication is bet A-2 SUBSTITUTED agreed by the Holder of this Bond that such Holder shall never have the right to require or compel the exercise of the ad valorem taxing power of the City, the State of Florida or any political subdivision thereof or taxation in any form of any real or personal property therein, for the payment of the principal of and interest on this Bond or the making of any other payments provided for in the Resolution. It is further agreed between the City and the Holder of this Bond that this Bond an the obligation evidenced thereby shall not constitute a lien upon property of or in the City, b shall constitute a lien only on the Pledged Funds, all in the manner provided in the Resolutio "Non -Ad Valorem Revenues" is defined in the Resolution as all revenu-: of the City derived from any source whatsoever, other than ad valorem taxation on rI or personal property, which are legally available to make the payments required under th_''esolution. The City covenants and agrees in the Resolution to budget and appropriate in i r' annual budget, by amendment, if necessary, from Non -Ad Valorem Revenues lawfully av,a'ilable in each Fiscal Year, amounts sufficient to satisfy (i) the Annual Debt Service Req ;'ement for such Fiscal Year, (ii) any deposits required to be made into the Debt Service Re-=rve Account during such Fiscal Year, (iii) any other amounts due the Provider of a Bond In 4rance Policy, the issuers of any other Reserve Account Insurance Policy and the Bond Re«'strar during such Fiscal Year and (iv) any Rebate Amount due during such Fiscal Year as ;'ovided in the Resolution. Such covenant and agreement on the part of the City to budge '.nd appropriate such amounts of Non -Ad Valorem Revenues shall be cumulative to the ex nt not paid, and shall continue until such Non -Ad Valorem Revenues or other legally ava' bie moneys in amounts sufficient to make all such required payments shall have been dgeted, appropriated and actually paid. Notwithstanding the foregoing covenant of the City e City does not covenant to maintain any services or programs, now provided or maintains y the City, which generate Non -Ad Valorem Revenues. Such covenant to budget and app priate does not create any lien upon or pledge of such Non -Ad Valorem Revenues, nor d s it preclude the City from pledging in the future its Non -Ad Valorem Revenues, nor does require the City to levy and collect any particular Non - Ad Valorem Revenues, nor does i ive the Bondholders, the Provider of a Bond Insurance Policy, the issuers of any other R erve Account Insurance Policy or the Bond Registrar a prior claim on the Non -Ad Valorem venues as opposed to claims of general creditors of the City, Such covenant to budget an ppropriate Non -Ad Valorem Revenues is subject in all respects to the payment of oblige,ns secured by a pledge of such Non -Ad Valorem Revenues heretofore or hereinafter v tered into (including the payment of debt service on bonds and other debt instruments). H..+�ever, the covenant to budget and appropriate in its general annual budget for the purp.,-.'es and in the manner stated in the Resolution shall have the effect of making available i e manner described herein Non -Ad Valorem Revenues and placing on the City a positive dy to budget and appropriate, by amendment, if necessary, amounts sufficient to meet its oblations under the Resolution subject, however, in all respects to the restrictions of Section 1 • .241(3), Florida Statutes, which provides, in part, that the governing body of each municipals, i make appropriations for each fiscal year which, in any one year, shall not exceed the amnt to be received from taxation or other revenue sources; and subject, further, to the paym t of services and programs which are for essential public purposes affecting the health, wel; re and safety of the inhabitants of the City or which are legally mandated by applicable law. A-3 SUBSTITUTED [Insert Redemption Provisions] Reference is hereby made to the Resolution for the provisions, amon• others, relating to the term, lien and security of the Bonds, the custody and application of e proceeds of the Bonds, continuing disclosure obligations of the City, the rights and reme•' s of the Bondholder, the extent of and limitations on the City's rights, duties and obligations and the provisions permitting the issuance of additional indebtedness, to all of which . °visions the Bondholder hereof for himself and his successors in interest assents by accepta e of this Bond. The City has previously issued and currently has o standing other indebtedness payable from and secured by, in whole or in part, its le.Ily available Non -Ad Valorem Revenues. The original registered owner, and each successiv registered owner of this Bond shall be conclusively deemed to have agreed and consented the following terms and conditions: 1. The Bond Registrar shall keep book for the registration of Bonds and for the registration of transfers of Bonds as provided the Resolution. The Bonds shall be transferable by the registered owner thereof in person or by his attorney duly authorized in writing only to a Qualified Institutional Buyer u'on the books kept by the Bond Registrar and only upon surrender thereof together with a ' ritten instrument of transfer satisfactory to the Bond Registrar duly executed by the register d owner or his duly authorized attorney. Upon the transfer of any such Bond, the City shall i ue in the name of the transferee' (which must be a Qualified Institutional Buyer) a new Bond r Bonds, 2. The City, the Bond Re % istrar and any other fiduciaries may deem and treat the person in whose name any Bond shl be registered upon the books kept by the Bond Registrar as the absolute owner of such ond,' whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond as the same becomes due, and f•'r all other purposes. All such payments so made to any such registered owner or upon hi order shall be valid and effectual to satisfy and discharge the liability upon such Bond to` e extent of the sum or sums so paid, and neither the City, the Bond Registrar nor any other fi.'ciary shall be affected by any notice to the contrary. 3. At the tion of the registered owner thereof and upon surrender thereof at the designated corporat-' trust office of the Bond Registrar with a written instrument of transfer satisfactory to the and Registrar duly executed by the registered owner or his duly authorized attorney and upor payment by such registered owner of any charges which the Bond Registrar or the City may ake as provided in the Resolution, the Bonds may be exchanged for Bonds of the same mat ity of any other Authorized Denominations. 4. In all cases in which the privilege of exchanging Bonds or transferring Bonds is exercise., the City shall execute and the Bond Registrar shall authenticate and deliver Bonds in accord ce with the provisions of the Resolution. There shall be no charge for any such exchge or transfer of Bonds, but the City or the Bond Registrar may require payment of a su sufficient to pay any tax, fee or other governmental charge required to be paid with respect to uch exchange or transfer. Neither the City nor the Bond Registrar shall be required (a) to ansfer or exchange Bonds for a period of 15 days next preceding an interest payment date on such Bonds or next preceding any selection of Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to transfer or exchange any Bonds called for redemption. A-4 SUBSTITUTED It is hereby certified and recited that all acts, conditions and things required to ist, to happen, and to be performed, precedent to and in the issuance of this Bond e st, have happened and have been performed in regular and due form and time as required y the Act, and that the issuance of this Bond, and of the issue of Series 2012 Bonds of whic this Bond is one, is in full compliance with all constitutional, statutory or charter limitations or ovisions. IN WITNESS WHEREOF, the City of Miami, Florida, has issued is Bond and has caused the same to be signed by its City Manager and attested and cou ersigned by its City Clerk, either manually or with their facsimile signatures, and its seal to e affixed hereto or a facsimile of its seal to be reproduced hereon, all as of the day of , 2012. (SEAL) ATTESTED: CITY OFIAMI, FLORIDA, a muni• pal corporation By: City Manager By: APPROVED AS TO FORM City Clerk AND CORRECTNESS By: City Attorney A-5 SUBSTITUTED CERTIFICATE OF AUTHENTICATION This Bond is one of the Series 2012 Bonds delivered pursuant to the with mentioned Resolution. Date of Authentication: Bv: Aorized Signatory A-6 SUBSTITUTED ABBREVIATIONS The following abbreviations, when used in the inscription on the face of the within ;end, shall be construed as though they were written out in full according to applicable I.,` s or regulations. TEN COM - as tenants in common TEN ENT as tenants by the entireties JT TEN - as joint tenants with the right of survivorship and .t as tenants in common UNIFORM GIFT MIN ACT - Custodian °(Gust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may a =o be used though not in the abo'- list. ASSIGNM-LNT For value received, the undersigned' hereby sells, assigns and 'transfers unto the within Bond, and all rights thereunder, and hereby irrevocably constitutes and appoin attorney to transfer the said Bond on t premises. Dated: Please insert Social Security orher identifying number of transfer Signature guaranteed: bond register, with full power of substitution in the NOTICE: The trans ror's signature to this Assignment must correspond with the name as it appears •n the face of the within Bond in every particular without alteration or any chang whatever. A-7 SUBSTITUTED EXHIBIT B FORM OF BOND PURCHASE AGREEMENT (TO BE COMPLETED UPON BOND SALE) • B-1 SUBSTITUTED Di r%. Y PL i- ) a tO 6 a ,v_b 54L. BOND PURCHASE AGREEMENT The City of Miami, Florida Special Obligation Non -Ad Valorem Revenue Refunding Bond Series 2012 November , 2012 The City of Miami, Florida 444 Southwest 2nd Avenue Miami, FL 33130-1910 Attention: Johnny Martinez, City Manager Ladies and Gentlemen: The undersigned, Wells Fargo Bank, National Assoc into the following agreement (this "Agreement") w which, upon the City's written acceptance of this the Underwriter. This offer is made subject to t 11:59 p.m., Eastern time, on December withdrawal by the Underwriter upon acceptance hereof by the City. Teens same meanings set forth in the Bond Memorandum (as defined herein). not n ion (the "Underwriter"), offers to enter the City of Miami, Florida (the "City") fer, will be binding upon the City and upon e City's written acceptance hereof on or before 012, and, if not so accepted, will be subject to e delivered to the City at any time prior to the otherwise defined in this Agreement shall have the solution (as defined herein) or in the Limited Offering 1. Purchase and Sale of the,: onds. Subject to the terms and conditions and in reliance upon the representations, w 3` anties and agreements set forth herein, the Underwriter hereby agrees to purchase fm the City, and the City hereby agrees to sell and deliver to the Underwriter, all, t not less than all, of the City's $ Special Obligation Non -Ad Valore,;' Revenue Refunding Bonds, Series 2012 (the "Bonds"). Inasmuch as this purchase, ind sale represents a negotiated transaction, the City acknowledges and agrees that. (i) the transaction contemplated by this Agreement is an arm's length, commerctransaction between the City and the Underwriter in which the Underwriter is acting ,• ely as a principal and is not acting as a municipal advisor, financial advisor or fiduciary to the City; (ii) the Underwriter has not assumed any advisory or fiduciary res onsibility to the City with respect to the transaction contemplated hereby and the scussions, undertakings and procedures leading thereto (irrespective of whether the nderwriter has provided other services or is currently providing other services to the City on other matters); (iii) the Underwriter is acting solely in its capacity as underwriter for its own account, (iv) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Agreement; and (v) the City has consulted its own legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate. . The principal amount of the Bonds to be issued, the dated date therefor, the maturities, sinking fund and optional redemption provisions and interest rates per annum are set 1 48404440-0657.2 37123/00151BS tgm SUBSTITUTED forth in Schedule I hereto. The Bonds shall be as described in, and shall be issued ae secured under and pursuant to the provisions of Resolution No. adopted by he City on [November 15, 2012] (the "Bond Resolution"). The Reserve A ount Requirement for the Bonds is $ , which is equal to the lesser o (i) the Maximum Annual Debt Service on all of the Bonds Outstanding, (ii) 12. yo of the average Annual Debt Service Requirement on all Bonds Outstanding, or (iii 10% of the proceeds of the Bonds.1 The aggregate purchase price for the Bonds shall be $ (the "Purchase Price"), which is the sum of $ original aggregate princi p :1 amount, plus/less net original issue premium/discount of $ and less Un erwriter's discount of ). Subject to the terms and conditions of this greement, the Purchase Price shall be paid by the Underwriter to the City at the Closi as described in Section 5 below. Upon the City's acceptance, execution, and deliv Underwriter, the Underwriter shall deliver to the Cii transfer of funds in the amount of $ - re onds (the "Good .Faith. Deposit"). In the event Faith Deposit shall be held by the City -in a seg • at which time such Good Faith Deposit shall City fail to deliver the Bonds at the Closi conditions of the obligations of the Und for the Bonds, as set forth in this A should such obligations of the Unde Agreement, such Good Faith Dep In the event that the Underwrit purchase, accept delivery of such Good Faith Deposit sh for such failure of the Un no party shall have any the City understand th less than such atno waives any right Good Faith De any right the y of this Agreement to the as a good faith deposit, a wire enting 1 % of the bar amount of the e City accepts this offer, such Good gated account until the time of Closing, e returned to the Underwriter. Should the or .should the City be unable to satisfy the writer to purchase, accept delivery of and pay cement (unless waived by the Underwriter), or riter be terminated for any reason permitted by this it shall immediately be returned to the Underwriter. fails (other than for a reason permitted hereunder) to d pay for the Bonds at the Closing as herein provided, be retained by the City as and for fully liquidated damages rwriter, and, except as set forth in Sections 8 and 10 hereof, urther rights against the other hereunder. The Underwriter and in such event the City's actual damages may be greater or may be t of the Good Faith Deposit. Accordingly, the Underwriter hereby claim that the City's actual damages are less than such amount of the sit, and the City's acceptance of.this offer shall constitute a waiver of ty may have to additional damages from the Underwriter. The Und:: writer shall upon execution of this Agreement provide to the City the Disclos e Letter and Truth -In -Bonding Statement required by Section 218.385, Florida Statu s, attached hereto as Schedule II and made a part hereof. 2. L' gaited Offering. The Underwriter agrees to make a limited offering of all of the Bonds t a price not to exceed the offering prices (which may be expressed in terms of yield) set forth on the inside cover of the Limited Offering Memorandum and in compliance with the Bond Resolution and may subsequently change such offering price without any requirement of prior notice. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower 2 4840-444Q-0657.2_37123/0015IBS tgm SUBSTITUTED (b) than the offering price stated on the inside cover of the Limited Offering Memo um. The Underwriter agrees to limit the initial sale of the Bonds to no nore than t ,� f've (35) investors. all of which must be (i) Qualified Institutional Buyers as sua` term is defined in Rule 144A promulgated under the Securities Act of 1933,.as wended (the "1933 Act") and (ii) Sophisticated Municipal Market Professionals as e fined by the Municipal Securities Rulemaking Board ("MSRB"). The Underwriteshall cause the initial purchasers of the Bonds to execute and deliver and Investor Le ,F=r substantially in the form attached hereto as Schedule III. 3. The Limited Offering Memorandum. (a) At the time of or before acceptance of this Agree ='nt, or at such later time as shall be agreeable to the Underwriter and the Cit the City shall deliver to the Underwriter three copies of the Limited Offeri Memorandum, dated the date hereof (which together with the cover page a r+ appendices contained therein, is herein called the "Limited Offering Memorai ,i um") executed on behalf of the City by its City Manager. The Preliminary Limited Offering M orandum has been prepared by the City for use by the Underwriter in co '''ection with the limited offering, sale and distribution of the Bonds. The Pity hereby represents and warrants that the Preliminary Limited Offering morandum was deemed final by the City as of its date, except for the omissiof such information which is dependent upon the final pricing of the Bonds'- `or completion, all as permitted to be excluded by Section (b)(1) of Rule 1 :'2-12 under the Securities Exchange Act of 1934 (the "Rule"). (c) The City represen that the officials of the City i.s delegated by the Bond Resolution have viewed and approved the information in the Limited Offering Memorandum d hereby authorizes the Limited Offering Memorandum to be used by the ,:' derwriter in connection with the limited offering and the sale of the Bonds. Th . ity shall provide, or cause to be provided, to the Underwriter as soon as practi• b1e after the date of the City's acceptance of this Agreement (but, in any event, ,, `ot later than within seven business days after the City's acceptance of this Agr-, went and in sufficient time to accompany any confirmation that requests p. ent from any customer) copies of the Limited Offering Memorandum which complete as of the date of its delivery to the Underwriter in such quantity as the Underwriter shall request and an electronic version of the Limited Offering Memorandum in searchable PDF format within one day of delivery of the Limited Offering Memorandum and, in any event, no later than the date of Closing in order for the Underwriter to comply with Section (b)(4) of the Rule and the rules of the MSRB. The City hereby confirms that it does not object to the distribution of the Limited Offering Memorandum in "designated electronic format" (as defined in MSRB Rule G-32). (d) If, after the date of this Agreement to and including the date the Underwriter is no longer required to provide a Limited Offering Memorandum to potential 3 4840-4440-0657.2 37(23/00I5.IBS tgm SUBSTITUTED customers who request the same pursuant to the Rule (the earlier of (i) 90 da from the "end of the underwriting period" (as defined in the Rule) and (ii) time when the Limited Offering Memorandum is available to any person fro. MSRB, but in no case less than 25 days after the "end of the underwritin for the Bonds), the City becomes aware of any fact or event which m.igh cause the Limited Offering Memorandum, as then supplemented or contain any untrue statement of a material fact or to omit to state required to be stated therein or necessary to make the state misleading, or if it is necessary to amend or supplement th Memorandum to comply with law, the City will notify the the purposes of this clause provide the Underwriter with may from time to time request), and if, in the opinion fact or event requires preparation and publication of to the Limited Offering Memorandum, the City furnish, at the City's own expense (in a form Underwriter), a reasonable number of co supplements to the Limited Offering Memo Limited Offering Memorandum as so ame any untrue statement of a material fact o be stated therein or necessary to make that the Limited Offering Memoran shall be subsequent to the Closi certificates, instruments and o necessary to evidence the tru the Limited Offering Mem e the eriod" or would ended, to material fact nts therein not invited Offering nderwriter (and for uch information as it f the Underwriter, such supplement or amendment will forthwith prepare and and manner approved by the es of either amendments or dum so that the statements in the ed and supplemented will not contain omit to state a material fact required to e statements therein not misleading or so m will comply with law. If such notification , the City shall furnish such legal opinions, er documents as the Underwriter may deem and accuracy of such supplement or amendment to ndum. (e) The Underwriter herebagrees to file the Limited Offering Memorandum with the MSRB's Elec 'onic Municipal Market Access system ("EMMA") (accompanied by a:? omplete Form G-32) by the date of Closing. The filing of the Limited Offerin Memorandum with EMMA shall be in accordance with the terms and co tions applicable to EMMA and the MSRB. Unless otherwise notified in iting by the Underwriter, the City can assume that the "end of the underwrit': `g period" for purposes of the Rule is the date of the Closing. 4. Repr°esentatior s, Warranties, and Covenants of the City. The City hereby represents and warrants to nd covenants with the Underwriter that, except as otherwise disclosed in the Prelimin y Limited Offering Memorandum: (a) The City is a municipal corporation duly created, organized and existing pursuant to the Constitution, the Charter and Code of the City, and under the laws of the State of Florida (the "State"). The City has full legal right, power and authority under the Constitution and laws of the State, including without limitation Florida Statutes, as amended, Chapter 166, Part II, and the Charter and Code of the City, as amended (collectively, the 'Act") and the Bond Resolution and at the date of the Closing will have full legal right, power and authority under the Act and the Bond Resolution (i) to enter into, execute and deliver this Agreement, the Bond Resolution, the Continuing Disclosure Agreement (the "Undertaking") as defined 4 4840-4440-0657.2_37123/0015 JB5 tgm SUBSTITUTED (c) (d) in Section 6(i)(3) hereof, and all documents required hereunder and thereunder to be executed and delivered by the City (this Agreement, the Bond Resolution, the Undertaking and the other documents referred to in this clause are hereinafter referred to as the "City Documents"), (ii) to sell, issue and deliver the Bonds to th Underwriter as provided herein, and (iii) to carry out and consummate ; `e transactions contemplated by the City Documents and the Limited Of ' ing Memorandum, and the City has complied, and will at the Closin,,'.e in compliance in all respects, with the terms of the Act and the City Doc ments as they pertain to such transactions; (b) By all necessary official actions of the City prior to or cone rently with the acceptance hereof, the 'City has duly authorized all necessary aon to be taken by it for (i) the adoption of the Bond Resolution and the iss nce and sale of the Bonds, (ii) the approval, execution and delivery of, and e performance by the City of the obligations on its part, contained in the Bon and the City Documents and (iii) the consummation by it of all other tran .actions contemplated by the Limited Offering Memorandum, and the City D •' uments and any and all such other agreements and documents as may be r • uired to be executed, delivered and/or received by the City in order to carry ut, give effect to, and consummate the transactions contemplated herein and i e Limited Offering Memorandum; The City Documents constitute legal ' alid and binding obligations of the City, enforceable in accordance with t it respective terms, subject to bankruptcy, insolvency, reorganization, mor. , •rium and other similar laws and principles of equity relating to or affectin: the enforcement of creditors' rights; the Bonds, when issued, delivered and {•id for, in accordance with the Bond Resolution and this Agreement, will co itute legal, valid and binding obligations of the City entitled to the benefits . ` the Bond Resolution and enforceable in accordance with their terms, subject ,s bankruptcy, insolvency, reorganization, moratorium and other similar laws d principles of equity relating to or affecting the enforcement of creditors' rigs; upon the issuance, authentication and delivery of the Bonds as aforesaid, th-- and Resolution will provide, for the benefit of the holders, from time to ti , of the Bonds, the legally valid and binding pledge of and lien it purports o create as set forth in the Bond Resolution; The City is not in breach of or default in any material respect under any applicable constitutional provision, law or administrative regulation of the State r the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or to which the City is or any of its property or assets are otherwise subject, and no event has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would constitute a default or event of default by the City under any of the foregoing; and the execution and delivery of the Bonds, the City Documents and the adoption of the Bond Resolution and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a material breach of or material default under any constitutional provision, administrative regulation, judgment, decree, 5 4840-444.0-0657 2_37123/0015 JBS tgm SUBSTITUTED loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or to which the City is or to which any of its property or assets are otherwise subject nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or othe security interest or encumbrance of any nature whatsoever upon any of e property or assets of the City to be pledged to secure the Bonds or under the rms of any such law, regulation or instrument, except as provided by the Bo r: s and the Bond Resolution; (e) All authorizations, approvals, licenses, permits, consents and r ders of any governmental authority, legislative body, board, agency or co ission having jurisdiction of the matter which are required for the due aut rization of, which would constitute a condition precedent to, or the abse e of which would materially adversely affect the due performance by the ' ity of its obligations under the City Documents, and the Bonds have been uly obtained, except for such approvals, consents and orders as may be re red under the Blue Sky or securities laws of any jurisdiction in connection w the offering and sale of the Bonds, as to which no representations are mad-, concerning compliance with the Federal securities or Blue Sky laws of the var`, s s states; (f) The Bonds and the Bond Resolution conf ` to the descriptions thereof contained in the Limited Offering Memorandu under the captions "INTRODUCTION," "DESCRIPTION OF THE SE • S 2012 BONDS," "SECURITY AND SOURCES OF PAYMENT Ft"M" THE SERIES 2012 BONDS," and in APPENDIX C attached theret." ''the proceeds of the sale of the Bonds will be applied generally as describ in the Limited Offering Memorandumunder the captions "THE REFUND: G PLAN" and "ESTIMATED SOURCES AND USES OF FUNDS" an the Undertaking conforms to the description thereof contained in the imited Offering Memorandum under the caption "CONTINUING D ::'CLOSURE" and "APPENDIX E" attached thereto; (g) Except as otheise disclosed in the Preliminary Limited Offering Memorandum and the Li 'ted Offering Memorandum, there is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, govern r° nt agency, public board or body, pending or, to the best knowledge of the C y after due inquiry, threatened against the City, affecting the existence of the ' ity or the titles of its officers to their respective offices, or affecting or eking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the lien on and pledge of the Pledged Funds and the covenant to budget and appropriate Non Ad Valorem Revenues pursuant to the Bond Resolution or in any way contesting or affecting the validity or enforceability of the Bonds, the City Documents or the Bond Resolution, or contesting the exclusion from gross income of interest on the Bonds for federal income tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Limited Offering Memorandum or the Limited Offering Memorandum or any supplement or amendment thereto, or contesting the powers of the City or any authority for the issuance of the Bonds, the adoption of the Bond Resolution or the execution and 6 4840.4440.0657.2_37123/0015 JBS tg,n SUBSTITUTED delivery of the City Documents, nor, to the best knowledge of the City, is there any basis therefor, wherein an unfavorable decision, ruling or finding woul.. materially adversely affect the validity or enforceability of the Bonds or the y Documents; (h) As of the date thereof (including the dates of any supplements th Preliminary Limited Offering Memorandum other that the informatic ca tions "DESCRIPTION OF THE SERIES )0 1 eto), the u lder the 1.2 BONDS Bo Entr -Onl S stem " "MUNICIP • L BOND INSUR • NCE " and "UN RITING" did not contain any untrue statement of a material fact or omit to ate a material fact required to be stated therein or necessary to make the stat ents therein, in the light of the circumstances under which they were made, nc, misleading; (i) At the time of the City's acceptance hereof and (; `'less the Limited Offering Memorandum is amended or supplemented pursua►' to paragraph (d) of Section 3 of this Agreement) at all times subsequent the ,„ to during the period up to and including the date of Closing, the Limited Of 'ring Memorandum (other than the 'nfortnation under the ca tions "DESCRIP . OF THE SERIES 201 BONDS ook Entrv-Onl S stem." "MU T..�` IPAL BOND INSURANCE nd "UNDERWRITING") does not and 1 not contain any untrue statement of a material fact or omit to state any terial fact required to be stated therein or necessary to make the statemen therein, in light of the circumstances under which they were made, not mis ding; (j) If the Limited Offering paragraph (d) of Sectio amendment thereto a pursuant to such pa and including th supplemented :, it "DESCRIP N • orandum is supplemented or amended pursuant to of this Agreement, at the time of each supplement or (unless subsequently again supplemented or amended graph) at all times subsequent thereto during the period up to date of Closing, the Limited Offering Memorandum as so amended .(other than the information under the captions THE SE MS 2012 : ONDS - Bo k E 1tr '-Onl S 'ste $ " "MUNICI L BOND INSURANCE." and "UNDERWRITING") will not contain y untrue statement of a material fact or omit to state any material fact requi ._ . to be stated therein or necessary to make the statements therein, in light of e circumstances under which made, not misleading; (k) he City will apply, or cause to be applied, the proceeds from the sale of the Bonds as provided in and subject to all of the terms and provisions of the Bond Resolution and not to take or omit to take any action which—aeti.on or omission will adversely affect theo clsssien from gess income` for federal income tax purposes of the interest on the Beds; (1) The City will furnish such information and execute such instruments and take such action in cooperation with the Underwriter as the Underwriter may reasonably request (A) to (y) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions in the United States as the Underwriter may designate and (z) determine the 7 4840-4410.0657.2_37123/0015 JBS tgm SUBSTITUTED eligibility of the Bonds for investment under the laws of such states d other jurisdictions and (B) to continue such qualifications in effect so long s required _for the distribution of the Bonds (provided, however, that the Ci will not be required to qualify as a foreign corporation or to file any ge►-ra1 or special consents to service of process under the laws of any jurisdiction' and will advise the Underwriter immediately of receipt by the City of a notification with respect to the suspension of the qualification of the B r nds for sale in any jurisdiction or the initiation or threat of any proceeding fo that purpose; (m) The financial statements of and other financial infor ration regarding the City in the Limited Offering Memorandum including wi rout lii itatio the unaudited Fiscal Year Cap 2012 financial information. fai present the financial position and results of the City as of the dates and for t r periods therein set forth. Prior to the Closing, there will be no adverse change n:' a material nature in such financial position, results of operations or condition, financial or otherwise, of the City. Except as set forth in the Preliminary imited Offering Memorandum and the Limited Offering Memorandum, the r y is not a party to any litigation or other proceeding pending or, to its know • dge, threatened which, if decided adversely to the City, would have a materi ,'y adverse effect on the financial condition of the City; (n) Prior to the Closing the Cwill not offer or issue any bonds, notes or other obligations for borrowe• ' money or incur any material liabilities, direct or contingent, payable fro r,' or secured by any of the revenues or assets which will secure or otherwise s •port the payment of the Bonds without the prior approval of the Underwriter; (o) Any certificate signed by any official of the City authorized to do so in connection th the transactions contemplated by this Agreement, shall be deemed a r •resentation and warranty by the City to the Underwriter as to the statemen _,:`made therein; (p) Othe. ' an as described in the Preliminary Limited Offering Memorandum and in the imited Offering Memorandum, since December 31, 1975, and at all times s sequent thereto up to and including the Date of Closing, the City has not been nd will not be in default with respect to payment of the principal of, or interest on, any bonds or other debt obligations that it has issued or will issue or that it has guaranteed or will guarantee (including bonds or other debt obligations for which it has served as a conduit issuer); (q) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon; (r) The City will not take any action nor omit to take any action which would adversely affect the exclusion from gross income for federal income tax purposes of interest on the Note or the Bonds under the Code; and 8 4840.4440-0657.2_37123/0015IBS tgm SUBSTITUTED (c), (s) Except as described in the Preliminary Limited Offering Memorandum an n the Limited Offering Memorandum, the City is presently in compliance wi _'ts prior continuing disclosure undertakings entered into pursuant to the Rule o r"r the past five years. 5. Closing, (a) At 12:00 p.m., Eastern time, on December , 2012, or a uch other time and date as shall have been mutually agreed upon by the City a d the Underwriter (the "Closing"), the City will, subject to the terms and con ions hereof, deliver the Bonds to the Underwriter duly executed and authentic. "ed, together with the other documents hereinafter mentioned, and the Underwri'er will, subject to the terms and conditions hereof, accept such delivery and ay the Purchase Price of the Bonds as set forth in Section 1 of this Agree ,r nt by a wire transfer payable in immediately available funds to the order of : e City. Payment for the Bonds as aforesaid shall be made at theoffices of :,rind Counsel, or such other place as shall have been mutually agreed' upon by e City and the Underwriter. (b) Delivery of the Bonds shall be mad -' to The Depository Trust Company, New York, New York. The Bonds shall ., delivered in definitive fully registered form, bearing CUSIP numbers withou- coupons, with one Bond for each maturity of each series of. the Bonds, regist ,` ed in the name of Cede & Co., all as provided in the Bond Resolution, and sh be made available to the Underwriter at least one business day before the Cl•.ng for purposes of inspection. 6. Closing Conditions. The Und the representations, warra reliance upon the repres documents and instrum the City of its obliga Closing. Accordin accept delivery o the City of its instruments conditions herein, i (a) riter has entered into this Agreement in reliance upon es and agreements of the City contained herein, and in tations, warranties and agreements to be contained in the is to be delivered at the Closing and upon the performance by ns hereunder, both as of the date hereof and as of the date of the the Underwriter's obligations under this Agreement to purchase, to nd to pay for the Bonds shall be conditioned upon the performance by bligations to be performed hereunder and• under such documents and or prior to the Closing, and shall also be subject to the following additional ncluding the delivery by the City of such documents as are enumerated orm andsubstance reasonably satisfactory to the Underwriter: The representations and warranties of the City contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing; (b) The City shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; At the time of the Closing, (i) the City Documents and the Bonds shall be in full force and effect in the form heretofore approved by the Underwriter and shall not 9 4840.4440-0657.2 37123/0015IBS,tgm SUBSTITUTED (f) (g) (h) (i) have been amended, modified or supplemented, and the Limited differing Memorandum shall not have been supplemented or amended, except ir:' any such case as may have been agreed to by the Underwriter; and (ii)all ar: ions of the City required to be taken by the City shall be performed in o er for Bond Counsel and Disclosure Counsel to deliver their respective opi p ons referred to hereafter; (d) At or prior to the Closing, the Bond Resolution shall have the City and the City shall have duly executed and Registrar shall have duly authenticated the Bonds; (e) [At or prior to the Closing, the Bond Insurance olicy Insurance Policy shall have been duly execute e , issued Provider]; At the time of the Closing, there shall n.' have occurred any change or any development involving a prospective :r'ange inthe condition, financial or otherwise, including without limitation,.' any change or development involving a prospective change or update relati to any investigation of the City by the United States Securities and Exc ange Commission (the "SEC"), or in the revenues or operations of the Ci , from that set forth in the Limited Offering Memorandum that in the judg! `ent of the Underwriter, is material and adverse and that makes it, in the judge: ent of the Underwriter, impracticable to market the Bonds on the terms and i the manner contemplated in the Limited Offering Memorandum.; een duly adopted by livered and the Bond and Reserve Account and delivered by the The City shall not ha failed to pay when due principal of or interest on any of its outstanding oblia, tions for borrowed money; All steps to be t.i en and all instruments and other documents to be executed, and all other lega alters in connection with the transactions contemplated by this Agreement ,` all be. reasonably satisfactory in legal form and effect to the Underwri At or for to the Closing, the Underwriter shall have received copies of each of the lowing documents: The Limited Offering Memorandum, and each supplement or amendment thereto, if any, executed on behalf of the City by its City Manager, or such other official as may have been agreed to by the Underwriter, and the reports and audits referred to or appearing in the Limited Offering Memorandum; (2) A certified copy of the Bond Resolution with such supplements or amendments as may have been agreed to by the Underwriter; (3) A certified copy of the Interlocal Agreement; 10 4840-4440.0657,2_37123/0015 7B8'gm+ SUBSTITUTED (4) The Undertaking of the City which satisfies the requi (the "Undertaking"); terra'=TT�aT vrccr..�cacUndC'.rtal{ing , (5) the approving opinion of Bond Counsel with respect to th-°`Bonds, in substantially the form attached to the Limited Offering Me ;randum with a reliance letter addressed to the Underwriter; (6) a supplemental opinion of Bond Counsel addressed o the Underwriter, substantially to the effect that: / (i) the Bonds are exempted from registratier` under the 1933 Act and the Bond Resolution is exempt from alification under the Trust Indenture Act of 1939, as amender (the "Trust Indenture Act"); and (ii) the statements contained in ,1 ` e Limited Offering Memorandum under the captions "DESK ` 'TION OF THE SERIES 2012 BONDS" (other than the formation relating to DTC and its book - entry only system, a to which no opinion shall be given), "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BODS," and in "APPENDIX C - Form of the Resolution" inso;/°r as such statements describe certain provisions of the Bond '. :'solution, the Bonds and the Statements under the caption "T >' MATTERS," are accurate and fairly present the informati •,' purported to be shown therein; (7) the opinion , `.f Disclosure Counsel addressed to the Underwriter, substantial to the effect that based on the examinations which they have made as 'Nisclosure Counsel and their participation at conferences at which ' e Limited Offering Memorandum was discussed, but without havi e undertaken to determine independently the accuracy or co pleteness of the statements in the Limited Offering Memorandum, ch counsel has no reason to believe that the Limited Offering Memorandum as of its date and as of the date hereof contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and statistical data included in the Limited Offering Memorandum and except for information regarding DTC and its book - entry system and information regarding the Provider in each case as to which no view need be expressed); (8) An opinion of the City Attorney of the City, addressed to the Underwriter, to the effect that: (i) The City is a municipal corporation duly created, organized and existing under the laws of the State, the Constitution, and the City's 11 4840-4440-0657.2_37123/0015 JBS tgm SUBSTITUTED Charter. The City has full legal right, power and authority and the Act and the Bond Resolution (A) to enter into, execute nd deliver the City Documents and all documents required her nder and thereunder to be executed and delivered by the Cit (B) to sell, issue and deliver the Bonds to the Underwriter . provided herein, (C) to pledge the Pledged Funds and coven.. t to budget and appropriate Non -Ad Valorem Revenues as ! ovided in the Bond Resolution and (D) to carry out and onsummate the transactions contemplated, by the City Docum . r' s, and the Limited Offering Memorandum, and the City has co plied, and will at the Closing be in compliance in all respects, th the terms of the Act and the City Documents as they pertain • such transactions; By all necessary official action of = City prior to or concurrently with the acceptance hereof, t City has duly authorized all necessary action to be taken b .'t for (A) the adoption of the Bond Resolution and the issuan :- and sale of the Bonds, (B) the approval, execution and ivery of, and the performance by the City of the obligations ,, ` its part, contained in the Bonds, the City Documents and the B ,' d Resolution, (C) the pledge of the Pledged Funds and the cp enant to budget and appropriate Non -Ad Valorem Revenue{: as provided in the Bond Resolution and (D) the consummation •y it of all other transactions contemplated by the Limited Off ng Memorandum, the City Documents, the Bond Resolutio and any and all such other agreements and documents as may required to be executed, delivered and/or received by the City order to carry out, give effect to, and consummate the tra ► actions contemplated herein and in the Limited Offering emorand.um; (iii) The Bond Resolution has been duly and validly adopted by the City and is in full force and effect; the Bond Resolution and all other proceedings pertinent to the validity and enforceability of the Bonds have been duly and validly adopted or undertaken in compliance with all applicable procedural requirements of the City and in compliance with the Constitution and laws of the State, including the Act; (iv) The City Documents have been duly authorized, executed and delivered by the City, and constitute legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except to the extent limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws and equitable principles of general application relating to or affecting the enforcement of creditors' rights; and the Bonds, when issued, delivered and paid for, in accordance with the Bond Resolution and this Agreement, will constitute legal, valid and 12 484014440-00573_37123/001 S JBS tgm SUBSTITUTED binding obligations of the City entitled to the benefits of the ••nd Resolution and enforceable in accordance with their terms, , ! bject to bankruptcy, insolvency, reorganization, moratorium • d other similar laws and principles of equity relating to or of cting the enforcement of creditors' rights; upon the issuance, aa'hentication and delivery of the Bonds as aforesaid, the Bond'esolution will provide, for the benefit of the holders, from ti : ' to time, of the Bonds, the legally valid and binding pledge n" and lien on the Pledged Funds and the covenant to budget an. appropriate Non -Ad Valorem Revenues it purports to create a , 'set forth. in the Bond Resolution; (v) The distribution of the Preliminary Li j ted Offering Memorandum and the Limited Offering Memorandum has been duly authorized by the City; (vi) Allauthorizations, approva., licenses, permits, consents and orders of any governme ;:: authority, legislative body, board, agency or commission h 'ing jurisdiction of the matter which are required for the due . • thorization of, which would constitute a condition precedent r, or the absence of which would materially adversely affect t ° due performance by the City of its obligations under the City D currents and the Bonds have been obtained; (vii) There is n legislation, action, suit, proceeding, inquiry or investigati , at law or in equity, before or by any court, govern ; nt agency, public board or body, pending or, to the best know -dge of the City, after due inquiry threatened against the City affecting the corporate existence of the City or the titles of its o ,''cers to their respective offices, or affecting or seeking to rohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the lien on an pledge of the Pledged Funds and the covenant to budget and appropriate Non -Ad Valorem Revenues pursuant to the Bond Resolution or in any way contesting or affecting the validity or enforceability of the Bonds, the City Documents or the Bond Resolution, or contesting the exclusion from gross income of interest on the Bonds for federal income tax purposes, or contesting in any way the completeness or accuracy of the Preliminary Limited Offering Memorandum or the Limited Offering Memorandum or any supplement or amendment thereto, or contesting the powers of the City or any authority for the issuance of the Bonds, the adoption of the Bond Resolution or the execution and delivery of the City Documents, nor, to the best knowledge of the City, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds, or the City Documents; 13 4840-4440-0657.2_37123/0015 JBStgm SUBSTITUTED (viii) The adoption of the Bond Resolution and the execution a delivery of the other City Documents by the City and compliar`ce by the City with the provisions hereof and thereof, und-, ' the circumstances contemplated herein and therein, will not onflict with or constitute on the part of the City a material Breaof or a default under any agreement or instrument to which t City is a party, or violate any existing law, administrative re, lation, court order, or consent decree to which the City is subjec and (ix) Based on the examination which such couns has caused to be made and its participation at conferences at ;�' ich the Preliminary Limited Offering Memorandum and e Lirnited Offering Memorandum were discussed, such cnsel has no reason to believe that the Preliminary Limited ! ering Memorandum as of its date and the Limited Offering emorandum as of the date hereof contains any untrue statem;: t of a material fact or omits to state a material fact relating to `]eaal matters affecting the City necessary to make the st., =ments therein, in light of the circumstances under which ,° ey were made, not misleading in any material respect (except +r any financial forecast, technical and statistical data included,the Limited Offering Memorandum and except for informatio regarding DTC and its book -entry system [and information garding the Provider, the Bond Insurance Policy and the R-:erve Account Insurance Policy, in each case] as to which no vier' need be expressed); (9) A certificate, dater e date of Closing, of the City to the effect that (i) the representations 'd warranties of the City contained herein are true and correct in all r:terial respects on and as of the date of Closing as if made onthe date e Closing; (ii) no litigation of proceeding against it is pending or, to its owledge, threatened in any court or administrative body nor is there a : asis for litigation which would (a) contest the right of the mem.,'rs or officials of the City to hold and exercise their respective pos';''ons, (b) contest the due organization and valid existence of the City, (c, contest the validity, due authorization and execution of the Bonds or e City Documents or (d) attempt to limit, enjoin or otherwise restrict or prevent the City from functioning or from collecting revenues, including payments on the Bonds, pursuant to the Bond Resolutions, and other income; (iii) the Bond Resolution has been duly adopted by the City, is in full force and effect and has not been modified, amended or repealed, and (iv) to the best of its knowledge, no event affecting the City has occurred since the date of the Limited Offering Memorandum which should be disclosed in the Limited Offering Memorandum (other than the information under the captions "DESCRIPTION OF THE SERIES 2012 BONDS - Book Entry -Only System," "MUNICIPAL BOND INSURANCE," and "UNDERWRITING") for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the 14 4840.4440-0657,2,37123/0015 JBS tgm SUBSTITUTED statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of Closing, and the information contained in the Limited Offering Memorandum othe • than th- informa i.n under the ca.tisns "DESCRIPTIIN 0 SERIES 2012 BONDS Book Entr -On1 S stem " "M IC e"AL BOND INSURANCE." and "UNDERWRITING") is correctn all material respects and, as of the date of the Limited Offering Me Rrandum did not, and as of the date of the Closing does not, contain.:' ny untrue statement of a material fact or omit to state a material fact quired to be stated therein or necessary to make the statements mad therein, in the light of the circumstances under which they were made, } of misleading; (10) A certificate of the City in form and substance; °satisfactory to Bond Counsel and counsel to the Underwriter (a) .setting forth the facts, estimates and circumstances in existence on th ; ate of the Closing, which establish that it is not expected that the procea ds of the Bonds will be used in a manner that would cause the Bonds to "arbitrage bonds" within the meaning of Section 148 of the Inter al Revenue Code of 1986, as amended (the "Code"), and any ap R icable regulations (whether final, temporary or proposed), issued pu want to the Code, and (b) certifying that to the best of the knowledge..nd belief of the City there are no other facts, estimates or circumst. 'ees that would materially change the conclusions, representations d expectations contained in such certificate; (11) Any other certificates a opinions required by the Bond Resolution for the issuance thereunder''of the Bonds; (12) Evidence satisfac .ery to the Underwriter that the Bonds have been rated r „1 nd tt by Moody'sr ,. a,, a .a, n,, ,wand Fitch Ratings, resptivel.y[, without regard to the Bond Insurance Policy, and that the B ;..-'ds have been rated [ "] "_" and by Moody'sf; and Fitch Ratings, respectively, with the under.;tnding that, upon delivery of the Bonds, the Bond Insurance Policy will issued by the Provider, and that all such ratings are in effect as of th€ date of Closing]; (13) [Copies of the Bond Insurance Policy and Reserve Account Insurance Policy together with an opinion of counsel to the Provider in form and substance satisfactory to the Underwriter]; (14) [A certificate of the Provider with respect to the accuracy of statements contained in the Limited Offering Memorandum regarding the Bond Insurance Policy, the Reserve Account Insurance Policy and the Provider and the due authorization execution issuance and delivery of the Bond Insurance Policy and the Reserve Account Insurance Policy]; 15 4540-4440.0657.237123/0015 JBS tgm SUBSTITUTED (15) Evidence that the outstanding principal and accrued but unpaid interest on the Note has been paid in full at Closing; and (16) Such additional legal opinions, certificates, instruments and oer documents as the Underwriter or counsel to the Underwriter,' may reasonably request to evidence the truth and accuracy, as of e date hereof and as of the date of the Closing, of the City's represen tions and warranties contained herein and of the statements andinformation contained in the Limited Offering Memorandum and the •• ae performance or satisfaction by the City pn or prior to the date of the , losing of all the respective agreements then to be performed and c ditions then to be satisfied by the City. (17) [Reserved All of the opinions, letters, certificates, instruments a other documents mentioned above or elsewhere in this Agreement shall be dee 'd to be in compliance with the provisions hereof if, but only if, they are in fo c''and substance satisfactory to the Underwriter, If the City shall be unable to satisfy the con ions to the obligations of the Underwriter to purchase, to accept delivery of and to p % for the Bonds contained in this Agreement, or if the obligations of the Underwriter {`'purchase, to accept delivery of and to pay for the Bonds shall be terminated for :ny reason permitted by this Agreement, this Agreement shall terminate and neitr ""=r the Underwriter nor the City shall be under any further obligation hereunder, excr.t that the respective obligations of the City and the Underwriter set forth in Section `4 and 8(c) hereof shall continue in full force and effect. (7) Termination. The Underw ;."er shall have the right to cancel its obligation to purchase the Bonds if, between the ate of this Agreement and the Closing, the market price or marketability of the Bds shall be materially adversely affected, in the sole judgment of the Underwriter, by ,;" e occurrence of any of the following: (a) legislat',F"n shall be enacted by or introduced in the Congress of the United States or re r mmended to the Congress for passage by the President of the United St s, or the Treasury Department of the United States or the Internal Revenue rvice or any member of the Congress or the state legislature or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United. States, the Internal Revenue Service or other governmental agency shall be rnade or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or state income taxation upon interest received on obligations of the general character of the Bonds, or other action or events shall have transpired which may have the purpose 16 4840-4440-0657.2_37123/0015]BS tgrn. SUBSTITUTED or effect, directly or indirectly, of changing the federal income tax consequer es or state income tax consequences of any of the transactions contemplated he in; (b) legislation is introduced in or enacted (or resolution passed) by the Con:, ess or an order, decree, or injunction is issued by any court of competent jurisd'tion, or an order, ruling, regulation (final, temporary, or proposed), press re ase or other form of notice is issued or made by or on behalf of the SE , or any other governmental agency having jurisdiction of the subject matte to the effect that obligations of the general character of the Bonds, including ny or all underlying arrangements, are not exempt from registration under or o : er requirements of the 1933 Act, or that the Bond Resolution is not exempt from qualification under or other requirements of the Trust Indenture Act, or the the issuance, offering, or sale of obligations of the general character of th- onds, including any or all underlying arrangements, as contemplated heresy or by the Limited Offering Memorandum or otherwise, is or would be in iolati.on of the federal securities law as amended and then in effect; (c) any state Blue Sky or securities co sion or other governmental agency or body shall have withheld registration '-xernption or clearance of the offering of the Bonds as describedherein, or '.sued a stop order or similar ruling relating thereto; (d) a general suspension of tradi in securities on the New York Stock Exchange or the American Stock Exc nge is imposed, minimum prices on either such exchange are establishedaterial restrictions (not in force as of the date hereof) upon trading securities ,enerally by any governmental authority or any national securities exchange „'e established, or a general banking moratorium is declared by federal, State o ew York, or State officials authorized to do so; the New Yor.<' Stock Exchange or other national securities exchange or any government; authority, shall impose, as to the Bonds or as to obligations of the general cacter of the Bonds, any material restrictions not now in force, or increas- aterially those now in force, with respect to the extension of credit by, or the.'harge to the net capital requirements of, Underwriter; aamendment is made to the federal or state Constitution or action by any ederal or state court, legislative body, regulatory body, or other authority is taken materially adversely affecting the tax status of the City, its property, income securities (or interest thereon); any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Limited Offering Memorandum, or has the effect that the Limited Offering Memorandum contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless the Limited Offering Memorandum can be (e) (f) (g) 17 4840-444O.O657,2_37123/OO15 JBS Ern SUBSTITUTED amended and supplemented to correct such statement. information or omission d such me dment or su.• eoent does of h ve material dve se fect on t market price or marketability of the Bonds; (h) there shall have occurred any materially adverse change in the affairs or '' ancial condition of the City, except for changes which the Limited,' Offering Memorandum discloses are expected to occur; (i) the United States shall have become engaged in hostilities whic ' ave resulted in a declaration of war or a national emergency or there shall, ave occurred any other outbreak or escalation of hostilities or a national or into:' ational calamity or crisis, financial or otherwise; (j) any fact or event shall exist or have existed that, in e Underwriter's judgment, requires or has required an amendment of or supp 4-" ent to the Limited Offering Memorandum and the Cit refuses to do so or. if. ' e fact or event that causes the need to a en . or su ement the Limited 0 enna emorandum s su that or s .3" .lement to the Limited Offer Me . orandurn. will like re ult in a late `:l adverse effect on the market when described in the amendment marketability of the Bonds; • pa ice or (k) there shall have occurred or any ri•tice shall have been given of any intended review, downgrading, suspensioi.'withdrawal, or negative change in credit watch status by any national rating s vice to any of the City's obligations or any rating of the Provider which in th.:'.easonab e 'udarne t of the Underwriter. will have a (1) (m) material adverse of ect on e ar et • rice or mar etabilitv of t e B . nds; the purchase of and p y°' ment for the Bonds by the Underwriter, or the resale of the Bonds by the Und° titer, on the terms and conditions herein provided shall be prohibited by a '' applicable law, governmental authority, board, agency or commission; any notic-.' as been given by the SEC regarding its investigation of the City, the effect o which, in the reasonable judgment of the Underwriter, could materially and .aversely affect the market price or the marketability of the Bonds or the ab' .'ty of the Underwriter to enforce contracts for the sale of the Bonds; (n) he discovery by the Underwriter, during its due diligence and the due diligence of its counsel, any fact relating to, or arising from, the SEC' s investigation of the City and the surrounding facts and circumstances which are the subject of the SEC's investigation, which, in the reasonable judgment of the Underwriter, could materially and adversely affect the market price or the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (o) there shall have occurred, after the signing hereof, either a financial crisis or a default with respectto the debt obligations of the City or proceedings under the federal or State of Florida bankruptcy laws shall have been instituted by the City, in either case the effect of which, in the reasonable judgment of the Underwriter, 18 -4840-4440-0657 2_37123/0015 JBS tgm SUBSTITUTED (p) (q) is such as to materially and adversely affect the market price or the marke .ility of the Bonds or the ability of the Underwriter to enforce contracts for t . sale of the Bonds; legal or regulatory action shall have been threatened or filed a-;ainst the City wherein an adverse ruling would materially adversely affect,e transactions contemplated hereby or by the Limited Offering Memorandum or the validity of the Bonds, the Bond Resolution, the Interlocal Agreement o.F this Bond Purchase Agreement; [negative information relating to the financial conditioof the Provider, its parent or any subsidiary of it, is made available to the : ' nderwriter, which, in the reasonable judgment of the Underwriter, could res , ' t in a downgrade of any of the ratings assigned to the Bonds, and which, in e opinion of the Underwriter materially adversely affects the market price o,' he Bonds]; or (r) [the Provider shall inform the Underwrite ' or the City that it will not insure the Bonds], 8. Expenses. (a) The Underwriter shall be user no obligation to pay, and the City shall pay all expenses incident to th performance of the City's obligations hereunder, including, but not limite,'to (i) the cost of preparation and printing of the Bonds, Preliminary Limited . fering Memorandum, Limited Offering Memorandum and any amendment or ;' pplement thereto, (ii) the fees and disbursements of Bond Counsel, counsel the City, and Disclosure Counsel, if any; (iii) the fees and disbursements ;r'f the Financial Advisor to the City; (iv) the fees and disbursement - of any Bond Registrar, Paying Agent or engineers, accountants, and other perts, consultants or advisers retained by the City; (v) the cost of preparati- and printing of this Agreement, (vi) all fees and expenses in connec :`.n with obtaining bond ratings and credit enhancement fees or premiums, and . °ii) all other expenses incurred by the Underwriter in connection with the li ed offering of the Bonds, including without limitation the fees and bursements of counsel retained by the Underwriter and the fees and isbursements of the independent certified public accountant retained by the Underwriter for purposes of reviewing materials relating to the SEC's investigation of the City. The City shall also pay for any expenses (included in the expense component of the Underwriter's discount) incurred by the Underwriter which are incidental to implementing this Agreement and the issuance of the Bonds, including, but not limited to, reasonable meals, transportation and lodging, if any, and any other miscellaneous closing costs. (b) The Underwriter shall pay all advertising expenses in connection with the lunited offering of the Bonds. 19 4840-4440.0657 _37123/001S JDS tgm SUBSTITUTED (c) If this Agreement shall be terminated by the,Underwriter because of any failure refusal on the part of the City to comply with the terms or to fulfill any of, ' e conditions of this Agreement, or if for any reason the City shall be une to perform its obligations under. this Agreement, the City will reimb se the Underwriter for all out-of-pocket expenses (including without limitati the fees and disbursements of counsel to the Underwriter and the fees and ursements of the independent certified public 1 accountant retained by the derwriter for purposes of reviewing materials relating to the SEC's investiu ion of the City) reasonably incurred by the Underwriter, in connection with t1 Agreement or the offering contemplated hereunder. (d) The City acknowledges that it has had an opportunity n consultation with such advisors as it may deem appropriate, if any, to evalu e and consider the fees and expenses being incurred as part of the issuance of t Bonds. 9. Notices. Any notice or other communication to be giv . ' to the City under this Agreement may be given by delivering the same in writing '` City of Miami, 444 Southwest rd Avenue, Miami, FL 33130-1910, Attention; Cit Manager with a copy to the Finance Director, and any notice or other corn nunica :+n to be given to the Underwriter under this Agreement may be given by deliverinthe same in writing to the Underwriter at Wells Fargo Securities, 2363 Gulf-to-B.. ` Boulevard, Suite 200, Clearwater, Florida 33765, Attention: John Generalli, Mana ng Director. 10.- Parties in Interest. This Agreeme as heretofore specified shall constitute the entire agreement between us, supersed-." all prior agreements and understandings between us, and is made solely for the ben:'t of the City and the Underwriter (including successors or assigns of the Underwr : 'r) and no other person shall acquire or have any right hereunder or by virtue he ,--'of, This Agreement may not be assigned by the City. All of the City's representatio , warranties and agreements contained in this Agreement shall remain operative and ' `' full force and effect, regardless of (i) any investigations made by or on behalf of a :" of the Underwriter; (ii) delivery of and payment for the Bonds pursuant to this *,,'reement; and (iii) any termination of this Agreement. Effectiveness This Agreement shall become effective upon the acceptance hereof by the City and s ► :11 be valid and enforceable at the time of such acceptance. 12, Choic of Law. This Agreement shall be governed by and construed in accordance with the ; w of the State. 13. t everability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any Constitution, statute, rule of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever. 20 4840-4440-0657,2 37123/0015 JBS [gm SUBSTITUTED 14. Business Day. For purposes of this Agreement, "business day" means any day on whic the New York Stock Exchange is open for trading. 15. Section Headings. Section headings have been inserted in this Agreement as a m ''er of convenience of reference only, and it is agreed that such section headings are no part of this Agreement and willnot be used in the interpretation of any provisis of this Agreement. 16. Counterparts. This Agreement may be executed in several counterparr each of which shall be regarded as an original (with the same effect as if the si•%atures thereto and hereto were upon the same document) and all of which shall consti -ate one and the same document. 21 4840.4440.0657,2_3712310Q151BS tgm SUBSTITUTED [Signature Page to Bond Purchase Agreement for Series 2012 Bonds] If you agree with the foregoing, please sign the enclosed counterpart of this Agreeme and return it to the Underwriter, This Agreement shall become a binding agreement between %ou and the Underwriter when at least the counterpart of this letter shall have been signed b or on behalf of each of the parties hereto. Respectfully submitted, WELLS FARGO BANK, NATIONAL ASSOCIATION By Name: John Generalli Title: Managing Director Date: [December] __, 2012 22 4840-4440-0657 2 37123/0015 JBS tgm SUBSTITUTED [Signature Page to Bond Purchase Agreement for Series 2012 Bonds] ACCEPTANCE ACCEPTED at [a.m/p.nn], Eastern time, this day of [December], 1 By Name: Johnny Martinez Title: City Manager Seal/Attest: By Name: Dwight S. Danie Title; City Clerk Approved as to Insurance Requirements: By Name: Calvin Ellis Title: Risk Management Director Approved as to Form and Correctness: By Name: Julie 0. Bru Title: City Attorney 23 484O.4440.0667.237123/ODIS TES tgcn SUBSTITUTED SCHEDULEI MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES YIELDS AND PRICES SCHEDULE I-1 48404440.0657 2_37123/OO15 JBS tgm SUBSTITUTED 4/9Fr:75 P r oW Ratb(sE.-- SCHEDULE II DISCLOSURE LETTER AND TRUTH -IN -BONDING STATE ENT [December] , 2012 The City of Miami, Florida 444 Southwest 2nd Avenue Miami, FL 33130-1910 Attention: Johnny Martinez, City Manager RE: $ The City of Miami, ' lorida Special Obligation Non -Ad Valorem Revenue Refunding Bonds, Seri;; 2012 Ladies and Gentlemen: In connection with the proposed issuance E, the City of Miami, Florida (the "City") of its aggregate principal amount of ity of Miami, Florida Special Obligation Non - Ad Valorem Revenue Refunding Bonds, Series 2012 (the "Series 2012 Bonds"), Wells Fargo Bank, National Association (the "Underwr' '=r") is underwriting a limited offering of the Series 2012 Bonds in accordance with the Bond :`"urchase Agreement dated as of [December] �, 2012 (the "Purchase Agreement"). All capita 'ized terms used but not otherwise defined herein shall have the meanings ascribed to them i ' he Purchase Agreement. The purpose of the folioing paragraphs of this letter is to furnish, pursuant to the provisions of Section 218.3', Florida Statutes, certain information in respect of the arrangements contemplated f.,;'the purchase and sale of the Series 2012 Bonds, as follows: 1. The nature d estimated amount of expenses to be incurred by the Underwriter in Connection with the purase and offering of the Series 2012 Bonds are set forth in Schedule A attached hereto. 2. The - are no "finders," as defined in Section 218.386, Florida Statutes, connected with the sale andurchase of the Series 2012 Bonds. 3. The underwriting spread, the difference between the price at which the Series 2012 Bond will be initially offered by the Underwriter and the price to be paid to the City for the Serie 012 Bonds, exclusive of accrued interest, will be approximately $ per $1,000 of Seri % 2012 Bonds issued. 4. As part of the estimated underwriting spread set forth in paragraph (3) above, the 14 °derwriter will charge a management fee of $ per $1,000 of Series 2012 Bonds issued. 5. No other fee, bonus or other compensation is estimated to be paid by the Underwriter in connection with the issuance of the Series 2012 Bonds to any person not regularly employed or retained by the Underwriter (including any "finder" as defined in Section SCHEDULE II-1 48404440.0657.2_37123/0015 IBS tgm SUBSTITUTED 218.386, Florida Statutes), except as specifically enumerated as expenses to be inired by the Underwriter, as set forth in paragraph (1) above. 6. The name and address of the Underwriter is: Wells Fargo Bank, National Association 375 Park Avenue, 2nd Floor MAC J0127-06,0 New York, New York 10152 Attention: Municipal Syndicate Desk 7. Based on representations of the City, it is our y derstanding that the City is proposing to issue $ in aggregate principal amopfit of the Series 2012 Bonds for the purposes of refunding certain indebtedness, funding a r perve account and paying certain costs and expenses relating to the issuance of the Series 20 Bonds. The Series 2012 Bonds are expected to be repaid over a period of approximately years. At a True Interest Cost of approximately, %, total interest paid over the ife of the Series 2012 Bonds will be 8. Based on representations of the Ci it is our understanding that the Series 2012 Bonds will be payable from the Pledged Funds nd a covenant to budget and appropriate Non- Ad Valorem Revenues in the manner provide in the Bond Resolution. The Series 2012 Bonds carry an average annual debt service of approximately $ . Assuming the City pays debt service on the Series 2012 Bolds from the Non -Ad Valorem Revenues, such funds equal to an average of $ (will not be available to finance the other services of the City each year that the Series 2012 onds will be outstanding, which is approximately years. Notwithstanding the foregoi we are not accountants or actuaries, nor are we engaged in the practice of law. Accordingly, hile we believe the above -described calculations to be correct, we do not warrant them to be sq( Yours very truly, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Underwriter By: Managing Director SCHEDULE II-2 4840.4440.0657 37123/0015 JBS tgm SUBSTITUTED F—r: 7T i� c-p-n i kPo/1/ /*AID J SCHEDULE A UNDERWRITER'S ESTIMATED EXPENSES SCHEDULE II-3 4640-4440-0657.2_37123/0015 ]13S lgm Per $1.000 '• mount SUBSTITUTED E7-; 75 /U Can Pic-7%b Hai/ Sint 316 SCHEDULE III INVESTOR. LETTER [December] ", 2012 The City of Miami, Florida Miami, Florida Wells Fargo Bank, National Association Clearwater, Florida $ The City of Miami, Florida Special Obligation Non -Ad Valorem Revenu Series 2012 Ladies and Gentlemen: This letter is being delivered in connec n with the limited offering and sale by Wells Fargo Bank, National Association (the "Ur erwriter") of the above -referenced bonds (the "Bonds") issued by the City of Miami, F1• ida (the "City") pursuant to that certain Resolution No. adopted by the City on ovember 15, 2012] (the "Bond Resolution) to the undersigned purchaser (the "Purchas- '), All capitalized terms used herein, but not defined herein, shall have the respective me 'ngs set forth in the Bond Resolution. The undersigned, an authorized representative of the urchaser, hereby represents to the Underwriter and the City that: efunding Bonds 1. The Purcha, r has sufficient knowledge and experience in financial and business matters, including purc se and ownership of municipal and other tax-exempt obligations, to be able to evaluate the ri .`s and merits of the investment represented by the purchase of the Bonds. The Purchaser is a re that: ) investment in the Bonds involves various risks and may result in a complete and total loss of investment for the Purchaser; (b) the Bonds are not general obligations of the City; and (c) the payment of principal or premium, if any, and interest on the Bonds is payable solely from the Pledged Revenues as described in the Bond Resolution and the Limited Offering Memorandum. SCHEDULE III-1 4840-4440-0657,2_37123/0015 IBS tgm SUBSTITUTED 2. The Purchaser has authority to purchase the Bonds and to execute this tter and any other instruments and documents required to be executed by the Purchaser in onnection with the purchase of the Bonds. 3. The undersigned is a duly appointed, qualified and acting repr'sentative of the Purchaser and is authorized to cause the Purchaser to make the certifications, r-presentations and warranties contained herein by execution of this letter on behalf of the Pure ser. 4, The Purchaser is a "qualified institutional buyer" as, defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the "19,`' Act"). The Purchaser is able to hold the Bonds for an indefinite period of time and is be. , the economic risks of such investment without material injury, which risks may include a t al and complete loss of such investment. S. The Purchaser is a "sophisticated municipal ,n.rket professional" as defined in the rules of the Municipal Securities Rulemaking Board, an• attests to the following in connection with any transaction in municipal securities with the Una =rwriter (a) as of the date of this letter, P chaser owns, or manages for the account(s) of others, municipal securities (as defined ' Section 3(a)(29) of the Securities Exchange Act of 1934, as amended) in excess of $ 0 million in par value; (b) Purchaser is capable f evaluating investment risks and market value independently, both in general d with regard to all transactions and investment strategies involving a municipal "curity or securities; and (c) Purchaser ha /exercised, and will exercise, independent judgment in evaluating the recommen ions of the Underwriter or its associated persons, unless it has otherwise notified th nderwriter in writing. 6. The Purchas acknowledges that it has been furnished with or has been given access, without restrictio r limitation, to all of the underlying documents in connection with this transaction, the Bo ds and the City, as well as all other information that a reasonable, prudent, and knowle 'eable investor would desire in evaluating the purchase of the Bonds, including a review the Limited Offering Memorandum of the City dated November 2012 relating to the Bo s. The Purchaser acknowledges that the City and the Underwriter have made available to it a.. its representatives the opportunity to obtain any additional information that it may desire ai ,"` the opportunity to ask any questions it may desire of and receive satisfactory answers fro the City concerning the security and the source of payment of the Bonds. The Purchaser, as based its decision to invest in the Bonds solely on its own investigation, exaniin , on, and evaluation of the City, the Bonds and other relevant matters, and the Purchaser has n •, relied upon the Underwriter or Underwriter's counsel for any advice. 7. The Purchaser understands that the Bonds (i) are not registered under the 1933 ct and are not registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, and (ii) are not listed on any stock or other securities exchange. Additionally, the Purchaser understands that the Bond Resolution is not being qualified under the SCHEDULE III-2 4849-4440.0657 2,371?3/0015 IBS tgm SUBSTITUTED Trust Indenture Act of 1939, as amended (the "1939 Act"), and that the City shall ve no obligations to effect any such registration or qualification. 8. The Purchaser is not acting as a bond house, broker, or other inte purchasing the Bonds as an investment for its own account and not with a prese or other distribution to the public. The City and Underwriter may rely on th' their certificates regarding federal tax matters, Although the Purchaser transfer the Bonds in the future, the Purchaser understands that the Bo tradable. The Bonds are being acquired by the Purchaser for investme not with a present view toward resale or distribution; provided, reserves the right to sell, transfer or redistribute the Bonds, but agr or distribution by the Purchaser shall be to a Person: (a) that is an affiliate of the Purchaser; (b) that is a trust or other custodial angement established by the Purchaser or one of its affiliates, the owners of any ►'neficial interest in which are limited to qualified institution buyers; (c) that the Purchaser reaso .:bly believes to be a qualified institutional buyer as defined in Rule 144A promulgatender the 1933 Act; or (d) who executes an ' estor letter substantially in the form of this letter. 4 4 -444 e- 0657, 4 4540-4440.0657.2 37123/0015 113S tgm diary, and is view to resale representation in etains the right to s may not be readily for its own account and wever, that the Purchaser s that any such sale, transfer Dated as of the day of [December], 2012. By. Name Title SCHEDULE III-3 SUBSTITUTED EXHIBIT C FORM OF PRELIMINARY LIMITED OFFERING MEMORANDUM (TO BE COMPLETED IN CONNECTION WITH BOND SALE) C-1 Dopr:7158 t CrYve rk oN of 5'/1-L,E BMO Draft #7 11/6/2012 PRELIMINARY LIMITED OFFERING MEMORANDUM DATED NOVEMBER 19, 2012 NEW ISSUE — BOOK -ENTRY ONLY Moody's: " Fitch: " (See "RATINGS" ;rein) In the. opinion of Squire Sanders (US) LLP, Bond Counsel, under existing law (i) assumin compliance with certain covenants and the accuracy of certain representations, interest on the Serie excluded from gross income for federal income tax purposes and is not an item of tax preference for pu alternative minimum tax imposed on individuals and corporations, and (ii) the Series 2012 B thereon are exempt from taxation under the laws of the State of Florida, except estate taxes i Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Fl Interest on the Series 2012 Bonds may be subject to certain federal taxes imposed only on c the corporate alternative minimum tax on a portion of that interest. For a more compl see "TAX MATTERS" herein, continuing 012 Bonds is oses of the federal ds and the income' osed by Chapter 198, 'ida Statutes, as amended. ain corporations, including e' discussion of the tax aspects, THE CITY OF MIAMI, FLORI A SPECIAL OBLIGATION NON -AD VALOREM REV UE REFUNDING BONDS SERIES 2012 (PORT OF MIAMI TU EL PROJECT) Dated: Date of Delivery Due: March 1, as shown on inside cover The Special Obligation Non -Ad Valorem venue Refunding Bonds, Series 2012 (Port of Miami Tunnel Project) (the "Series 2012 Bonds") are bei „`issued by the City of Miami, Florida (the "City") pursuant to the Constitution and laws of the State of Flo da, including Chapter 166, Part II, Florida Statutes and the Charter of the City (collectively, the "Act") "d pursuant to Resolution No. adopted by the City Commission of the City on November 15 ` 012 (the "Resolution"). The Series 2012 Bonds are be''g issued for the purpose of (i) refinancing the City's Revenue Note, Series 2010 (Port of Miami Tunnel d Access Improvement Project) outstanding in the aggregate principal amount of $45,000,000, includin-' he payment of accrued interest; (ii) funding a deposit to the Debt Service Reserve Account or paying t ° premium for a Reserve Account Insurance Policy for the Series 2012 Bonds and (iii) paying certain cos of issuance of the Series 2012 Bonds, including the premium for a municipal bond insurance policy, i ' ecessary. The Series 2P .2 Bonds are being issued by the City as fully registered bonds, which initially will be registered in the n e of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Interest on the ries 2012 Bonds will be payable semi-annually on March 1 and September. 1, commencing March 1, 201 Individual purchases will be made in book -entry form only through participants in authorized denominat'. ns in the amounts of $100,000 and integral multiples of $5,000 in excess of $100,000. Purchasers of the Series 20, ' Bonds (the "Beneficial Owners") will not receive physical delivery of certificates. Transfers of ownership interein the Series 2012 Bonds will be effected through the DTC book -entry system as described herein. As long as Ce• • & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such gistered owner which will in turn remit such payments to the participants for subsequent disbursement to the Beneficial Owners. Principal of and interest on the Series 2012 Bonds will be payable by U.S. Bank, National Association, Miami, Florida, as Bond Registrar. SUBSTITUTED SUBSTITUTED Certain maturities of the Series 2012 Bonds are subject to optional redemption prior to their respective maturities, as described herein under "DESCRIPTION OF THE SERIES 2012 BONDS - Optional Redemption." The Series 2012 Bonds are payable from and secured by a lien upon and pledge of the Pledge ands, which includes a covenant to budget and appropriate from Non -Ad Valorem Revenues. See " , CURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS" and "INVESTMENT RIS ACTORS" herein. THE CITY IS NOT OBLIGATED TO PAY THE SERIES 2012 BONDS OR THE IN REST THEREON EXCEPT FROM THE PLEDGED FUNDS, AS HEREAFTER DEFINED, THE ISSUANC ; *F THE SERIES 2012 BONDS SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE E CITY TO LEVY OR TO PLEDGE ANY TAXES WHATEVER THEREFOR OR TO MAKE ANY APP rPRIATION FOR THEIR PAYMENT EXCEPT FROM THE PLEDGED FUNDS. NEITHER THE FULL FAI AND CREDIT NOR THE TAXING POWER OF THE CITY, MIAMI-DADE COUNTY, FLORIDA, THE . ATE OF FLORIDA OR ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO PAYME OF THE SERIES 2012 BONDS, THE SERIES 2012 BONDS INVOLVE A DEGREE OF RISK (SE "INVESTMENT RISK FACTORS" HEREIN) AND ARE NOT SUITABLE FOR ALL INVESTORS (SEE " , ' TED OFFERING," "INVESTMENT RISK FACTORS" AND "RATINGS" HEREIN). THE ISSUER AND HE UNDERWRITER ARE OFFERING THE SERIES 2012 BONDS ONLY TO QUALIFIED INTUITION.^ BUYERS WITHIN THE MEANING OF SECURITIES AND EXCHANGE COMMISSION RULE 144 • ADDITIONALLY, THE UNDERWRITER INTENDS TO FURTHER LIMIT THE OFFERING OF THE RIES 2012 BONDS TO LESS THAN THIRTY- FIVE INVESTORS, ALL OF WHICH SHALL BE SOPHISTICATED MUNICIPAL MARKET PROFESSIONALS WITHIN THE MEANING OF THE MUNICIPAL SEC . TIES RULEMAKING BOARD NOTICE 2012-27, DATED MAY 29, 2012. SEE "DESCRIPTION OF TH ERIES 2012 BONDS — TRANSFER RESTRICTIONS" HEREIN. This cover page contains certain infor ation for quick reference only. It is not a summary of the issue. Investors must read the entire Limited • ' ering Memorandum to obtain information essential to making an unformed investment decision. See "INVESTf' ENT RISK FACTORS" herein. The City has applied to Assu ,; d Guaranty Corp, for a bond insurance policy to guarantee the scheduled payment of principal of a interest on the Series 2012 Bonds. The City may choose to insure all, some or none of the Series 2012 Bo ds. Such determination will be made by the City at the time the Series 2012 Bonds are marketed. In the vent the City elects to provide for such insurance, the scheduled payment of principal of and interest on .'e Series 2012 Bonds will be guaranteed under a financial guaranty insurance policy to be issued concurr-, tly with the delivery of the Series 2012 Bonds by Assured Guaranty Corp. See "INSURANCE RISK FA ;'ORS" herein. The Series 201 r:onds are offered when, as, and if issued and received by the Underwriter, subject to the opinion on certain legal matters r rating to their issuance by Squire Sanders (US) LLP, Miami, Florida, Bond Counsel. Certain legal matters will be passed upo for the City by Julie 0. Bru, Esq., City Attorney and ly Bryant Miller Olive P,A., Miami, Florida, Disclosure Cour, el to the City. Public Financial Management, Inc., Coral Gables, Florida is serving as Financial Advisor to the City. Br o'./and Cassel, Miami, Florida is serving as Underwriter's Counsel. It is expected that the Series 2012 Bonds in definitive f in will be available for delivery to the Underwriter in New York, New York at the facilities of DTC on or about Decemb , 2012. WELLS FARGO SECURITIES ated: , 2012 *Preliminary, subject to change. SUBSTITUTED SERIES 2012 BONDS $ Serial Bonds MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND INITIAL CUSIP NUMBERS Maturity Principal fiilitial CUSIP .(March 1) Amount Interest Rate Yield Price Number* Term Bond Due March 1, at % Yield %"'rice Initial CUSIP No, 1, *The City is not responsible for the use of therCUSIP numbers, nor is a representation made as to their correctness. The CUSIP numbers are included solely for the convenience of the readers of the Limited Offering Memorandum and may be changed after the issuance of the Series 2012 Bonds, �J SUBSTITUTED THE CITY OF MIAMI, FLORIDA MAYOR Tomas A. Regalado CITY COMMISSIONERS Francis X. Suarez, Chairman Marc D. Sarnoff, Vice Chairman Wifredo Gort Frank X. Carollo Michelle Spence -Jones CITY MANAGER Johnny Martinez ASSISTANT CITY MANAGE CHIEF FINANCIAL OFFICE Janice Larned DIRECTOR OF MANAGEME ;° AND BUDGET Daniel Alfo ►f' o CITY AT ORNEY Julie Bru, Esq, BOND COUNSEL Squire Sanders (US) LLP Miami, Florida DISCLOSURE COUNSEL Bryant Miller Olive P.A. Miami, Florida FINANCIAL ADVISOR Public Financial Management, Inc. Coral. Gables, Florida SUBSTITUTED REGARDING USE OF THIS LIMITED OFFERING MEMORANDUM Prospective investors are invited to request from the City documents, instruments and information which m not necessarily be referred to, summarized or described herein, Additional information will be made available to ch prospective investor as such prospective investor deems necessary in order to make an informed decision with;,espect to the Series 2012 Bonds. This Limited Offering Memorandum does not constitute an offer to sell or the soli r tation of an offer to buy, nor shall there be any sale of the Series 2012 Bonds by any person in any jurisdiction 'r `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, DTC and other sourc:- that are believed to be reliable, but is not guaranteed as to accuracy or completeness by and is not ; be construed as a representation by the Underwriter. The Underwriter listed on the cover page hereof has r ewed the information in this Limited Offering Memorandum in accordance with and as part of its responsibi ' ies to investors under the federal securities laws as applied to the facts and circumstances of this transaction, . t the Underwriter does not guarantee the accuracy or completeness of such information, The information ai expressions of opinion stated herein are subject to change. [THE INFORMATION RELATING TO THE INSURER CTAINED HEREIN HAS BEEN FURNISHED BY THE INSURER. NO REPRESENTATION I MADE BY THE CITY OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY OF S'CH INFORMATION OR THAT THERE HAS NOT BEEN ANY MATERIAL ADVERSE CHANGE IN SU INFORMATION SUBSEQUENT TO THE DATE OF SUCH INFORMATION, NEITHER THE CITY NaR THE UNDERWRITER HAS MADE ANY INVESTIGATION INTO THE FINANCIAL CONDITION • ' THE INSURER, AND NO REPRESENTATION IS MADE AS TO THE ABILITY OF THE INSURER TO M . ' T ITS OBLIGATIONS UNDER THE MUNICIPAL BOND INSURANCE POLICY,] [The Insurer makes no representation reg.:'ding the Series 2012 Bonds or the advisability of investing in the Series 2012 Bonds. In addition, the Insurr has not independently verified, makes no representation regarding, and does not accept any responsib.'''ity for the accuracy or completeness of this Limited Offering Memorandum or any information or dis .sure contained herein, or omitted herefrom, other than with respect to the accuracy of the informatio egarding the Insurer, supplied by the Insurer, and presented under the heading "MUNICIPAL BOND IN ' RANCE" and in "APPENDIX F - SPECIMEN MUNICIPAL BOND INSURANCE POLICY" attached h eto.] IN CONNECTION WI THE OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT T.RANSACTIONS THAT ST 1LIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2012 BONDS AT LEVELS ABOVE TH WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, SUCH STABILIZING ACTIVIT; : IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. All summar'=s herein of documents and agreements are qualified in their entirety by reference to such documents •;'d agreements, and all summaries herein of the Series 2012 Bonds are qualified in their entirety by refer ce to the form thereof included in the aforesaid documents and agreements. NO EGISTRATION STATEMENT RELATING TO THE SERIES 2012 BONDS HAS BEEN FILED WITH SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR WITH ANY STATE SECURITIES COMSSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN E INATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND INVOLVED. THE SERIES 2012 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE EC OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS LIMITED OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. SUBSTITUTED RED HERRING LANGUAGE: This Limited Offering Memorandum and the information contained herein are subject to comple'.' n or amendment. The Series 2012 Bonds may not be sold, nor may any offer to buy be accepted prior ,,. the time the Limited Offering Memorandum is delivered in final form. Under no circumstances s..a11 this Limited Offering Memorandum, constitute an offer to sell or the solicitation of an offer to buy, no -WI there be any sale, of the Series 2012 Bonds in any jurisdiction in which such offer, solicitation or s e would be unlawful prior to registration, qualification or exemption under the securities laws of any s ; jurisdiction. SUBSTITUTED TABLE OF CONTENTS Contents INTRODUCTION 1 LIMITED OFFERING 2 INVESTMENT RISK FACTORS 2 THE REFUNDING PLAN 5 ESTIMATED SOURCES AND USES OF FUNDS 5 DEBT SERVICE SCHEDULE 6 DESCRIPTION OF THE SERIES 2012 BONDS 7 General 7 Book -Entry Only System 7 Optional Redemption 10 Mandatory Redemption 10 Notice of Redemption 10 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost 11 Negotiability, Registration and Cancellation 11 Transfer Restrictions 12 SECURITY AND SOURCES OF PAYMENT FOR THE SERI 2012 BONDS .13 General 13 Flow of Funds 14 Debt Service Reserve Account 16 DESCRIPTION OF NON -AD VALOREM REVENU 17 Franchise Fees 17 Public Service Tax 17 Local Communications Services Tax 18 Licenses and Permits 21 Intergovernmental 21 Charges for Services 23 Other Revenue and Financing S %urces 24 General Fund 28 Special Investment'Consid ' ations 30 Additional Debt Payabl rom Non -Ad Valorem Revenues 30 Pledge of Non -Ad Valrem Revenues 30 MANAGEMENT DIS ;'SSION OF BUDGET AND FINANCES 31 Fiscal Year 2012 -suits 31 Fiscal Year 201 Operations and Projections 33 OTHER DEBT 4 NSIDERATIONS 35 CMUNICIPA .'OND INSURANCE] 35 GENERAL ,'` FORMATION REGARDING THE CITY OF MIAMI 35 Back ound 35 Ci + Government 35 doption of Investment Policy and Debt Management Policy 37 Financial Integrity Ordinance 39 Fiscal and Accounting Procedures 39 Internal Auditor 40 SUBSTITUTED LIABILITIES OF THE CITY Insurance Considerations Affecting the City !.41 Workers' Compensation 41 Health Insurance 42 Ability to be Sued, Judgments Enforceable 42 Direct Debt 43 Pension Plans 44 Accrued Compensated Absences 44 44 45 46 47 47 47 48 S 49 49 51 52 FINANCIAL ADVISOR 52 AUDITED FINANCIAL STATEMENTS 52 UNDERWRITING 53 ENFORCEABILITY OF REMEDIES 53 CONTINUING DISCLOSURE 54 ACCURACY AND COMPLETENESS OF LI , "' TED OFFERING MEMORANDUM 54 FORWARD -LOOKING STATEMENTS ....,, 55 MISCELLANEOUS 55 AUTHORIZATION OF LIMITED OF ?';RING MEMORANDUM 55 Other Post -Employment Benefits Financial Urgency THE OMNI COMMUNITY REDEVELOPMENT AGENCY LEGAL MATTERS LITIGATION SECURITIES AND EXCHANGE COMMISSION INVESTIGATIONS INTERNAL REVENUE SERVICE EXAMINATION DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATI TAX MATTERS Original Issue Discount and Original Issue Premium RATINGS APPENDICES APPENDIX A: APPENDIX B: APPENDIX C: APPENDIX D: APPENDIX APPEND F: [APPE IX G: APP +DIX H: AP ' ,NDIX I: GENE L INFORMATION REGARDING THE CITY OF MIAMI AND MIA I-DADE COUNTY P ,, SION PLANS AND OTHER POST EMPLOYMENT BENEFITS RM OF THE RESOLUTION COMPREHENSIVE ANNUAL FINANCIAL. REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 FORM OF BOND COUNSEL OPINION FORM OF CONTINUING DISCLOSURE AGREEMENT SPECIMEN. MUNICIPAL BOND INSURANCE POLICY] FORM OF INVESTOR LETTER LITIGATION ii SUBSTITUTED PRELIMINARY LIMITED OFFERING MEMORANDUM RELATING TO THE CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION NON -AD VALOREM REVENUE REFUNDING BONDS SERIES 2012 (PORT OF MIAMI TUNNEL PROJECT) INTRODUCTION The purpose of this Limited Offering Memorandum, including the cover page an.ppendices hereto, is to set forth information concerning the Special Obligation Non -Ad Valorem Reve , e Refunding Bonds, Series 2012 (Port of Miami Tunnel Project) (the "Series 2012 Bonds"). The City of Miami, Florida (the "City") is situated at the mouth of the iami River on the western shores of Biscayne Bay. It is the county seat of Miami -Dade County, Florida. r e City comprises 35.87 square miles of land and 19.5 square miles of water, The City's diversified econo is base is comprised of, among other things, light manufacturing, commerce, wholesale and retail trade d tourism. For more information about the City, see "APPENDIX A - GENERAL INFORMATION REG DING THE CITY OF MIAMI AND MIAMI-DADE COUNTY, FLORIDA" attached hereto, The Series 2012 Bonds are being issued pursuant to the .:restitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes and the Ch. r er of the City (collectively, the "Act") and pursuant to Resolution No. of the City adopted by t City Commission of the City on November 15, 2012 (the "Resolution"). The Series 2012 Bonds are being issued for th- '.urpose of (i) refinancing the principal amount of the City's Revenue Note, Series 2010 (Port of Miami Tu F let and Access Improvement Project) outstanding in the aggregate principal amount of $45,000,000, plus «'e accrued but unpaid interest to the date of repayment (the "Note"); (ii) funding a deposit to the Debt Se vice Reserve Account or paying the premium for a Reserve Account Insurance Policy for the Series 2012onds and (iii) paying certain costs of issuance of the Series 2012 Bonds, including the premium fora munin`pal bond insurance policy, if necessary. See "THE REFUNDING PLAN" herein. The Series 2012 Bonds will f = payable from the Pledged Funds, which primarily consists of moneys received from the City's coven 1t to budget and appropriate from Non -Ad Valorem Revenues. See "SECURITY AND SOURCES PAYMENT FOR THE SERIES 2012 BONDS" herein. The Series 2012 Bo 'ds and any redemption premium with respect thereto and the interest thereon shall not be or constitut a general debt, liability or obligation of the City or the State of Florida or any political subdivision t. -reof, or a pledge of the faith and credit of the City or of the State of Florida or any political subdivisio :>' ereof, but shall be payable solely from and secured by a lien upon and a pledge of the Pledged Funds ai , the City is not obligated to pay the Series 2012 Bonds, the redemption premium, if any, related thereto ' the interest thereon except from the Pledged Funds as provided in the Resolution. Neither the faith and edit nor the taxing power of the City or of the State of Florida or any political subdivision thereof is , 'edged to the payment of the Series 2012 Bonds. No Bondholder shall ever have the right to compel e exercise of the ad valorem taxing power of the City or taxation in any form on any property to pay such ries 2012 Bonds or the interest thereon, nor shall such Bondholder be entitled to payment of such pri ipal and interest or premium thereon from any other funds of the City except the Pledged Funds as p .vided in the Resolution. *Preliminary, subject to change. SUBSTITUTED For discussion of various risks related to the purchase of the Series 2012 Bonds, see "INVESTMENT RISK FACTORS" herein. The summaries of and references to all documents, statutes, reports and other instruments referrer to herein do not purport to be complete, comprehensive or definitive, and each such summary and refer ce is qualified in its entirety by reference to each such document, statute, report or instrument. All ca • talized terms used in this Limited Offering Memorandum and not otherwise defined herein have the mnings set forth in the Resolution, unless the context would clearly indicate otherwise. A copy of the resolution is attached hereto as "APPENDIX C - FORM OF THE RESOLUTION". LIMITED OFFERING Investment in the Series 2012 Bonds poses certain economic risks. Prospe ve investors in the Series 2012 Bonds are invited to request from the City documents, instruments and '' formation which may not necessarily be referred to, summarized or described herein. Therefore, pro .ective investors should rely upon the information appearing in this Limited Offering Memorandum w f in the context of the availability of such additional information and the sources thereof. Prospective inve ors in the Series 2012 Bonds should have such knowledge and experience in financial and business matter ' o be capable of evaluating the merits and risks of an investment in the Series 2012 Bonds and should hav'''he ability to bear the economic risks of such prospective investment, including a complete loss of such i , ` estment. Additional information will be made available to each prospective investor as such prospectiv ,,'nvestor deems necessary in order to make an informed decision with respect to the purchase of the Serie . ' 012 Bonds. Such requests should be made in writing and directed to: John Generalli, aging Director Wells Fa ,wo Bank, N.A. 2363 Gu to Bay Boulevard Clear -Water, Florida 33765 Email: jo .generalli(wellsfargo.com While the Series 2012 Bonds .-'e not subject to registration under the Securities Act of 1933, as amended (the "Securities Act"), the :suer and the Underwriter have determined to restrict the sale of the Series 2012 Bonds to "qualified ins .+` tional buyers," as defined in Rule 144A of the Securities Act ("Qualified Institutional Buyers") and will ffer the Series 2012 Bonds only to such Qualified Institutional Buyers. Additionally, the Underwrite ntends to further limit the offering of the Series 2012 Bonds to less than thirty- five investors, all of which all be "sophisticated municipal market professionals" as defined in Municipal Securities Rulemaking B r rd Notice 2012-27, dated May 29, 2012 ("SMMPs"). See "DESCRIPTION OF THE SERIES 2012 BONDS Transfer Restrictions", "APPENDIX H — FORM OF INVESTOR LETTER" and "INVESTMENT RIS. FACTORS." INVESTMENT RISK FACTORS TH'' URCHASE OF THE SERIES 2012 BONDS INVOLVES A DEGREE OF RISK, AS IS THE CASE WITH A ` INVESTMENTS. EXCEPT AS SPECIFICALLY DESCRIBED BELOW, FACTORS THAT COULD AFFE THE CITY'S ABILITY TO PERFORM ITS OBLIGATIONS UNDER THE RESOLUTION, INC DING THE TIMELY PAYMENT OF PRINCIPAL OF AND INTEREST ON THE SERIES 2012 BONDS, 1 LUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: 2 SUBSTITUTED 1. There is no assurance that any rating assigned to the Series 2012 Bonds by the rating ag-, cies will continue for any given period of time or that such rating will not be lowered or withdrawn en `' ely by such rating agency, if in its judgment, circumstances warrant. A downgrade, change in or withdr. " al of any rating may have an adverse effect on the market price of the Series 2012 Bonds, See "RATING':' herein. 2. The City's covenant to budget and appropriate from Non -Ad Valorem t venues for the payment of the Series 2012 Bonds is limited by a number of factors. As indicated ,nder the caption "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS Gener,. `" herein, the City is required to operate with a balanced budget. All Non Ad Valorem Revenues are curr tly budgeted for other purposes. In addition, the City is not required and does not covenant to maintai .ny services or programs which generate Non -Ad Valorem Revenues. Cancellation of any services or pro ams which are not essential services and that generate Non -Ad Valorem Revenues could have an advers affect on the City fulfilling its covenant obligations under the Resolution. Certain Non -Ad Valorem C, venues, such as State revenue sharing, may be subject to modification or repeal by the Legislature. rtain matching Non -Ad Valorem Revenues, such as governmental, foundation or corporate grants r the City, also may be subject to modification or may be discontinued. See "NON -AD VALOR REVENUES - Special Investment Considerations" herein. 3. The City has three separate, single employer efined benefit plans, in which its current and former employees may participate. The City of Miami Fir., ighters' and Police Officers' Retirement Trust ("FIFO") and the City of Miami General Employees' and sanitation Employees' Retirement Trust ("GESE") are contributory plans that cover substantially all . the City's employees. The third plan is a non- contributory defined benefits plan, the City of Mia lected Officers' Retirement Trust ("EORT"), in which all elected officials with seven or more years of ele'' ed service to the City may participate. The City annually funds its FIPO, the GESE and the EORT pensio bligations. The estimated aggregate budgeted pension costs for the FIPO, GESE and EORT is $66,887,667 f r Fiscal Year 2013 and the City has allocated such expenditure in its Fiscal Year 2013 Budget. See "APPE IX B- PENSION FUNDS AND OTHER POST -EMPLOYMENT BENEFITS" herein and also Note 10 - Pe ions to the Comprehensive Annual Financial Report of The City of Miami for Fiscal Year Ended Septemb r 30, 2011." 4. The City has fou separate collective bargaining units, the American Federation of State, County and Municipal Employ s ("AFSCME") Local 1907 for general City employees, AFSCME Local 871 for. the City's solid waste e loyees, the Fraternal Order of Police ("FOP") Lodge No. 20 for police and detention officers, and th International Association of Fire Fighters ("IAFF") Local 587 for the City's firefighters. In connecti n with the City's need to adopt a balanced budget, the City declared a financial urgency under Secti 447.4095, Florida Statutes, seeking modification of the collective bargaining agreements. The ty's declaration of financial urgency has been challenged and if such litigation is determined advert e to the City, such determination may have a material financial impact on the City's ability to meet its obi',.ations under the Resolution. See "LIABILITIES OF THE CITY -Financial Urgency" and "APPENDIX " LITIGATION-B. CIVIL LITIGATION -Labor Litigation related to "Financial Urgency"" herein. The City has also experienced significant increases in its obligations for contributions for heal :'care benefits for employees and retirees, and their dependents, and other post -employment benefit (" PEB") obligations. The City has two separate OPEB plans, one for police officers and the other for all ther employees. While these obligations have been projected to increase significantly if plan changes were not made, the City made major changes to its health care plan in the 2011, plan. year and increased retiree contributions significantly beginning in the 2012 plan year. See "LIABILITIES OF THE CITY - Other 3 SUBSTITUTED Postemployment Benefits" and Note 11- Post -Employment Healthcare Benefits to the Comprehensive Az i ual Financial Report of The City of Miami for Fiscal Year Ended September 30, 2011. 6. After informal requests for documents in December 2009, in February 2010 the SE instituted a formal investigation of the City in connection with various bond offerings by the City in 200 and 2009 to determine whether the City violated Section 10(b) of the Securities Exchange Act of 1934 d Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. On July 26, 2012, the SEC staff nitified the City of its intent to recommend that the SEC file civil fraud charges against the City based 4 transactions that occurred with respect to the City's fiscal years ending September 30, 2007 and :' eptember 30, 2008. Additionally;, the SEC has requested documents in connection with the City's Sp ial Obligation Parking Revenue Bonds, Series 2010A and Series 2010B (Marlins Stadium Project). ese investigations have temporarily diverted the attention of City officials and employees from the con ct of City operations, have caused the City to incur significant defense expenses, and could have a mate r': I effect on the City's financial condition and operations. See "SECURITIES AND EXCHANGE COMMIS ON INVESTIGATIONS" herein. 7. In November 2011, the City received an examination r''quest letter from the Department of Treasury, Internal Revenue Service, informing the City that its $153,►60,000 City of Miami, Florida Limited Ad Valorem Tax Refunding Bonds, Series 2007A. (Homeland Defey e/Neighborhood Capital Improvement Projects) and City of Miami, Florida Limited Ad Valore (Tax Bonds, Series 2007E (Homeland Defense/Neighborhood Capital Improvement Projects) dated uly 10, 2007 have been selected for a routine examination to determine compliance with federal tax re irements. This investigation has temporarily diverted the attention of the City employees from the co duct of City operations and has caused the City incur expenses. See "INTERNAL REVENUE SERVICE XAMINATION" herein. 8, In the event of a default in the pay nt of principal of and interest on the Series 2012 Bonds, the remedies of the owners of the Series 2012 Bon s are limited under the Resolution. See "APPENDIX C — FORM OF THE RESOLUTION" herein. 9. The City has multiple litigat' n suits that it is defending at this time, The City cannot predict the outcome of such suits nor the economi . effect on the City. See "APPENDIX I - LITIGATION" herein for a description of certain pending litigatio. 10. Although the July , 2012 release of the office of the property appraiser of the County's estimated taxable value of the pro erties located in the City for Fiscal Year 2013 to be $31,333,834,037 which is an increase of 3.23% from Fisca ear 2012, the City cannot accurately predict that increases will continue in the future, Past publicized ec nomic factors which created crises in many geographic areas also affected the City, as property values, pr erty tax revenues, and sales tax revenues declined. In Fiscal Year 2011, the total net assessed value of pro erty in the City declined 17.85% as compared to Fiscal Year 2010 and the estimated actual value of assesseproperty in the City declined 18,75% in Fiscal Year 2011 as compared to Fiscal Year 2010, See "APPEND A — GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI- DADE COUNTY — ssessed Valuations." Economic conditions have historically contributed significantly to the City's finan , 'al distress and there may be future declines in City property tax values, property tax revenues and er revenues of the City. Additionally, the City's property tax revenues have been affected by various pro R°erty tax reform measures. See "APPENDIX A — GENERAL INFORMATION REGARDING THE CITY OF w 1AMI AND MIAMI-DADE COUNTY — Property Tax Reform." The City car rot accurately predict when, w or to what extent these conditions will change, and there is no assurance that they will improve in the f•, eseeable future. See "MANAGEMENT DISCUSSION OF BUDGET AND FINANCES" herein for the Ci s current and projected financial condition. 4 SUBSTITUTED THE REFUNDING PLAN The City expects to refinance the Note, proceeds of which were used to fund the City's quired financial contribution to the acquisition and construction by the Florida Department of Transpor ion of the Port of Miami Tunnel and Access Improvement Project, located within the Omni Community R•development Area (the "Redevelopment Area"), as provided in the Omni Community Redevelop ent Agency's Community Redevelopment Plan. The refinancing of the Note will be accomplished thro the issuance of the Series 2012 Bonds and the use of a portion of the proceeds thereof to prepay the f,'`1 principal of and accrued interest on the Note. Upon delivery of the Series 2012 Bonds, the principal of . d accrued interest on the Note, which matures on January 5, 201.3, will be immediately paid to We11Fargo Bank, National Association, the Lender. ESTIMATED SOURCES AND USES OF FU +DS The table that follows summarizes the estimated sources and use of funds to be derived from the sale of the Series 2012 Bonds: SOURCES: Principal Amount of Series 2012 Bonds [Plus/Minus Original Net Premium/Discount] TOTAL SOURCES USES: Payment of principal and accrued interest on ote $ Deposit to Debt Service Reserve Account $ Costs of IssuanceO) $ $ TOTAL USES (1) Includes underwriter's discount, andal advisory and legalfees and expenses, rating agencies' fees, [bond insurance and Reserve Account Insurance Policy premiums] and miscellaneous other costs of issuance. [Remainder of page intentionally left blank] 5 SUBSTITUTED DEBT SERVICE SCHEDULE The following table sets forth the debt service schedule for the Series 2012 Bonds. Bond Year Principal Interest Total 2013 2014 ' 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total ainder of page intentionally left blank] 6 SUBSTITUTED DESCRIPTION OF THE SERIES 2012 BONDS General The Series 2012 Bonds will only be offered and sold to less than thirty-five Qualified In itutional Buyers, which are also SMMPs, as described under "LIMITED OFFERING" herein and ; ay only be transferred in the secondary market to Qualified Institutional Buyers as described under fi' e heading "- Transfer Restrictions". The Series 2012 Bonds shall be issued as fully registered, book -entry only bonds i" `the denomination of $100,000 and integral multiples of $5,000 in excess of $100,000 ("Authorized Deno %nations") through the book -entry only system maintained by The Depository Trust Company, New Yo ' , New York. The Series 2012 Bonds shall be numbered consecutively from 1 upward preceded by t n' letter "R" prefixed to the number. The principal and redemption premium, if any, on the Series 201 : ands shall be payable upon presentation and surrender at the principal office of U.S. Bank, National ssociation, Miami, Florida (the "Bond Registrar"). Interest on the Series 2012 Bonds (calculated on the b is of a 360 day year twelve 30-day months) is payable semi-annually on March 1 and September 1 of eac ear, commencing March 1, 2013.and shall be paid by check or draft drawn upon the Bond Registrar an ailed to the registered owners of the Series 2012 Bonds at the addresses as they appear on the registrati n books maintained by the Bond Registrar at the close of business on the 15th day (whether or not a bu 'mess day) of the month next preceding the interest payment date (the "Record Date"), irrespective of an transfer or exchange of such Series 2012 Bonds subsequent to such Record Date and prior to such interest yment date, unless the City shall be in default in payment of interest due on such interest payment date rovided, however, that (i) if ownership of Series 2012 Bonds is maintained in a book -entry only system y a securities depository, such payment may be made by automatic funds transfer (wire) to such security s depository or its nominee or (ii) if such Series 2012 Bonds are not maintained in a book -entry only sy em by a securities depository, upon written request of the holder of $1,000,000 or more in principal arno >'t of Series 2012 Bonds, such payments may be made by wire transfer to the bank and bank account specif/d in writing by such Holder (such bank being a bank within the continental United States), if such Holder as advanced to the Bond Registrar the amount necessary to pay the cost of such wire transfer or author ed the Bond Registrar to deduct the cost of such wire transfer from the payment due such Holder. Notwithstanding anythin'in this paragraph to the contrary, any interest not punctually paid on a Regular Record Date shall fort ,' ith cease to be payable to the Holder on such Regular Record Date and may be paid at the close of busine ` on a special record date for the payment of such defaulted interest to be fixed by the Bond Registrar, not; " e of which shall be given not less than 10 days prior to such special record date to such Holder. Book -Entry Only S,tem THE Fr' LOWING INFORMATION CONCERNING DTC AND DTC'S BOOK -ENTRY ONLY SYSTEM HA''".EEN OBTAINED FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT NEITHER E CITY NOR THE UNDERWRITER TAKES ANY RESPONSIBILITY FOR THE ACCURACY OR COMPL '' ENESS THEREOF. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for t ; Series 2012 Bonds. The Series 2012 Bonds will be issued as fully -registered securities registered in the ame of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized 7 SUBSTITUTED representative of DTC. One fully -registered certificate will be issued for each maturity of the Series 2012 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited -purpose trust company organized.. nder the New York Banking Law, a "banking organization" within the meaning of the Newyork Banki 6 Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the ew York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of . ction 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 i illion issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. D also facilitates the post -trade settlement among Direct Participants of sales and other securities tra . '`actions in deposited securities through electronic computerized book -entry transfers and pledges bet:'een Direct Participants' accounts. This eliminates the need for physical movement of securities certi cates. Direct Participants include both U.S. and non-U.S, securities brokers and dealers, banks, trust co r anies, clearing corporations, and certain other. organizations. DTC is a wholly -owned subsidiary of Tr e Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, Nation Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered c1e< ing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also ailable 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 relationshipwith a Direct Particip t, either directly or indirectly ("Indirect Participants"), DTC has a Standard & Poor's rating: "AA+". e DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. ,' ore information about DTC can be found at www, dtcc. com. Purchases of Series 2012 Bonds under tDTC system must be made by or through Direct Participants, which will receive a credit for the Se'es2012 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2012 Bon ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial riwners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however xpected to receive written confirmations providing details of the transaction, as well as periodic stateme of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered i ,'o the transaction. Transfers of ownership interests in the Series 2012 Bonds are to be accomplished by e r`tries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Be -ficial Owners will not receive certificates representing their ownership interests in Series 2012 Bonds, -:.'cept in the event that use of the book -entry system for the Series 2012 Bonds is discontinued. To facilitate sub quent transfers, all Series 2012 Bonds deposited by Direct Participants with DTC are registered in the name ,u f DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized repre . ntative of DTC, The deposit of Series 2012 Bonds with DTC and their registration in the name of Cede & or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of t actual Beneficial Owners of the Series 2012 Bonds; DTC's records reflect only the identity of the Direct Pa icipants to whose accounts such Series 2012 Bonds are credited, which may or may not be the Beneficial hwners. The Direct and Indirect Participants will remain responsible for keeping account of their holding on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct P : °'ticipants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners ill be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 8 SUBSTITUTED Beneficial Owners of Series 2012 Bonds may wish to take certain steps to augment the trans ,Fission to them of notices of significant events with respect to the Series 2012 Bonds, such as redemptions , proposed amendments to the Series 2012 Bond documents. For example, Beneficial Owners of Series 20 Bonds may wish to ascertain that the nominee holding the Series 2012 Bonds for their benefit has afire-,: to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to p vide their names and addresses to the Bond Registrar and request that copies of notices be provided dirt' tly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2012 Bo ► ds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Part ipant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will co :ent or vote with respect to the Series 2012 Bonds unless authorized by a Direct Participant in accordai e with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City .'s soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or votin•;' ights to those Direct Participants to whose accounts the Series 2012 Bonds are credited on the record d.. e (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2012 Bo- ds will be made to Cede & Co., or such other nominee as may be requested by an authorized represent.. `ve of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and .rresponding detail information from the City or Bond Registrar on the payable date in accordance with Zeir respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will -:e governed by standing instructions and customary practices, as is the case with Series 2012 Bonds held r. r the accounts of customers in bearer form or registered in "street name," and will be the responsibility of uch Participant and not of DTC, the Bond Registrar or the City, subject to any statutory or regulatory re. 'cements as may be in effect from time to time. Payment of principal and interest payments to Cede & C.,(or such other nominee as may be requested by an authorized representative of DTC) is the responsibility .f the City or the Bond Registrar, disbursement of such payments to Direct Participants will be the responsility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of D ect and Indirect Participants. DTC may discontinue pro ding its services as depository with respect to the Series 2012 Bonds at any time by giving reasonable n. ice to the City or Bond Registrar. Under such circumstances, in the event that a successor depository is of obtained, Series 2012 Bond certificates are required to be printed and delivered. The City may de de to discontinue use of the system of book -entry only transfers through DTC (or a successor securities de .sitory). In that event, Series 2012 Bond certificates will be printed and delivered to DTC. Thereafter, S: ies 2012 Bond certificates may be transferred and exchanged as described in the Resolution. See "- egotiability, Registration and Cancellation" herein. THE C AND THE BOND REGISTRAR WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO THE BENEF IAL OWNERS, DTC PARTICIPANTS OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS N INEES WITH RESPECT TO THE SERIES 2012 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, ' EDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2012 BONDS OR THE P"OVIDING OF NOTICE OR PAYMENT OF PRINCIPAL OR INTEREST ON THE SERIES 2012 BO S, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2012 DS FOR REDEMPTION. 9 SUBSTITUTED Optional Redemption The Series 2012 Bonds maturing on or prior to March 1, are not redeemable prior , their respective dates of maturity. The Series 2012 Bonds maturing on and after March 1, are bject to redemption at the option of the City on or after March 1, , in whole or in part at any tie'e, in such manner as shall be determined by the Bond Registrar, at a redemption price equal to the par a r ount thereof plus accrued interest to the date fixed for redemption. Mandatory Redemption The Series 2012 Bonds maturing on March 1, will be subject to mandat maturity, by lot, in such manner as the Bond Registrar may deem appropriate, at a par plus accrued interest to the redemption date, on March 1, and on ea moneys deposited in the Debt Service Account, in the following Amortizati specified: *Maturity Notice of Redemption y redemption prior to demption price equal to March 1 thereafter, from n Requirements in the years Year Amoryat on Requirements Notice of redemption for Series 2012 Bon of a copy of a redemption notice, postage prepa registered owners of the Series 2012 Bonds addresses as they appear on the registratio Resolution. Failure to mail any such notic shall not affect the validity of the proce respect to which no failure or defect rate of interest borne by each Serie the redemption price to be paid for redemption, the distinctly Bonds to be redeemed and, principal amount thereof redemption which relat surrender of such Ser' to the unredeemed optional redemp Registrar of su optional red described redemp 'n being redeemed shall be given by deposit in the U.S. mail , at leastthirty (30) days before the redemption date, to all portions of the Series 2012 Bonds to be redeemed at their ooks to be maintained in accordance with the provisions of the to a registered owner of a Series 2012 Bond, or any defect therein, ings for redemption of any Series 2012 Bond or portion thereof with curred. Such notice shall set forth the date fixed for redemption, the 012 Bond being redeemed, the name and address of the Bond Registrar, d, if less than all of the Series 2012 l3onds then Outstanding shall be called numbers and letters, including CUSIP numbers, if any, of such Series 2012 the case of Series 2012 Bonds to be redeemed in part only, the portion of the be redeemed. If any Series 2012 Bond is to be redeemed in part only, the notice of to such Series 2012 Bond shall also state that on or after the redemption date, upon s 2012 Bond, a new Series 2012 Bond or Series 2012 Bonds in a principal amount equal ortion of such Series 2012 Bond and in an Authorized Denomination will be issued. The on of the Series 2012 Bonds, if any, may be conditioned upon the receipt by the Bond cient moneys to pay the redemption price of the Series 2012 Bonds to be redeemed. If the ption of any of the Series 2012 Bonds is conditioned upon the receipt of sufficient moneys as ove, the notice of redemption which relates to such Series 2012 Bonds shall also state that the is so conditioned. Any notice mailed as provided in the Resolution shall be conclusively presumed to have been duly , whether or not the owner of such Series 2012 Bond receives such notice. 10 SUBSTITUTED Notice having been given in the manner and under the conditions provided in the Resolutiot the Series 2012 Bonds or portions of Series 2012 Bonds so called for redemption shall, on the redempti date designated in such notice, become and be due and payable at the redemption price provided for re • ernption for such Series 2012 Bonds or portions of Series 2012 Bonds on such date; provided, however, tha eries 2012 Bonds or portion of Series 2012 Bonds called for optional redemption and which redemption ;,:conditioned upon the receipt of sufficient moneys as described above, shall not become due and ;.ayable on the redemption date if sufficient moneys to pay the redemption price of such Series 2012 Bo ds or portions of Series 2012 Bonds have not been received by the Bond Registrar on or prior to the redemption date. On the date so designated for redemption, moneys for payment of the redemption price eing held in separate accounts by the Bond Registrar in trust for the registered owners of the Series 2012 onds or portions thereof to be redeemed, all as provided in the Resolution, interest on the Series 2012 Bo i os or portions of Series 2012 Bonds so called for redemption shall cease to accrue, such Series 2012 Bon.: and portions of Series 2012. Bonds shall cease to be entitled to any lien, benefit or security under the Resution and shall be deemed paid hereunder, and the registered owners of such Series 2012 Bonds or port s of Series 2012 Bonds shall have no right in respect thereof except to receive payment of the redemion price thereof and, to the extent provided below, to receive Series 2012 Bonds in Authorized Denom ` ations for any unredeemed portions of the Series 2012 Bonds. In case part but not all of a Series 2012 Bond shall be sected for redemption, the registered owners thereof shall present and surrender such Series 2012 Bond t `he Bond Registrar for payment of the principal amount thereof so called for redemption, and the City sh•.' execute and deliver to or upon the order of such registered owner, without charge therefor, for the unre! =emed balance of the principal amount of the Series 2012 Bonds so surrendered, a Series 2012 Bond or S,> ries 2012 Bonds in Authorized Denominations fully registered as to principal and interest. Replacement of Bonds Mutilated, Destroyed ; tolen or Lost In case any Series 2012 Bond shall . come mutilated, destroyed, stolen or lost, the City may execute and the Bond Registrar shall authentiwte and deliver a new Series 2012 Bond, with such maturity, Authorized Denomination and interesr`rate as the Series 2012 Bond so mutilated, destroyed, stolen or lost; provided that, in the case of any mu ated Series 2012 Bond, such mutilated Series 2012 Band shall first be surrendered to the City and, in th-. ` ase of any lost, stolen or destroyed Series 2012 Bond, there shall first be furnished to the City and the B.:^ d Registrar evidence of such loss, theft, or destruction satisfactory to the City and the Bond Registrar, t ether with indemnity satisfactory to them. In the event any such Series 2012 Bond shall be about to ma re or has matured or has been called for redemption, instead of issuing a duplicate Series 2012 Bon ' , the City may direct the Bond Registrar to pay the same without surrender thereof. The City and Bond Re strar may charge the Holder of such Series 2012 Bonds their reasonable fees and expenses in connecti. ` with this transaction. Any Series 2012 Bond surrendered for replacement shall be canceled in the sa manner as provided in the Resolution. Any sup i duplicate Series 2012 Bonds issued pursuant to the Resolution shall constitute additional contractual o.'igations on the part of the City, whether or not the lost, stolen or destroyed Series 2012 Bonds be at any e found by anyone, and such duplicate Series 2012 Bonds shall be entitled to equal and proporti e••` ate benefits and rights as to lien on and source and security for payment from the Pledged Funds, with a; other Series 2012 Bonds issued under the Resolution. N-'otiability, Registration and Cancellation At the option of the Holder thereof and upon surrender thereof at the designated corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar duly SUBSTITUTED executed by the Holder or his duly authorized attorney and upon payment by such Holder of any char, which the Bond Registrar or the City may make as provided in this Section, the Series 2012 Bonds ma .e exchanged for Series 2012 Bonds of the same series, aggregate principal amount of the same maturity any other Authorized Denominations. The Bond Registrar shall keep books for the registration of Series 2012 Bonds and for th registration of transfers of Series 2012 Bonds. The Series 2012 Bonds shall be transferable by the Holder t reof in person or by his attorney duly authorized in writing only to a Qualified Institutional Buyer upo he books of the City kept by the Bond Registrar and only upon surrender thereof together with a w ten instrument of transfer satisfactory to the Bond Registrar duly executed by the Holder or his duly authized attorney. Upon the transfer of any such Series 2012 Bond, the City shall cause to be issued in th name of the transferee (which must be a Qualified Institutional Buyer) a new Series 2012 Bond or Serie•-' 012 Bonds. The City, the Bond Registrar and any other fiduciaries may deem and : eat the person in whose name any Series 2012 Bond shall be registered upon the books kept by the Bond gistrar as the absolute Holder of such Series 2012 Bond, whether such Series 2012 Bond shall be overdue . not, for the purpose of receiving payment of, or on account of, the principal of, redemption premium, i ny, and interest on such Series 2012 Bond as the same becomes due and for all other purposes. All such yments so made to any such Holder or upon his order shall be valid and effectual to satisfy and discharg•:' e liability upon such Series 2012 Bond to the extent of the sum or sums so paid, and neither the City, the and Registrar nor any other fiduciary shall be affected by any notice to the contrary. In all cases in which the privilege of exchanging 'Fries 2012 Bonds or transferring Series 2012 Bonds is exercised, the City shall execute and the Bond Regis r shall authenticate and deliver Series 2012 Bonds in accordance with the provisions of the Resolution. A r'Series 2012 Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the BRegistrar and canceled by the Bond Registrar in the mariner provided in the Resolution. There shall e no charge for any such exchange or transfer of Series 2012 Bonds, but the City or the Bond Registrar ma /require the payment of a sum sufficient to pay any tax, fee or other governmental charge required to be r.id with respect to such exchange or transfer. Neither the City nor the Bond Registrar shall be required :' to transfer or exchange Series 2012 Bonds for a period of 15 days next preceding any selection of Series >> 12 Bonds to be redeemed or thereafter until after the mailing of any notice of redemption; or (b) to trans -r or exchange any Series 2012 Bonds called for redemption. All Series 2012 Bonds paior redeemed, either at or before maturity shall be delivered to the Bond Registrar when such paymen r redemption is made, and such Series 2012 Bonds, together with all Series 2012 Bonds purchased by t _ City, shall thereupon be promptly canceled. Series 2012 Bonds so canceled may at any time be destroyed F the Bond Registrar, who shall execute a certification of destruction in duplicate by the signature of on of its authorized officers describing the Series 2012 Bonds so destroyed, and one executed certificate s 11 be filed with the City and the other executed certificate shall be retained by the Bond Registrar. Transfer Restr tions Ever ' eries 2012 Bond authenticated and delivered under the Resolution, including any issued upon transfer,: xchange or replacement of such Bond, shall be issued and delivered only to Qualified Institutional Buyer'; and each Series 2012 Bond shall bear on its face a legend stating such restriction in substantially the foll r' ing form: THIS BOND IS SUBJECT TO TRANSFER 'RESTRICTIONS. THE INITIAL PURCHASER HEREOF AND ANY SUBSEQUENT TRANSFEREE, BY PURCHASING THIS 12 SUBSTITUTED BOND, AGREES FOR THE BENEFIT OF THE CITY OF MIAMI, FLORIDA, THAT THIS BOND MAY BE TRANSFERRED, RESOLD OR ASSIGNED ONLY TO ANOTHER QUALIFIED INSTITUTIONAL BUYER. NOTWITHSTANDING ANYTHING IN T RESOLUTION OR THIS BOND TO THE CONTRARY, NO TRANSFER, RESAT ' OR ASSIGNMENT OF THIS BOND SHALL BE EFFECTIVE UNLESS THE TRANSFER, '` SALE OR ASSIGNMENT OF THIS BOND IS TO ANY PURCHASER, TRANSFEREE, •;' SIGNEE OR PARTICIPANT THAT IS A "QUALIFIED INSTITUTIONAL BUYER" AS ► FINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933, AAMENDED. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES CT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. ANY T SEER, RESALE, ASSIGNMENT OR OTHER DISPOSITION OF THIS BOND, OR A PARTICIPATION HEREIN, SHALL BE IN EACH CASE ONLY IN A MANNER THA,' 1 OES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RU S AND REGULATIONS PROMULGATED THEREUNDER, OF ANY APPLICABLE ATE SECURITIES LAWS. THIS BOND SHALL BE ISSUED AND SOLD, AND MAY Ir LY BE TRANSFERRED, IN DENOMINATIONS OF $100,000 OR ANY INTEGRAL MU, " PLE OF $5,000 IN EXCESS OF, $100,000. SECURITY AND SOURCES OF PAYMENT OR THE SERIES 2012 BONDS G eneral Payment of the principal of, premium, if a and interest on the Series 2012 Bonds shall be secured by a lien upon and pledge of the Pledged Funds. ` e "Pledged Funds" are defined in the Resolution to mean collectively, all moneys, securities and inst ments held in the Bond Fund and the Accounts (and subaccounts) therein created and establishes under the Resolution for the Series 2012 Bonds, except the Rebate Account. As more particularly describe.; n the following paragraph, the City has covenanted in the'Resolution to budget and appropriate in its ann budget, by amendment, if necessary, and to deposit into the Accounts established within the Bond Fund nder the Resolution, Non -Ad Valorem Revenues lawfully available in each Fiscal Year, in amounts suff' ient to satisfy the (i) Annual Debt Service Requirement for such Fiscal Year (ii) any deposits required to b,°`made into the Debt Service Reserve Account during such Fiscal Year, (iii) any other amounts due the Prov' ers of any Bond Insurance Policy or Reserve Account Insurance Policy and the Bond Registrar during su : Fiscal Year and (iv) any Rebate Amount due during such Fiscal Year as provided in the Resolution. "No Ad Valorem Revenues" are defined in the Resolution to mean all revenues of the City derived from an , source whatsoever, other than ad' valorem taxation on real or personal property, which are legally availabl to make the payments required under the Resolution. Such co ='enant to budget and appropriate does not create any lien upon or pledge of such Non -Ad Valorem Rev ues, nor does it preclude the City from pledging in the future its Non -Ad Valorem Revenues, nor does it r' quire the City to Ievy and collect any particular Non -Ad Valorem Revenues, nor does it give the Bondholrs, the Providers of any Bond Insurance Policy, Reserve Account Insurance Policy or the Bond Registra prior claim on the Non -Ad Valorem Revenues as opposed to claim's of general creditors of the City.,' uch covenant to budget and appropriate Non -Ad Valorem Revenues is subject in all respects to the pa. ` ent of obligations secured by a pledge of such Non -Ad Valorem Revenues heretofore or hereinafter tered into (including the payment of debt service on bonds and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated herein shall have the effect of making available in the manner described herein Non -Ad Valorem Revenues and placing on the City a positive duty to budget and appropriate, by amendment, if necessary, amounts 13 SUBSTITUTED sufficient to meet its obligations hereunder; subject, however, in all respects to the restrictions of Se ion 166.241(2), Florida Statutes, which provides, in part, that the governing body of each municipalit, make appropriations for each Fiscal Year which, in any one year, shall not exceed the amount to be rece. ed from taxation orother revenue sources; and subject further, to the payment of services and programs - ich are for essential public purposes affecting the health, welfare and safety of the inhabitants of the Ci or which are legally mandated by applicable law. Flow of Funds The Resolution establishes a Bond Fund, and within the Bond Fund, the foll. ing separate accounts and subaccounts: (i) Debt Service Account which shall include three separate sub. r'counts therein designated as the Interest Subaccount, the Principal Subaccount, and the Bond Redernpt. n Subaccount; (ii) the Debt Service Reserve Account; (iii) the Cost of Issuance Account; and (iv) the Re••te Account. Non -Ad Valorem Revenues appropriated in each Fiscal Year fo the payment of the principal of, redemption premium, if any, and interest on the Series 2012 Bonds, sha .e applied in the following manner: 1. To the full extent necessary, for deposit into the . ` terest Subaccount in the Debt Service Account, on the fifth (5th) day preceding each Interest Payment ►ate, such sums as shall be sufficient to pay the interest becoming due on the Series 2012 Bonds on each su Interest Payment Date; provided, however, that such deposits for interest shall not be required to be ma R e into the Interest Subaccount to the extent that money on deposit therein is sufficient for such purpose. The City shall, on each Interest Payment Dat :; transfer to the Bond Registrar moneys in an amount equal to the interest due on such Interest Payment ! `te or shall, prior to such Interest Payment Date, advise the Bond Registrar of the amount of any deficit cy in the amount so to be transferred so that the Bond Registrar may give the appropriate notice re red to provide for the payment of such deficiency on such Interest Payment Date from any Reserve A Fount Insurance Policy, if any, on deposit in the Debt Service Reserve Account or from the Bond Insur. 'ce Policy, as applicable. 2. (a) To the full e -nt necessary, for deposit into the Principal Subaccount in the Debt Service Account, on the fifth (5th) d ' preceding each principal maturity date, the principal amount of Serial Bonds which will mature and bece due on such maturity dates; provided, however, that such deposits for principal shall not be required be made -into the Principal Subaccount to the extent that money on deposit therein is sufficient for such r%urpose. The City shall, o► each principal payment date, transfer to the Bond Registrar moneys in an amount equal to the principal ue on such principal payment date or shall, prior to such principal payment date, advise the Bond Re!''trar of the amount of any deficiency in the amount so to be transferred so that the Bond Registrar may giv the appropriate notice required to provide for the payment of such deficiency on such principal paym it date from any Reserve Account Insurance Policy, if any, on deposit in the Debt Service Reserve Acco -nt or from the Bond Insurance Policy, if any, as applicable. (b) To the full extent necessary, for deposit into the Bond Redemption Subaccount, if applic.. e, in the Debt Service Account, on the fifth (5th) day preceding each redemption or maturity date, the ortization Requirements as may be necessary for the payment of any Term Bonds payable from the Bo d Redemption Subaccount on such redemption or maturity dates; provided, however, that such deposits r Amortization Installments shall not be required to be made into the Bond Redemption Subaccount to the extent that money on deposit therein is sufficient for such purpose. 14 SUBSTITUTED The moneys in the Bond Redemption Subaccount shall be used solely for the purchase or redemption of Term Bonds payable therefrom, The City may at any time purchase any of said Term Bonds or portions thereof at prices not greater than the then redemption price of said Term Bonds. If the Term Bonds are no then redeemable, the City may purchase said Term Bonds at prices not greater than the redemption pric such Term Bonds on the next ensuing redemption date. The City is mandatorily obligated to use any meys in the Bond Redemption Subaccount for the redemption prior to maturity of such Term Bonds. ''n such manner and at such times as the same are subject to mandatory redemption. If, by the applicatio r f moneys in the Bond Redemption Subaccount, the City shall purchase or call for redemption in any ye. erm Bonds in excess of the Amortization Requirements for such year, such excess of Term Bonds purchased or redeemed shall be credited in such manner and at such times as the Director of Finance, pon consultation with the City Manager, shall determine over the remaining payment dates. The City shall, on each redemption or maturity date, transfer to the Bo ,«: Registrar moneys in an amount equal to the payments due on the Term Bonds on such redemption or turity date or shall, prior to such redemption or maturity date, advise the Bond Registrar of the amount,. any deficiency in the amount so to be transferred so that the Bond Registrar may give the appropriate .tice required to provide for the payment of such deficiency on such redemption or maturity date from . F' Reserve Account Insurance Policy on deposit in the Debt Service Reserve Account or from the Bond I ranee Policy, if any, as applicable. 3. To the full extent necessary, for deposit into e Debt Service Reserve Account on the fifteenth (15th) day of each month in eachyear, beginning ,''%ith the fifteenth (15th) day of the first full calendar inonth following the date on which there is a defi ency in the amount required to be on deposit in the Debt Service Reserve Account, such sums as shall b at least sufficient to pay an amount equal to one - twelfth (1/12) of the difference between the amou . on deposit in the Debt Service Reserve Account (including any Reserve Account Insurance Policy) . the Reserve Account Requirement; provided, however, that no payments shall be required to be made i the Debt Service Reserve Account whenever and as long as the amount on deposit therein (including y Reserve Account Insurance Policy) shall be equal to the Reserve Account Requirement for the Seri 2012 Bonds, Moneys in the Debt Service Re rve Account shall be used only forthe purpose of making payments of principal of and interest on the S . es 2012 Bonds when the moneys in any Account held pursuant to the Resolution and available for suc .urpose are insufficient therefor. Any moneys in the D t Service Reserve Account in excess of the Reserve Account Requirement for the Series 2012 Bonds ma in the discretion of the City, be transferred to and deposited into the Interest Subaccount, the Princip.' Subaccount or the Bond Redemption Subaccount as the City at its option may determine. 4. the Providers, if any, and the Bond Registrar, as applicable, in payment of amounts payable to succ parties during such Fiscal Year not paid pursuant to the above provisions. Series 2012 Bonds shall not be and shall not constitute an indebtedness of the City, within the meanins of any constitutional, statutory or charter provisions or limitations, but shall be secured solely by and yable from, the Pledged Funds as provided in the Resolution. No holder or holders of any Series 2012 B. 'ds shall ever have the right to compel the exercise of the ad valorem taxing power of the City, the State, or ny other political subdivision thereof or taxation in any form on any real or personal property therein or the application of any moneys of the City, except the Pledged Funds, and solely to the extent provided in the Resolution, the Non -Ad Valorem Revenues that have been budgeted and appropriated and deposited into the bond Fund to pay the Series 2012 Bonds or the interest thereon or the making of any debt service, reserve or other payments provided for in the Resolution. 15 SUBSTITUTED Enforcement of the City's obligation to budget and appropriate legally available Non-%'d Valorem Revenues shall be through appropriate judicial proceedings. The City has issued and may iss e other bonds or debt obligations secured by a similar covenant. See "The City of Miami, Florida Schedul -f Principal and Interest for Non -Ad Valorem Revenue Bonds" herein. In addition, various contracts of th ity which do not constitute debt may be secured in a similar manner. The City has not covenanted to maintain any programs or other activities 'hich generate Non -Ad Valorem Revenues. Furthermore, the obligation of the City to budget and apppriate Non -Ad Valorem Revenues is subject to a variety of factors, including the payment of essential .vernmental services of the City and the obligation of the City to have a balanced budget. For a descripti z of additional limitations see "Special Investment Considerations" herein. Debt Service Reserve Account The Resolution requires the City to maintain on deposit ithe Debt Service Reserve Account an amount equal to the Reserve Account Requirement for the ;series 2012 Bonds. "Reserve Account Requirement" shall mean up to the lesser of (i) the Maximum ual Debt Service on all Series 2012 Bonds Outstanding, (ii) 125% of the average Annual Debt Ser 'ce Requirement on all Series 2012 Bonds Outstanding, or (iii) 10% of the proceeds of the Series 20 , Bonds within the meaning of the Code, The Reserve Account Requirement for the Series 2012 Bonds , equal to $ , [The Debt Service Reserve Account shall be funded in the amount of Reserve Acco; zit Requirement from a portion of the proceeds of the Series 2012 Bonds simultaneously with the delivery the Series 2012 Bonds] See "ESTIMATED SOURCES AND USES OF FUNDS" herein. In lieu of or in substitute for the requir deposits (including existing deposits therein) into the Debt Service Reserve Account, the City may cause,': be deposited into the Debt Service Reserve Account a Reserve Account Insurance Policy for the benefit of ` e Holders of the Series 2012 Bonds Outstanding, which Reserve Account Insurance Policy shall be payab, or available to be drawn upon, as the case may be (upon the giving of notice as required thereunder), on , ay Interest Payment Date or principal payment date or mandatory redemption date on which a deficie , 'y exists which cannot be cured by moneys in any other fund or account held pursuant to the Resolution a available for such purpose, If a disbursement is made under the Reserve Account Insurance Policy, the Fity shall be obligated to either (i) reinstate the maximum limits of such Reserve Account Insurance Po: ,cy within twelve months by increasing the amount payable or available to be drawn thereunder in equal r'onthly amounts over such twelve month period, or (ii) deposit, on a monthly basis in accordance with t 'e Resolution, into the Debt Service Reserve Account from the Non -Ad Valorem Revenues appropriated,'' accordance with the Resolution, moneys in the amount of the disbursements made under such Reserve A count Insurance Policy, or a combination of such alternatives as shall cause the amount then on deposit to t credit of the Debt Service Reserve Account to equal the Reserve Account Requirement for the Series 201 onds Outstanding. In th-,'event that upon the occurrence of any deficiency in the Interest Subaccount, the Principal Subaccount; •r the Bond Redemption Subaccount, the Debt Service Reserve Account is then funded with a Reserve count Insurance Policy, the City or the Bond Registrar, as applicable, shall,. on an interest or princip payment date or mandatory redemption date to which such deficiency relates, draw upon or cause to be `.aid under such facilities, on a pro-rata basis thereunder, an amount sufficient to remedy such def. iency, in accordance with the terms and provisions of such facilities and any corresponding mbursement or other agreement governing such facilities; provided however, that if at the time of such deficiency the Debt Service Reserve Account is only partially funded with a Reserve Account Insurance Policy, prior to drawing on such facilities or causing payments to be made thereunder, the City shall first 16 SUBSTITUTED apply any cash and securities on deposit in the Debt Service Reserve Account to remedy the deficiency and, if after such application a deficiency still exists, the City or the Bond Registrar, as applicable, shall make up e balance of the deficiency by drawing on such facilities or causing payments to be made thereundE , as provided in this paragraph. Amounts drawn or paid under a Reserve Account Insurance Policy all be applied as set forth in the Resolution. Any amounts drawn or paid under a Reserve Account Insur ce Policy shall be reimbursed to the Provider thereof in accordance with the terms and provisions of the rei bursement or other agreement governing such facility, DESCRIPTION OF NON -AD VALOREM REVENUES The following describes the major sources of the City's Non -Ad Valorem revenues; Franchise Fees Franchise fees are Ievied annually on utility companies by the City ' a return for granting a privilege, sanctioning a monopoly or permitting the use of public property. Su , fees are currently levied against Florida Power and Light Co. Additionally, the City has granted n• -exclusive commercial solid waste franchises and levies certain fees thereunder against commercial ss.: d waste service providers. There is no guarantee that the services described abve will continue to be provided by such franchisees in the future rather than by governmental entities;'ncluding the City, in which case no franchise fees would be received. Additionally, continued recei of the franchise fees is dependent upon the continued financial viability of such franchise and the c tinued need by the City's citizens for the services provided. Public Service Tax •The Public Service Tax is imposed, ied and collected by the City pursuant to Section 166.231, Florida Statutes, and other applicable prov ions of law, on the purchase of electricity, fuel oil, metered or bottled gas (natural liquefied petroleum ,as or manufactured), water service, and other services on which a tax may be imposed by law. Florida law authorizes an , municipality in the State of Florida (the "State" ) to levy a Public Service Tax on the purchase within sucr'municipality of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, m. `ufactured gas either metered or bottled, water service and fuel oil as well as any services competitive w ° those specifically enumerated. This tax may not exceed 10%0 of the payments received by the sellers of ' ch services from purchasers (except in the case of fuel oil, for which the maximum tax is four cents per g. on). The purchase of natural gas or fuel oil by a public or private utility either for resale or for use as f : el in the generation of electricity, or the purchase of fuel oil or kerosene for use as an aircraft engine fu. "or propellant or for use in internal combustion engines, is exempt from the levy of such tax. Pu uant to the Constitution of the State, Florida Statutes and a resolution of the City, the City levies a Public rvice Tax, within the incorporated area of the City at the rate of 10% on sales of all services for which ', is allowed to tax, and with the restriction that the tax on fuel oil cannot exceed four cents per gallon. Pursuant to the Section 166.231, Florida Statutes, a municipality is permitted to grant to any qualified usiness located within an enterprise zone an exemption equal to fifty percent (50%) of the Public Service Tax imposed, or one hundred percent (100%) in the case of the purchase of electricity, if no less than twenty percent (20%) of the employees of such business are residents of an enterprise zone, excluding temporary and 17 SUBSTITUTED part-time employees. The ability to authorize this exemption expires on December 31, 2015 pursuant t Chapter 290, Florida Statutes. A municipality is also permitted to exempt from the Public Service Tax u-'o and including the first 500 kilowatt hours of electricity purchased per month for residential use a d to exempt all or a portion of the purchase of electricity, metered natural gas, liquefied petroleum g.:'either metered or bottled, or manufactured gas either metered or bottled, or reduce the rate of taxatio thereon, when purchased by an industrial consumer which uses the electricity or gas directly i industrial manufacturing, processing, compounding or a production process of items of personal prope for sale. The City has not provided any of the foregoing exemptions. Additionally, a municipality may provide an exemption to the public service t for any public body as defined in Section 1.01, Florida Statutes, and any non-profit corporation or c operative association organized under Chapter 617, Florida Statutes, which provides water utility servi s to no more than 13,500 equivalent residential units, ownership of which will revert to a political subdiv. ion upon retirement of all outstanding indebtedness. In addition to the other exemptions and ex usions described herein, a municipality may exempt from the Public Service Tax the purchase of etered or bottled gas (natural liquefied petroleum gas or manufactured) or fuel oil for agricultural p poses. "Agricultural purposes" means bona fide farming, pasture, grove or forestry operations a uding horticulture, floricultural, viticulture, dairy, livestock, poultry, bee and aquaculture. The City . foes exempt purchases by the United States Federal Government, the State, the county, the school distric and any public bodies exempted by law or court order. The Public Service Tax must be collected by the selle rom purchasers at the time of sale and remitted to the City. Such tax will appear on a periodic bill rendere to consumers for electricity, metered and bottled gas, water service and fuel oil. A failure by a consum to pay that portion of the bill attributable to the Public Service Tax may result in a suspension of the se ice involved in the same fashion as the failure to pay that portion of the bill attributable to the particular tility service. The amount of Public Service. Tax re ved by the City is subject to increase or decrease due to legislative changes. The amount of the Publi ervice Tax collected within the City may be adversely affected by changes in population within the Cit : Such changes in population could decrease the number of purchasers of electricity, water, metere atural gas, bottled natural gas and fuel oil within the City. Local Communications Services Tax The Communications Se /%ices Tax Simplification Act, enacted by Chapter 2000-260, Laws of Florida, as amended by Chapter 2001- 0, Laws of Florida, and now codified in part as Chapter 202, Florida Statutes (the "Communications Seryes Tax Act") established, effective October 1, 2001, a communications services tax on the sale of commu cations services as defined in Section 202,11, Florida Statutes, and as of the same date repealed Section 1 .231(9), Florida Statutes, which previously granted municipalities the authority to levy a utility services x on the purchase of telecommunication services. Florida Statutes, Section 202.19, as amended, provides at counties and municipalities may levy, by ordinance, a discretionary communications services tax (the' ocal Communications Services Tax") on communications services, the revenues from which may be ,edged for the repayment of current or future bonded indebtedness. The City set the rates for its Local Communications Services Tax pursuant to Ordinance No. 12078 enacted on June 14, 2001. ommunication services are defined as the transmission, conveyance, or routing of voice, data, audio, video r any other information or signals, including video services, to a point, or between or among points, by y through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in e : stence or hereafter devised, regardless of the protocol used for such transmission or conveyance. The term foes not include: 18 SUBSTITUTED (a) Information services; (b) Installation or maintenance of wiring or equipment on a custom 's premises; (c) The sale or rental of tangible personal property; (d) The sale of advertising, including, but not limited to, directs ry advertising; (e) Bad check charges; (f) Late payment charges; (g) Billing and collection services; or (h) Internet access service, electronic mail service, elctronic bulletin board service, or similar on-line services. Any sale of communications services charged to a service adress in the City is subject to the City's local communications services tax at a rate of 5,62%. The Communi ations Services Tax Act further provides that, to the extent that a provider of communications services is r-uired to pay to a local taxing jurisdiction a tax, charge, or other fee under any franchise agreement or ordin : nce with respect to the services or revenues that are also subject to the tax, such provider is entitled to a c r dit against the amount of such tax payable to the State in the amount of such tax, charge, or fee with res,.' ct to such service or revenues. The amount of such credit shall be deducted from the amount that the 1. al taxing jurisdiction is entitled to receive. The Local Communications Services Tax mu a` be collected by the provider from purchasers and remitted to the Florida Department of Revenue (" i►OR"). The proceeds of said Local Communications Services Tax less the FDOR's cost of adrninistratio, is deposited in the Local Communications Services Tax clearing trust fund and distributed monthly to 1e appropriate jurisdictions and may be pledged for the repayment of current or future bonded indeb dness. The sale of communications servic to (i) the federal government, or any instrumentality or agency thereof, or any entity that is exempt £ m state taxes under federal law, (ii) the state or any county, municipality or political subdivision f the state when payment is made directly to the dealer by, the governmental entity, and (iii) any heime for the aged, educational institution (which includes state tax - supported and nonprofit private scr ools, colleges and universities and nonprofit libraries, art galleries and museums, among others) or religious institutions (which includes, but is not limited to, organizations having an established physical place f ' worship at which nonprofit religious services and activities are regularly conducted) that is exempt fro federal income tax under Section 501(c)(3) of the Code are exempt from the Local Communications Ser - ces Tax. Under the Comz unication Service Tax Act, local governments must work with the FDOR to properly identify service addre .es to each municipality and county. If a jurisdiction fails to provide the FDOR with accurate service add=ss information, the local government risks losing tax proceeds that it should properly receive. The City believes it has provided the FDOR with all information that the FDOR has requested as of the date hereof a that such information is accurate. The f deral Internet Tax Freedom Act ("ITFA") imposes a moratorium on taxation of Internet access by states al % political subdivisions. As amended by the Internet Tax Nondiscrimination Act ("ITNA"), the IINA ma ave a material adverse effect upon future collections of the Local Communications Services Tax Reven . s. Signed into law on December 3, 2004, the ITNA extended the ITFA until November 1, 2007. Feder legislation was enacted on October 31, 2007, to extend the moratorium, which was set to expire on No -mber 1, 2007, on certain state, and local government taxation on Internet access, to November 1, 2014. is legislation prohibits a state from reimposing a tax on Internet access which the state repealed more than 19 SUBSTITUTED twenty-four (24) months prior to this legislation's enactment, Additionally, a specific exemption was creat for certain state business taxes enacted between June 20, 2005 and before November 1, 2007 which do ' of discriminate against providers of communication services, Internet access or telecommunications. Ef ctive November 1, 2003, "Internet access" was amended to include telecommunications services purchase • used or sold by a provider of Internet access to provide Internet access. "Internet access" now also inclues related communication services, such as email and instant messaging. •The definition of "Internet • ccess" was revised, in part, to eliminate existing language which could be read to allow providers of mmunication services to exclude from taxation charges for Internet access services which are bundled for single price with taxable communication services, "Telecommunications," as amended, includes un-r- ulated non -utility telecommunications, such as cable services. Application of the amended definition o Internet access" was delayed until June 30, 2008 for state or local tax on Internet access that was: (1) .benerally imposed and actually enforced on telecommunication services, or (2) the subject of litigation ins; 'tuted in a state court prior to July 1, 2007. Prior. to December 3, 2004, under the Communication Services ; ax Act, according to FDOR, when charges for Internet access services are not separately stated on a custe rter's bill, the entire charge is taxed, regardless of whether the charge includes Internet access or tele nrnunications services used to provide Internet access. The negative impact on future collections of Local Communications Services Tax because of the ITNA cannot be determined at this time. The amount of Local Communications Services Tax re increase or decrease due to (i) increases or decreases in the dolla,i legislative changes, and/or (iii) technological advances whi Voice over Internet Protocol ("VoIP"). VoIP is a less expel made in digital form using a broadband Internet connec potential to supplant traditional telephone service. I volume of taxable sales within the City or will be a In 2012, the Florida Legislature passed number of provisions in which the commun "sales price" to expand the existing provis may exclude from the taxable sales price of section 202.22, Florida Statutes, rela situsing methods. The liability of a c tax resulting from that dealer assi only those situation where the d the amount underpaid by that liability provisions retroact changes to dealer liabilit governments of $4.3 m changes made by the the Revenue Estim stated would ha and the reme cornmunica expected, nues received by the City is subject to volume of taxable sales within the City, (ii) could affect consumer preferences, such as ive technology that allows telephone calls to be on, rather than an analog phone line, and has the s possible that VoIP could eitherreduce the dollar n-taxable service altogether. ouse Bill 809 ("HB 809"), which updates and modifies a tions services tax is levied. HB 809 revises the definition of ns relating to what charges a communications services dealer communications services. HB 809 also modifies the requirements g to a dealer that does not use one of the three approved Local tax munications services tax dealer in the cases of underpayment of the ing a service address to the incorrect local taxing jurisdiction is limited to ler did not use an approved situsing method and the FDOR has determined ealer between all jurisdictions. HB 809 makes these revised definitions and e and remedial. The 2012 Revenue Estimating Conference estimates that the for incorrectly assigned service addresses will have a negative impact on local ion in Fiscal Year 2012-13 and a recurring negative impact of $4.7 million. Other ill will have a negative indeterminate effect on local government revenues; however, mg Conference agreed that the provisions related to the taxation of items not separately a negative recurring impact of at least $21.3 million for local communications services tax, al and retroactive provisions will have at least a $2.2 million negative impact on local ns services tax. Although a negative impact ori'the City's local communication services tax is this time, the extent of HB 809 on the City's finances cannot be accurately ascertained. 20 i SUBSTITUTED Licenses and Permits These are revenues derived from the issuance of local licenses and permits, including pro ssional and occupational licenses required for the privilege of engaging in certain trades, occupations;nd other activities. Intergovernmental This category includes federal, State and other local units' grants, and revenue hared by the State and other local units. The largest component is the half -cent sales tax. Half Cent Sales Tax. The State levies and collects a sales tax on, among otl r things, the sales price of each item or article of tangible personal property sold at retail in the State, subj - t to certain exceptions and dealer allowances. In 1982, the Florida legislature created the Local Govrnment Half -Cent Sales Tax Program (the "Local Government Half -Cent Sales Tax Program") which di . ributes a portion of the sales tax revenue and money from the State's General Revenue Fund to counties nd municipalities that meet strict eligibility requirements. In 1982, when the Local Government Half-Ce, Sales Tax Program was created, the general rate of sales tax in the State was increased from 4% to 5%, an one-half of the fifth cent was devoted to the Local Government Half -Cent Sales Tax Program, thus givi rise to the name "Half -Cent Sales Tax." Although the amount of sales tax revenue deposited into the Lo -, Government Half -Cent Sales Tax Program is no longer one-half of the fifth cent of every dollar of the sale price of an item subject to sales tax, the name "Half -Cent Sales Tax" has continued to be utilized. Section 212.20, Florida Statutes, provides for tl. distribution of sales tax revenues collected by the State and further provides for the distribution of a p;rtion of sales tax revenues to the Local Government Half -Cent Sales Tax Clearing Trust Fund (the "Tr, 'st Fund"), after providing for transfers to the General Fund. The entire sales tax remitted to the State by:-ach sales tax dealer located within a particular county (the "Local Government Half -Cent Sales Tax Rev r ues") is deposited in the Trust Fund and earmarked for distribution to the governing body of such !. unty and each participating municipality within that county pursuant to a distribution formula. The percentage of Local Govement Half -Cent Sales Tax Revenues deposited in the Trust Fund is 8.814%. The general rate of sales ax in the State is currently 6.00%. After takirig into account the distributions to the General Fund ' istorically 5% of taxes collected), for every dollar of taxable sales price of an item,approximately 0.501 -nts is deposited into the Trust Fund. As of October 1, 200 the Trust Fund began receiving a portion of certain taxes imposed by the State on the sales of communi.tion services (the "CST Revenues") pursuant to Chapter 202, Florida Statutes. Accordingly, moneys d',-'tributed from the Trust Fund now consist of funds derived from both general sales tax proceeds and CS evenues required to be deposited into the Trust Fund. The Half,' ent Sales Tax collected within a county and distributed to Local government units is distributed am 1g the county and the municipalities therein in accordance with the following formula: 21 SUBSTITUTED County Share (percentage of total Half -Cent = unincorporated + 2/3 incorporated Sales Tax receipts) area population area population Municipality Share (percentage of total Half -Cent Sales Tax receipts) total county + 2/3 incorporated population area population municipality population total county + 2/3 incorpored population area pop ation • For purposes of the foregoing formula, "population" is based upon the, atest official State estimate of population certified prior to the beginning of the local government fiscal yer Should any unincorporated area of Miami -Dade County become incorporated as a municipality, the hare of the Half -Cent Sales Tax received by Miami -Dade County and the City would be reduced. The Half -Cent Sales Tax is distributed from the Trust Fund ..1 a monthly basis to participating units of local government in accordance with Part VI, Chapter 21.8,.Flor'+ a Statutes (the "Sales Tax Act"), The Sales Tax Act permits the City to pledge its share of the Half -Cent S , es Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Half -Cent Sal = Tax Program, each municipality and county is required to have: (i) reported its finances f. its most recently completed fiscal year to the State Department of Financial Services as re., ired by Florida law; (ii) made provisionfor annuaI post audits of financial accounts in accordance with provisions of lati (iii) levied, as sh., n on its most recent financial report, ad valorem taxes, exclusive of taxes Levied for debt servic. ' or other special millages authorized by the voters, to produce the revenue equivalent to a m .'age rate of three (3) mills on the dollar based upon 1973 taxable values or, in order to produce reve ue equivalent to that which would otherwise be produced by such three (3) mill ad valorem tax, t.• lave received a remittance from the county pursuant to a municipal services benefit emit, collec . d, an occupational license tax, utility tax, or ad valorem tax, or have received revenue from an combination of those four sources; (iv) certified that persons in its employ as law enforcement officers meet certain qualificatio for employment, and receive certain compensation; certified that persons in its employ as firefighters meet certain employment qualif', ations and are eligible for certain compensation; (vi) certified that each dependent special district that is budgeted separately from the Zeral budget of such county or municipality has met the provisions for annual post audit of its financial accounts in accordance with law; and (vii) certified to the Florida Department of Revenue ("FDOR") that it has complied with' 22 SUBSTITUTED certain procedures regarding the establishment of the ad valorem tax millage of the coytnty or municipality as required by law. Although the Sales Tax Act does not impose any limitation on the number of years du (g which the City can receive distributions of the Half -Cent Sales Tax from the Trust Fund, there thay be future amendments to the Sales Tax Act in subsequent years imposing additional requirement of eligibility for counties and municipalities participating in the Half -Cent Sales Tax, or the distribution rmulas in Sections 212,20(6)(d) or 218,62, Florida Statutes, may be revised. To be eligible to participat in the Trust Fund in future years, the City must comply with the financial reporting and other requirem: is of the Sales Tax Act. Otherwise, the City would lose its Trust Fund distributions for twelve 2) months following a "determination of noncompliance" by FDOR. The City has always maintained igibility to receive the Half - Cent Sales Tax. State Revenue Sharing. A portion of the taxes levied and collect-. by the State is shared with local governments under the provisions of Chapter 218, Part II, Florida Statu. -s. The amount deposited by FDOR into the State Revenue Sharing Trust Fund for Municipalities is 1;' 409% of available sales and use .tax collections after certain required distributions,12.5% of the Florid.: iternative fuel user decal fee collections, and the net collections from the one -cent municipal fuel tax. To be eligible for State Revenue Sharing funds, a I., al government must be audited, with certain exceptions; must have filed its annual financial report w ' the Florida Department of Financial Services; must certify certain requirements pertaining to the ei ,' loyment and compensation of law enforcement officers and the employment of firefighters; must levy >ii ad valorem tax of at least three (3) mills or collected equivalent alternative revenues from a con-ibinatio of the following sources available to municipalities: a remittance from the county pursuant to Section 5.01(6)(a), Florida Statutes, occupational license taxes, utility taxes, and ad valorem taxes. Eligibil' y is retained if the local government has met eligibility requirements for the previous three years, e -n if the local government reduces its millage or utility taxes because of the receipt of the Half -Cent Sal-. Tax. The amount of the State Revenue Sharing Trust Fund for Municipalities distributed to any one municipality is the average of three f tors: an adjusted population factor; a sales tax collection factor, which is the proportion of the local muni ;'. ality's ordinary sales tax collected within the municipality to the total sales tax collected within all elig', e municipalities in the State; and a relative revenue -raising ability factor, which measures the municipa ' y's ability to raise revenue relative to other qualifying municipalities in the State. Each municipali - is entitled to receive a minimum amount of State Revenue Sharing funds known as the "guaranteed entitl ent" as defined in Section 218.21(6), Florida Statutes,, A municipality is also eligible to receive distributio s under Section 212,20(6)(d)5., Florida Statutes and Section 218.245(3), Florida Statutes, To be el`: ible fo participate in State .Revenue Sharing in future years, the City must comply with certain eligibil and reporting requirements, otherwise, the City will not be entitled to distributions for a period of ti nes and Forfeitures, These are revenues derived from fines and forfeitures imposed by local courts. Char_; s or Services Charges for various services provided by the City to residents, property owners, and grants received rom other governments, including the following: 23 SUBSTITUTED (a) General Government: all money resulting from charges for current s- vices; i.e., photographs, reports and ordinances; (b) Public Safety: fees for police services, fire protection services and emerge y services; (c) Physical Environment: charges include cemetery fees; (d) Building and Zoning Inspections: fees for inspections such as plumbi g, electrical, elevator and mechanical inspections; (e) (f) Marina Fees: all fees associated with operations of the various ;'ty marinas; Recreational and Special Events; fees for parks and recreatio activities and events; and (g) Other: fees for services not specifically mentioned above, i, engineering services, public hearing fees. Other Revenue and Financing Sources This category includes a variety of revenues and transfers om other funds, including the interest earnings on invested funds. As described herein, the obligation and the abilit Valorem Revenues is subject to a variety of factors, incl governmental services and the obligation of the City services provided by the City are generally consider services which the City is obligated to provide for t scope of essential governmental services is not functions and programs are considered essenti budget may be funded from Non -Ad Valor available for the City to budget and appr Bonds. In the calculation of the Non -Ad Bonds set forth herein, the City has tre services related to health, welfare an (other than pension costs, which a constituting essential governmen governmental services. of the City to budget and appropriate Non -Ad ing the obligation of the City to provide essential have a balanced budget. Essential governmental to include police and fire services and governmental e health, welfare and safety of the people. However, the recisely defined by State law. To the extent other City governmental services, a corresponding portion of the City's Revenues prior to such Non -Ad Valorem Revenues being riate for the purpose of making payments on the Series 2012 alorem Revenues available to make payments on the Series 2012 ed the costs of police and fire services and general governmental safety of the people as the costs of essential governmental services a separate line item). While these are the largest budget categories services, other specific functions and programs may constitute essential 24 SUBSTITUTED The following table represents the City's audited determination of legally av Revenues for the Fiscal Years Ended September 30, 2007 through Septem determination of legally available Non -Ad Valorem Revenues for Fiscal Year En the budgeted and projected determination of legally available Non -Ad Valo Ending September 30, 2013, The reader should note that the dollars amo captioned Net Non -Ad Valorem Revenues Available for Debt Service Governmental Services does not represent an amount of available funds t purpose. As indicated under the caption "SECURITY AND SOURCES 0 BONDS — General" herein, the City is required to operate with a ba Revenues are currently budgeted for other purposes. The infor merely indicates that in the event the City desired to pay debt ser legally permitted to amend its budget and appropriate amoun Revenues listed in the chart on the following page. See "GE CITY OF MIAMI — General Fund" herein. Currently the City InterIocal and Grant Agreement between the City and the 0 debt service on the Series 2012 Bonds. See "THE OMN HEREIN. liable Non -Ad Valorem er 30, 2011, unaudited ed September. 30, 2012 and m Revenues for Fiscal Year is indicated in the line item fter the Payment of Essential at are currently available for such PAYMENT FOR THE SERIES 2012 need budget. All Non Ad Valorem :ion in the line item described above ce on the Series 2012 Bonds it would be from the categories of Non Ad Valorem RAL INFORMATION REGARDING THE ntends to use funds allocated pursuant to an NI Community Redevelopment Agency to pay COMMUNITY REDEVELOPMENT AGENCY" [Remainder.of page intentionally left blank] 25 THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM REVENUES FISCAL YEAR ENDED SEPTEMBER 30TII Unaudited As of Sept. 30, Budget 2007 2008 2009 2010 2011 2012 2013 Revenues: Franchise and Utility 'c. s $ 42,257,282 $ 35,319,051 $ 36,228,332 $ 36,448,254 $104,277,3440) $ 92,868,890) $ 88,363,625 Licenses and Permits: Business Licenses and Per nits ` 7,064,358 7,769,633 7,508,453 7,680,315 7,501,746 7,987,435 7,825,000 Construction Permits 66 010 22,019,185 18,524,028 17,469,460 26,463,331 27,805,289 32,469,100 Total Licenses and Permits $ 32,83c . 68 $ 29,788,818 $ 26,032,481 $ 25,149,775 $'33,965,077 $ 35,792,724 $ 40,294,100 Intergovernmental: State and Revenue Sharing $ 13,073,886 12,187,197 $ 10,791,455 $10,516,183 $ 11,429,920 12,009,612 11,211,200 Half -Cent Sales Tax 25,505,412 , 719,050 22,566,791 22,665,743 25,987,633 25,803,387 26,121,200 Fine and Forfeitures 5,283,695 6, '_ 799 6,396,471 4,298,283 4,673,993 4,808,276 4,400,200 Other 15,517,110 14414 13,875,682 18,122,138 17,122,559 18,363,710 7,652,200 Total Intergovernmental $ 59,380,103 $ 57,352 741 $ 53,630,399 $ 55,602,347 $ 59,214,105 $ 60,984,985 $ 49,384,800 Charges for Services: Engineering Services $ 46,587,956 $ 47,079,358 $ 4 ". 5,500 $ 51,784,383 $ 51,004,353 46,247,906 46,402,300 Public Safety 22,952,361 22,596,110 25,009, 21,763,551 27,509,243 31,238,075 29,006,300 Recreation 3,488,492 3,144,370 2,541,056 3,085,270 - 3,213,671 3,669,433 4,344,900 Other 4,145,343 2,178,334 1,242,353 1,496,625 3,449,087 9,386,145 8,243,500 Total Charges for Services $ 77,174,155 $ 74,998,172 $ 76,508,093 `':78,129,829 $ 85,226,353 $ 90,541,559 $ 87,997,000 Interest Income 16,248,307 10,086,415 4,064,924 2 7.''.f28 1,915,415 2,418,809 800,000 Other 4,950,826 6,594,312 8,196,844 6,332,03. 7,247,510 20,895,487 9,201,200 Operating. Transfers 1na) 61,411,040 76,817,851 47,785,001 53,493,902 2,817,357 5 206,967 Total Sources of Legally Available Non -Ad Valorem Revenues $ 294,252,081 $ 290,957,360 $ 252,446,074 $ 257,889,188 $ 304,663 $ 308,709,421 $ 276,110,625 Essential Expenses Not Paid with Ad Valorem Taxes0) (52 246 548) (49,012,560) (39,317,193) (37,980,623) (52,086,638) 29 653 741 (34 652,500))0 Net Non -Ad Valorem Revenues Available after Payment of Essential Governmental Services)4) ; 242,iL05.533 $ 24L244,800$ 213 128 881 $ 219 908 5 $ 252 576523 $ 279,1255, ' 2 12 Debt Service 15,334,423 37,323,086 37,968,012 39,992,035 75,660,882 .75,660,882 � 660,882 Coverage 15.58x 6.48x 5.61x 5.50x 3.34x 3.69x _19x Source: City of Miami Finance Department t)) Amounts comprised primarily of Public Service Taxes, Local Option Gas Taxes and amounts from Public Works special revenue funds. Both Public Service Taxes and Local Option Taxes are recurring each year although the amounts may differ from year to year. These amounts have been reclassed to Franchise and Utility Taxes in 2011 to comply with GASB 54. (2) Transfers In are net of debt service on other bond obligations_ Total ad valorem taxes minus General Fund government and public safety expenses. This amount does not include a pro rata share of the pension costs associated with the General Fund and Public Safety expenses; which amounts for Fiscal Year ended September30, 2011, unaudited for Fiscal Year Ended September 30, 2012 and budgeted amounts for Fiscal Year ending September30, 2013 are equal to $72,194,979, $72,956,094 and $62,435,100, respectively. Retirement contribution, life and health and workers' compensation allocations are removed from the budget amount. a3..nlnsens 26 f SUBSTITUTED The following table represents current debt service as of October 31, 2012, prio to refinancing the Note, on obligations payable from legally available Non -Ad Valorem Revenues. For a etailed listing of the City's outstanding debt see "LIABILITIES OF THE CITY — Direct Debt" herein. Total THE CITY OF MIAMI, FLORIDA SCHEDULE OF PRINCIPAL AND INTEREST FOR NON -AD VALOREM REVENUE BONDS Fiscal Year Principal Interest(-) Total 2013(1) $53,666,229 $21,994,653 $75,660,882 2014 10,201,160 19,511,110 / 29,712,270 2015 6,519,407 18,802,68 25,322,090 2016 6,540,000 13,944, 0 20,484,890 2017 16,245,000 13,29,-548 29,537,548 2018 16,730,000 12, ,'1,760 29,051,760 2019 15,520,000 1 / 83,477 26,803,477 2020 15,105,000 1,319,882 25,424,882 2021 11,050,000 9,546,699 20,596,699 2022 7,575,000 9,003,674 16,578,674 2023 7,985,000 8,569,026 16,554,026 2024 8,430,000 8,104,362 16,534,362 2025 8,920,000 7,593,545 16,513,545 2026 12,015,000 6,919,125 18,934,125 2027 9,140,001 6,238,438 15,378,438 2028 9,715,0r'S 5,663,513 15,378,513 2029 10,265,400 5,110,463 15,375,463 2030 10,8 ,000 4,525,813 15,375,813 2031 13,;;'65,000 3,907,463 17,372,463 2032 %,350,000 3,353,438 10,703,438 2033 7,735,000 2,967,563 10,702,563 2034 8,140,000 2,561,475 10,701,475 2035 8,565,000 2,134,125 10,699,125 2036 9,015,000 1,684,463 10,699,463 2037 9,830,000 1,211,175 11,041,175 2038 10,350,000 695,100 11,045,100 2039 2,890,000 151,725 3,041,725 $313 811,796 $211,412,484 8,525 224,280 Source: City of Miami Firr.nce Department (1) The interest rate on t Note which is being refinanced with the Series 2012 Bonds is assumed at 4.50%, If not refunded with the Series 2012 :,ynds, such Note would come due in Fiscal Year 2013, (2) Net of capitalizeinterest on the Series 2010A Bonds and Series 2010B Bonds, 27 SUBSTITUTED General Fund The General Fund is the general operating fund of the City. It accounts for all financia esources except for those required to be accounted for in another fund. The largest source of revenue i this fund is generated from ad valorem taxation. See "GENERAL INFORMATION REGARDING THE CI OF MIAMI— Financial Integrity Ordinance" herein for a discussion of the general fund reserves. [Remainder of page intentionally left blank.] 28 SUBSTITUTED The following chart shows audited information regarding the General Fund for the Fisca ears Ended September 30, 2007 through September 30, 2011 and unaudited information for Fiscal ended Sep, ember 20, 2012. Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for e General Fund Unaudited as of 2007 2008 2009 2010 201 Sept. 30, 2012 Revenues Property Taxes $258,756,957 $258,294,391 $266,860,263 $247,646,519 $2 ,697,277 $209,126,414 Franchise Fees/Other Taxes 42,257,282 35,319,051 36,228,332 36,448,254 104,277,344 102,373,290 Licenses and Permits 32,830,368 29,788,818 26,032,481 25,149,775 33,965,077 35,792,724 Fines and Forfeitures 5,283,695 6,031,799 6,396,471 4,298,283 4,673,959 4,808,276 Intergovernmental 54,096,408 51,320,942 47,233,928 51,304,06 ' 54,540,146 56,176,709 Charges for Services 78,676,199 74,998,172 76,508,093 78,129,:.'9 85,226,353 90,541,558 Interest 16,248,307 10,086,415 4,064,924 2,73,128 1,915,415 2,418,809 Other 3,448,782 6,594,312 8,196,844 6 r22 053 7,247,510 11,307,598(2) Total Revenues $491,597,998 $472,433,900 $471,521,336 45 ;141 805 $502 543,081 $512,545,379 Expenditures General Government 47,015,325 57,525,471 56,699,386 54,913,599 57,590,383 48,376,621 Planning & Development 10,814,727 10,788,224 10,8.43,924 8,974,853 8,309,065 7,703,911 Public Works 56,376,608 54,858,769 54,938,564` 51,276,106 46,634,027 48,749,615 Public Safety 235,497,950 249,881,480 249,478,1i0 230,713,543 205,193,532 190,403,534 Public Facilities 7,419,797 6,248,557 5,00 38 4,389,912 .4,334,995 4,144,955 Parks and Recreation 20,201,873 24,276,993 28,351,738 23,755,930 23,403,186 21,730,648 Risk Management 18,115,929 28,796,859 1 ,: 07,068 22,354,729 26,546,382 21,997,003 Pensions 70,708,285 65,116,477 6,906,558 89,975,265 72,194,979 72,956,094 Organizational Support/Group Benefits 35,122,459 27,751,691 41,314,516 32,218,742 30,523,550 26,544,574)2) Non -departmental 28,490,230 - - Debt Service: Principal Interest and Other - Charges Capital Outlay 166,365 Total Expenditures $529,763,183 $52 i'244 521 $526,591,932 $518,572,679 $474,896,464 5442,606,955 Excess (Deficiency) of Revenues Over (Under) Expenditures (38,165,185) _ (52,810,621) (55,070,596) (66,530,874) 27,646,617 69,938,423 Other Financing Sources and (Uses): Operating Transfers In 61,41. ,040 76,817,851 47,785,001 53,493,902 12,817,357 5,206,967 Operating Transfers Out (49,0 ,224) (30,879,926) (46,319,266) (13,493,245) (38,293,085) (29,432,022) Total Other Financing Sources(Uses) 2,358,816 45,937,925 1,465,735 40,000,657 J25,475,728) (24,225,055) Net Change in Fund Balance $(25,806,36) $(6,872,696) $(53,604,861) $(26,530,217) $ 2,170,889 $ 45,713,368(3) Fund Balance - Beginning of Year $126,256,513 $100,450,144 $ 93,577,448 $ 39,972,587 $ 17,473,285(1) 519 644,174 Fund Balance - End of Year $100 450,1 4 5'43 577,448 $ 39,972,587 5i3;442.370 $ 19 64.4 174 $ 65,357,542 Source: The C'.' of Miami, Florida, )') The beg' %ing Fund Balance for Fiscal Year 2011 has been adjusted and restated due to GASB Statement No. 54 changes in reporting of classifi .'ions. (2) The r ` enue number includes the amounts reimbursed by retirees for health costs reported in the net of expenses under the Risk- Gro p Benefits Category in the Year to Date Actual. 29 SUBSTITUTED (3) This is an estimated number which does not include amounts that may be identified for 130, month adjustments of , '.proximately $8 million, such adjustments could reduce the Net Change in Fund Balance to $37 million, Special Investment Considerations As described above, the City's covenant to budget and appropriate Non -Ad,` alorem Revenues does not constitute a lien, either legal or equitable, on any of the City's revenues. The mount of such revenues available to make payments on the Series 2012 Bonds may be effectively limited (i) the requirement for a balanced budget, (ii) funding requirements for essential governmental service of the City, (iii) a decrease in one or more of the sources of Non -Ad Valorem Revenues, for example, a fl tuation in the Half -Cent Sales Tax collections due to changes in economic activity and a decrease in tl:.. dollar volume of purchases in Miami -Dade County, (iv) legislative action and (v) the inability of ze City to expend revenues not appropriated or in excess of funds actually available after the use of su funds to satisfy obligations having an express lien or pledge on such funds. Furthermore, except as pro ided in the Resolution (and described herein under the caption "SECURITY AND SOURCES OF PA NT FOR THE SERIES 2012 BONDS — Additional Debt Payable From Non -Ad Valorem Revenues"), t, e City is not restricted in its ability (i) to pledge such revenues for other purposes or to issue additional ebt specifically secured by such revenues or by a covenant similar to that securing the Series 2012 Bon., `or (ii) to reduce or discontinue services that generate Non -Ad Valorem Revenues. All of these factors may limit the availability o;,' on -Ad Valorem Revenues to pay a portion of the debt service on the Series 2012 Bonds, In addition, the can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to app priate such funds. Additional Debt Payable from Non -Ad Valor ;' Revenues Pursuant to the Resolution, the City i ay incur additional debt that is payable from all or a portion of the legally available Non -Ad Valorem Rev F rues only if the total amount of the Non -Ad Valorem Revenues for the prior Fiscal Year were (a) at least 10 times the aggregate Maximum Annual Debt Service of all debt (including all long-term financial oblig., ions appearing on the City's most recent audited financial statements and the debt proposed to be incurred to be paid from Non -Ad Valorem Revenues and not other moneys of the City (collectively, "Debt"), including any Debt payable from one or several specific Non -Ad. Valorem Revenue sources but only to the xtent such Non -Ad Valorem Revenues are legally available to pay debt service on the Series 2012 Bon.::, and (b) so long as the Series 2012 Bonds are outstanding and if a Reserve Account Insurance Policy is i /effect, at least 1.00 times the obligation of the City to repay any costs then due and owing to the Provider r,1 a Reserve Account Insurance Policy. Pledge of Non -Ad Valo:>em Revenues No specific s rce of Non -Ad Valorem Revenues (which includes, without limitation, Public Service Tax revenues, fran se revenues, occupational license tax revenues, the guaranteed entitlement portion of the State Revenue Sh,"ing funds and fines and forfeitures) are pledged to the payment of the Series 2012 Bonds. Certain specifi ources of Non Ad Valorem Revenues are pledged for the payment of other indebtedness of the City. See " IABILITIES OF THE CITY -Direct Debt" herein. Future issues of other indebtedness of the City may bsecured by a pledge of Non -Ad Valorem Revenues as described above. See "OTHER DEBT CONSID TIONS" herein. 30 SUBSTITUTED MANAGEMENT DISCUSSION OF BUDGET AND FINANCES The following discusses the City's current financial position and projected finances fe Fiscal Years 2012 through 2013. Fiscal Year 2012 Results The City's Fiscal Year ended September 30, 2012 is expected to have a surp , s of $[45.71 million] greater than the original budget based on the unaudited results as of September 0, 2012. Such surplus amount is estimated based on the most accurate information available at this ti e, it is possible that the surplus may decrease by $8.0 million after. the City's year end close which is e ected to be completed in February, 2013 because of additional year end adjustments. This budget s rplus is attributable to the following revenues collected in excess of the budgeted amounts: Intergover ental Revenues, Charges for Services and Franchise Fees and other Taxes. Total revenues are expected, "o be $14.7 million greater than budgeted. Intergovernmental Revenues are expected to be $3.8 million gr ater than budgeted due to Charges for Services are expected to be $8.6 million greater than budge due to Interest income is expected to be $.7 million greater than budgeted. Franchise Fees an other Taxes are expected to be $1.6 million greater than budgeted, however due to the merging of the to 1 option gas tax and,public service tax special revenue funds into the general fund in order to comply w ` GASB Statement No. 54 such amount presents as $65 million greater. Although the consolidation of thorie funds increases the revenue for Franchise Fees and Other Taxes, the Transfers -in are reduced because the, oney is being transferred from the Special Revenue Funds and Non -Departmental transfers -out decrea , significantly also. It is anticipated that the following expenditures . ill be below the budgeted amounts which will contribute to the anticipated surplus: General Governm ' t, Public Works, Planning and Development and Risk Management. However, the Solid Waste depart,.' ent is expected to exceed its budget because trash collections are averaging 750 tons more per month th .' in the previous year which increases the tipping fees due to the county. Also, the single stream recycling =s'rogram did not begin operating as scheduled, therefore the tonnage reduction which was taken into account when developing the budget did not materialize. The Public Facilities and Parks and Recreations dep'tments are also expected to exceed their budgets due to an increase in utilities in the City's public faciliti • iand the costs of summer program. See "Actual vs.Budgeted Revenues, Expenditures and Changes in F d Balance for the General Fund through September 30, 2012" below. 31 SUBSTITUTED The following table provides the original Fiscal Year ended September 30, 2012 adopted budget, the midyear amended Fiscal Year ended September 30, 2012 budget and. unaudited actual reve es and expenditures through September 30, 2012 to the original Fiscal Year ended September 30, 20 _' adopted budget: Budgeted Revenues, Expenditures and Net Changes in Fund Balance for the General Fund for Fiscal Year ended Septernb- 30, 2012 and Actual Revenues and Expenditures Year to Date through Septe r ' • er 30, 2012 Unaud'red Year ,� Date Budgeted Amounts tual %of Actual to 9/30/2012 Original Budget Revenues: Property Taxes $ 215,449,900 $ 215,449,900 $ 209,126,414 97.06% Franchise and Other Taxes 36,350,000 36,350,000 37,775,438 103.92%r(1) LOGT and PST Revenues 64,422,92 64,597,852 n/a Occupational Licenses and Permits 36,177,500 36,616,5r, i 35,792,724 98.94% Fines and Forfeitures 5,000,000 5,001, 400 4,808,276 96.17% Intergovernmental 42,477,500 42,4, ,500 56,176,709 132.25% Charges for Services 82,645,800 81;:97,400 90,541,558 109.55% Interest 1,500,000 ,500,000 • 2,418,809 161.25% Other 13,575,100 17,845,600 11,307,598 83.30% Total Revenues 433,175,800 501,559,822 512,545,379 118.326/o Expenditures: General Government 67,360,6f 0 69,184,100 48,376,621 71.82% Planning and Development 8,15 ,00 8,317,600 7,703,911 94.50% Public Works 49,76,100 49,766,100 48,749,615 97.96% Public Safety 18 i.60,600 185,710,600 190,403,534 102.55% Pensions 6,808,800 76,808,800 72,956,094 94,98% Public Facilities 4,244,300 4,244,300 4,144,955 97.66% Parks and Recreation 21,562,300 21,894,700 21,730,648 100,78% Risk Management 58,413,200 58,413,200 21,997,003 37,66% Risk - Group Benefits - - 26,544,574 , n/a Total Expenditures 471,968,500 474,339,400 442,606,955 93.78% Excess (Deficiency) of Revenues Over (Under) Expenditure Operating transfers in Operating transfers out Total Other Financing Source: /(Uses) Net Change in Fund Bala Fund Balance Beginnin Fund Balance as of S= tember 30, 2012 (38,792,700) 27,220,422 69,938,423 46,110,500 5,317,500 5,206,967 (7,317,800) (32,537,922) (29,432,022) 38,792,700 (27,220,422) (24,225,055) Source: City o iami Finance Department (1) 45,713,368 19,644,174 65,357,542 -180.29% 11.29%r(1) 402.20% r(1) -62.45% unts include Public Service Taxes, Local Option Gas Taxes and amounts from Public Works Special Reve e Funds. Both Public Service Taxes and Local Option Gas Taxes are recurring each year although the am • nts may differ from year to year. These amounts have been reclassed from Operating Transfers in to Franchise 32 SUBSTITUTED and Utility Taxes in 2011 to comply with GASB Statement No. 54. Transfers In and net of debt ser - ce, on other bonds obligations. Fiscal Year 2013 Operations and Projections The City's original Fiscal Year 2013 budget was adopted on September 27, 20 Year 2013 general fund budget was approximately $503.25 million which reflecte 4.14% ($20 million) from the original Fiscal Year 2012 general fund budget, includi and Transfers out as expenditures. Property tax revenue is budgeted at an inc Fiscal Year 2012 budget, Franchise Fees increased by $61.09 million over the F. the implementation of GASB Statement No. 54, The revenue from Public Sery Tax were reported under the Special Revenue Fund, but are now reported is experiencing an increase in property values and turn around in the eco is budgeted at an increase of $7.5 million over the Fiscal Year 2012 bas Revenue Sharing and Half -Cent Sales Tax from the State. Fines and F the Fiscal year 2012 budget due to a revised estimate from the City's on current year collections. The City anticipates that the collectio by $3.68 million or 10.02% over the Fiscal year 2012 budget pri fees and permits from planning and zoning and building. Ch $5.5 million over the Fiscal Year 2012 budget. Other Reve 2012 budget primarily due to retirees contributions for lif the Internal Service Fund and the elimination of $1.1 mil Cars. . The original Fiscal an overall increase of g Transfers in as revenue ase of $2 million over the al Year 2012 budget due to ce Taxes and Local Option Gas der the General Fund. The City omy. Intergovernmental Revenue d on the estimated increase in State rfeitures is reduced by $465,400 over stimating Conference Committee based s from Licenses and Permits will increase ily due to increases in other licenses, mural rges for Services is budgeted at an increase of es is reduced by $8.64 million over Fiscal Year and health insurance now being recorded under on from Other Non -Operating Revenue -Take Horne On the expenditure side, the following exenditure categories, general government, planning and development, public safety, public facilities, par and recreation, increased by an average of 37% mainly due to the cost allocation of pension, life, health ins/"ranee and worker's compensation included those categories. Conversely, Risk Management decreased by ''.44.84 or 76,78% and Pension decreased by $76.15 million or 99.14% because the previous costs were ce o' rally budgeted in the Risk Management department and pension category, respectively, and are now bein allocated in the individual departments. Further, this budget avoids s vice reductions and layoffs. 33 SUBSTITUTED Budgeted and Projected Revenues, Expenditures for the General Fund for Fiscal Year ending September 30, 2013 ,varmruiownvshrlv[Eofbe verYfxed the Budget Deptit'i Revenues: Property Taxes Franchise and Other Taxes Interest Income Transfers -in Fines and Forfeitures Intergovernmental Revenues Other Revenues Charges for Service Total Revenue Expenditures: General Government $ , /215,400 Planning & Development 12,668,100 Public Works 66,145,500 Public Safety 272,546,000 Pensions 657,600 Public Facilities 5,966,400 Parks and Recreation 29,820,000 Risk Management 13,665,900 Non -Departmental 14,251,000 Transfers Out 37,488,000 Total Expenditures $509,423,900 Original $217,631,200 97,870,700 800,000 69,900 4,400,200 49,849,600 10,511,200 87 997 0 00 City's Operations Despite the financial stress th.,-the City has experienced in the past, the City seems to be stabilizing again. The City Commission reque ed the City Manger find new revenue sources and the City Manager responded by taking an assessme ,'of all of the revenues and expenditure of the City and he has charged each member of the executive team to• `ind new revenues sources and increase the existing revenues sources along with finding ways to further ;'educe expenditures. In reviewing the leases, the City was able to be more aggressive in collections an the delinquency rate on leases has decreased to 2%. In an effort to r- uce expenditures, the City has been able to negotiate with the unions and achieve, reductions in the app .ximate range of $75-$100 million over the last three years and kept costs from rising leaving expenditu -s relatively stable. Such reduction is primarily attributable to the decrease in contributions to =alth care and pension costs. See "LIABILITIES OF THE CITY -Financial Urgency" herein. It is not the inte of the City to declare financial urgency in preparation of the Fiscal Year 2014 budget. H ever, there is still work to be done. The City has experienced a number of resignations recently. The Fin ce Director resigned on October 30, 2012. Prior to that, the interim Treasurer and the Director of Capit. '` Improvements resigned. Over the last six months, there have been 12 resignations and there exists 34 SUBSTITUTED 5vacancies in key positions. The City is recruiting for those positions and expects to have them filled i the next 90-120 days. As part of the City's focus on finances, they have noted the comments in the Single Aud'. "reports, as noted in the Single Audit Reports in accordance with OMB Circulate A-133 and the Florida Sii; ble Audit Act for Fiscal Year ended September 30, 2011. For example, (i) the financial statement close pro , ss was noted to be a material weakness due to quantity and dollar amount of the audit adjustments at yea end, timeliness of preparation of the financial statements, internal controls, process for review of tii. eliness of required. arbitrage calculations and all debt agreement for debt covenants requirements; (ii) ' e recording of capital assets, the timely close out of projects; and (iii) timeliness of grant reimbursemen In response, the City is working on a business plan for the finance department which would includ:,° the review of the finance department's organizational structure for operations and structural improve nts, as well as increasing the communication between departments to received timely information for th.,'ther departments to complete its financial processes. Such business plan has been approved and suppoed by the City Manager and the Mayor. Although it has not been formally approved bythe City Comm' sion, $900,00 has been approved in the Fiscal. Year 2013 budget which will allow the finance department tmove forward with the business plan, OTHER DEBT CONSIDE TIONS The City expects to issue additional debt in the fut 'e which may include the refunding of its Special Revenue Refunding Bonds, Series 2002A and Special Re iue Refunding Bonds, Series 2002C in 2013, The Southeast Overtown Park West District Community '' development Agency expects to issue debt in the amount of not to exeed $50 million, payable from the .' crement revenue of such community redevelopment area. However, such debt is not a debt of the City MU CIPAL BOND INSURANCE [To Come] GENERAL FORMATION REGARDING THE CITY OF MIAMI Background Now 116 years old,; e City is part of the nation's seventh largest metropolitan area. Incorporated in 1896, the City is the only F`unicipality conceived and founded by a woman - Julia Tuttle. According to the U.S. Census Bureau, th City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity of ap F3` oximately 399,457 residents according to the 2010 U.S. Census, 58.9% of them foreign born. In physical s 'e, the City is not large, encompassing only 35.87 square miles. In population, the City is the largest of the .gin municipalities that make up Miami -Dade County and is the county seat. For additional information co , erning the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF NCIAMI, FLOP/ sA AND MIAMI-DADE COUNTY". City Go rnment Since 1997, the City has been governed by a form of government known as the "Mayor -Commissioner pi ' ." The City Commission is the legislative body of the City, There are five Commissioners elected every ur years 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 City Commission, however, the City 35 SUBSTITUTED Commission can override such veto with a 4/5 vote, The Mayor appoints the CityManager who func ; bns as Y pp g chief administrative officer. The Mayor of the City is Tomas P. Regalado whose term expires November 2013. The members of the City Commission and expiration of their current terms of offi e are: Commission Members Wifredo Gort Marc D. Sarnoff Francis X, Suarez Frank X, Carollo Michelle Spence -Jones Date Term Ex ire November 201 November 2 5 Novembe " 014 Novenlr 2013 Nove ". er 2013 The City Manager, Joluzny Martinez, is a full-time employee and , the chief administrative officer of the City. He was appointed as City Manager by the Mayor on June 21, ; d 11, The City Manager is responsible for directing the administrative and operational aspects of the City i ornpliance with the policies set by the City Commission and the Mayor. He is responsible for an organiz. ' ion that has more than 4,309 employees and administers a budget of more than $534 million. Prior to hi .'urrent position, he served as Deputy City Manager. Prior to being promoted to Deputy City Manager, served as Assistant City Manager and Chief of Infrastructure. Mr. Martinez has a 30 year professio ,.1 history which includes key private sector engineering positions in various consulting firms includin • he Florida Department of Transportation (FDOT) where he served from 1985 to 2003. He holds a Bachelo of Science in Civil Engineering from the University of Miami and is a registered State of Florida Profess' al Engineer (P.E,). The City's Assistant City Manager and C 'ef Financial Officer is Janice Lamed. She is responsible for internal support functions of Finance, Procure r. =nt, Risk Management, and union negotiations on behalf of the City Manager. Ms. Larned was appointe.'as the Assistant City Manager and Chief Financial Officer on December 5, 2011, Ms, Larned had be the Vice President of Finance for District Offices/Moyer Group/Severn Trent -Moyer where she di =cted the financial management of local governments, Prior to that, she was an executive on loan serving i 'arious executive financial roles with Sarasota County, Florida, City of Arlington, Texas and a private co R any in Kansas City, Missouri, Ms. Larned received a Bachelor of Arts degree in Economics from Wichit , State University, and an Executive Master of Business Administration degree from the University of ► issouri Kansas City, She has achieved certification as a Certified Cash Manager and is registered as . municipal advisor for both the Securities Exchange Commission and the Municipal Securities Rulem ing Board. She has completed continuing education from the University of Pennsylvania - Wharton B, siness School and Harvard University - Harvard Business School. The City's Dir'°ctor of Finance position is vacant, The City's, 'rector of Management and Budget and Special Assistant to the City Manager is Daniel J. Alfonso. He rep';rts directly to the City Manager. He is responsible for planning, organizing, directing and controlling th • udgetary and related financial processes, developing, coordinating and publishing the City's budget doc , ent in accordance with legal and regulatory requirements, advising on financial matters, developi r policies and procedures concerning budget activities, and other matters related to budgetary and financi., issues. Mr. Alfonso was appointed as Director of Management and Budget and Special. Assistant to the C. Manager on August 8, 2011. Prior to that Mr. Alfonso served as the Assistant Director for Miami - Da e- County, Florida's General Services Administration Department after working as Miami -Dade County's erating Budget Coordinator in the Office of Management and Budget. Mr. Alfonso received a Bachelor of 36 SUBSTITUTED Arts degree in Business Administration and a Master of Science degree in Finance both from Flora International University, Adoption of Investment Policy and Debt Management Policy The City adopted a detailed written investment policy on May 10, 2001, that applies t.'aIl cash and investments held or controlled by the City and identified as "general operating funds" of t City with the exception of the City's Pension Funds, Deferred Compensation & Section 401(a) Plans, and ch funds related to the issuance of debt where there are other existing policies or indentures in effct for such funds. Additionally, any future revenues, which have statutory investment requirements co icting with the City's Investment Policy and funds held by State agencies (e.g. Department of Revenu are not subject to the provisions of the policy. The primary objective of the investment program is the safety of the .; incipal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a r inimum, whether they are from securities defaults or erosion of market value, To attain this objective, divrsification is required in order that potential losses on individual securities do not exceed the income • 'lerated from the remainder of the portfolio. The portfolios are required to be managed in. such a m� er that funds are available to meet reasonably anticipated cash flow requirements in an orderly mfiner. 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 provid' g oversight and direction in regard to the management of the investment program resides with the Ci +'s Director of Finance. The Director of Finance has established written procedures for the operation of e 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 inv tment 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 A•,' cies, (d) Federal Instrumentalities, (e) Interest Bearing Time Deposit or Savings Accounts, (f) Repurch,. �e 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 Mark! ` Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the City may invest in investment pro cts that include the use of derivatives. The City does not own any derivative products. As of October 1, 2012, pproximately 68,2% of the City's investment portfolio was invested in United States Treasury Obligations:nd obligations of agencies of the United States Government and approximately 31,8% of the City's inves ' ent portfolio was invested in commercial paper. The City ado ted a Debt Management Policy on July 21, 1998 to provide guidance governing the issuance, manages -it, continuing evaluation of and reporting on all debt obligations issued by the City and to provide for th reparation and implementation necessary to assure compliance and conformity with the policy. It is tre responsibility of the City's finance committee to review and make recommendations regarding th ssuance of debt obligations and the management of outstanding debt. The finance committee approved . ` e Series 2012 Bonds and their negotiated sale to the Underwriter on October 24, 2012. he following policies concerning the issuance and management of debt were established in the Debt M gement Policy: (a) the City will not issue debt obligations or use debt proceeds to finance current o rations; (b) the City will utilize debt obligations only for acquisition, construction or remodeling of capital provement projects that cannot be funded from current revenue sources or in such cases wherein it is more 37 SUBSTITUTED equitable to the users of the projects to finance the project over its useful life; and (c) the City will, ` easure the impact of debt service requirements of outstanding and proposed debt obligations on single,' ear, five, ten and twenty year periods. Pursuant to the Debt Management Policy, the City's debt issuance is subje constraints: (i) the Net Debt Per. Capita and the Net Debt to Taxable Assessed Value pe be determined by the finance committee by bench marking the City to current indus maximum maturity shall be the earlier of (a) the estimated useful life of, the ca financed or (b) thirty years or (c) in the event debt was issued to refinance outs final maturity of the debt obligations being refinanced, unless a longer term i committee. to the following entages, which shall 7 standards, and (ii) the tal improvements being lding debt obligations the ecommended by the finance The City is currently in compliance with its Investment Policy ' d Debt Management Policy. 38 SUBSTITUTED Financial Integrity Ordinance On February 10, 2000, the City enacted Ordinance No, 11890, as amended and supplement d (the "Financial Integrity Ordinance") establishing thirteen financial integrity principles, The Financial tegrity Ordinance was enacted as a preventative measure setting forth financial practices that would event the recurrence of a financial emergency. It also includes a self-governing provision where the City's Independent Auditor General is required to prepare an annual report on the City's ad ence to these principles by July 1 of each year, The Financial Integrity Ordinance addresses the fo owing integrity principles: (i) Structurally Balanced Budget, (ii) Estimating Conference Process, (iii) Inter nd Borrowing, (iv) Budget Surpluses, (v) Reserve Policies, (vi) Proprietary Funds, (vii) Multi -year Fina ral Plan, (viii) Multi- Year Capital Improvement Plan, (ix) Debt Management, (x) Financial Oversight d Reporting, (xi) Basic Financial Policies, (xii) Evaluation Committees and (xiii) Full Cost of Servic •The Financial Integrity Ordinance requires the City to establish three reserves: (1) a "contingency" serve of $5,000,000 to fund unanticipated budget issues which arise or, potential expenditure overruns ich cannot be offset through other sources or actions; (2) an "unassigned" fund balance reserve equal,'o ten percent (10%) of the prior three years average of general revenues (excluding transfers and inclu ; ing the contingency reserves in (1) above) to fund unexpected mid -year revenue shortfalls or for an eme s envy such as a natural or man-made disaster, which threatens the health, safety and welfare of the City's,:'esidents, businesses or visitors; and (3) an "assigned" reserve equal to ten percent (10%) of the prior -tree years average of general revenues (excluding transfers) to fund long-term liabilities and com r tments of the City, such as compensated absences, self-insurance plan deficits and anticipated adjust; ents in pension plan payment resulting from market losses. One of the principles established certain para eters for the reserve fund for the general operating fund of the City, including having general fund re). ryes equal to twenty percent (20%) of the prior three years average of general revenues, excluding tran Ars. Although, the City's general fund reserves increased at the end of September 30, 2011, the prior thr years general fund reserves have been declining, See the table entitled "Summary Schedule of Reven , es, Expenditures and Net Changes in Fund Balance for the General Fund" herein. The City is not in co , pliance with the Financial Integrity Ordinance. As of September 30, 2011, the City had approximately 6,494,676 in its reserves. Pursuant to the Financial Integrity Ordinance, the amount should have een $93,066,470, Failure to comply with the Financial Integrity Ordinance is not an event of default der the Resolution. The City will strive to come into compliance with the Ordinance, However, there an be no assurance that the general fund reserves will reach or be maintained at the level require y the Financial Integrity Ordinance. In addition to the r erve fund principle, the City is also not in compliance with principles (i), (ii), (iii), (v), (vi), (viii), (x) an xiii) above for Fiscal Year 2011. Please see Independent Auditor General's Report No. 13-005 dated Octo , r 30, 2012. However, in Fiscal Year 2012, the City expects to be in with all principles, except, e reserve fund principle. fF The ful ' text of the Independent Auditor General's report may be reviewed at http://egov.ci. r ami.fl.us/Office_of_Auditor_General/index.aspx. Fiscal and ccounting Procedures le accounts of the City are organized on the basis of funds or account groups, each of which is cons ;4 ered a separate accounting entity in accordance with generally accepted accounting principles, as ed by the Governmental Accounting Standards Board ("GASB"). The operation of each fund is ccounted for in a separate, self -balancing set of accounts which comprise its assets and other debits, 39 SUBSTITUTED liabilities, fund equities and other credits, revenues and expenditures. Individual funds th.; have similar characteristics are combined into fund types. There are two new GASB pronouncements that, will affect the City over the nex wo years. GASB Statement No. 67 dealing with pension funds and GASB Statement No. 68 dealing with nancial statements, effective in 2014 and 2015, respectively. These changes will effect the recording of un 6 corded liabilities on the City's balance sheet. It is not expected that these changes will impact the City's'.sh expenditures. The City is assessing the impact on its accounting procedures. For the Fiscal Year 2012-2013 Budget, the City created Internal Service F, nds primarily to provide a mechanism that allows for both a cost allocation of pension, health insuranc and worker's compensation benefits in the operating departments and a centralized account from which p, yments are made. The Internal Service Funds are a financing mechanism and self-insurance reserve for these payments. Such funds are in accordance with general accepted accounting principles and are allowe...y GASB. For the past two years the City has received the Certificate of A ievement for Excellence in Financial Reporting from the Government Finance Officers Association of ` e United States and Canada. For a complete description of the fund types and account groups, se,c' "Notes to General Purpose Financial Statements of the City" in the City of Miami Comprehensive Ann ial Financial Report for Fiscal Year Ended September 30, 2011. Internal Auditor Pursuant to Section 48 of the City Charter, the Of e of the Independent Auditor General performs internal audit functions including financial, operatic al, compliance, single audit, investigative, and performance audits of the City, its officials, and indepe,dent agencies; and examines accounting systems and provides legislative analysis, Its mission is to provi•; objective oversight through audits of all of the City's departments, agencies and programs. The City's Inr''ependent Auditor General is Theodore Cuba who began his service with the City on May 7, "2012. The full text of the Independe't Auditor General's reports may be reviewed at http:/ eQov.ci.miami.fl.us Office of Auditor ' eneral index.as x. 40 SUBSTITUTED LIABILITIES OF THE CITY Insurance Considerations Affecting the City Section 768,28, Florida Statutes, provides for waiver of sovereign immunity i against the state and its agencies and subdivisions. The present limit of recovery i relief granted by the Florida legislature is $200,000 per person per claim or judgm for all claims or judgments arising out of the same incident or occurrence is $300, Judgments Enforceable" below. Under the protection of this sovereign imn 768.28 and Chapter 440, Florida Statutes covering Workers' Compensation, insured program to provide coverage for almost all areas of liability incl General Liability, Automotive Liability, Police Professional Liability, Employment Practices Liability. In addition, the City also purchases catastrophic losses associated with its liability exposures. The excess li $20 million in combined limits. The excess insurance program cu $750,000 per occurrence for Workers' Compensation, and $500,000 also purchases dedicated commercial general liability policies fo and the various various marinas that it operates. These poi' occurrence and on an aggregate basis, with a $1,000 deductib The City's master property insurance program pro for the City's $444 million property values. Included in tl flood coverage. With the exception of earthquake, f deductible is $50,000 per occurrence. In regard to the the deductible is 5%0 of the location's values at the t' The City also maintains separate propert Marlins Stadium parking garages. The James limits for all perils including windstorm and for $25 million in total limits for windstorm Knight Center property program has a $ insured values at time of loss, with a $1, The funds to account for liab General Fund. Claims are being Claims expenditures and liabilitie of that loss can be reasonably est utilizes information develope and present/specific knowle Workers' Compensation The City has Attorney's Office t Compensation rel Modification Rat Worker's Comp Worker's Co ort actions or claims the absence of special t. The limit of recovery 0. See "Ability to be Sued, nity limit, Florida Statutes e City has established a self - ding Workers' Compensation, ublic . Officials' Liability, and ess insurance coverage to limit ility insurance program provides for ently has a self -insured retention of r all other liability coverages. The City he Grapeland Waterpark, Bayfront Park, ies typically carry a $1 million Iimit per ides for a total of $100 million in insurance limits s amount is $25 million for named windstorm and od and named windstorm, the All -Other -Perils' amed windstorm, flood, and earthquake exposures, e of loss with a minimum of $250,000. insurance programs for the James L. Knight Center and the Knight Center property program provides $46,442,539 in ood. The Marlins Stadium parking garage program provides nd flood, and for $81,200,000 for all other perils. The James L. ,000 all other perils deductible, and a deductible of 5% of total 00,000 minimum for named windstorm and flood perils. ity losses within the self -insured retention level are derived from the edominantly adjusted by an independent third party administrator. are reported when it is probable that a loss has occurred and the amount ated based on an independent actuarial valuation. The budgeting process in the previous year's actuarial report in addition to historical information ge on the status of claims and litigations. een working diligently with its third party claims administrator and the City's effectively mitigate indemnity and medical expenses resulting from Workers' ed losses, The City has been successful in significantly reducing its Experience (EMR) from 1,89 to 1.33 in 2010 and up to 1.38 in 2011. As of October 1, 2012, open nsation claims total about 1,180 claims. In 2012, the City paid approximately $12,525,176 in ensation related claims compared to $13,460,891 in 2011. 41 SUBSTITUTED • Health. Insurance The City provides group health benefits for its active employees, retirees, and through a fully self -funded health insurance program. The City is currently contributing a while the employees are contributing 13% to the cost of the group health insurance pro part, retirees are almost fully funding their premium costs, and when compared to the the active employees, the non -Medicare retirees are paying 100% of the premium co losses, the City is currently purchasing specific stop loss coverage for claims in e loss corridor between $200,000 to $300,000, the City and stop loss insurance car quota share basis. Loss expenses exceeding $300,000 are fully covered by th Ability to be Sued, Judgments Enforceable Notwithstanding the liability Iimits described below, the laws waived sovereign immunity for liability in tort to the extent provi Therefore, the City is liable for tort claims in the same manner and, extent as a private individual under like circumstances, except th or interest for the period prior to judgment. Such statute also 1' excess of $200,000 to any one person or in excess of $300,00 Judgments in excess of $200,000 per person and $300,000 City funds only pursuant to further action of the Fiori Insurance Considerations Affecting the City" herein, within the limits of insurance coverage provided, t without further action by the Legislature, but the sovereign immunity or to have increased the coverage for tortious acts in excess of the $200 Florida Statutes. See "LITIGATION" herei dependents roximately 87% ram. For the most otal premium cost of t. To limit catastrophic cess of $200,000. For the er quota share the cost on a top loss carrier. tl f the State provide that each city has d in Section 768.28, Florida Statutes. bject to limits stated below, to the same the City is not liable for punitive damages its the liability of a city to pay a judgment in because of any single incident or occurrence. r claim may be rendered, but may be paid from a Legislature. See " L,IABILITIES OF THE CITY- otwithstanding the foregoing, the City may agree, settle a claim made or a judgment rendered against it ty shall not be deemed to have waived any defense or its of its liability as a result of its obtaining insurance 00 per person or $300,000 per claim waiver, as provided by mainder of page intentionally left blank] 42 SUBSTITUTED Direct Debt The City has met certain of its financial needs through debt financing. The table wh follows is a schedule of the outstanding debt of the City as of October 31, 2012, including that which.: s payable from sources other than ad valorem taxes. DESCRIPTION General Obligations Bonds: Homeland Defense/Neighborhood CIP, Series 2002 General Obligation Refunding Bonds, Series 2002A General Obligation Refunding Bonds, Series 2003 General Obligation Refunding Bonds, Series 2003B General Obligation Refunding Bonds, Series 2007A General Obligation Refunding Bonds, Series 2007B General Obligation Refunding Bonds, Series 2009 Total General Obligation Bonds Special Obligation and Revenue Bonds: Special Revenue Refunding Bonds, Series 1987 Community Entitlement Revenue Bonds, Series 19 Special Obligation Non -Ad Valorem Revenue, Ser'4s 1995 Special Revenue Refunding Bonds, Series 2002 Special Revenue Refunding Bonds, Series 20C Special Revenue Bonds, Series 2007 Special Revenue Bonds, Series 2009 Non -Ad Valorem Refunding Bonds, Se es 2009 Special Revenue Bonds, Marlins Gar -a e, Series 2010A Special Revenue Bonds, Marlins R il, Series 2010B Revenue Note, Series 2010 (Port Miami Tunnel) Special Obligation Refunding B.+nds, Series 2011A Loans: SEOPW - Section 108 HUD `"oan Wagner Square -Section 1 HUD Loan Gran Central Corporati; n Loan(1) Total Special Obligation d Revenue Bonds Total Debt Source: City of Miami, 0) Prepayment of loa no revenue generat portion of the loa lance Department s based on revenue generated from the completed project. As of October 31, 2012, there has been by the project in the designated portion of the Southeast Overtown Park West CRA to repay any Amount Outstanding Issued Balance $153,186,41. $ 22,063,415 32,510,"00 16,715,000 18,6. (000 -- 4„'0,000 2,740,000 10; y",060,000 102, 500, 000 0,000,000 50,000,000 51 055 000 45,970,000 $ 412,671,406 $ 239,988,415 65,271,325 2,161,796 11,500,000 72,000,000 26,885,000 27,895,000 18,330,000 28,390,000 14,025,000 80,000,000 74,225,000 65,000,000 63,160,000 37,435,000 35,395,000 84,540,000 84,540,000 16,830,000 16,830,000 50,000,000 45,000,000 70,645,000 70,645,000 5,100,000 1,250,000 4,000,000 1,708,863 1,708,863 $ 620,315,188 $ 454,155,659 $ 1,032 986,594 $ 694,144.074 [Remainder of page intentionally left blank.] 43 SUBSTITUTED Pension Plans The City's employees participate in two separate, single employer defined benef contributory pension plans under the administration and management of separate Boards of Trustees: e City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIFO") and the City of Miami Gene .1 Employees and Sanitation Employees' Retirement Trust ("GESE"). The plans cover substantially all ty employees who contribute a percentage of their base salary or wage on a bi-weekly basis with the exce.r ion of executive level employees hired after October 2009, Those executive employees are required to articipate in a defined contribution plan (4010). The Board of Trustees of GESE administers three definepension plans; (i) City of Miami General Employees and Sanitation Employees Retirement Trust ("GES etirement Trust"), (ii) an Excess Benefit Plan for the City of Miami and (iii) City of Miami Gener. ` Employees and Sanitation Employees Retirement Trust Staff Pension Plan ("GESE Staff Trust"). Each p n's assets may be used only far the payment of benefits to the members of that plan, in accordance with tr e term of the plan. The City's elected officials participate in a single employer defi ed benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("FORT"), This plan covers all elected rfficials with 7 or more years of elected service. The EORT is a non-contributory plan. Due to an ordinanc9- change in 2009, the plan has been closed to any new participants. The total pension costs budgeted for Fiscal Year 20 was $66 million. See "APPENDIX B — PENSION PLANS AND OTI- R POST -EMPLOYMENT BENEFITS" herein for a full discussion of the City's pension plans. This discuJsion has been prepared as an appendix due to the length of the information being presented. Accrued Compensated Absences Under terms of Civil Service regulatioi , labor contracts and administrative policy, City employees are granted vacation and sick leave in varyin amounts. Additionally, certain overtime hours can be accrued and carried forward as earned time off. U used vacation and sick time is payable upon separation from service, subject to various limitations dep ding upon the employee's seniority and civil service classification. The amount accrued as of September 3 , 2012.is $68.0 million of which $9.0 million is the current portion. Such amount only includes the pri ary government employees and does not include employees of component units. The amount for c mponent units as of September. 30, 2012 was $727,758, which is funded by other funding sources of such omponent units, Other Post -Employment Ben • its Pursuant to Sectio 112.0801, Florida Statutes, the City is required to permit participation to the health insurance progra .y retirees and their eligible dependents at a cost to the retiree that is no greater than the cost at which co erage is available for active employees. Retired police officers are offered coverage at a discounted premi m under the FOP Health Trust that is administered separately from the City's health care plan. For non-p.lice retirees (fire fighters, general employees, sanitation employees and elected officials) and their depende ts, the City has a stated policy of subsidizing health care coverage and life insurance at a discounted pre ►ium equal to 87% of the blended group rate. The etal other post -employment benefits ("OPEB") costs budgeted for Fiscal year 2013 was $9.6 million, Se- "APPENDIX B- PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS" herein for a 44 SUBSTITUTED full discussion of OPEB. This discussion has been prepared as an appendix due to the length of the information being presented. Financial Urgency Pursuant to Section 447.4095 of the Florida Statutes, the City may declare a financial urge "y. That statute, which requires declaration each year, provides that, in the event of a financial urgenc,'requiring modification of a collective bargaining agreement, the City and the representative of the bar:, .'' ing unit are required to meet as soon as possible to negotiate the impact of the financial urgency. If. a -r a reasonable period which may not exceed 14 days the parties are in disagreement, then they must pro, ed under Section 447,403 of the Florida Statutes, which provides for the appointment of a mediator ' The City Manager declared a financial urgency on April 30, 2010 (with respect to the International Assoation of Fire Fighters), July 29, 2010 (with respect to the Fraternal Order of Police), August 15, 2011 and .'' ly 27, 2012. Pursuant to the statute and under the City's authority, in 2010 it imp ed the following changes on the unions: • There was a tiered reduction in wages ranging from 0% for sal ` ies less than $39,999.99 to 12% for salaries greater than $120,000 that applied to members.f the International Association of Firefighters, AFL-CIO, Local 587, Fraternal Order of Poli , Walter E. Headley, Jr., Miami, Miami Lodge No. 20 and Miami General Employees, American.,'`ederation of State, County and Municipal Employees, Local 1907, AFL-CIO. • There was also a freezing of step and longevity .:y. 0 Modification to supplemental pay items, wi included elimination of education pay supplements, among other things. • Changes to the healthcare plan, su as increasing the co -pays for primary and specialist care physician visits, adding a deduct]. e for the healthcare plan, adding an out-of-pocket maximum, lowering the coinsurance, increa-'`ng co -pays for prescriptions, increasing emergency room co -pays and adding a co -pay for urge care facilities. Modifying the pension : refits by increasing the normal retirement date, changing the benefit formula, changing the P'aximum benefit, changing the average final compensation. Additionally, for the members of the F rida Public Employees' Council 79, AFSCME, AFL-CIO, Local 871, effective on October 1, 2010, n nber contributions shall be made at the rate of 13%. The impact these changes on the General Fund was $ for Fiscal Year 2011. Althoua Financial Urgency was declared in 2011 and 2012, the City was able to negotiate a one-year contract in 20 ' (no modifications were made) and a two-year contract in 2012 with the unions. They also were able t. each a settlement with the unions which included, among other things, changes to the pension plans in . 12. There may be a legal requirement that certain terms in the pension agreements which were modifit 4 in 2012 be approved by the Circuit Court. However, the City does not expect this to be an issue beca se all parties have jointly agreed to petition the Court for those terms, if legally necessary. See PENDIX B-PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS" herein. 45 SUBSTITUTED The City anticipates that the 2012 changes will reduce the City's pension costs by, 17,391,300 and healthcare costs by $1,135,000 for the Fiscal Year 2013 General Fund budget. The financial urgency has been challenged each year, See "APPENDIX I-L ` IGATION-B, CIVIL LITIGATION - Labor Litigation related to "Financial Urgency" herein regarding cert, legal actions brought in connection therewith. THE OMNI COMMUNITY REDEVELOPMENT A ENCY The Omni Community Redevelopment Agency (the "Omni C ") was created in 1986 and is responsible for implementing the redevelopment plan as adopted (the " j development Plan"). The Board of Directors for the Omni CRA is comprised of the members of the City 'ommission and is separate, distinct and independent from the governing body of the City. The current members of the Board of Directors are: Marc D. Sarnoff, Boar.,' hair Francis X. Suarez, Vif''e Chair Wifredo G.,'t Frank X. C.,' olio Michelle Sp Ace -Jones The mission of the Omni CRA is to improve t c`e quality of life for residents and stakeholders within the Redevelopment Area through activities and pr?grams that create new job opportunities, substantially improve the quality of housing stock and iznpr./re the physical appearance of the Redevelopment Area, The current boundaries of the Redeye, pment Area are N.E. 5th Street, Biscayne Boulevard, 1-95 and I- 395, N.E. 20th Street, then north to NW 22nd treet, with a section bounded by NW 23rd Street, I-95, NW 22nd Street and NW 1st Court, The Redevelop e "ent Area is immediately north of the central business district in the City of Miami. Such boundaries may R> expanded from time -to -time. Although the City intends to b 'dget the Omni CRA revenues pursuant to the Interlocal and Grant Agreement between the City and the Omni CP o pay the Series 2022 Bonds, tax increment revenues of the Omni CRA are not pledged to the Series 2022 Bonds. Wider certain circumstances they will become Non -Ad Valorem Revenues of the City, However, a Bondholder cannot ,inpel the use of tax increment revenues by the City to pay the Series 2012 Bonds. [Remainder of page intentionally left blank.] 46 SUBSTITUTED LEGAL MATTERS Certain legal matters incident to the validity of the Series 2012 Bonds are subject to th--approval of Squire Sanders (US) LLP, Bond Counsel, Miami, Florida whose approving opinion in the,:'orm attached hereto as "APPENDIX D - FORM OF BOND COUNSEL OPINION" will be furnished wit ut charge to the purchasers of the Series 2012 Bonds at the time of their delivery. The actual legal opinion be delivered may vary from that text if necessary to reflect facts and Iaw on the date of delivery. The proposed legal opinion is set forth in APPENDIX E attached hereto. ; e actual legal opinion to be delivered may vary from that text as necessary to reflect facts and law on the ate of delivery. The opinion will speak only as of its date and subsequent distribution thereof by retire '' ation of the Limited Offering Memorandum or otherwise shall create no implication that Bond Coun r' has reviewed or expresses any opinion concerning any of the matters referenced in the opinion subse''ent to its date. While Bond Counsel has participated in the preparation of rtain portions of this Limited Offering Memorandum, it has not been engaged by the City to confirm or ,4rify, and except as may be set forth in an opinion of Bond Counsel delivered to the Underwriter, Bond; ' ounsel will express no opinion as to the accuracy, completeness or fairness of any statements in this L', `ited Offering Memorandum, or in any other reports, financial information, offering or disclosure docum ' is or other information pertaining to the City or the Series 2012 Bonds that may be prepared or made ava',':ble by the City, the Underwriter or others to the holders of the Series 2012 Bonds or other parties. Certain legal matters will be passed upon ;r the City by Julie O, Bru, Esq., City Attorney, and by Bryant Miller Olive P.A., Miami, Florida, Disclos,e Counsel to the City. ITIGATION There is no pending or, to the kno ledge of the City, any threatened Iitigation against the City of any nature whatsoever which in any way ,uestions or affects the validity of the Series 2012 Bonds, or any proceedings or transactions relating their issuance, sale, execution, or delivery, or the adoption of the Resolution, or the levy or collectionf the Non -Ad Valorem Revenues. Neither the creation, organization or existence, nor the title of the pre , nt members of the City Commission or other officers of the City is being contested. See "APPENDIX I IGATION"for material litigation involving the City. SEC ITIES AND EXCHANGE COMMISSION INVESTIGATIONS On Decem ;''r 10, 2009, the City of Miami was notified by the Miami Regional Office of the SEC that the staff of the SE was conducting a non-public inquiry concerning certain City of Miami bond offerings to determine whet` er there had been any violations of federal securities laws. In letters dated December 10, 2009 and De °ember 23, 2009, the SEC staff requested that the City voluntarily provide the SEC staff with documents,%oncerning (a) City bond offerings in 2007 and 2009, (b) the transfer of approximately $13.1 million fm the Capital Projects Fund to the. General Fund in Fiscal Year 2007, (c) the transfer of appro / ately $13.3 million from the Capital Projects Fund to the General Fund in Fiscal Year 2008, and (d) Aud', eport No. 010-005, Audit of Compliance with the Financial Integrity Principles, issued by the City of Mi i Office of Independent Auditor General in November, 2009. 47 SUBSTITUTED In February 2010, the SEC issued a formal order directing a non-public investigation ("Formal Order"), stating that it had information tending to show possible violations of Section 10(b) f the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 33. According to the Formal Order, the SEC is investigating whether, since at least 2005, the City and othe s may have violated these provisions by, among other things, employing devices, schemes or artifices to . efraud, engaging in transactions which operated or would operate as a fraud or deceit, or making false s tements of material fact or failing to disclose material facts concerning, among other things, the state of tha, ' ity's financial condition. The SEC has requested documents from the City, both voluntarily a by subpoena, and has also issued subpoenas for documents from and the testimony of current and for r City officials and employees, and has taken the testimony of some individuals. The City has received r ltiple subpoenas from the SEC asking for additional documents concerning primarily the Auditor Ge rays report referenced above, the fund transfers referenced above, City bond issues in 2007 and 2009, b.. d document disclosures, reports to bondholders, City pension plans and obligations under such plans, a y policies, procedures and guidelines related to inter -fund transfers, any adverse conditions concer ing the City's finances, any internal investigation, review or analysis conducted by the City and rela -d to matters that have been identified as subjects of the SEC investigation and documents related to t use of certain revenue sources as recently mentioned in the Internal Auditor General Report No. 11-001. ocuments requested include communications with and among City management and elected officials. On July 23, 2012, the SEC notified the City that e SEC's enforcement staff intends to recommend that the SEC file civil fraud charges against the City b sed on transactions that occurred with respect to the City's fiscal years ending September 30, 2007 and Se tember 30, 2008. This notification from the SEC staff is commonly referred to as a "Wells Notice," and it ontains the SEC staff's recommendations based upon its investigation. On August 6, 2012, the City filed i. response to the Wells Notice which respectfully disagrees with the SEC staff's position and states the Cit,- s intent to present information to the SEC's Commissioners demonstrating that such charges are not,waP anted. The SEC investigation has tempo arily diverted the attention of City officials and employees from the conduct of City operations, has caused ' e City to incur significant expenses, and could have a material effect on the City's financial condition an. operations. The City cannot predict at this time the duration or the outcome of the final conclusion of is investigation. Additionally, the SEC gas requested documents in connection with the City's Special Obligation Parking Revenue Bonds, Seri-: 2010A and Series 2010B (Marlins Stadium Project), The City is cooperating fully with the SEC investiga on and is providing information in response to the SEC's requests. The SEC has not advised the City whe the investigation is expected to be concluded or of any potential outcome of the investigation, and the C. y cannot predict either the duration of the investigation or its outcome. The SEC investigation may tem r:orarily divert the attention of City officials and employees from the conduct of City operations, could ca se the City to incur significant expenses, and could have a material effect on the City's financial condition ^ nd operations. The City cannot predict the outcome of this investigation or the ultimate consequences re- lting from any action on the part of the SEC. See also "LITIGATION - Certain Legal Proceedings" scussed below and ".INVESTMENT RISK FACTORS" discussed herein. INTERNAL REVENUE SERVICE EXAMINATION On November 18, 2011, the City was notified by an examination request letter from the Department of Tr:. sury, Internal Revenue Service ("IRS"), informing the City that its $153,060,000 City of Miami, Florida Li . ted Ad Valorem Tax Refunding Bonds, Series 2007A (Homeland Defense/Neighborhood Capital 48 SUBSTITUTED Improvement Projects) and City of Miami, Florida Limited Ad Valorem Tax Bonds, Series 2007B ('omeland Defense/Neighborhood Capital Improvement Projects) dated July 10, 2007 (collectively, the "200:' omeland Defense/Neighborhood Capital Improvement Bonds) have been selected for a routine e .urination to determine compliance with federal tax requirements regarding arbitrage under sections 14 and 149 of the Internal Revenue Code. The City is cooperating fully with the IRS examination and is providing infor ation in response to the IRS's requests. The IRS has not advised the City when the examination is expect to be concluded or of any potential outcome of the examination. The IRS examination has temporarily iverted the attention of City officials and employees from the conduct of City operations, could cause e City to incur significant expense, and could have a material effect on the City's future financial condit'n and operations. The City cannot predict the duration or the outcome of this examination or the ultirn e consequences resulting from any action on the part of the IRS. DISCLOSURE REQUIRED BY FLORIDA BLUE S REGULATIONS Rule 69W-400.003, Rules of Government Securities, p'omulgated by the Office of Financial Regulation of the Financial Services Commission, under Sectir'1517.051(1), Florida Statutes ("Rule 69W- 400.003" ), requires the City to disclose each and every default.: s to the payment of principal and interest with respect to obligations issued by the City after December .' 1, 1975. Rule 69W-400.003 further provides, however, that if the City in good faith believes that such sclosures would not be considered material by.a reasonable investor, such disclosures may be omitted. !R e City has not defaulted on the payment of principal or interest with respect to obligations issued by the ty after December 31, 1975, AX MATTERS In the opinion of Squire Sanders (US) ° LP, Bond Counsel, under existing law: (i) interest on the Series 2012 Bonds is excluded from gross income .r federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) the Series 2012 Bonds and the income thereon are exempt fro taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida atutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, amended. Bond Counsel expresses no opinion as to any other tax consequences regarding the Se es 2012 Bonds, The opinion on tax r: utters will be based on and will assume the accuracy of certain representations and certifications, and coi cluing compliance with certain covenants, of the City contained in the transcript of proceedings and that ar< intended to evidence and assure the foregoing, including that the Series 2012 Bonds are and will remain o• igations the interest on which is excluded from gross income for federal income tax purposes. Bond +unsel will not independently verify the accuracy of the City's certifications and representations o he continuing compliance with the City's covenants. The o minion of Bond Counsel is based on current legal authority and covers certain matters not directly add r-ssed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Se 2012 Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusi :n. The opinion is not binding on the Internal Revenue Service ("IRS") or any court. Bond Counsel expre .es no opinion about (i) the effect of future changes in the Code and the applicable regulations under the rode or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS. 49 SUBSTITUTED The Code prescribes a number of, qualifications and conditions for the interest on stat-' and local government obligations to be and to remain excluded from gross income for federal income ; x purposes, some of which require future or continued compliance after issuance of the obligations. Nonc%' pliance with these requirements by the City may cause loss of such status and result in the interest o the Series 2012 Bonds being included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2012 Bonds. The City has covenanted to take the actions required of it for the terest on the Series 2012 Bonds to be and to remain excluded from gross income for federal income tax p poses, and not to take any actions that would adversely affect that exclusion. After the date of issuance f the Series 2012 Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whet''er any actions taken or not taken, or any events occurring or not occurring, or any other matters corning .'o Bond Counsel's attention, may adversely affect the exclusion from gross income for federal income tax rposes of interest on the Series 2012 Bonds or the market value of the Series 2012 Bonds. A portion of the interest on the Series 2012 Bonds earned by ce ain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on t Series 2012 Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations oing business in the United States and to ` a federal tax imposed on excess net passive income of certain S c.;'porations. Under the Code, the exclusion of interest from gross income for federal income tax purposes ay have certain adverse federal income tax consequences on items of income, deduction or credit for cer, ain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security; nd Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire .rr carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. he applicability and extent of these and other tax consequences will depend upon the particular tax s r tus or other tax items of the owner of the Series 2012 Bonds. Bond Counsel will express no opinion re tr rding those consequences. Payments of interest on tax-exempt ob ; ations, including the Series.2012 Bonds, are generally subject to IRS Form 1099-INT information reporting; equirements. If a Series 2012 Bond owner is subject to backup withholding under those requirements, thsl payments of interest will also be subject to backup withholding. Those requirements do not affect the e ��'usion of such interest from gross income for federal income tax purposes. Legislation affecting tax-e mpt obligations is regularly considered by the United States Congress and may also be considered by t e State legislature. Court proceedings may also be filed, the outcome of which could modify the tax tre.' meet of obligations such as the Series 2012 Bonds. There can be no assurance that legislation enacted or pr'`'.osed, or actions by a court, after the date of issuance of the Series 2012 Bonds will not have an adverse e ect on the tax status of interest on the Series 2012 Bonds or the market value or marketability of the Series 2012 Bonds. These adverse effects could result, for example, from changes to federal or state inco tax rates, changes in the structure of federal or state income taxes (including replacement with an her type of tax), or repeal (or reduction in the benefit)'of the exclusion of interest on the Series 2012 Bonds 'om gross income for federal or state income tax purposes for all or certain taxpayers. For ex. r ple, both the American jobs Act of 2011 proposed by President Obama on September 12, 2011, and int .duced into the Senate on September 13, 2011, and the federal budget for fiscal year 2013 as proposed b President Obama on February 13, 2012, contain provisions that could, among other things, result in additnal federal income tax for tax years beginning after 2012 on taxpayers that own tax-exempt obliga ; •ns, including the Series 2012 Bonds, if they have incomes above certain thresholds. Prospective purchasers of the Series 2012 Bonds should consult their own tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of 50 SUBSTITUTED the Series 2012 Bonds at other than their original issuance at the respective prices indicated on tr e inside cover of this Limited Offering Memorandum should also consult their own tax advisers regardi other tax considerations such as the consequences of market discount, as to all of which Bond Counsel presses no opinion. p Bond Counsel's engagement with respect to the Series 2012 Bonds ends with the iss ance of the Series 2012 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend th- City or the owners of the Series 2012 Bonds regarding the tax status of interest thereon in the event of an udit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine wheth the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit th eries 2012 Bonds, under current IRS procedures, the IRS will treat the City as the taxpayer and the benefic`:I owners of the Series 2012 Bonds will have only limited rights, if any, to obtain and participate in judici review of such audit. Any action of the IRS, including but not limited to selection of the Series 2012 B ds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax i ues, may affect the market value of the Series 2012 Bonds. Original Issue Discount and Original Issue Premium Certain of the Series 2012'Bonds ("Discount Series 2012 B Bids") as indicated on the inside cover of this Limited Offering Memorandum were offered and sold to the ublic at an original issue discount ("OI Y'). OID is the excess of the stated redemption price at maturity (t principal amount) over the "issue price" of a Discount Series 2012 Bond. The issue price of a Discount Se 'es 2012 Bond is the initial offering price to the public (other than to bond houses, brokers or similar pe sons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Disco t Series 2012 Bonds of the same maturity is sold pursuant to that offering. For federal income tax purp ses, OID accrues to the owner of a Discount Series 2012 Bond over the period to maturity based on the nstant yield method, compounded semiannually (or over a shorter permitted compounding interval se cted by the owner). The portion of OID that accrues during the period of ownership of a Discount Seri 2012 Bond (i) is interest excluded from the owner's gross income for federal income tax purposes to the s e extent, and subject to the same considerations discussed above, as other interest on the Series 2012 Bo ds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, re emption, prior sale or other disposition of that Discount Series 2012 Bond. The amount of OID that accru each year to a corporate`owner of a Discount Series 2012 Bond is taken into account in computing the cor ration's liability for federal alternative minimum tax. A purchaser of a Discount Series 2012 Bond in the ' itial public offering at the price for that Discount Series 2012 Bond stated on the inside cover of this Li ed Offering Memorandum who holds that Discount Series 2012 Bond to maturity will realize no gain or ss upon the retirement of that Discount Series 2012 Bond. Certain of the Series 20 Bonds ("Premium Series 2012 Bonds") as indicated on the inside cover of this Limited Offering Memor dum were offered and sold to the public at a price in excess of their stated redemption price at maturi, ` (the principal amount). That excess constitutes bond premium. For federal income tax purposes, bonpremium is amortized over the period to maturity of a Premium Series 2012 Bond, based on the yield to m- urity of that Premium Series 2012 Bond (or, in the case of a Premium Series 2012 Bond callable prior to stated maturity, the amortization period and yield may be required to be determined on the basis of an -rlier call date that results in the lowest yield on that Premium Series 2012 Bond), compounded sem nnually. No portion of that bond premium is deductible by the owner of a Premium Series 2012 Bon.: For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at ' aturity) or other disposition of a Premium Series 2012 Bond, the owner's tax basis in the Premium Ser''-s 2012 Bond is reduced by the amount of bond premium that is amortized during the period of ownership As a result, an owner may realize taxable gain for federal income tax purposes from the sale or 51 SUBSTITUTED other disposition of a Premium Series 2012 Bond for an amount equal to or less than the amount paid b ; the owner for that Premium Series 2012 Bond. A purchaser of a Premium Series 2012 Bond in the initial vublic offering at the price for that Premium Series 2012 Bond stated on the inside cover of this Limited Hering Memorandum who holds that Premium Series 2012 Bond to maturity (or, in the case of a ca11ab1 remium Series 2012 Bond, to its earlier call date that results in the lowest yield on that Premium Series 20 Bond) will realize no gain or loss upon the retirement of that Premium Series 2012 Bond. Owners of Discount Series 2012 Bonds and Premium Series 2012 Bonds should c.;' stilt their own tax advisers as to the determination for federal income tax purposes of the amount of 0 or bond premium properly accruable or amortizable in any period with respect to the Discount Series 2P 2 Bonds or Premium Series 2012 Bonds and as to other federal tax consequences and the treatment of OI'and bond premium for purposes of state and local taxes on, or based on, income. RATINGS Moody's Investor's Service ("Moody's") and Fitch Ratings ("Fite " have assigned underlying ratings of " " and " ", respectively, to the Series 2012 Bonds[, with r ut any regard to the Policy]. The ratings reflect only the views of said rating agencies . r d an explanation of the ratings may be obtained only from said rating agencies. There is no assurance tl ;t such ratings will continue for any given period of time or that they will not be lowered or withdrawn e rely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward c ange in or withdrawal of any of such ratings, may have an adverse effect on the market price of the Serie-'' 012 Bonds. An explanation of the significance of the ratings can be received from the rating agencies, a `he following addresses: Fitch Ratings, One State Street Plaza, New York, New York 10004, and Moody' Investor Service, 250 Greenwich Street, New York, New York 10007. . FINA ;` JAL ADVISOR The City has retained Public Financi in connection with the authorization and assisted the City in the preparation of tl other matters relating to the plannin Advisor is not obligated to underta assume responsibility for the accu Offering Memorandum. Management, Inc., Coral Gables, Florida, as Financial Advisor ssuance of the Series 2012 Bonds. The Financial Advisor has s Limited Offering Memorandum and has advised the City as to structuring and issuance of the Series 2012 Bonds, The Financial e and has not undertaken to make an independent verification or to cy, completeness or fairness of the information contained in this Limited Public Financial M.; agement, Inc. is an independent advisory firm and is not engaged in the business of underwriting, ading or distributing municipal or other public securities. Prior to the re tion of Public Financial Management, Inc., First Southwest Company, Aventura, Florida ("First South = est") had been the financial advisor in connection with the proposed issuance of Series 2012 Bonds. AUDITED FINANCIAL STATEMENTS Comprehensive Annual Financial Report of the City for the Fiscal Year ended September 30, 2011 (the "Au' ited Financial Statements"), report thereon of Ernst & Young LLP, as independent certified public accou ants, and the Supplement to the Comprehensive Annual Financial Report for the Fiscal Year ended 52 SUBSTITUTED September 30, 2011 are attached hereto as "APPENDIX D—COMPREHENSIVE ANNUAL FI ✓• NCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011" as a art of this Limited Offering Memorandum, The Audited Financial Statements have been included as a pu `ic document and no consent was requested or received from Ernst & Young, LLP. UNDERWRITING The Series 2012 Bonds are being purchased by Wells Fargo Bank, Nat' Fnal Association (the "Underwriter") at an aggregate purchase price of $ (the par amount of th Series 2012 Bonds, less Underwriter's discount of $ _, [plus/minus net original issue premium/d'.count of $ ). The Underwriter's obligations are subject to certain conditions precedent descr ed in the Bond Purchase Agreement entered into between the City and the Underwriter, and they will ri e obligated to purchase all of the Series 2012 Bonds if any Series 2012 Bonds are purchased. The Series 201, Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2012 Bonds int.: investment trusts) at prices lower than such public offering prices, and such public offering prices may be hanged, from time to time, by the Underwriter. Wells Fargo Securities is the trade name for certain capital r arkets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells F, go Bank, National Association, the lender on the Note to be repaid with the proceeds of the Series 2012 B zds, The Underwriter and its respective affiliates are full rvice financial institutions engaged in various activities, which may include securities trading, commer.'al and investment banking, financial advisory, investment management, principal investment, hedging inancing and brokerage activities. Certain of the Underwriter and their respective affiliates have, fro r< time to time, performed, and may in the future perform, various investment banking services for th ity, for which they receive or will receive customary fees and expenses. In the ordinary course of their variou,, .usiness activities, the Underwriter and their respective affiliates may make or hold a broad array of '„ vestments and actively trade debt and equity securities (or related derivative securities) and financial i truments (which may include bank loans and/or credit default swaps) for their own account and for the a ; ounts of their customers and may at any time hold long and short positions in such securities and instrume ts. Such investment and securities activities may involve securities and instruments of the City. Prior to the retention of We • s Fargo Bank, National Association, RBC Capital Markets, LLC, Miami, Florida ("RBC") had been the un• rwriter in connection with the proposed issuance of Series 2012 Bonds. The remedies avai Resolution are in many r delay. Under existing federal bankruptcy c • readily available o of the Series 20 enforceability o bankruptcy, r after such d ENFORCEABILITY OF REMEDIES ble to the owners of the Series 2012 Bonds upon an event of default under the spects dependent upon judicial actions which are often subject to discretion and onstitutional and statutory law and judicial decisions, including specifically the de, the remedies specified by the Resolution and the Series 2012 Bonds may not be ay be limited. The various legal opinions to be delivered concurrently with the delivery Bonds, including Bond Counsel's approving opinion, will be qualified, as to the the remedies provided in the various legal instruments, by limitations imposed by rganization, insolvency or other similar laws affecting the rights of creditors enacted before or every. 53 SUBSTITUTED CONTINUING DISCLOSURE While not subject to Rule 15c2-12(b)(5) promulgated by the Securities and Exchang- ommission pursuant to the Securities Exchange Act of 1934, as amended (the "Rule"), the City has cov nanted for the benefit of the holders of the Series 2012 Bonds to provide certain financial information a operating data relating to the City and the Series 2012 Bonds in each year (the "Annual Report"), and t. rovide notices of the occurrence of certain enumerated material events, Such covenant will only applyo long as the Series 2012 Bonds remain outstanding. The Annual Report and any notices of material ev-,'ts will be filed by the City with the Municipal Securities Rulemaking Board's Electronic Municipal M. ket Access ("EMMA") system for municipal securities disclosures as described in the proposed form f Continuing Disclosure Agreement attached hereto as APPENDIX F. The specific nature of the information to be contained in the Annual Report and the notices of material events are described in "APPEND 1 i - FORM OF CONTINUING DISCLOSURE AGREEMENT" attached hereto, which will be executed by ti City at the time of issuance of the Series 2012 Bonds. Failure of the City to comply with the provisio-s of the Continuing Disclosure Agreement will not constitute an event of default under the Resolution. is the position of the City that the sole and exclusive remedy of any holder of a Series 2012 Bond for e-'forcement of the provisions of the Continuing Disclosure Agreement will be an action of mandamus or s ecific performance to cause the City to comply with its obligations thereunder. The City's disseminatio agent for such undertakings is Digital Assurance Certification, L.L.C. With respect to the Series 201.2 Bonds, no party other han the City is obligated to provide, nor is expected to provide, any continuing disclosure in£ormat', n with respect to the Rule. The City has undertaken certain continuing disclosure obligations in pri >r continuing disclosure certificates in connection with its outstanding debt and its outstanding bonds to p :.vide certain financial and operating information and notices to EMMA. Due to a change in auditors and nancial management system (which was changed to an Enterprise Resource Planning System), the City diof timely file its 2007 annual report. Such report has been filed, and as of the date hereof, the City is com. 'lance with all of its continuing disclosure obligations, in all material respects, and has implemented proce. res to assure future compliance with all of its continuing disclosure obligations. On August 30, 2012, the City filed a s pplement to its annual report which included supplementing its Comprehensive Annual Financial Repor for Fiscal Year ended September 30, 2011 and its Supplemental Report to Bondholders as of September a, 2011. Such supplements provide additional and/or clarifying detail to the information previously pr. ` ided. ACCURACY AND CO LETENESS OF LIMITED OFFERING MEMORANDUM The references, excerpts, nd summaries of all documents, statutes, and information concerning the City and certain reports and sta ''stical data referred to herein do not purport to be complete, comprehensive and definitive and each such ummary and reference is qualified in its entirety by reference to each such document for full and comp ete statements of all matters of fact relating to the Series 2012 Bonds, the security for the payment of the Se r es 2012 Bonds and the rights and obligations of the owners thereof and to each such statute, report or i trument. The appendi "-s attached hereto are integral parts of this Limited Offering Memorandum and must be read in their entire together with all foregoing statements. The information and expressions of opinions herein are subjec 'o change without notice and neither the delivery of this Limited Offering Memorandum nor any sale m. e hereunder is to create, under any circumstances, any implication that there has been no change in the ffairs of the City from the date hereof. 54 SUBSTITUTED FORWARD -LOOKING STATEMENTS This Limited Offering Memorandum contains certain "forward -looking statements" conce G' ing the City's operations, performance and financial condition, including its future economic performanc- plans and objectives. These statements, are based upon a number of assumptions and estimates which -'e subject to significant uncertainties, many of which are beyond the control of the City. The words "n y," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similexpressions are meant to identify these forward -looking statements. Actual results may differ mat- iaily from those expressed or implied by these forward -looking statements. MISCELLANEOUS Any statements made in this Limited Offering Memorandum involv 'g matters of opinion or of estimates, whether or not so expressly stated are set forth as such and not as presentations of fact, and no representation is made that any of the estimates will be realized. Neither this invited Offering Memorandum nor any statement that may have been made verbally or in writing is to b construed as a contract with the owners of the Series 2012 Bonds, AUTHORIZATION OF LIMITED OFFERIN >' EMORANDUM The execution and delivery of this Limited Offering M approved by the City. At the time of delivery of the Series 20 the effect that nothing has come to their attention which w Memorandum (other than information herein related to information relating to the Bond Insurer or provider information contained under the captions ["MUNICI "UNDERWRITING" as to which no opinion shall be the Series 2012 Bonds, contains an untrue stateme should be included therein for the purposes for used, or which is necessary to make the statem which they were made, not misleading. is orandum has been duly authorized and Bonds, the City will furnish a certificate to Id lead it to believe that the Limited Offering C, the book -entry only system of registration, f a Reserve account Insurance Policy, and the AL BOND INSURANCE"], "TAX MATTERS" and pressed), as of its date and as of the date of delivery of of a material fact or omits to state a material fact which ich the Limited Offering Memorandum is intended to be contained therein, in the light of the circumstances under 55 THE CITY OF MIAMI, FLORIDA By: City Manager By: Chief Financial Officer SUBSTITUTED /u 6 € kte PA -MD FOIe 26/111) 4r3L.e.-: APPENDIX A GENERAL INFORMATION REGARDING THE CITY OF MIAMI AND MIAMI-DADE COUNTY • General Now 116 years old, the City of Miami, Florida (the "City") is part of the nat metropolitan area. Incorporated in 1896, the City is the only major municipality con woman, Julia Tuttle. According to the U.S. Census Bureau, the City's population Today it is a City rich in cultural and ethnic diversity with 399,457 residents Census, 58.9% of them foreign born. In physical size the City is not large, en miles. The City is situated at the mouth of the Miami River on the western port entry in Florida. The City is the southernmost major city and seapo The nearest foreign territory is the Bahamian Island of Bimini, 50 miles the City is the largest of the 35 municipalities that make up Miami - Dade County") and is the County seat. City of Percent Year Miami Change 1960 291,688 1970 331,553 13:6% 1980 346,865 4,6 1990 358,648 3.4 2000 362,470 1.0 2010 399,457 10.2 Source: Bureau of Economic and Business Annual Report to Bondholders 2010 Government • Since 1997, the Cityas been governed by a form of government known as the "Mayor -City Commissioner plan." Ther°are five Commissioners elected from designated districts within the City. The Mayor is elected at large ' very four years. As official head of the City, the Mayor has veto authority over actions of the Commis. on. The Mayor appoints the City Manager who functions as chief administrative officer, Populati Miami -Dade County 935,047 1,267,7, 1,625 09 1,9;:-`,194 53,362 ,563,885 n's seventh largest ived and founded by a 1900 was 1,700 people. ccording to the 2010 U.S. mpassing only 35,87 square ore of Biscayne Bay, the main in the continental United States. �m the City's coast. In population, de County (the "County" or "Miami - Percent State of Percent Change Florida Change -- 4,951,560 35.6% 6,791,418 37.2% 28.2 9,746,961 43,5 19.2 12,938,071 32.7 16.3 15,982,378 23.5 13.7 18,801,310 17.6 esearch, University of Florida, US Census Bureau, Miami -Dade County, City elect •ns are held in November every two years on a non -partisan basis. Candidates for Mayor must run as su and not for the Commission in general. At each election, two or three members of the Commission e elected for four-year terms. Thus, the terms are staggered so that there are always at least two experier'ced members of the Commission. e City Manager serves as the administrative head of the municipal government, charged with the respo ibility of managing the City's financial operations and organizing and directing the administrative infr. tructure. The City Manager also retains full authority in the appointment and supervision of d-•artment directors, preparation of the City's annual budget and initiation of the investigative procedures. addition, the City Manager takes appropriate action on all administrative matters. A-1 SUBSTITUTED Climate The City's climate is sub -tropical -marine, characterized by long summers with abundant in fall and mild, dry winters. The average temperature in the summer is 81.4 degrees Fahrenheit an• 9.1 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, rollerbladi,<<g, boating and fishing can be enjoyed year-round. Altogether, Miami. -Dade County has over 300 park and recreational areas totaling over one million acres, including Everglades and Biscayne National P ,' s. Eighteen public golf courses and 504 public tennis courts are available throughout the County. Miami -Dade County's 22 miles of public beach comprise.1,400 acres,' hich are freely accessible and are enjoyed year round by residents and tourists. Athletics for spectator sports fans are held at the American •,'lines Arena. Land Shark Stadium, which is used by the Miami Dolphins and the Miami Hurricanes, is ocated in North Central Miami -Dade County. The City and County jointly constructed a new stadium a , parking garage for the Florida Marlins baseball franchise. Sports competition includes professional an. / oliege football, basketball, baseball, tennis, golf, sailing and championship boat races. Other athletic event ''include amateur football, basketball, soccer, baseball, motorcycle speedway racing and rowing events. Education Miami -Dade County's public school system i;`he fourth largest in the United States, as measured by student enrollment. The countywide school district,ffers a wide variety of programs to meet the needs of its 398,000-plus students. For example, The School ; oard of Miami -Dade County's magnet schools provide intensive levels of instruction in subjects lik-;'science and technology, foreign languages, health care, architecture, the performing arts and marine;.ciences. Other public school programs serve students with different academic, physical or emotional ;'eds, including gifted, advanced and remedial courses. Miami -Dade County is also n•,' ed for its high quality private schools, which include Gulliver Academy, Miami Country Day School nd Ransom Everglades, as well as numerous schools affiliated with religious organizations. Overall, 80% of graduati ; seniors continue their education in a post -secondary institution. Miami - Dade County is also home to ,'iami-Dade College, the largest comprehensive community college in the United States. Florida Inter : tional University is one of the 25 largest universities in the nation and offers more than 200 bachelor's, ster's and doctoral programs in 21 colleges. The University of Miami, a private undergraduate and grad to institution, includes diversified research facilities and exceptional schools of law, music, medicine, .'d marine sciences. Barry University, St. Thomas University and Florida Memorial University offer degr es in a variety of subjects and programs. Medical Miami bade County has the largest concentration of medical facilities in Florida, with 32 hospitals and more th 32,000 licensed health care professionals. Nursing homes, adult congregate living facilities and home c-ealth care services also serve the region. A-2 SUBSTITUTED The University of Miami Jackson Memorial Medical Center, the second-largest public hosp al in the nation, forms the hub of the region's medical centers, which includes world-renowned specializ-. facilities like Bascom Palmer Eye Institute, the Mailman Center for Child Development and t e Sylvester Comprehensive Cancer Center. Miami -Dade County has an extensive network of community hospitals, such as M. ` nt Sinai Medical Center, Cedars Medical Center, Baptist Hospital, Mercy Hospital and Miami Children's ospital. Nine area hospitals have formed the Miami Medical Alliance, a cooperative effort to serve patiei from Latin America and the Caribbean Transportation Miami -Dade County has a comprehensive transportation network • signed to meet the needs of residents, travelers and area businesses, The County's internal transportatin system includes Metrorail, a 22.6 mile above -ground system connecting South Miami -Dade and the Ci of Hialeah with the Downtown and Civic Center areas providing 18,1 million passenger trips annually. etromover, a 4.4 mile automated loop, carries approximately 9,2 million passenger trips annually arou downtown Miami, Brickell Avenue and the Omni shopping center areas. Miami -Dade County's Metro •;' s operates over 29.8 million miles per year and over 75.7 million passenger trips annually. The Cou also provides para-transit services to qualified riders in the amount of 1.59 million passenger trips az r'ually. Cargo rail service is available from both Miami International Airport and the Port of Miami, and trak has a passenger station in the City. Tri- Rail, a 72-mile train system, links West Palm Beach, Boca R.:' on, Fort Lauderdale, Hollywood and Miami International Airport. Miami International Airport. Miami Internation. Airport is one of the busiest airports in the world for both passengers and cargo traffic. It ranks twelfth in t;r'e nation and twenty-eighth in the world in passenger traffic through the airport. The airport ranks thir., `in the nation and eleventh in the world in tonnage of domestic and international cargo movement. I Fiscal Year 2011, over 37.63 million air travelers were serviced by Miami International Airport, and a.-roximately 2.0 million tons of domestic and international cargo was handled. As of April 2011, 93 airline' serve Miami International Airport, flying passengers to more than 130 destinations around the globe. Port of Miami. The Port of Mia ri, known as the "cruise capital of the world," is operated by the Seaport Department of Miami -Dade Cr3unty. In Fiscal Year 2011, more than 4.0 million passengers sailed from the Port of Miami aboard one . the eight cruise companies who operate out of Miami. The Port of Miami is also a hub for Caribbean d Latin American commerce, These countries account for over half of the 8.2 million tons of cargo trans rred through the Port of Miami in Fiscal Year 2011. The Port of Miami is also reaching out to the global cvmmunity where trade with the Far East, Asia and the Pacific accounted for almost 32% of thetotal cargo andled at the Port of Miami, The Port of Miami is also important to the U.S. economy, contributing in e < ess of $17 billion annually, which should increase after the completion of the Port of Miami's five year„,346 million capital improvement program. Economy The econo r'ic base of the City has diversified in recent years, shifting from reliance on the tourism industry to a comr-nnation of motion picture production, manufacturing, service industries and international trade. The area' advantages in terms of climate, geography, low taxes and skilled labor have combined to make the Mis'' i area a prime relocation area for major manufacturing firms and international corporate headquarte A-3 SUBSTITUTED The following major companies have their. Latin American headquarters located in the City: The Gap, Inc. Federal Express Corporation ABN AMR() Bank Sony Broadcast Export Corporation Olympus America ExxonMob i l Inter -America Black & Decker Latin America Group Hewlett Packard Co. Latin America Eastman Chemical Latin America Telefonica International USA, Inc. Source: Beacon Council Caterpillar Americas Co. Ericsson, Inc. Terra Networks USA IBM Corporation Canon Latin America Acer Latin America Komatsu Latin America Tech Data Chevron -Texaco Johnson & Johnson Distribution of Major Employment, Classifications for Mia Occupational Title Construction Manufacturing Mining and Natural Resources Transportation, Warehousing, and Utilities Wholesale Trade Retail Trade Information Finance Activities Professional and Business Education and Health Services Leisure and Hospitality Other Services Government Total Employed Lucent Technologies Barclays Bank PLC Oracle Latin Am; ica Cisco Systems AT&T Latin merica Olympus tin America Clorox L.:'in America Amen. n Express Stan y Latin America -Dade County September 2011 mployees 31,100 33,900 300 58,800 68,900 125,100 16,700 61,400 134,900 165,200 107,200 39,000 151,600 994,100 Percentage of Totals 3.2% 3,4 0.0 5.9 6,9 12.6 1.7 6.2 ].3.6 16.6 10.8 3.9 15.2 100.0% Source: Miami -Dade County Dep.; ent of Planning/Zoning Research Section, February 2012 Year 2007 2008 2009 2010 201 Labor Force and Employment Statistics Greater Miami Metropolitan Area Employment 1,143,548 1,142,665 1,093,000 1,117,000 1,046,110 Civilian Labor Force 1,196, 086 1,212,446 1,232,500 1,281,900 1,103, 895 Source: ity of Miami, Florida *Sour e: US Department of Labor, Bureau Labor Statistics A-4 Unemployment Rate 4.1 6.1 11,3 12.8 8.9 Florida Unemployment Rate 4.1 6.2 10.8 11.7 10.5 SUBSTITUTED Top Ten Major Employers in Miami -Dade County 2011 Public Employers: Name Number of Em. y ees Miami -Dade County Public Schools 44,13 Miami -Dade County 26,3, 1 U.S. Federal Government 19400 Florida State Government ,600 Jackson Health System 10,809 , Florida International University 8,000 Miami -Dade College 6,200 City of Miami 4,309 Homestead Airforce Base 2,700 VA Healthcare System 2,487 Source: The Beacon Council/ Miami -Dade County, Florida- Miaini'Bus, ess Profile & Relocation Guide 2012 Private Employers: Name Number of Employees Baptist Health Systems of South F .rida 14,865 University of Miami 13,233 Publix Supermarkets 10,800 American Airlines 9,000 Precision Response Corp 5,000 Florida Power & Light 3,840 Carnival Cruise Lines 3,500 Winn Dixie Stores 3,400 Mount Sinai Medica,'Center 3,400 AT&T 3,100 Source: The Beacon Council/ Miami-ade County, Florida -Miami Business Profile & Relocation Guide 201E A-5 SUBSTITUTED Record of Building Permits, 2005 through 2011 City of Miami, Florida New Other New Other Commercial Commercial Residential Residential Fiscal Building Building Building Building Year Permits Estimated Cost Permits Permits Est' ated Cost Permits 2005-2006 125 $ 2,573,453,643 2,582 450 s. 119,113,620 . 5,208 2006-2007 98 1,266,199,562 2,816 349 110,732,621 5,285 2007-2008 80 1,615,039,791. 3,218 178 60,467,105 3,759. 2008-2009 264 128,192,793 3,640 259 12,484,788 3,346 2009-2010 236 592,1.11,103 5,277 220 16,477,268 2,794 2010-2011 217 $ 421,757,347 6,458 194 $ 50,244,764 2,555 Source: City of Miami, Florida Building Department Per. Capita Personal In ,ume Year Miami Florida 2006 33,712 37,992 2007 36,70,=' 39,078 2008 35,..7 39,572 2009 36 57 38,572 2010 N/A 39,230 2011 N/A 39,563 Source: (1) City of Miami, Florida (2) Bureau of Economic and Business Re arch, University of Florida e City of Miami, Florida Property Tax Rates Fiscal Year Tax Roll Year General Operations Debt Service Total City 2002 2001 8.99500 1.2180 10.2130 2003 2002 8.85000 1.2180 10.0680 2004 2003 8,76250 1.0800 9.8425 2005 200 8.71625 0.9500 9.6663 2006 25 8.49950 0.7650 9.2645 2007 '106 8.37450 0.6210 8.9955 2008 .2007 7,29990 0.5776 7.8775 2009 2008 7.67400 0.6595 8,3335 2010 2009 7,67400 0.9701 8,6441 2011 2010 7.57100 0.9300 8.5010 Source: City of Mi Comprehensive Annual Financial Report Fiscal Year 2011 and Miami -Dade County Property Appraiser's Office. Note: All millage ates are based on $1 for every $1,000 of assessed value. A-6 SUBSTITUTED Property Tax Reform During recent years, various legislative proposals and constitutional amendments relatin• to ad valorem taxation and revenue limitation have been introduced in Florida. Many of these proposals aught to provide for new or increased exemptions to ad valorem taxation, limit the amount of revenue that local governments could generate or otherwise restrict the ability of local governments in Flori to levy ad valorem taxes at recent, historical levels. There can be no assurance that similar or additio a legislative or other proposals will not be introduced or enacted in the future that would, or might a ly to, or have a material adverse effect upon the City or its finances. Several constitutional and legislative amendments affecting ad valorem taxes -lave been approved by voters in the past including the following: Save Our Homes Amendment. By voter referendum held on November ,1992, Article VII, Section 4 of the State Constitution was amended by adding thereto a subsection whic ' in effect, limits the increases in assessed just value of homestead property to the lesser of (1) three percen of the assessment for the prior year or (2) the percentage change in the Consumer Price Index for all urb consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year s initially reported by the United States Department of Labor, Bureau of Labor Statistics. Further, the a ldment provides that (1) no assessment shall exceed just value, (2) after any change of ownership of I :'mestead property or upon termination of homestead status, such property shall be reassessed at just va , "e as of January 1 of the year following the year of sale or change of status, (3) new homestead property.sh ' l be assessed at just value as of January 1 of the year following the establishment of the homestead, and Changes, additions, reductions or improvements to homestead shall initially be assessed as provided fo by general law, and thereafter as provided in the amendment. This amendment is known as the "Sa „e Our Homes Amendment." The effective date of the amendment was January 5, 1993 and, pursuant to ruling by the Florida Supreme Court, it began to affect homestead property valuations commencing Ja nary 1, 1995, with 1994 assessed values being the base year for determining compliance. Limitations on State Revenue Amerx'dhnezt. In the 1994 general election, Florida voters approved an amendment to the State Constitution which is commonly referred to as the "Limitation On State Revenues Amendment." This amendment pro ides that state revenues collected for any fiscal year shall be limited to state revenues allowed under the endment for the prior fiscal year plus an adjustment for growth. Growth is defined as an amount equal t the average annual rate of growth in state personal income over the most recent twenty quarters times tie state revenues allowed under the amendment for the prior fiscal, year. State revenues collected for any fiscal year in excess of this limitation are required to be transferred to a budget. stabilization fund until t e fund reaches the maximum balance specified in the amendment to the State Constitution, and then -after is required to be refunded to taxpayers as provided by general law. The limitation on state re . -nues imposed by the amendment may be increased by the State Legislature, by a two- thirds vote in each, 'ouse. The to "state revenues," as used in the amendment, means taxes, fees, licenses, and charges for services imp sed by the State Legislature on individuals, businesses, or agencies outside state government. However, ; ` e term "state revenues" does not include: (1) revenues that are necessary to meet the requirements set fort 'n documents authorizing the issuance of bonds by the State; (2) revenues that are used to provide matcl g funds for the federal Medicaid program with the exception of the revenues used to support the Pu. is Medical Assistance Trust Fund or its successor program and with the exception of State matching Ads used to fund elective expansions made after July 1, 1994; (3) proceeds from the State lottery returned as prizes; (4) receipts of the Florida Hurricane Catastrophe Fund; (5) balances carried forward from prior fiscal A-7 SUBSTITUTED years; (6) taxes, licenses, fees and charges for services imposed by local, regional, or school ., trict governing bodies, or (7) revenue from taxes, licenses, fees and charges for services required to b imposed by any amendment or revision to the State Constitution after July 1,1994. This amendment too effect on January 1, 1995, and was first applicable to Florida's fiscal year 1995-1996. In its 2011 Regular Session, the Florida Legislature enacted SJR 958 which a { ends Article VII, Section 1 of the Florida Constitution (which is the Limitation on State Revenues Amend e -nt) and creates Article VII, Section 19 and Article XII, Section 32 of the Florida Constitution. SJR 958 replaces the existing state revenue limitation based on Florida personal income growth (as described aoove) with a new state revenue limitation based on changes in population and inflation; (2) requires excess evenues to be deposited into the Budget Stabilization Fund to support public education or returned to tax payers; (3) adds fines and revenues used to pay debt service on bonds issued after July 1, 2012 to the state venues subject to the limitation; (4) authorizes the Florida Legislature to increase the revenue limitat'/.n by a supermajority vote; and (5) authorizes the Florida Legislature to place a proposed increase r efore the voters, which would require approval of 60% of the voters. SJR 958 will be on the ballot ii `he 2012 general election or at an earlier election authorized by law. If approved by 60% of the voters, tl;, new state revenue limitation will be phased in starting in Florida fiscal year 2014-2015. Over time, the ew state revenue limitation is more likely to constrain state revenues than the current state revenue limi s ton; however, the potential impact on the City or its finances cannot be ascertained at this time. Millage Rollback Legislation. In 2007, the Flo .t da Legislature adopted Chapter 2007-321, Laws of Florida, a property tax plan which significantly 'rnpacted ad valorem tax collections for State local governments. One component of the adopted legislation required counties, cities and special districts to rollback their millage rates for the 2007-2008 fiscal year to a level that, with certain adjustments and exceptions, would generate the same level of 'd valorem tax revenue as in fiscal year 2006-2007; provided, however, depending upon the relative grow of each local government's own ad valorem tax revenues from 2001 to 2006, such rolled back millage rat were determined after first reducing 2006-2007 ad valorem tax revenues by zero to nine percent (0% t.,'9%0), In addition, the legislation limits how much the aggregate amount of ad valorem tax revenues y increase in future fiscal years. A local government may override certain portions of these requiremen by a supermajority, and for certain requirements, a unanimous vote of its governing body. The City fell under the '/o ad valorem tax revenue reduction category. As a result, the City's general millage rate was reduced fro-" 4.4253 mills in fiscal year 2006-07 to 4.0934 mills in fiscal year 2007-08. The millage rate was decrease. `further in the fiscal year 2008-09 to 3.5597 mills, where the millage rate has remained through fiscal , ar 2011-12. Constitutional ` nezdments Related to Ad Valorem Exem tions. On January 29, 2008, in a special election held in conjunctioi with the State's presidential primary, the requisite number of voters approved amendments to t .- Florida Constitution exempting certain portions of a property's assessed value from taxation. The fo owing is a brief summary of certain important provisions contained in such amendments: 1. rovides for an additional exemption for the assessed value of homestead property between $50,000 an. $75,000, thus doubling the existing homestead exemption for property with an assessed value equal to greater than $75,000. 2. Permits owners of homestead property to transfer their "Save Our Homes Amendment" benefit (up o $500,000) to a new homesteadproperty purchased within two years of the sale of their previous h estead property to which such benefit applied if the just value of the new homestead is greater than or is qua] to the just value of the prior homestead. If the just value of the new homestead is less than the just A-8 SUBSTITUTED value of the prior homestead, then owners of homestead property may transfer a proporti al amount of their Save Our Homes Amendment benefit, such proportional amount equaling the just l alue of the new homestead divided by the just value of the prior homestead multiplied by the assesse., alue of the prior homestead. As discussed above, the Save Our Homes Amendment generally limits a ual increases in ad valorem tax assessments for those properties with homestead exemptions to the less of three percent (3%) or the annual rate of inflation. 3. Exempts from ad valorem taxation $25,000 of the assessed value o roperty subject to tangible personal property tax. 4. Limits increases in the assessed value of non -homestead property to 10%0 per Tear, subject to certain adjustments. The cap on increases would be in effect for a 10 year .eriod, subject to extension by an affirmative vote of electors. The amendments were effective for the 2008 tax year (fiscal ear 2008-2009 for local governments). Over the last few years, the Save Our Homes Amendmen assessment cap and portability provisions described above have been subject to legal challenge. The plai iffs in such cases have argued that the Save Our Homes Amendment assessment cap constitutes an unla ful residency requirement for tax benefits on substantially similar property in violation of the equal prote bon provisions of the Florida Constitution and the Privileges and Immunities Clause of the Fourteenth A r' endment to the United States Constitution, The plaintiffs also argued that the portability provision simp r extends the unconstitutionality of the tax shelters granted to long-term homeowners by Save Our Hom Amendment. The courts in each case have rejected such constitutional arguments and upheld the con-,`itutionality of such provisions; however, there is no assurance that any future challenges to such prow' :'ions will not be successful. In addition to the legislative activity de '.ribed above, the constitutionally mandated Florida Taxation and Budget Reform Commission (required '. be convened every 20 years) (the "TBRC") completed its meetings on April 25, 2008 and placed seven constitutional amendments on the November 4, 2008 General Election ballot. Three of such arnendme ; s were approved by the voters of Florida, which, among other things, do the following: (a) allow the F1v'rida Legislature, by general law, to exempt from assessed value of residential homes, improvements may e to protect property from wind damage and installation of a new renewable energy source device; (b assess specified working waterfront properties based on current use rather than highest and best use; (c :. rovide property tax exemption for real property that is perpetually used for conservation (began in 2010); µ`. d, for land not perpetually encumbered, require the Florida Legislature to provide classification and asse ment of land use for conservation purposes solely on the basis of character or use. Recentl A. roved t onstitutional Amendments Relatin to Ad Valorem Taxation. Additionally, during its 2009 session, the Flori. Legislature passed House Bill 833, which provides an additional homestead exemption for deplo)-, military personnel, The exemption equals the percentage of clays during the prior calendar year that the military homeowner was deployed outside of the United States in support of military operations design. '-d by the Legislature. The measure was approved by the voters at the November 2010 General election . d took effect January 1, 2011. Other:'ro.osals A, ectin o Ad Valorem Taxation, The Florida Legislature convened for its 2011 Regular Session on ,arch 8, 2011. During this Regular Session, the Florida Legislature passed House Joint Resolution 381 ("HJR1:1"), which will be placed on the November 2012 ballot for a vote by the electors. Among other things, R 381 (1) authorizes the Florida Legislature to prohibit by general law the increase of assessed value for pr..erty whose fair market value declined over the prior year; (2) reduces the limitation on annual A-9 SUBSTITUTED increases of non -homestead property from 10% to 5% (the.5% cap sunsets in 2,p"23); and (3) provides an additional homestead exemption of 50% (is reduced to 0% in five years) of just v ue of the property for first- time homeowners. The additional homestead exemption for first-timehomem ers does not apply to school property taxes. Such proposal requires approval by 60% of the voters. A resent, it is uncertain if this proposal will be approved by the voters. If approved, the impact of This sroposal on the City's finances cannot be accurately ascertained. Pending Legislation. House Bill 95, enrolled on March 9, 2012, proposes to amend Section 196.081, Florida Statutes, to add an additional exemption for surviving spous of first responders who die in the line of duty. House Joint Resolution 169, proposes an amendment t; Article VII, Section 6 of the Florida Constitution which would authorize the Florida Legislature, y general law, to allow counties and municipalities to grant an additional homestead tax exemption eal to the assessed value of the property, if the property has a just value below a certain amount, to an ow °r who has maintained residency for at least 25 years and who is at least 65 years of age. In order for these amendments to take effect, they must be approved by a vote of the electors at the general election in ovember 2012. At this time, it is impossible to determine whether these amendments will be approved b r a vote of the electors, and if approved estimate with any certainty the level of impact that the Legislative. 'ill have on the City, if any. There can be no assurance that similar or a .itional legislative or other proposals will not be introduced or enacted in the future that would, or mi t apply to, or have a material adverse effect upon, the City or its finances. [Remainder cif page intentionally left blank] A-10 SUBSTITUTED Assessed Valuations Fiscal Year Ended September 30, 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CITY OF MIAMI, FLORIDA NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PR! PERTY LAST TEN FISCAL YEARS Real Property Residential Property $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 23,572,178,928 23,341,894,079 18,536,983,090 Commercial Property $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 11,890,691,413 11,921,087,043 10,078,997,005 Personal Property $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 1,686,320,651 1,686,540,244 1,736,766,113 Source Miami -Dade County Property Appraiser's Office. Note: Property in the City is reassessed each year. State law market value. The Florida Constitution was amended, effe property with homestead exemption to 3 percent per year increase is not automatic since no assessed value shall e (1) Includes tax-exempt property. Property Tax Levies and Collections PROPERTY TAX LEVI Net Assessed Value $15,113,061,441 16,937,886,770 18,871,123,318 21,929,702,0 26,977,377, 88 33,032,9► ,346 37,755 39,094 37,1,190,992 3.-''49,521,366 0,352,746,208 Total Died Tax Ra 1r,.21 0.07 9.84 9,67 9,26 9.00 7,88 8.33 8.64 8.50 Estimated Actual Value $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 52,185,972,858 52,146, 883,603 42,365,151,484 Net Assessed Value as a Percentage of Estimated Actual 68.58% 68,41% 68.08% 68.25% 68.96% 68.93 °/a 68,34% 71.19% 70,86% 71.65% requires the Property Appraiser to appraise property at 100% of • N,e January 1,1995, to limit annual increases in assessed value of the amount of the Consumer Price Index, whichever is lower, The ceed market value. Tax rates are per $1,000 of assessed value. OF MIAMI, FLORIDA AND COLLECTIONS LAST TEN FISCAL YEARS Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Total Taxe ,' Collections in Ended Levied Percent Subsequent Percent September 30 Fiscal ar Amount of Levy Years Amount of Levy 2002 154,3,696 145,506,737 94,27% 4,079,641 149,586,378 96.91% 2003 170 30,644 161,197,051 94.53% 7,735,274 168,932,325 99.06% 2004 1 ,739,031 178,766,680 96.25% 1,640,252 180,406,932 97.13% 2005 211,977,983 206,451,562 97,39% 2,379,977 208,831,539 98.52% 2006 249,931,912 243,957,356 96.82% 3,801,414 247,758,770 99,13% 2007 297,147,536 290,449,738 97.76% 7,111,337 297,561,075 100.14% 2008 297,421,622 284,001,962 95.49% 8,489,434 292,491,396 98,34% 2009 309,582,783 296,404,297 95.74% 9,200,940 305,605,237 98.72% 2010 319,395,358 278,010,020 87.04% --- 278,010,020 87.04% 2011 258,028,695 263,361,953 102.07%(1) 263,361,953 102.07% Source: ty of Miami, Finance Department and Miami -Dade County. Tax Collector's Office o> A-11 SUBSTITUTED Ten Largest Tax Assessments Taxpayer Florida Power & Light 200 S Biscayne TIC 1 LLC Crescent Miami Center T C 701 Brickell LLC Bellsouth Communications 1111 Brickell Office LLC Trustees of L&B Opera Tower LLC Estoril Incorporated Teachers Insurance Total Net Assessed Value Source: City of Miami, Florida Overlapping Debt CITY OF MIAMI, FLORIDA PRINCIPAL PROPERTY TAXPAYERS 2011 Net Assessed Value $437,878,458 270,000,000 178,400,000 172,000,000 158,961,503 138,500,000 124,100,000 112,499,679 107,436,953 91,260,906 17.11 74:_ $ 30,352,746, ,d8 Rank 5 6 7 8 9 10 Percent of Total City Net Assessed Value 1.44% . . 0.89% 0.59% 0.57% 0,52% 0.46% 0.41% 0.37% 0.35% 0.30% 5,90% CI OF MIAMI, FLORIDA DIRECT AND OVERL."PPtNG GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2011 Government a nit Debt Repaid With Proper t axes Miami -Dade Coun Miami -Dade Co School Board Subtotal, Overlapp Debt City of Miami, Flo ida Direct Debt (excludes s •cial obligation, revenue ..ids, loans and capital leases) Total Dir t and Overlapping Debt Net Debt Outstanding $1,000,133,355 290,998,000 Percentage Applicable to the City of Miami(1) 19.00% 19.00% 100% Amount • Applicable to the City of Miami $190,025,337 55,289,620 245,314,957 265,804,455 $ 511,119,412 Sources: ata provided by the Miami -Dade County Finance Department and the Miami -Dade County School Board. Note: verlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule est' , tes the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of '4iami. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden ne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. A-12 SUBSTITUTED (1) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated us : taxable assessed property values. Value that is within the City's boundaries and dividing it by the County's and school Board's total taxable assessed value. This approach was also used for the other debt, CITY OF MIAMI, FLORIDA FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 SUMMARY OF DEBT RATIOS, MEASUREMENTS AND DEBT CONS Debt Ratios General Obligation & Limited Ad Valorem Debt Per Capita General Obligation & Limited Ad Valorem Debt as a Percentage of Taxable value Non -Self Supporting Revenue Debt Per Capita Non -Self Supporting Revenue Debt as a Percentage of Taxa General Governmental Debt Service (non-self-supportin Non -Ad Valorem General Fund Expenditures General Government Debt Service as a Percentage of General Fund Revenues Source:,City of Miami Finance Department A-13 RAINTS CRITERIA e Assessed value as a Percentage of on -Ad Valorem 628,93 • 0.83% 1,108.28 1.46% 8,08% 8.02% SUBSTITUTED APPENDIX B PENSION PLANS AND OTHER POST -EMPLOYMENT BENEFITS PENSION PLANS The information relating to the Plans (defined herein) relies on information p • duced by the Plans and their independent accountants and actuaries. The actuarial assessments ar orward-looking information that reflects the judgment of the fiduciaries of the Plans. Actuarial as ssments are based upon a variety of assumption, one or more of which may prove to be inaccurat or be changed in the future, and will change with future experience of the Plans. General The City sponsors separate single -employer, defined benefit pensih. plans under the administration and management of separate Boards of Trustees: the City of Miam ire Fighters and Police Officers Retirement Trust ("FIFO"), the City of Miami General Employees and nitation Employees Retirement Trust ("GESE") and Other Managed Trusts, and the City of Miami Electecfficers Retirement Trust ("EORT" and, together with FIPO and GESE, the "Plans"). Basis of Accounting. The financial statements for the " lans are prepared using the accrual basis of accounting. All Plans are reported as pension trust funds the City's financial statements. Plan member contributions are recognized in the period which the c ntributions are due. Employer contributions are recognized when due and the employer has made formal commitment to provide the contributions. Benefits and refunds are recognized when due and ayable in accordance with the terms of the Plans. Method Used to Value Investments, Inv stments of the Plans are recorded at fair market value. Securities traded on a national exchange are v ued at the last reported sales price on the last business day of the fiscal year. Securities traded in the ove the -counter market and listed securities for which no sale was reported on that date are valued at the la 'reported bid price. Commercial paper, time deposits, and short- term investment pools are valued at fi market value and mortgages are valued based on current market yield which approximate fair value et appreciation (depreciation) in fair value of investments includes realized and unrealized gains al)/losses. Interest and dividends are reported as investment earnings. Realized gains and Iosses on th4- sale of investments are based on average cost. FIPO Plan Descri tion IPO is a single -employer, defined benefit plan established by the City pursuant to the provisions and re e uirements of Ordinance No, 10002 as amended. Participants are contributing police officers and fire fig ers with full-time employment status in the Police or Fire Department of the City. As of f ctober 1, 2011, the date of the most recent actuarial valuation, membership in the FIPO consisted of , I89 retired members and beneficiaries and 178 disabled members currently receiving benefits and 18 ter . mated vested members entitled to benefits but not yet receiving them; current active employees equaled ;196 as of that date. Pension Benefits. Members may elect to retire after attaining 50 years of age and ten or more years of crr Bitable service or, under certain circumstances, Rule of 64 Retirement, Rule of 68 Retirement or Rule of 70 etirement (each as defined herein). B-F SUBSTITUTED "Rule of 64 Retirement" means service retirement on the, basis of combined age and cre /table service equaling 64 or more. Rule of 64 Retirement applies to fire fighters who had obtained 64 poi s by September 30, 2010, and police officers who had 64 points by September 30, 2011. Rule of 64 Retirem tit also applies to the accrued benefit as of September 30, 2011, of police officers who were active members 's of September 29, 2011. "Rule of 68 Retirement" means service retirement on the basis of combinedge and creditable service equaling 68 or more. Rule of 68 Retirement applies to fire fighters who had if-ot attained 64 points by September 30, 2010 and had attained 68 points by September 30, 2011. Rule of 8 Retirement also applies to the accrued benefit as of September 30, 2011, of fire fighters who were activ9•members as of September 29, 2011. / . "Rule of 70 Retirement" means service retirement on the basis of &mbined age and creditable service equaling 70 or more. Rule of 70 applies to all new members hired on o after October 1, 2011, as well as to all benefits accrued after September 30, 2011 by fire fighters who had pot attained 68 points on September 30, 2011 and police officers who had not attained 64 points on September 30, 2011. Police officers who have reached Rule of 64 Retirementy September 30, 2011, fire fighters who had reached Rule of 64 Retirement by September 30, 2010, an fire fighters who have reached Rule of 68 Retirement by September 30, 2011, are entitled to a norm retirement benefit equal to 3% of average final compensation 1 for each of the first 15 years of creditable ervice plus 3.5% of average final compensation for each year of creditable service after the 1.5.th year. Tie maximum benefit for these members is 100% of average final compensation. All other police officers and firefighters, fd' service prior to October 1, 2011, are entitled to a normal retirement benefit equal to 3% of average final c , pensation for each of the first 15 years of creditable service plus 3.5% of average final compensation for e ch creditable service after the 15th year, and for service after September 30, 2011, are entitled to a normal ,etirement benefit equal to 3% of average final compensation for each year of creditable service. The combed percentage for service before October 1, 2011 and service after September 30, 2011 may not exceed 100°'" of average final compensation. Earlyretirement,disability, e and other y, pi o er benefits are also provided as follows: Early Service Retirement. embers are entitled to early service retirement after 20 years of creditable service. Benefits are based on average final compensation and creditable service at the retirement date. Average Final Cor Sensation means for members who retire or terminate employment with ten or more years of creditable service prior tq bctober 1, 2010, the annual earnable compensation of a member during either the last one year or the highest year onembership service, whichever is greater. Effective September 30, 2010, for members who retire on or after Octobey1, 2011, average final compensation shall mean the average of the highest five years of service, to be phased in over t3 6 next four years as follows: for members who retire on or after October 1, 2011, and on or before September 30, 2012„ he average of the highest two years of membership service; for members who retire on or after October 1, 2011, a:d on or before September 30, 2012,.the average of the highest three years of membership service; for members who rplre on or after October 1, 2012, and on or before September 30, 2013, the average of the highest four years of membbership service; and for members who retire on or after October 1, 2013, the average of the highest five years of membership service. Provided, in no event shall the average final compensation of any member who was employed as a police of,ieer or fire fighter on September 30, 2011, and retires on or after October 1, 2011, be less than the highest year of membership service prior to September 30, 2011. B-2 SUBSTITUTED Disability, Members not eligible for service retirement are entitled to ordinary disability briefits after 10 or more years of creditable service. For accidents not incurred in the performance of . uties eligible members are entitled to 90% of benefit rate times average final compensation times creditabl- service, with a minimum benefit of 30%0 of average final compensation. The ordinary disability benefits a e payable for life, except that in the event the member dies before such allowance has been received for a, eriod of ten years, the member's beneficiary or beneficiaries shall be paid the same allowance for the rer r ainder of the 10-year period. For accidents incurred in performance of duties, members are entitled to acci ental disability benefits equal to 66 2/3% of average final compensation, or 66 2/3% of final compensation, ` hichever is great, Upon the death of any member who has received accidental disability benefits, the sp c ` se of the member who has been designated as the member's beneficiary may receive the payment of a ' amount equal to 40% of the member's monthly retirement allowance during the spouse's lifetime, wit a minimum of 10 years. Death. A member with three to 10 years of creditable service,/ d whose death is not accidentally incurred in the performance of their duties is entitled to the ordinary, Bath benefits of a lump sum payment equal to 50% of compensation received in the year preceding death�r�''After 10 years of creditable service and before eligibility for early service retirement or Rule of 64 R,irement, a member whose death is not accidentally incurred in the performance of their duties is e titled to an accrued ordinary death benefit deferred to the earlier of the member's 50th birthday or Rule R 64 Retirement eligibility, paying for 10 years. If the member is eligible for service retirement, early servic retirement or Rule of 64 Retirement, the member is considered to have retired on the date of their death. T e surviving spouse is entitled to receive 40% of the member's monthly retirement allowance. An accide 'al death incurred in the performance of a members duties is entitled to accidental death benefits equal : (i) pension of 50% of average final compensation to spouse until death or remarriage, or if there is no s souse, or if spouse dies or remarries before youngest child is 18, then payable until attainment of age 18, or, "f no spouse or no children under 18, payable to dependent parents; (ii) after 10 years of creditable service nd before eligibility for early service retirement or Rule of 64 Retirement, accrued benefit deferred to earl, r of member's 50th birthday or Rule of 64 Retirement eligibility, payable for 10 years, The beneficiary donot have to survive deferral period or 10 years' certain period. Cost of Living Adjustment. Eff; ctive January 1, 1994, the FIPO Trust entered into an agreement with the City with regards to the fundin ethods, employee benefits, employee contributions and retiree cost of living adjustment ("COLA"). Pu want to the agreement, members no longer contribute to the original COLA account ("COLA I") and a new ' OLA account ("COLA II") was established, The agreement included the following: (a) the funding m- od was changed to an aggregate cost method; (b) all accounts were combined for investment purposes (r embership and benefits, COLA I, and COLA II); (c) retirees receive additional COLA benefits and (d) a''ive members no Ionger contribute 2% if pretax earnings to fund the original retiree COLA I account. The COL I account is funded annually by a percentage of the excess investment return from the COLA I account,ssets (75% of first 2.5%, 50% of next 2,5%, and 25% of next 2.5%). The excess earnings contributed to -le COLA II account are used to fund a minimum annual payment of $2.5 million, increasing by 4% comp . ` nded annually. To the extent necessary, the City will fund the portion of the minimum annual payment t funded by the annual excess earnings no later than January 1 of the following year. There will not be -"' OLA transfer as of January 1, 2012; however, there could be a transfer on January 1, 2013 of $5,683 00, but only if there is a favorable cumulative experience position as of September 30, 2012. The Cit minimum COLA contributions without the transfer will be $5,064,541 on January 1, 2012 and $ ; _ 67,123 on January 1, 2013, B-3 SUBSTITUTED Historical Funding Progress COLA Fund (in $ millions) (1) (2) (3) (4) (5) Unfunded PBO as Pension Percentage Net Assets Benefit Unfunded Ann of Covered Available for Obligation Percent PBO Covered Payroll Fiscal Year Benefits>1) 0BO)(2) Funded (2)-(1) ' roll (4)/(5) 2001 $195.0 $158.4 123% $(36,6) $89.7 (41)% 2002 174.1 164.5 106 (9.6) 96.9 (10) 2003 194.8 165.1 118 (29.7) ,` 98.9 (30) 2004 210.3. 185.7 113 (24.7, 89.2 (28) 2005 231.6 195.0 119 (3.,;.) 91.5 (40) 2006 249.0 216.8 115 2.2) 90,4 (36) 2007 300.2 242.9 124 ; (57.3) 103.6 (55) 2008 305.8 279.4 109 '� (26.4) 129.4 (20) 2009 296.3 290.0 102 (6.3) 122.2 (5) 2010 311.8 315.6 99 3.8 80.2 5 2011 310,0 303,6 102 (6.4) 82,2 (8) Source: City of Miami Fire Fighters' and Police Officers' atirement Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc. (1) Excluding future City minimum contributions. (2) Excluding new increment, contingency reserve and reserves for future actives. Benefits payable from the COL accounts are computed in accordance with an actuarially based formula as defined in Section 40.204 o e City Code, with $1,312 monthly benefit for 25 years of creditable service and 22 completed years of re ement (after age 46). The $1,312 amount is reduced by 5% for each year of retirement less than 22 and eacf year of creditable service less than 25 and increase similarly for years of retirement greater than 22 and ars of creditable service greater than 25. Benefits are subject to review and modification in accordance ith Section 40.204 of the City Code, which provides that all other matters regarding the COLA acco As shall be determined by negotiations between the City, the Board of Trustees and the bargaining representatives of the International Association of Firefighters and the Fraternal order of Police. De erred tirement 0 tion Plan. Members who are eligible for service retirement or Rule of 64 Retirement afte eptember 1998 may elect to enter the deferred retirement option plan (the "DROP"). Upon election of pa '"icipation, a member's creditable service, accrued benefits, and compensation calculation are frozen an, , 'he DROP payment is based on the member's average final compensation. The member's contribution and the City contribution to the retirement plan for that member ceases as no further service credit/earned. The member does not acquire additional pension credit for the purposes of the pension plan, but , ay continue City employment for a maximum of 36 months prior to October 1, 2001, Effective October 1 001, maximum participation in the DROP for firefighters shall be 48 full months and for police officers ho elect the DROP on October 1, 2003, or thereafter, maximum participation in the DROP shall be 48 full months. Effective July 24, 2008, firefighter DROP participants may also continue City employment for up to 54 full months (48 full months prior to July 24, 2008 and 36 full months prior to October 1, 2001), Police B-4 SUBSTITUTED officers who elect the DROP on or after May 8, 2008, may continue City employment for up to 84 ful, onths (48 full months prior to May 8, 2008 and 36 full months prior to October 1, 2003). Once the `. aximum participation has been achieved, the participant must terminate employment. There are two DROP programs: the Forward DROP and the Benefit Actuarially C. culated DROP ("BACDROP"). A member can participate in both programs simultaneously. The Forwar•, •ROP is a DROP benefit equal to the regular retirement benefit the member would have received had the ember separated from service and commenced the receipt of benefits from the plan. The BACDRO is a DROP benefit actuarially calculated, •A member may elect to BACDROP to a date, no further ba than the date of the member's requirement eligibility date, The BACDROP period must be in 12 monthncrements, beginning at the start of a pay period, not to exceed 48 full months for firefighters (36 months p for to October 1, 2001) and for police officers who elected BACDROP on October 1y_ 2003 (36 months pr'.yr to October 1, 2003). The benefits of the BACDROP will then be actuarially calculated to be the equivalent to the benefit earned at the date of retirement, An individual account is created for each participant. A series o i `nvestment vehicles, as established by FIPO's Board of Trustees, are made available to DROP participants t%''choose from, Any losses incurred on account of the option selected by the participant will not be made up, y the City or the FIPO Trust, and will be borne by the participant only. All interest will be credited to th ember's account, Upon termination of employment, a participant may receive payment from the DR • account in a lump sum distribution; or periodic payments. A participant may elect to rollover the b•. ance to another qualified retirement plan, individual retirement account, an Internal Revenue Code Sec. on 457 Plan, or an annuity. A participant may defer payment until the latest date authorized by Section 01(a)(9) of the Internal Revenue Code, DROP participation will not affect any other death or disability b 'nefitprovided under law or applicable collective bargaining agreement. If a participant dies before the • count balances are paid out in full, the beneficiary will receive the remaining balance. Participants in the DROP are not entitled tc receive an ordinary or service disability retirement and in the event of death of a DROP participant, th:,' e is no accidental death benefit for pension purposes. Participation in the DROP does not affect any her death or disability benefit provided to a member under federal law, state law, City ordinance, or an,; rights or benefits under any applicable collective bargaining agreement. Contributions and Fundin • Polici t. PoIice officer members of FIPO are required to contribute 10% of their salary on a bi-weekly basis (7% rior to October 1, 2011), Firefighter members are also required to contribute 10% (9% prior to Octob 1, 2010) of their salary on a bi-weekly basis. The City is required to contribute such amounts annually : s necessary to maintain the actuarial soundness of FIPO and to provide FIPO with assets sufficient to ' eet the benefits to be paid to participants. Contributions to FIPO are authorized pursuant to Secti •is 40.196(a) and (b) of the City Code. Contributions to the FIPO COLA • accounts are authorized pu uant to Section 40.204 of the City Code. The City's contributions to FIPO" provide for non-investme ; expenses and normal costs, The yield on investments on FIPO serves to reduce future contributions that could otherwise be required to provide for the defined level of benefits under the FIPO Trust. The payro for employees covered by FIPO for the year ended September 30, 2011 was approximately $7 7 million; the City's total payroll was approximately $268.2 million, Annu l'Pension Cost. The City's current year contribution was determined through an actuarial valuation pe ormed as of October 1, 2010. Significant actuarial assumptions used to compute the arunual requirement are as follows: B-5 SUBSTITUTED Valuation date: Actuarial cost method: Amortization method: Amortization method: Asset valuation method: Investment rate of return: Projected salary increases due to inflation: Seniority/merit: Promotion/other Mortality table: Mortality, disability, retirement and turnover: October 1, 2010 Aggregate Cost Method Not Applicable Not Applicable 20% Write -Up Method: expected discount/investment return rate applied to the actu previous valuation date and cash flow during difference between expected value and the ma transfers to the COLA accounts) is added t result cannot be greater than 120% of ma market value (net of pending COLA tra 7.50%, compounded annually 3.25% 5.00% to 0% reducing by attain age 1.50% RP 2000 Mortality Table P.jected to 2020 value is . on the interest al asset value as of e year. 20% of the et value (net of pending the expected value. The et value or less than 80% of sfers). RP 2000 Disabled Mo base lity Table Projected to 2020 Source: City of Miami Fire Fighters' and Police Officers' Retire ent Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc. FIPO contributions are determined using t aggregate cost method. The aggregate cost method does not identify and separately amortize the unfundeactuarial liabilities. The annual pension cost is equal to the annual required contribution each year. Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * After September 3 Source: City of Mi The Nyhart Co Annua mployer Contributions cluding COLA Fund Annual Pension $ 1,051,62 18,163,5:8 36,341 .15 45,54;,130 50,E 5,213 41;542,078 040,251 36,993,395 55,095,791 42,287,046* 42,353, 775 45,516,941 ost Percentage Contributed 100% 100 100 100 100 100 100 100 99 95 2010 impact statement changes. i Fire Fighters' and Police Officers' Retirement Trust October 1, 2011 Actuarial Report prepared by any, Inc. Net Pension Obligation $ 752,865 3,037,485 The nding policy provides for periodic employer contributions at actuarially determined rates that are sufficif t to pay benefits when due. Contributions for normal costs are determined using the aggregate actuari. `cost method. This cost method does not provide for an unfunded actuarial accrued liability. Since B-6 SUBSTITUTED the FIPO uses the aggregate cost method, technically no schedule of funding progress is req a red. However, such schedule may be prepared using another acceptable cost method. The schedule of fuiy. ing progress for the FIPO is prepared using the Entry Age Normal Actuarial Accrued Liability. Contributions totaling $47,196,715 ($40,058,891 employer contribution an•'$7,137,824 employee contribution) were made for the year ending September 30, 2011..These col ributions consisted of $47,196,175 normal cost, (b) $0 amortization of unfunded actuarial accrued liabili /and (c) $0 noninvestment expenses. As of October 1, 2011, the entry age reserve ("EAR") is $1,590.5 millio:This compares to assets of $1,150.3 million for a funded ratio of 72%. Last year the funded ratio was 75 Historical Funding Progress Excluding COLA Fund (in $ millions) (1) (2) (3) ,'') (5) Unfunded EAR as Percentage Unfunded Annual of Covered Actuarial Percent ;' EAR Covered Payroll Fiscal Year Asset Value EAR Funde.,' (2)-(1) Payroll f 4V(5) 2001 $ 941.8 $ 932.7 101,'/0 $ (9.1) $ 89,7 (10)% 2002 865.5 999,8 :r° 134.3 96.9 139 2003 865.8 1,067.9 :1 202.1 98.9 204 2004 894.6 1,152.8 78 258.2 89.2 289 2005 1,064.9 1,221.6 87 156.7 91.5 171 2006 1,133.0 1,260.5 90 127.5 90,4 141 2007 1,208.8 1,318.4 92 109.6 103.6 106 2008 1,219,6 1,452.5 85 222.9 129.4 172 2009 1,165.0 1,539.3/ 76 374.4 122.2 306 2010 1,180.6 1,5675 387.7 80.2 483 2011 1,1.50.3 1,5"`1.5 72 440,2 82.2 536 Source: City of Miami Fire Fighters' . ` d Police Officers' Retirement Trust October 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc. The rate of return o e' the mean market value for the period ending September 30, 2011 was 3.6%, as compared to the 7.75% ass mption. The asset valuation method results in an actuarial asset value of $1.150 billion as of October 1, 21 1, as compared to the market value of $987 million. The market value of assets on October 1, 2011 is $98710,729, as compared to the value of accrued benefits of $1,568,323,110 for a ratio of 62.9%. The ratio as •,,'October 1, 2010 was 66.5%. The following is a table of revenues and expenses of the FIPO (excluding Co A Fund): B-7 SUBSTITUTED Fiscal Employee Employer Investment Year Contributions Contributions Income Total 2001 $ 6,336,918 $ 5,481,599 $ 17,717,791 $ 29,536,3 2002 6,721,236 5,400,784 (27,704,711) (15,582i91) 2003 7,193,936 15,024,366 30,466,098 52,6?'4,400 2004 24,415,150 32,959,003 53,963,150 11 37,303 2005 18,607,681 45,545,130 71,904,910 6,057,721 2006 7,698,594 50,635,213 71,669,124 30,002,931 2007 14,702,629 40,542,078 82,937,630 138,182,337 2008 9,719,896 36,040,251 62,728,078 i'" 108,488,225 2009 9,769,139 36,993,395 (58,111,2'-') (11,348,757) 2010 10,436,367 ' 54,342,926 62,4596 127,239,209 2011 7,137,824 40,058,891 83,9- ,919 131,148,634 Source: City of Miami Fire Fighters' and Police Officers' Retirement Trust Oct.,er 1, 2011 Actuarial Report prepared by The Nyhart Company, Inc. The following changes were made to FIPO pursuant to th ?negotiations with the union in 2012. Member contributions. Effective the first full pa,`period following October 1, 2012, the member contribution for police officers hired prior to October/, 2012 shall be 10% of earnable compensation; and effective September 30, 2014, the member contributi.,�' for police officers hired prior to October 1, 2012 shall be 7% of earnable compensation. The member co c` ribution for police officers hired on or after October 1, 2012 shall be 3% of earnable compensation great =°'than the member contribution for police officer members hired prior to October 1, 2012. Effective the first full pay period f�"' owing October 1, 2012, the member contribution for firefighters shall be 10% of earnable compensatio ,'' and effective September 30, 2014, the member contribution for firefighters hired prior to October 1, 21'4 shall be 7% of earnable compensation, The member contribution for firefighters hired on or after Octob �' 1, 2014 shall be 10% of earnable compensation. Actuarial ndin methoThe City's contribution to the retirement system shall be determined by applying the individual ent -Wage actuarial funding method (changed from the aggregate actuarial cost method), as such method isefined by the American Academy of Actuaries, to the projected liabilities of the system as of October 1, 2 1, using an assumed system payroll growth rate of 3% and using an unfunded liability amortization riod of 25 years, or such other reasonable payroll growth rate and amortization periodas agreed by ;..'e retirement system's actuary and the City's actuary. Backdro .tion. A Backdrop benefit option shall be implemented on January 1, 2013, and shall replace the ex ing deferred retirement option program ("DROP"). Employees who have not attained normal retire. ent eligibility as of January 1, 2013, and all employees hired on or after that date, will be eligible for `1e Backdrop option, but will not be eligible for the DROP. Employees who have attained normal retirem•, 't eligibility as of January 1, 2013 and are thus eligible to elect the forward DROP as of January 1, 2013, ;' all remain eligible to elect the forward DROP as it presently exists, and employees who are eligible to ele the forward DROP as of January 1, 2013 who choose not to enter the forward DROP shall also remain B-8 SUBSTITUTED eligible for the Backdrop. Any employee with accrued pension benefits vested prior to October „'2010 will remain eligible to exercise the existing DROP program option for those accrued benefits. GESE The Board of Trustees of the GESE administers three defined benefit pension ply' s: (a) the GESE; (b) an Excess Benefit Plan for the City of Miami (the "EBP"); and (c) General Emp vyees and Sanitation Employees Retirement Trust Staff Pension Plan (the "Staff Trust"). Each plan's ass f`s may be used only for the payment of benefits to the members of that plan, in accordance with the ter : of the plan. GESE. Plan Description. The GESE is a single -employer defined benefit %' an. The GESE was established pursuant to the City Ordinance No. 10002 and subsequently revised un, r City Ordinance No, 12111. The GESE covers all City general and sanitation employees except ce ,a'"ain employees eligible to decline membership. Participation in the GESE is a mandatory conditio% of employment for all regular and permanent employees other than fire fighters, police officers an executive level employees hired after October 1, 2009. Those executive employees are required to parti ;.ate in a defined contribution plan (401(a)) At October 1, 2011, the date of the most recent actuari.."report, membership in the GESE consisted of 1,727 retired members, 381 beneficiaries and 54 disabled . ' embers currently 'receiving benefits and 155 terminated vested and inactive members entitled to be p fits but not yet receiving them; current active. employees equaled 1,241 as of that date, Pension Benefits. The minimum normal retir?'f ent age is 55. Any member in service who has 10 or more years of continuous creditable service may el,' t to retire upon attainment of normal retirement age. A member who has completed a combination of at ,'`ast 10 or more years of creditable service plus attained an age equaling 70 points may elect a Rule of 70 R k`irement. For members not eligible to retire as of September 30, 2010, the retirement age and service will b,, age 55 and 30 years of creditable service or age 60 and 10 years of continuous creditable service or a comb'f'ation of at least 10, years of creditable service plus attained age equaling 80 points (the "Rule of 80 Retir:,�`ent"), Retirement benefits are genera `ly based on 3% of the average final compensation' multiplied by years of creditable service, which is paid .,r° lually in monthly installments. For service after September 30, 2010, for members not eligible to retire as f that date, benefits are based on 2.25% of average final compensation multiplied by creditable servic up to 15 years, 2.5% of average final compensation for 15 to 20 years of service and 2.75% for service o,,%er 20 years. Effective September 30, 2010, for members not eligible to retire on 2 For members eligible f.;'retirement as of September 30, 2010, Average Final Compensation means the average annual compensation during e highest two years of membership service. For members employed before May 24, 1984, Average Final Comp :/ sation is the average annual compensation during the highest year of membership. For all other members, AverageCompensation means the average annual compensation during the highest five years of the last 10 years of servic ' Members retiring betv.'een October 1, 2010 and on or before September 30, 2011, will be based on the average of the ghest three years of membership service; for members who retire on or after October 1, 2011, and or before Septe :'.er 20, 2012, it will be based on the average highest four years of membership service; and for members who retire or after October 1, 2012, the average of the highest five years of the last 10 years of service. In no event shall the Aver. e Final Compensation of any member who is employed on September 20, 201.0, and retires on or after October 1, 2010 e less than the member's final average compensation as of September 30, 2010. B-9 SUBSTITUTED that date, member retirement allowances shall not exceed the lesser of 100% of the member's av age final compensation or an annual retirement allowance of $100,000. Members eligible to receive accumulated sick and vacation leave from the City are ab,- to transfer the amount to an eligible retirement plan. The GESE facilitates the transfer of accumulated ,. ck and vacation leave to any eligible retirement plan and is pursuant to Section 40-266 of the City Code Early retirement, disability, death and other benefits are also provided as £..' ows: Early Service Retirement. Members are entitled to early service retirement,. fter 20 years of creditable service. Benefits are based on the actuarial equivalent of the basic service retir ' ent benefit that otherwise would have commenced at age 55. For members not eligible for retirement or '•ctober 1, 2010, the amount is the actuarial equivalent of the basic service retirement benefit payable .' the earliest of the retirement eligibility dates for normal retirement. Disability. For an ordinary disability, a member with 10 or ore years of creditable service will receive 90% of their benefit rate times their average final cornpe cation times creditable service, with a minimum benefit of 30% of their average final compensation. Fo n accidental service incurred disability, a member is entitled to 66 2/3% of their average final compensatio :`' or final compensation, whichever is greater, For a service incurred disability, a member is entitled tot greater of 90% of the product of the benefit multiplier in effect at the time the service is earned multip -d by the number of years of credited service or 40% of the member's final average compensation. Death. For an ordinary death a member '; entitled to a lump sum payment of accumulated contributions plus 50% of compensation during th ' year immediately preceding death, if the member has completed three years of creditable service. For v" accidental death while in the performance of his or her duties a member is entitled to 50% of avera•, final compensation plus a lump sum payment equal to accumulated contributions. Any member w is eligible for normal, early or Rule of 70 Retirement who dies prior to actual retirement and whose spo e elects not to receive a payment of the member's accumulate contributions, if the member is eligible fo,,F'retirement on September 30, 2010, the spouse will receive 40% of the sum of the member's basic retireme `` benefit calculated as if'the member had attained age 55 and retired on the date of death. Additionally, t e spouse will receive 50% of the member's compensation during the year immediately preceding death,.' If the member is not eligible for retirement on September 30, 2010, the spousal benefit will be based on te optional form of payment elected by the member. If the member has not elected an optional allowance, ; e spouse will receive the 40% survivor benefit actuarially reduced, A retired member who dies prior to ha. rng received 12 monthly retirement payments and prior to having an optional allowance becoming effec:''e will have a Iump sum equal to the excess, if any, of 12 times the monthly payments over the actu.-'.ayments received paid to his designated beneficiary. Cost o Livm Ad'ustment. Effective October 1, 1998, the GESE was amended to provide for an increase in the COL paid to retirees to 4% with a $400 annual maximum increase, provided the retiree's first anniversary of re ':' ement has been reached. The amendment also provided for retirees electing the return of their contributir option to receive a minimum COLA benefit of $27 per year and a maximum COLA benefit of $200 adde to the previous COLA benefit, provided the retiree's first anniversary of retirement has been reached. referred Retirement Option Plan. The GESE made the DROP available to all GESE members effective May 2002. Any employee who is eligible for regular retirement or Rule of 70 Retirement is eligible to par:. 'cipate in the DROP. Upon election of participation, a member's creditable service, accrued, benefits, and c pensation calculations are frozen and the DROP payment is based on the member's average final B-10 SUBSTITUTED compensation. The member's contribution and the City contribution to the retirement plan fo that member ceases as no further service credit is earned. The member does not acquire additional pensi-1 credit for the purposes of the pension plan, but may continue City employment for a maximum of 48 i `onths. Once the maximum participation has been achieved, the participant must terminate employmen There are two DROP programs: the Forward DROP and the BACDROP. A me both programs simultaneously. The Forward DROP is a DROP benefit equal to the r the member would have received had the member separated from service and benefits from the plan. The BACDROP is a DROP benefit actuarially calculat BACDROP to a date, no further back than the date of the member's requi BACDROP period must be in 12 month increments, beginning at the start of months. The benefits for the BACDROP will then be actuarially calculated earned at the date of retirement. An individual account is created for each participant. A series by GESE's Board of Trustees, are made available to DROP participa on account of the option selected by the participant will not be ma borne by the participant only. All interest will be credited to th employment, a participant may receive payment from the D periodic payments. A participant may elect to rollover the individual retirement account, an Internal Revenue Code Se defer payment until the latest date authorized by Section participation will not affect any other death or disability bargaining agreement. If a participant dies before the will receive the remaining balance. Contributions and Funding Policies. Membe on a bi-weekly basis. The GESE's funding p determined rates that, expressed as percenta actuarial soundness of the GESE and to accu required to contribute an actuarially d contributions, will fully provide all be authorized pursuant to Sections 40-241( to fund the GESE's non -investment ex liability. The yield (interest, dividen GESE serves to reduce or increase defined level of benefits under t The payroll for emp approximately $68.4 millio account expected membe $27,504,507 or 41.99% o comparison, the requir covered payroll. The experience being 1 contributions ma quarter. On this the City is req ber can participate in lar retirement benefit mmenced the receipt of A member may elect to went eligibility date. The pay period, not to exceed 48 be the equivalent to the benefit f investment vehicles, as established to choose from. Any losses incurred up by the City or the GESE, and will be member's account. Upon termination of P account in a lump sum distribution; or alance to another qualified retirement plan, ion 457 Plan, or an annuity. A participant may 401(a)(9) of the Internal Revenue Code. DROP iefit provided under law or applicable collective count balances are paid out in full, the beneficiary of the GESE are required to contribute 13% of their salary licies provide for periodic contributions at actuarially s of annual covered payroll, are sufficient to maintain the ulate sufficient assets to pay benefits when due. The City is ermined amount that, when combined with participants' fits as they become payable. Contributions to the GESE are and (b) of the City Code. Contributions from the City are designed enses and normal costs and to fund the unfunded actuarial accrued s and net realized and unrealized gains and losses) on investment of the ture contributions that would otherwise be required to provide for the GESE. yees covered by the GESE for the year ended September 30, 2011 was the City's total payroll was approximately $268.2 million. After taking into contributions, the total required minimum contribution from the City is covered payroll, for Fiscal Year 2012-2013 payable on October 1, 2012, In minimum contribution for the Fiscal Year 2011-2012 was $25,724,977, or 36.32% of was a large investment loss during the year and an actuarial loss due to the actuarial s favorable compared to the assumed experience for the Trust. All fiscal year by the City to the GESE will be made quarterly, in equal payments on the first day of each asis, the total recommended City contribution for Fiscal Year 2012-2013 is $28,303,314, and red to make minimum quarterly contributions of $7,075,829 beginning on October 1, 2012. B-11 SUBSTITUTED Annual Pension Cost. The City's current year contribution was determined throu an actuarial valuation performed as of October 1, 2011. Significant actuarial assumptions used to co .'.ute the annual contribution requirement are, as follows: Valuation date:, October 1, 2010 Actuarial cost method: Modified Entry Age Normal Amortization method: Level percent, closed Amortization method: 7 to 18 years Asset valuation method: 5-Year Smooth Market Investment rate of return: 8.10% Projected salary increases: 5.25% Payroll Growth: 3.00% Includes inflation at 3.50% Cost of living adjustments: 4% per year, with $5 per year minimum and $400 per year maximum Source: City of Miami General Employees' and Sanitation Employees' Reti • ment Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC. GESE contributions are determined using the entry a, normal cost method with frozen actuarial accrued liability, The annual pension cost is equal to the an al required contribution each year. B-12 SUBSTITUTED Annual. Employer Contributions Fiscal Year Annual Pension Cost Percentage Contributed Net Pension Oation 2004 $10,669,846 100% 2005 19,003,415 100 2006 22,018,443 100 2007 24,229,028 100 2008 22,762,902 100 2009 23,191,828 100 2010 24,037,093 100 2011 20,232,513 100 2012 25,724,977 Source: City of Miami General Employees' and Sanitation Employees' Retire ent Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC. The GESE's unfunded liability was projected to be $17/,363,801 as of October 1, 2011, taking into account expected contributions from the City of $25,724,977 ased on the October 1, 2010 valuation. The actual unfunded liability is $243,102,598. The increase of $,<` ,738,797 in the unfunded liability is primarily due to an actuarial asset return of (1.11%) compared to thc.'-xpected 8,10% return, compounded by losses due to more retirements than expected. The total increase i ' ity contribution to amortize the unfunded liability is $1,779,530 per year. Historical ''unding Progress $ millions) (a) (b) (b) - (a) (a)/(b) (c) I(b) - (a)l/(c) Actuarial Actuarial UAAL as Valuation Actuarial Accrue Unfunded Percent of Date Value of Liab'; 'ty AAL Funded Annual Annual (October 1) Assets L .(UAAL) Ratio Payroll Payroll 2003 $ 555,5 u.'682,4 $ 126.9 81.41% $ 70.7 179.42% 2004 564.6 709.9 145.4 79,53 72.5 200.43 2005 588.5 746,3 157.8 78.85 71,5 220.79 2006 618.5 732.0 113.5 84.49 75.6 150.16 2007 664.1 . 770.2 106.1 86.23 82.1 129.28 2008 691, ;' 808.6 116.8 85.55 91.0 128.42 2009 6,6 780.6 135.0 82.70 90.0 149.94 2010 3.0 840,9 187.9 77.66 68.8 .273,22 2011 600.7 843.8 243.1 71,19 63.6 382.23 Source: City o., iami General Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 21.,' 1 prepared by Cavanaugh Macdonald Consulting, LLC. B-13 SUBSTITUTED Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(2) Present Value of Accrued Benefits and Market Value of Assets Interest Rate Assumption 8,10% 8.10 8.10 8.10 8.10 8.10 8,10 8.10 8.10 8.10 8,00 Present Value of Accrued Benefits(') $ 496,990,860 516,434,721 578,712,725 605,934,834 647,824,031 650, 607,217 683,690,757 714,893,783 742, 076,105 800,285,084 804,294,009 Market Value of Assets $ 551,197,253 467,725,075 516,813,945 546,454,226 586,943,151 623,992,356 694,302,333 • 576,492,50 538,012,. '11 553,79/518 517 f04,877 Source: City of Miami General Employees' and Sanitation Employees' Ret. October 1, 2011 prepared by Cavanaugh Macdonald Consulting, LLC. h) The cost method used for determining the present value of accrue current service and current salaries as of the valuation date. participants' accumulated plan benefits as those future benefit p to employees' service rendered to the benefit information dat history of pay and service and other appropriate factors as o years of service are considered only in determining emp example, early retirement, death and disability benefits to adjust those accumulated plan benefits to reflect probability of payment (by means of decrements benefit information date and the expected dat assumptions. (2) The calculations were performed by usin used in the October 1, 2011 valuation, Funded �� do 110;"'0% 60 89.30 90.20 90.60 95.90 101.60 80.64 72.50 69.20 64.39 ment Trust Actuarial Valuation Report as of enefits is unit credit. Calculations are based on e present value of accrued benefits is defined by ments that are attributable under the plan's provisions Their measurement is primarily based on employees' at date. Future salary changes are not considered. Future ees' expected eligibility for particular types of benefits, for o measure their actuarial present value, assumptions are used e time value of money (through discounts for interest) and the ch as for death, disability, withdrawal or retirement) between the of payment; An assumption of an ongoing plan underlies those he plan's discount rate of 8,0% which was adopted in May 2012 and first B-14 SUBSTITUTED The rate of return on the market value for the period ending September 30, 2011 wa 1.78%, as compared to the 8.10% assumption. The asset valuation method results in an actuarial asset v ue of $653.0 million as of September 30, 2011, as compared to the market value of $553.8 million. The foil' ing is a table of the GESE revenues for the past ten years: Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 City Contributions $ 2,090,701 3,602,457 10,669,846 19,003,415 22,018,443 24,229,028 22,762,902 23,191,828 24,037,093 20,232,513 Member Contributions $ 7,147,651 7,605,397 7,937,387 7,858,302 8,021,488 8,819,536 9,517,052 11,791,902 12, 728, 711 9,183,073 Investment Income $ (53,892,226) 79,765,973 55,410,170 63,303,292 59,921,49 91,851,5.5 (94,75':, 47) (16, 3,559) 4;,195,934 1,660,396 otal $ 44,653,874) 90,973,827 74,017,403 90,165, 009 88,961,426 124, 900,149 (62,471,793) 18,510,171 81, 961, 738 41,075,982 Source: City of Miami General Employees' and Sanitation Employe.:' Retirement Trust Actuarial Valuation Report as of October 1, 2011 prepared by Cavanaugh Macdonald Consulting,, LC. Recent Benefit and Member Contribution Chan;e Below is a summary of the benefit and member contribution changes adopted by the City effective Se.tember 30, 2010 and reflect in the prior and current valuation. (a) Benefit multiplier: 3% for curre 15 years; 2.5% for years 16-20; 2.75% for sery current service level. The revised benefit m deferred and disability retirement benefi service plus service graded for future service —2.25% first e over 20 years. Current members enter graded formula at tiplier schedule is used in the calculation of the normal, early, where applicable. (b) Average final compe Nation: Five year average pay for all years of service. Phase in from two to five year average pay over th- ext 3 years. The average final compensation shall not be less than the average final compensation as of tee date of the plan change. (c) Normal retire '-nt date: Unreduced retirement at earlier of age 55 and 30 years of service, age 60 and 10 years of servic-; `or Rule of 80. (d) No benefi hanges for current members who are eligible to retire (that is, meet the Rule of 70 or age 55 and 10 years o ervice) as of the effective date of the plan changes. (e) Maxi um benefit: maximum annual benefit at retirement is lesser of average final compensation and 00,000. Cost -of -living increases are applied to the benefit after retirement. Normal benefit form: life - nuity as normal form of payment. Other actuarial equivalent options will be available. In no - +ent will the revised benefits be less than the member's accrued benefit as of the effective date of the plan . anges, that is, September 30, 2010. In addition to the member contributions to the GESE will increase frm the current 10% of pay to 13% of pay. B-15 SUBSTITUTED The following changes were made to GESE in 2012 pursuant to negotiations with the un Member contributions. Effective the first full pay period following October 1, ri12, regular contributions of each member of the plan shall be made each pay period at the rate of 10% (in r ead of 13%) of each member's earnable compensation. Amortization period of unfunded actuarial accrued liability. As of October 1, 2011, t :,�' unfunded actuarial accrued liability shall be amortized as a level percentage of the projected payroll of a _,r've plan members. The unfunded actuarial accrued liability as of October 1, 2011.shall be amortized adding 5 years to the remaining years (instead of over the remaining years) of each unfunded actuaria , = ecrued liability base. As of October 1, 2011, benefit improvements for actives shall be amortized overyears (instead of 15 years). Benefit improvements for retirees shall be amortized over 15 years. Act rial gains and losses shall be amortized over 20 years (instead of 15 years). Changes in actuarial asr'mptions and methods shall be amortized over 20 years (instead of 15 years). Backdrop option. A Backdrop benefit option shall be im.p]em/ ted on January 1, 2013. The Backdrop option shall replace the existing DROP program. Employees : 'o have not attained normal retirement eligibility as of January 1, 2013 or were not vested by October ; ; 2010, and all employees hired on or after January 1, 2013, will be eligible for the Backdrop option, b ,�` will not be eligible for the DROP. Anyone eligible for the forward DROP as of January 1, 2013, rema s eligible for the forward DROP as it presently exists and anyone eligible for the forward DROP as of Jan `ary 1, 2013 or vested prior to October 1, 2010, who chooses not to enter the forward DROP remains eligib • for the Backdrop. Limitation on benefits. Effective September 31;'2012, member retirement allowances shall not exceed an annual retirement allowance of $80,000 as of retir; ent or DROP entry based on the normal form of benefit in effect on the date of retirement; provided, an employee who has an accrued benefit in excess of $80,000 annually on the effective date shall retain th . `•enefit, but shall not accrue any additional benefits after that date. GESE EBP Plan Description. In July 20, the City, pursuant to applicable Internal Revenue Code provisions, established a qualified governm4 tal excess benefit plan to continue to cover the difference between the allowable pension to be paid a ci the amount of the defined benefit so the benefits for eligible members are not diminished by changes i ' he Internal Revenue Code, The GESE Board of Trustees administers the excess benefit plan. GESE memb:'s are not required to contribute to the EBP. Members of. the GESE participate in this plan. At October 1;'.010, the date of the most recent actuarial report, membership in the EBP consisted of 35 retirees and ben "iciaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving the,There are no current employees in the plan. Cont, ' utions and Funding Policies. The payment of the City's contribution of excess retirement benefits foeligible members of the GESE above the limits permitted by the Internal Revenue Code is: (a) funded f .m the City's General Fund; (b) paid annually concurrently with the City's annual contribution to norma pension costs which causes the City to realize a reduction in normal pension costs in the same amot; and (c) deposited in a separate account established specifically for the GESE to receive the City's ex s -ss retirement benefit contributions. This account is separate and apart from the accounts established to ceive the City's normal pension contributions for the GESE. The City is required to contribute as benefits become payable. B-16 SUBSTITUTED The payroll for employees covered by the EBP for the year ended September 31 2011 was approximately $68.4 million; the City's payroll was approximately $268.2 million. Annual Pension Cost and Net Pension Obligation. The EBP is an unfunded plan; ho 'ever if the City were to fund the EBP on the same actuarial basis as the GESE, the annual contribution fo October 1, 2011 is $585,357. This contribution represents 0.85% of the active members' payroll of $68,76 827 as of October 1, 2010. The unfunded actuarial accrued liability of 5,704,602 as of October. 1, 2010 is a!' ortized over 20 years from that date. Note that the illustrative annual contribution determined as of Oct. «er 1, 2009 is $625,539 or 0.69% of payroll. The City's current year contribution was determined through an actu. •ial valuation performed as of October 1, 2010. Significant actuarial assumptions used to compute the ann al contribution requirement are as follows: Valuation date: Actuarial cost method: Amortization method: Remaining amortization period: Asset valuation method; Investment rate of return: Projected salary increases: Payroll Growth: Includes inflation at Source: City of Miami General Employees' and Sanitati of October 1, 2010 prepared by Cavanaugh Macdona EBP contributions are determined u accrued liability. Fiscal Year 2005 2006 2007 2008 2009 2010 2011 Annual Required Contribution $818,446 824,766 823,371 898,1 566 se46 6 ",539 85,357 Source: City of Mia of October 1, 201 Miami, Compr Ac . arial October 1, 2010 Modified Entry •: e Normal Level dollar, cl.'ed 20 years Not applic 8,10% 5,25% 3.00% 3.50'0 Employees' Excess Benefit Plan Actuarial Valuation Report as Consulting, LLC. ng the entry age normal cost method with frozen actuarial Annual Employer Contributions Contribution Made $475,076 463,126 476,252 446,916 464,325 339,602 403,896 Percentage Contributed 58.05% 56.15 57.84 49.76 82.03 54.29 69.00 (Excess)/Deficiency $343,370 361,640 347,119 451,233 101,721 285,937 181,461 i General Employees' and Sanitation Employees' Excess Benefit Plan Actuarial Valuation Report as prepared by Cavanaugh Macdonald Consulting, LLC. Fiscal Year 2011 numbers based on City of ensive Annual Financial Report for Fiscal Year Ended September 30, 2011. (a) (b) Historical Funding Progress (in $ millions) (a)/(b) (c) [(b) - (a)]/(c) SUBSTITUTED Valuation Actuarial U AL as Date Actuarial Accrued Unfunded -rcent of October 1) Value of Liability AAL Funded Annual Annual Assets (AAL) .(UAAL) Ratio Payroll Payroll 2001 $ 0.0 $ 9.3 $ 9.3 0,00% $ 66.7 13.93%0 2002 0.0 8.6 8,6 0.00 70.4 12.28 2003 0.0 9.9 9.9 0.00 70 ` 14.04 2004 0.0 8.4 8.4 0.00 7.5 11.63 2005 0.0. 8.4 8.4 0.00 •`71,5 11.75 2006 0.0 8.0 8.0 0.00 75.6 10.58 2007 0.0 8.6 8,6 0.00 82.1 10.48 2008 0.0 5.2 5.2 0.00 91.0 5.66 2009 0.0 5.8 5.8 0.00 90.0 6.48 2010 0.0 5.7 5.7 0,0S 68.8 8.30 Source: For valuation dates 2001-2003, City of Miami, Comprehensive ual Financial Report for Fiscal Year Ended September 30, 2007. For valuation. dates 2004-2010, City of Miami P-�neral Employees' and Sanitation Employees' Retirement Trust Actuarial Valuation Report as of October 1, 2010 pr-dared by Cavanaugh Macdonald Consulting, LLC. B-18 SUBSTITUTED The City's annual pension cost and net pension obligation to the EBP is as follows: Fiscal Year 2010 Fiscal Year 20 Annual required contribution (ARC) $ 625,539 '$ 585,357 Interest on net pension obligation (NPO) 347,600 363,9 Adjustment to ARC (431,711) 461 t 2 Annual Pension Cost $ 541,428 $ 48253 Contributions made (339,602) 44 243 Increase in NPO $ 201,826 >''.82,010 NPO, beginning of year 4,291,360 493 186 NPO, end of year $ 4,493,186 4,575,196 Source: City of Miami General Employees' and Sanitation Employees' Excess Benefit ran Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulting, LLC. Staff Trust Plan Description. The Staff Trust. is a single -employer, defi/ed benefit plan. The Staff Trust was established by the rule -making authority of the GESE, pursuant t•'Chapter 40 of the City Code. The Staff Trust covers all administrative full-time employees and other p/sitions as may be named by the Board of Trustees. Participation in the Staff Trust is a mandatory conditi`'z of employment for all full-time employees, other than those eligible to decline membership. At October 1, 2010, the date of the most recent actt�rial report, membership in the Staff Trust had no retirees and beneficiaries currently receiving benefits; o ; r, terminated employee entitled to benefits, but not yet receiving them and 11 current employees. Pension Benefits. The minimum normal retf,`ement age is 55. Any member in service who has 10 or more years of continuous creditable service may .ect to retire upon attainment of normal retirement age. A member who has completed a combination of a 4 "east 10 or more years of creditable service plus attained an age equaling 70 points may elect a Rule of 70 , tirement. However, a member is entitled to early retirement at any age with at least 10 years of creditabl.service. Retirement benefits are generally based on 3% of the average final compensation during the rbhest two years of membership service multiplied by years of creditable service, which is paid annual "' in monthly installments. A retired member who dies having an optional allowance beco the monthly payments over the a or to having received 12 monthly retirement payments and prior to ng effective will have a lump sum equal to the excess, if any, of 12 times al payments received paid to his designated beneficiary. De erred Retirement 0 on Plan. The Staff Trust implemented a DROP for employees eligible for Rule of 70 Retirement on March 2t2010. Any employee who is eligible for a Rule of 70 Retirement is eligible, to participate in the DROP. U a'on election of participation, a member's creditable service, accrued benefits, and compensation calculatio ' are frozen and the DROP payment is based on the member's average final compensation. The me! 'er's contribution and the City contribution to the retirement plan for that member ceases as no further s -; vice credit is earned. The member does not acquire additional pension credit for the purposes of the pen on plan, but may continue City employment for up to a maximum of 48 months. Once the maximum parr cipation has been achieved, the participant must terminate employment. Upon rmination of employment, a participant may receive payment from the DROP account in a lump sum di.'ribution; or periodic payments. A participant may elect to rollover the balance to another B-19 SUBSTITUTED qualified retirement plan, individual retirement account, an Internal Revenue Code Section 457 P.: n, or an annuity, A participant may defer payment until the latest date authorized by Section 401(a)(9) of `1e Internal Revenue Code. DROP participation will not affect any other death or disability benefit provid under law or applicable collective bargaining agreement. If a participant dies before the account balanc are paid out in full, the beneficiary will receive the remaining balance. Contributions and Funding Policies. Members of the Staff Trust are required to c..•'tribute 10% of their salary on a bi-weekly basis. The funding policies of the Staff Trust provide for p-;'odic contributions at actuarially determined rates that, expressed as percentages of annual covered ayroll, are sufficient to maintain the actuarial soundness of the Staff Trust and to accumulate sufficient •.'sets to pay benefits when due. The City is required to contribute an actuarially determined amount that, ,'1en combined with member contributions, will fully provide all benefits as they become payable. The yi d (interest, dividends and net realized and unrealized gains and losses) on investments of the Staff Trust ; rves to reduce or increase future contributions that would otherwise be required to provide for the defin 'd level of benefits under the Staff Trust. The payroll for employees covered by the Staff Trust for ' e year ended September 30, 2011 was approximately $843,000 the City's total payroll was approximat y $268.2 million. Annual Pension Cost, The City's current year contrition was determined through an actuarial valuation performed as of October 1, 2010. Significan actuarial assumptions used to compute the contribution requires are as follows: Valuation date: Actuarial cost method: Amortization method: Amortization method: Asset valuation metho Investment rate of retu ": Projected salary incre;'es*: *Includes inf1. ' ion at Cost of living adj tments: Oct.ser 1, 2009 ' M'dified Entry Age Normal evel dollar amounts, closed 6 to 20 years 3-Year Smooth Market 8,10% 6.00% 3.50% None Source: City of Miami General Emplo; ees' and Sanitation Employees' Retirement Trust Staff Pension Plan Actuarial Valuation Report as of October 1, 20 prepared by Cavanaugh Macdonald Consulting, LLC. The Staff Trust contributions are determined using the entry age normal cost method wit11 frozen actuarial accrued liability. e annual pension cost is equal to the annual required contribution each year. B-20 SUBSTITUTED Annual Employer Contributions Fiscal Year Annual Pension Cost Percentac e Contributed Net Pension Ob ation 2004 $ 98,044 100.00 % 2005 99,779 100.00 2006 72,380 100.00 2007 57,995 100.00 2008 109,163 100.00 2009 159,837 100.00 2010 132,542 100.71 $(945) 2011 164,490 100.00 Source: City of Miami General Employees' and Sanitation Employees' Retireme t Trust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Con sting, LLC. For fiscal year 2011, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended Septer' ber 30, 2011. After taking into account expected member contributions,;` e total required contribution from the City is $226,793, or 26,90% of covered payroll for the 2012 fiss" 1 year payable on October 1, 2011, IN comparison, the required contribution for the 2011 fiscal year ws $164,490, or 22.26% of cover payroll. There was an experience loss during the year. The implementat;.n of 4-Year DROP provision increased the required contribution by $2,483 for fiscal year 2012. The St.. f Trust's unfunded liability was projected to be $539,335 as of October 1, 2010, taking into account expect contributions from the City of $164,490 based on the October 1, 2009 valuation. The actual unfunded li .ility is $992,369. The increase of $453,034 in the unfunded liability is mainly due to the return on tl actuarial value of assets of 1.37% compared to the expected retune of 8.10% and greater than expected, ay increases. The total increase in City contribution to amortize the unfunded liability is $53,070 per ye Histori 1 Funding Progress (a) ,�''") (b) - (a) (a)/(b) (c) [(b) - (a)]/(c) Actuarial •,' tuarial UAAL as Valuation Market Actuarial Accrued Percent of Date Value of Value of Liability Unfunded Funded Covered Annual (October 1) Assets Assets (AAL) AAL (UAAL) Ratio Payroll Payroll 2001 $ 206, "8 $ 714,036 $ 507,458 28.93% $ 363,176 139.73% 2002 30 28 900,721 596,993 33.72 411,278 145.16 2003 $ 267,345 6,666 1,057,295 610,629 42,25 448,457 136.16 2004 437,30E :15,132 1,005,846 390,714 61.16 487,639 80.12 2005 587,697 768,336 1,084,275 215,939 70.86 455,220 69.40 2006 746,102 939,698 1,129,276 189,578 83.21 643,770 29.45 2007 913,71,138,655 1,622,719 484,064 70.17 734,116 65.94 2008 1,141„ '' S 1,313,407 1,748,147 434,740 75.13 632,259 68.76 2009 1,1,033 1,556,718 2,121,806 565,088 73.37 738,898 76.48 2010 1, ' 3,562 1,834,613 2,826,982 992,369 64.90 842,955 117.72 Source: For valuation dates 2001-2002, City of Miami, Comprehensive Annual Financial Report for Fiscal Year Ended September 3 2007. For valuation dates 2003-2010, City of Miami General Employees' and Sanitation Employees' Retirement ,' rust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Consulti LLC. 13-21 SUBSTITUTED The City's annual pension cost and net pension obligation to the Staff Trust is as follows: Fiscal Year 2010 Fiscal Year 201 Annual required contribution (ARC) $ 132,542 $ 164,490 Interest on net pension obligation (NPO) 0 Adjustment to ARC 0 '0 Annual Pension Cost $ 132,542 $ 16}490 Contributions made 133,487 :4 490 Decrease in NPO $ (945) $; 0 NPO, beginning of year 0 0 NPO, end of year $ 0 �'$ 0 Source: City of Miami General Employees' and Sanitation Employees' Retiremen ,' rust Staff Pension Plan Actuarial Valuation Report as of October 1, 2010 prepared by Cavanaugh Macdonald Con ' lting, LLC, The rate of return on the market value for the period end',%g September 30, 2010 was 9.67, as compared to the 8.10% assumption. The asset valuation method r -tilts in an actuarial asset value of $1.6 million as of September 30, 2010, as compared to the market valuof $1.4 million. Recent Benefit and Member Contribution Changes. Effect;' e October 1, 2010 the retirement rates were updated to reflect the adoption of the DROP. Rates wer- changed from 50% to 65% for the pension administrator upon reaching Rule of 70 eligibility; 20% wa .'. dded to the current rates upon reaching Rule of 70 eligibility for other members. The marriage assumpti., ` was also changed from 80% for all members to 0% for the pension administrator and 40% for all other m:>' bers, EORT Plan Description. Prior to October 22, 009, the City's elected officials participated in a single - employer, non-contributory defined benefit ;r nsion plan under the administration and management of a separate Board of Trustees. Under the EO s`, eligibility requires 7 years of total service if elected between October 1, 2001 and October 22, 2009, or'' 0 years of total service if elected prior to October 1, 2001as an elected official of the City to be vested.-' ithout requiring that such service be continuous. Any official elected after 10/22/2009 is not eligible participate in the plan. The City, pursuant to ap; icable Internal Revenue Code provisions, also established qualified 'governmental excess benefit pl. ,' to continue to cover the difference between the allowable pension to be paid, and the amount of the de 'ned benefit, so that the benefits for eligible members are not diminished by changes in the Internal Reve,e Code. At the most recei . `preliminary actuarial valuation dated November 5, 2012, membership.in the EORT consisted of 7 retirees d beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet r:,- eiving them. and 4 active officers with the future range of service from 2 to 4 years. Pension B ,'e 'ts. Benefits accrue for City Commissioners at the rate of 50% of the highest annual W-2 wages in the las ,' hree years of employment after 7 years of service as an elected official of the City plus 5% for each addit nal year up to 100% at 17 or more years of service. Benefits are payable on the later of age 55 or on the fir day of the month following an officer's termination. An active participant will be fully vested upon dea and a single sum death benefit is payable. The EORT was frozen to new entrants effective October '2, 2009. Only participants who were accruing benefits and had not yet become vested in their B-22 SUBSTITUTED benefits as of that date continue to accrue benefits under the EORT, Benefit accruals for all .' 1er participants were frozen. Contributions and Funding Policies. The funding methodology recently Chang- from the individual aggregate cost method to the Projected Unit Credit (PUC) method. Assets are alloca d first to the non -active participants, then to the active participants based on their accrued liability. The r' funded present value of future benefits is determined for each individual and spread over their expected „ ture working lifetime with the City. As EORT is a non-contributory defined benefit plan, all funding is vided by the City. The payroll for employees covered by the EORT for the year nded September 30, 2011 was approximately $336,000; the City's total payroll was approximately $26: million. Annual Pension Costs, The City's current year contribution ras determined through an actuarial valuation determined as of December 31, 2010. Significant actua ' al assumptions used to computer the annual contribution requirement are as follows: Valuation date: Actuarial cost method: Amortization method: Amortization method: Asset valuation method: Investment rate of return: Projected salary increases: Inflation: Merit, longevity, etc Mortality ta.; e: Disability, turnover and retire ents: Source: City of Miami Elected Officers prepared by Cowden Associates, Inc EORT contributions separates and develops fu amortization payment tow method allows.the City t and necessary contrib contribution for the interest at an annu contributions we based on the ac annual requir December 3. , 2011 Projected '` nit Credit Not Ap,.`icable Not A plicable Dec:= ber 31 market values 3.7 % ot Applicable ot Applicable Not Applicable RP-2000 White Collar Active/Retiree, Healthy Mortality table without setback No disability or turnover assumed. Retirement is assumed at end of the current term of 100% vested. tirement Trust Preliminary Actuarial Valuation Report as of December 1, 2011 a determined using the Projected Unit Credit funding method. This method ng components for annual contributions into 1) normal costs and 2) an rd the unfunded liability for past service benefits. Revising the actuarial funding fund the payment liability over a longer period of time. While the 2011 EORT cost ion amounted to $545,785 as of December 31, 2010, the City's annual required 12 plan year, if paid on December 31, 2012, will be $488,713. This amount includes rate of 3.75% from December 31, 2011 to the actual contribution date. The following made to EORT in accordance with actuarially determined contribution requirements, arial valuation performed for each respective year. The annual pension cost is equal to the d contribution each year. B-23 SUBSTITUTED Fiscal Year 2006 2007 2008 2009 2010 2011 2012 Annual Employer Contributions Annual Pension Cost $1,043,209 285,408 711,209 412,588 1,275,242 432,170 545,785 Percentage Contributed 100% 100 100 100 100 100 100 Net Pension Ob1i•-3tion Source: For valuation dates 2011-2009, City of Miami, Comprehensive Annual Fin •='' cial Report for Fiscal Year Ended September 30, 2011. For valuation dates 2006-2008, City of Miami, Comprehens', e Annual Financial Report for Fiscal Year Ended September 30, 2008. For FY 2012, City of Miami Preliminary 2012 /aluation Results for EORT by Cowden Associates, Inc, dated November 5, 2012, Special Benefit Plans Certain executive employees of the City are allowed to , in the ICMA Retirement Trust's 401(a) plan (the "SBP"). This defined contribution deferred compensatio y'plan, which covers governmental employees throughout the country, is governed by a Board of Dir- ors responsible for carrying out the overall management of the organization, including investme:�=°t administration and regulatory compliance. Membership for the City employees is limited by the C J`' Code to specific members of the City Clerk, City Manager, City Attorney's offices, Department Dire rs, Assistant Directors, and other executives. To participate in the plan a written trust agreement mu-' be executed, which requires the City to contribute 8% of the individual's earnable compensation, and th.'employee to contribute 10% of their salary. Participants may withdraw funds at retirement or upon sep..'ation based on a variety of payout options. The City does not have any fiduciary responsibility relating the plan, consequently the amount accrued for benefits are not recorded in the fiduciary funds. The following information relate:.' to the City participation in the SBP: Total current year's p yro11 for all employees Current year's payr%11 for participating employees Current year emp.; over contributions Source: City of Miami, Florida Co In addition to co separate non-contributo • and 185, Florida Sta taxes levied by the This tax, which is Trustees. The C as long as the City does no not record remitted o $268,215,510 3,427,824 289,634 prehensive Annual Financial Report for Fiscal Year Ended September 30, 2011. rage under the FIPO, the firefighters and police officers are members of two money purchase benefit plans established under the provisions of Chapters 175 s, respectively. These two plans are funded solely from proceeds of certain excise y and imposed upon property and casualty insurance coverage within the City limits. Ilected from insurers by the State of Florida, is remitted directly to the plans' Boards of is entitled to levy such excise taxes solely for the use of the money purchase benefit plans inimum benefit provisions of Chapter 175 and 185, Florida Statutes, are met by the FIPO. The ave any fiduciary responsibility relating to the SBP, consequently amount accrued benefits are d in the fiduciary funds. The total of such excise taxes received from the state of Florida and the plans was $9,375,374 for the year ended September 30, 2011. Accordingly, these monies are B-24 SUBSTITUTED recorded as pass through funds in the City's financial statements. Benefits are allocated to the part ipants based upon their service during the year and the level of funding received during said year. Partic',. ants are fully vested after nine years of service. Upon termination of service, a participant may elect to re =ive one of the three options (1) a lump sum payment; (2) five substantially equal payments, or (3) 10% ;' more in the first year and the remainder in any way over the next four years. The total must be paid out thin five years. Legislative Proposals Affecting Pension Plans Senate Bill 1128 ("SB 1128"), which impacts government pension systems including police and firefighter systems, became effective on July 1, 2011. SB 1128 provides that up to 30,E hours of overtime may be included as compensation for pension purposes, but excludes payments for ac ed unused sick or annual leave. The use of an actuarial or cash surplus in a local government's pension an for any expenses outside the plan is also prohibited under SB 1128. SB 1128 also prevents a local go %"'rnment's contributions to be reduced below the normal cost of its pension plan. Specifically to police and firefighter pensions, SB 1128 eliminate the requirement to increase pension benefits whenever member contributions are increased, SB 1127 als.''allows cities with a local law plan in existence on or before June 30, 1986, to change the representation of; `leir pension boards, if such change does not reduce the percentage of police and firefighter members on ch boards. SB 1128 also provides for the Department of Mana%`ement Services ("DMS") to provide certain disclosures defined benefit pension plans of cities, inclu.°ng information on the plan's actuarial data, minimum funding requirements, and five year history of ,,'` nded ratios. Under SB 1128, DMS is responsible for developing a standardized rating system for Iocal go ;v ernment defined benefit pension plans. Finally, SB 1128 creates a Task Force on Public Employee Disabil y Presumptions. The task force will study and make recommendations concerning the inclusion of certaf' disabilities to be job related, The task force's report and recommendations must be submitted to the Florin -a Legislature by January 1, 2012. At present, it is uncertain how SB 11 Z`wi11 impact the City's finances. OTHER POST -EMPLOYMENT BENEFI Pursuant to Section 112.0801, orida Statutes, the City is required to permit participation to the health insurance program by retiree <'.nd their eligible dependents at a cost to the retiree that is no greater than the cost at which coverage is a,'ailable for active employees. Retired police officers are offered coverage at a discounted premium under e FOP Health Trust that is administered separately from the City's health care plan. For non -police retir `s (fire fighters, generalemployees, sanitation employees and elected officials) and their dependents, the Ci , has a stated policy of subsidizing health care coverage and life insurance at a discounted premium equao 87% of the blended group rate. GASB Statemei ' No. 45 allows flexibility to governmental employers in the use of various actuarial cost methods. Severa such acceptable actuarial cost methods were evaluated,' including the entry age normal cost method, the fr en entry age normal cost method, the aggregate cost method, and the projected unit credit normal cos method. The goal was for the City to adopt an actuarial cost method which is acceptable, appropriate, an " commonly used. The City's annual Other Post Employment Benefit ("OPEB") liability was calculated us '> g the entry age normal cost method. P ,'n Descri• tion. The City has two separate single -employer OPEB plans for its retirees. One plan is for retir `g police officers and the other plan is for all other retiring employees (the "Non -Police Retirees"). The b efits afforded to all retirees include lifetime medical, prescription, vision, dental and certain life B-25 SUBSTITUTED insurance coverage for retiree and dependents. Non -Police Retirees receive the same benefits .`s similarly situated active employees of the City, while retired police officers receive the same benefit-' as provided through the Fraternal Order of Police (the "FOP") Health Trust. The City offers to its retirees comprehensive medical coverage and life insurance enefits through its self-insurance plan. This plan was established in accordance with Section 112.081, Florida Statutes. Substantially all of the City's general employees, sanitation employees and firefighte s may become eligible for these benefits when they reach normal retirement age while working fthe City. There are approximately 6,483 covered participants (including spouses and dependents), of hich approximately 2,164 are active employees and 870 are retirees. Funding Policy. The City is authorized to establish benefit le '=1s and approve the actuarial assumptions used in the determination of contributions levels. Beginning; ith the 2012 plan year, the retirees are contributing the majority of their premium costs each month. Spo)i ses and other dependents are also eligible for coverage, although the retiree pays the premium cost. The FOP sponsors a Health Insurance Trust (the "HIT") th,.` is partially self -insured, which provides life, heath, and accidental death and dismemberment insurance , " substantially all full-time sworn members of the City's Police department, eligible retirees, their fam:,es and beneficiaries. The HIT receives a significant source of its funding from the City, pursuant to ,. e terms of a collective bargaining agreement. The agreement requires the City to reimburse the HIT an a;,` punt that is required to bring the HIT's minimum fund balance to $2.35 million annually. Currently, the City's subsidy to OPEB bene s is unfunded. There are no separate trust funds or equivalent arrangements into which the City make j` ontributions to advance -fund the OPEB obligations, as it does for its retiree pension plans. The City's cos of the OPEB benefits is funded on a pay-as-you-go basis. The City contributed $14,114,241 for the fiscal ;,>'ear ended September 30, 2011. The ultimate implicit subsidies whi.,� `, are provided over time are financed directly by general assets of the City, which are invested in short t; ''`m fixed income instruments according to its current investment policy. The City selected an interest dis<':unt rate of 4.25%, which is the long-range expected return on such short-term fixed income instruments,, `o calculate the present values and costs of the OPEB. • Actuarial. Methods. Actua amounts and assumptions abo determined amounts are subje new estimates are made abo consultant believes are rea may actually be and refl interest rates, discoun result in actual costs Projectio OPEB plan as the time of ea members. effects of the lon valuations of an ongoing plan involve estimates of the value of reported the probability of occurrence of events far into the future. Actuarially to continual revision as actual results are compared to past expectations and t the future. Although the valuation results are based on values the actuarial nable assumptions, the valuation result is only an estimate of what future costs t a long-term perspective. Deviations in any of the several factors, such as future medical cost inflation, Medicare coverage risk and changes in marital status could eing greater or less than estimated. of benefits for financial reporting.purposes are based on the substantive OPEB plan (the derstood by the employer and the members) and include the types of benefits provided at valuation and the historical pattern of sharing of benefit costs between the employer and plan e actuarial methods and assumptions used include techniques that are designed to reduce the ort-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with term perspective of calculations. B-26 SUBSTITUTED Significant actuarial assumptions and methods Valuation date: Actuarial cost method: Amortization method: Amortization Period: Assumed rate of return on investments:. Assumed health care cost trend rates: used to estimate the OPEB liability are as follows: October 1, 2008 Entry Age Normal Cost Method Level Percent of Payroll 28 years 4.25% 2009 — 10.0% 2010 — 6.8% 2011— 8.5% 2012-8.0%0 2013-7.5% 2014 - Thereafter — 7. !`% - 5.0% Source: City of Miami Comprehensive Annual Financial Report for iscal Year Ended September 30, 2011. Annual OPEB Cost and Net OPEB Obligation. The City'sr•'nnual OPEB cost is calculated based on the annual required contribution of the employer, an amount auarially determined in accordance with the parameters of GASB Statement No. 45. The annual require. ,+' ontribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal c.,'t each year and amortize the actuarial liabilities over a period not to exceed 30 years. The City's annual,=i1PEB cost for the fiscal year ended September 30, 2011 was $36,016,664 for police retirees and $12,543,95 ; for non -police retirees. The City's annual OPEB cost' and net OPEB obligation for the fiscal year ended Se. 'ember 30, 2011 for both non -police and police retirees are as follows: Annual required contribution (ARC) Interest on Net OPEB Obligation (NOO) Adjustment to ARC Annual OPEB Cost Contributions made Increase in Net OPEB Obligation (NO NOO, beginning of year NOO, end of year on -Police Police Total 12,464,535 $ 35,732,002 $ 48,196,537 785,767 2,816,540 3,602,307 (706,351) (2,531,878) (3,238,229) 12,543,951. 36,016,664 48,560,615 (4,931,874) (9,182,367) (14,114,241) 7,612,077 ' 26,834,297 34,446,374 18,488,637 66,271,536 84,760,173 $ 26,100,714 $ 93,105,833 $ 119,206,547 Source: City of Miami CompreE'ensive Annual Financial Report for Fiscal Year Ended September 30, 2011, B-27 SUBSTITUTED The City's percentage of annual OPEB cost contributed to the plans, and the net r, EB obligations for the fiscal year. ended September 30, 2011 are as follows: Non -Police OPEB Employer Percentage of Annua ; wPEB Fiscal Year Annual OPEB Cost Contribution Cost Contribu F-d Net OPEB Obligation 2008 $10,786,386 $5,261,988 48.78°/ $5,524,398 2009 10,926,498 5,220,141 47.7•,' 11,230,755 2010 • 12,540,416 5,282,534 42.. 18,488,637 2011. 12,543,951 4,931,874 3''.32 26,100,714 Source: City of Miami.Other Post -Employment Benefits for City En . loyees Other Than Police Officers GASB Statement No. 45 Impact Study prepared by Gabriel Roeder Smi & Company on March 9, 2012, Police OPEB Annual Employer Percentage of Annual Net Fiscal Year OPEB Cost Contribution • OPEB Cost Contributed OPEB Obligation 2008 $26,578,385 $4,910,046 r 18.47% $21,668,339 2009. 26,959,115 6,314,600 23.42 42,312,854 2010 31,572,155 7,613,47y 24.11 66,271,536 2011 36,016,664 9,182,;F67 25.49 93,105,833 Source: City of Miami Other Post-Employme : Benefits for Police Officers GASB Statement No. 45 Impact Study prepared by Gabriel Roeder Smith & l'ompany on March 9, 2012. The 2011 contributions for Poi ,'e and Non -Police Retiree plans represented 25.49% and 39.32%, respectively, of the annual required c•:' tributions. B-28. SUBSTITUTED The following table illustrates how the Net OPEB Obligation and the Annual OPEB Co are expected to grow over the next 10 years assuming no advance -funding, The projections in the tabare made in a manner so as to simulate an open group forecast, that is, they approximate what forecast ;ould produce if it included the effect of new hires after the valuation date. Non -Police OPEB (in millions) Current Net Annual N a'` Net OPEB Fiscal Year Annual OPEB Cost Employer Subsidy OPEB Sho fall Obligation 2011 $ 13.2 $ 5.0 $ 8. $ 26.7 2012 14.1 5,2 1;:8 35.5 2013 14.7 5.9 8,8 44.4 2014 15.9 6.4 9.5 55.9 2015 16.6 6,9 9.7 63,6 2016 17.9 7.3 10.6 74.2 2017 18,6 7.7 10.9 85.1 2018 20.2 8.1 12,1 97.2 2019 20.8 8.5 12.3 109.4 2020 22.6 8.9 13.7 123.2 Source: City of Miami Other Post -Employment Benefits for ° ity Employees Other 'Than Police Officers Actuarial Valuation Report for Year Ending September 30, 2010 prep.,;'ed by Gabriel Roeder Smith & Company. Po. `ce OPEB 1 millions) Annual /Current Net Annual Net Net Fiscal Year OPEB Cost ''m.loyer Subsidy OPEB Shortfall OPEB Obligation 2011 $ 33.1 $ 8.8 $ 24.3 $ 90.6 2012 35.8 10,0 25,8 116.4 2013 37,4 11.3 26.1 142.5 2014 40.8 , 12.5 28.3 170.7 2015 42.4 13.7 28.6 199.4 2016 46. 15.0 31.2 230.6 2017 4 '7 1.6.2 31.6 262.1 2018 y 2.1 17.6 34,5 296.6 2019 53.5 19.0 34.5 331.1 2020 58,6 20,5 38.1 369.3 Source: City of Miami 0r er Post -Employment Benefits for Police Officers Actuarial Valuation Report for Year Ending. September 30, 2010 prs:'.ared by Gabriel Roeder Smith & Company. B-29 SUBSTITUTED The following tables are the OPEB funding progress. Non -Police OPEB (in millions) Actuarial UAAL as Actual Actuarial Accrued Unfunded Percent of Valuation .Value of Liability AAL ;�overed Annual Date Assets (AAL) (UAAL) Funded Ratio Payroll Payroll .(October 1) (a) (b) (b) — (a) (a)/(b) (c) [(b) - (a)]/(c)l 2006 $ 0 $ 146.8 $ 146.8 0.00 $ 129.9 113.02% 2008(2) 0 148,7 148.7 0.00 170.8 87.08 2008(1) 0 146.6 146.6 0.0 185.1 79.19 Source: City of Miami Other Post -Employment Benefits for City Employee `Sther Than Police Officers GASB Statement No, 45 Impact Study prepared by Gabriel Roeder Smith & Company o ; arch 9, 2012. (1) After reflecting changes in assumptions and retirement. eligibility °visions. (2) Before reflecting changes. olice OPEB (in millions) Actuarial UAAL as Actual Actuarial Accrued Unfunded Percent of Valuation Value of Liability .,' AAL Funded. Covered Annual Date Assets (AAL) r (UAAL) Ration Payroll Payroll (October 1) (a) b (b) — (a) (a)/(b) (c) 1(b) - (a)1/(c)1 2006 $ 0 $ 3 .5 $333.5 0.00$ $57.6 579.06% 2008A-A 0 3.1 373.1 0,00 71.8 519.76 2008O 0 ;'`394.1 394.1 0.00 72.7 542.03 Source: City of Miami Other Post- "ployment Benefits for Police Officers GASB Statement No. 45 Impact Study prepared by Gabriel Roeder Smith & Company on M.,r'ch 9, 2012. (1) After reflecting changes in amptions and retirement eligibility provisions. (2) Before reflecting changes. SUBSTITUTED APPENDIX C. FORM OF THE RESOLUTION (7F) et. ADD PoJl A-bbP?'ioAl y GT Ty Nanr) s 5 ► o J) SUBSTITUTED APPENDIX D COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2011 CID 2 W c-t ttD Foe (3 SY\(.D . /41.- E .Ai o SUBSTITUTED APPENDIX E FORM OF BOND COUNSEL OPINION SUBSTITUTED [APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT] (T /3 S OaLsr£i) ktPow 0.e,DSitvG--) SUBSTITUTED [APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY] 0 Pt-sTi lr kPPn1 ea o3;iv & ) SUBSTITUTED APPENDIX H FORM OF INVESTOR LETTER m %s E. Cam ,p i i I Cclo p AI 6/ /1YG— A%JJ;1 I C.A.mAt.@c 7 &t ui r 7W SUBSTITUTED 1:12W-11111Mr IS E. e / t PbW 6-0 c. , APPENDIX I LITIGATION There is rio pending or, to the knowledge of the City, any threatened litigation agains the City of any nature whatsoever which in any way questions or affects the validity of the Series 20 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or e adoption of the Resolution, or the levy or collection of the non -Ad Valorem Revenues, Neither the creion, organization or existence, nor the title of the present members of the City Commission or other offiv-rs of the City is being contested. Certain Legal Proceedings and Asserted Claims The following are summaries of pending litigation or asserted cia;''is, of which the City is aware, having an exposure either (a) not caped by the limitations of s. 768.2/ ), F.S. (2012), i.e., $200,000 per person/$300,000 per incident; and (b) not covered by the availability o excess insurance purchased by the City to cover certain liabilities in excess of a $500,000 self -insured ret,r` tion. A. CIVIL LITIGATION General 1. Jose Acuna v. City of Miami;Miami-Dade Co my Circuit Court, Case No.: 07-6321 CA 06. Plaintiff is a police officer who alleges that he was forced to eer resign or face termination as a result of his involvement in a shooting in Coconut Grove where a gun t s allegedly planted on the scene to substantiate the shooting. Although the Plaintiff was indicted, he wa of convicted, The Plaintiff was acquitted on some charges and drew a hung jury on others, The federal p osecutors declined to continue their prosecution of the Plaintiff, but the Miami Police found just cause to erminate. Plaintiff seeks reinstatement, back pay and emoluments under the Whistle Blower statute, Th City prevailed on summary judgment, and the Plaintiff has appealed. At this time, the City cannot pred' t with certainty the final outcome of this lawsuit, 2, Armando Aguilar, on behal of all Bargaining Unit Members; Fraternal Order of Police, Class Action Grievance No.: 12-08. This is class action grievance filed by the Fraternal Order of Police ("FOP") alleging that the Collective Barga' ing Agreement ("CBA") ending September 30, 2012, provides that if, during the term of the contract the IA Local 587 receives an increase in wages or benefits higher than the FOP, the FOP would automatically b ntitled to the same additional wages and benefits, and that the IAFF received a retroactive increase in ages and benefits higher than the FOP, including but not limited to anniversary and longevity payme is that had been frozen in 2010 and 2011. Specifically, the FOP claims that the failure to give the FOP the 9. e compensation is a violation of past practice, and Articles 1, 4, 23 & 45 of the CBA. The FOP is seekingy6 be make whole by being provided with the compensation to all bargaining unit members, retroactive to October 1, 2010, equal to the higher wages and benefits provided to IAFF Local 587, including, but not limd to step and longevity raises from October 1, 2010 with interest, in excess of one million dollars. At this rime, the City cannot predict with certainty the final outcome of this lawsuit. 3. AP Group, Inc. v. City of Miami; Miami -Dade County Circuit Court, Case No.: 12-35085 CA 04. Plaintiff al 'ges that on May 23, 2005, it entered into a Horizontal Construction. A contract with the City to perform,: work on several projects over the course of several years, including the US-1 Wall Replacement Poject and the Belle Meade Storm Sewer Project Phase II, Plaintiff further alleges that it fully performed i, contractual obligations, but the City failed, despite prior demand, to pay the Plaintiff $351,965,5: for its work on the US-1 Wall Replacement Project and $2,215,080,33 for its work on the Belle Meade S +rm Sewer Project, for a total of $2,567,045.91. This lawsuit is relatively new and is in the pleadings stage. ; t this time, the City cannot predict with certainty the final outcome of this lawsuit. I - 1 SUBSTITUTED 4, Chalks Airlines, Inc. v. Miami Sports and Exhibition Authority and the City o Miami Miami -Dade County Circuit Court, Case No.: 07-30071 CA 25. Plaintiff, a MSEA sub -tenant Watson Island (the City owns the property and leases it to MSEA), claims that MSEA and the City hav mproperly terminated its sub -lease, and is requesting a declaratory judgment to that effect. MSEA was gr ted summary judgment by Judge Adrian on the issue of a breach of the sub -lease based on unpaid fede::1 tax liens, and later, in December 2010, Final Judgment. Judge Adrian was replaced in the Division by J , ge Butchko, who reconsidered the "finality" of the order and set the Final Judgment aside. MSEA appealed the successor judge's reconsideration, but the 3rd DCA affirmed. A second successor judge has n. " been assigned to the Division (Judge Cueto), and, accordingly, MSEA will again be moving for entry of "'nal Judgment, based on the earlier summary judgment on the issue of the non-payment of federal tax 1i- s, which order remains in place. The case is set for trial in February, 2013. The City has an exposure for a 'orneys fees, At this time, the City cannot predict with certainty the final outcome of this lawsuit. 5. Jorge Fernandez v. City of Miami; Miami -Dade County ,. 'rcuit Court, Case No. 08-17486 CA 13, The former City Attorney brought suit in State Court alleging brch of contract, seeking payment of severance benefits and accumulated leave balances (sick and vacatio which were denied upon his forced resignation as part of a plea deal. The City asserted a counterclai equesting damages for excessive travel and reimbursements for meals unrelated to City business. The C y's potential exposure exceeded $200,000. This case was assigned to outside conflict counsel. The case w tried to the Court which resulted in a finding against the former City Attorney, and in favor of the City on its counterclaim, in the amount of not less than $3,000, which may entitle the City to an award of its attorn 's fees, The Plaintiff has appealed. At this time, the City cannot predict with certainty the final outcor- f this lawsuit. 6 . Fraternal Order of Police, Miami L r, • ge No. 20 and Alfredo Vega v. City of Miami, et al.; Miami -Dade County Circuit Court, Case No.: 98-7,.0 CA 27. This lawsuit, brought by the police union, seeks promotions to the rank of sergeant for certain ;�'f its membership retroactive to 1994, with back pay and emoluments. The testing company, who ad ; nistered the promotional examination, has been joined as a party but severed from the present proceeds °bs, so the court could first address only liability. A prior action (Manning, et al, v. City of Miami), involvin • , 1e same examination, but a different group of Plaintiffs, resulted in a judgment being entered against the ity. The Manning jury determined that the exam did not comply with the requirements of the Civil Se r' ice Rules. This case was tried to the Court in 2007, with the same result. The parties are now in the R! mages phase. The Court has ruled in the City's favor regarding the identity of the Plaintiffs and foun. hat FOP did not have standing to seek relief for back pay, thereby leaving seven (7) individuals as Plaintif :'. However, another individual has now been allowed to intervene creating the potential for other FOP m bers to intervene. The Court has ordered the parties back to mediation. The City's exposure exceeds $1 rr' illion. At this time, the City cannot predict with certainty the final outcome of this Iawsuit. 7. Frate ' al Order of Police (FOP) v. City of Miami; Federal Mediation and Conciliation Service, Case No.: 0' 1902-60467-3 Claim No.: NDA. This is a labor arbitration, filed as a grievance, by the Fraternal Order o olice ("FOP"). The Union alleges the City failed to pay police officers wage increases due under collectivargaining agreement ("CBA"). The City faces potential exposure for back wages. At this time, the City annot predict with certainty the final outcome of this lawsuit. 8.,' In re The Fraternal Order of Police v. The City of Miami FMCS; Arbitration Case No.: 12- 50509-3 rn March 5, 2010, the FOP brought a class action grievance on behalf of five (5) police officers who were volved in off -duty injuries or illnesses and were denied light duty work after July 17, 2007. These offi•-rs had previously been included in a grievance filed by Officer Andrew Markowitz, but were denied a , remedies by the Circuit Court who ruled that a class action had not been properly certified and they were I - 2 SUBSTITUTED not parties to the Markowitz grievance. ,The Judge's ruling was affirmed by the Third District .urt of Appeals. The officers are seeking the remedies that were previously denied by the Court. One oft, e officers in this grievance resigned from the City over three (3) years ago; if she were to be reinstated as a ,=suit of this arbitration, the City faces a potential exposure for back wages. At this time, the City canno predict with certainty the final outcome of this lawsuit. 9 . Barbara Gomez v. City of Miami; Miami -Dade County Circuit Court, Ca 27. This is a breach of contract claim filed by the former Director of Community Develo reinstatement and back pay for the remaining time she needs to qualify for her exposure for back wages. At this time, the City cannot predict with certainty lawsuit. e No.: 08-24348 CA ment. She is seeking ensign. The City has e final outcome of this 10 . Cheryl K. Haigley v. City of Miami; Miami -Dade County C cult Court, Case No,: 11-01364 CA 05. Plaintiff, on behalf of herself and the class of all others si ilarly situated, challenges the constitutionality of City of Miami Ordinance No. 11007, which, since Jan ry 1,1993, imposes a $100,00 "non- resident surcharge" upon all,non-City of Miami residents who receive . ergency medical services. Plaintiff seeks a refund of all amounts collected from 2008 forward, and the, try of an order requiring the City to cease the collection of the surcharge, costs and attorney'sfees. The,' ity's motion to dismiss was denied. The case is currently in discovery. The City s exposure currently, approximates $120,000, and increases by approximately another $30,000 per year. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 11. Miguel Hervis v. City of Miami; Miam/ade County Equal Opp. Board, Case No. 07-0809- 182. This is a claim of discrimination under the Ameri ains with Disabilities Act ("ADA"), The Miami -Dade County Equal Opportunity Board found that the Cit 'discriminated against the claimant, a police lieutenant, based upon his disability, Parkinson's disease, an awarded inter cilia back pay and attorney's fees. The City appealed to the 3rd DCA, who reversed and renldnded fora new hearing. No date has been set for the new hear:,-- At this time, the City cannot predict ithcertainty the final outcome of this Iawsuit. 12. Victor Igwe vs. City of Miami; Miami -•Dade County Circuit Court, Case No.: 11-35238 CA 05, Plaintiff, the former Independent ditor of the City, claims that he suffered "adverse employment action", i.e., that his four (4) year cont, ct was not renewed, as a result of his "protected behavior" under s. 112.3187(7), F.S., to wit: issuing audi reports critical of the City financial decisions, his cooperation with an SEC in an investigation of the City sand in other respects, resulting in lost wages, employee benefits and other damages. The Plaintiff seeks a jgment for back wages and compensatory damages, an injunction requiring the City to reinstate him, ands attorneys fees and costs. The City answered the Complaint with discovery ongoing. At this time, the C, y cannot predict with certainty the final outcome of this lawsuit. � 13. Bernard, CA 25. Plaintiff, a fou 2009, when Miguel E) employment decis and was not con and an unlaw ohnson v. City of Miami; Miami -Dade County Circuit Court, Case No.: 12-21565 een (14) year veteran of the Miami Police Department alleges that in November of posito became the Chief of Police, and who was the final decision -maker regarding any n within the MPD, he was demoted from a Commander position to a Lieutenant position, dered for reassignment because of his race, i.e., Black. Plaintiff further alleges retaliation, I pattern and practice of discrimination by refusing to consider Black officers for so-called "White" Pos•t'ons, Plaintiff is proceeding under the Florida Civil Rights Act, s. 760.01. et seq., F.S. At this time, the ty cannot predict with certainty the final outcome of this lawsuit. 14. Kwaku Designs International, Inc., Harlan Woodard and Nathaniel Styles v. Michelle Spe e-Jones, Leroy Jones, and Lillian Biondet; Miami -Dade County Circuit Court, Case No.:11-34073 CA 05 laintiffs allege that they created a project called Osun's Village, which was a part of a larger initiative I - 3 SUBSTITUTED called the African Caribbean. Cultural Arts Corridor. Plaintiffs further allege that they w e able to obtain an allocation of funding in excess of $500,000 from the City of Miami for the project. In ad ion, Plaintiffs allege that Michelle Spence -Jones, Leroy Jones and Lillian Blondet, interfered with the laintiffs' contractual arrangements thereby committing a tortuous interference with Plaintiffs' rights. Piatiffs seek damages din excess of $100,000. The case is in the pleading stage. At this time, the City cannot redict with certainty the final outcome of this lawsuit. 15. City of Miami v. Little River Club; Miami -Dade County Circ it Court, Case no, 11-24889 CA 15. The City filed suit seeking injunctive relief based on two Code Enfor••ment Board orders finding the Little River Club ("LRC") guilty of using two properties as a parking 1• in violation of the City's Zoning Ordinance, Miami 21. The LRC asserted a counterclaim against the Cit for inverse condemnation, alleging that Miami 21 has denied the LRC of all beneficial and productive use f its properties and the prohibited use of the properties has caused a loss of income to the LRC's business. %s part of its counterclaim, the LRC also seeks attorney's fees. The alleged loss of value and income, as wel s the claim of attorney's fees, presents an exposure to the City. At this time, the City cannot predict with c tainty the final outcome of this lawsuit. At this time, the City cannot predict with certainty the final outc e of this lawsuit. 16. Jeffrey Locke, et al. v. City of Miami; Mia .' -Dade County Circuit Court, Case No.: 00-10487 CA 09. This is an action initially brought by numerous P1. `ntiffs challenging the City's decision to declare the Plaintiffs ineligible to sit for a promotional examination Since then, the Court struck the claims of most of the Plaintiffs, now leaving only four (4). The Judge h- denied the City's Motion for Summary Judgment argument; however the only remaining count is for each of Civil Service Rules. The potential exposure in this case exceeds $200,000, for back wages and be -fits. At this time, the City cannot predict with certainty 'the final outcome of this lawsuit. 17. In the matter of Glenn Ma,'osLCivil Service Board, Case No.: 10-21G. Mr. Marcos was terminated from his position as Purchasin• anager for the City on August 5, 2010. He alleges that he was terminated because he voiced oral and ritten complaints regarding unlawful financial practices by the Finance Department, specifically the di 'ribution and/or allocation of funds from restricted accounts to the General Fund. Mr. Marcos amended s complaint on May 15, 2012, to include a variety of other allegations. Mr. Marcos requested a hearing and r Section 40-128(b) of the City Code, and the hearing was conducted on October 30, 2012. The Board foun.. hat facts did not warrant a whistleblower remedy. Mr. Marcos can now proceed to Court. 18. Milan Inves ent Group, Inc. v. City of Miami, et al. (Milan I); Miami -Dade County Circuit Court, Case No.: 08-77800 _A 08. This is a putative class action lawsuit to invalidate the Downtown Development Authority a d obtain refunds of all ad valorem taxes paid to the DDA on behalf of the named Plaintiff and the putativ class dating back to 1965. The City filed a Motion to Dismiss and/or Strike. The Motion challenged, in: er alia, the Plaintiff's ability to bring this case as a class action given the state's jurisdictional requir_ ents for ad valorem tax suits which were not followed by the putative class members. The other Defendants joined in the City's Motion. The trial court granted the Motions to Dismiss, and the case was appeale. The Court of Appeal affirmed in part and reserved in part. The appellate court ruled that the all Plaintiff • claims were barred except to the extent that they present a challenge to the current years' tax assessment. ! le Plaintiff filed an amended Complaint seeking a refund of the tax assessments for 2009 & 2010. The ty filed another Motion to Dismiss, challenging the merits of the amended Complaint and the Plaintiffs •ility to bring this case as a class action given the state's jurisdictional requirements for ad valorem tax suit where were not followed by the putative class members. The Court denied the City's Motion. Dismi the amended Complaint. The City has filed an Answer to the Amended Complaint and Affirmative Def• ses. At this time, the City cannot predict with certainty the final outcome of this lawsuit. I-4' SUBSTITUTED 19. Milan Investment Group, Inc. v. City of Miami, et al. (Milan II); Miami -Dade County Circuit Court, Case No.: 11-40596 CA 25. Milan filed this second suit as a putative class . ion lawsuit to obtain refunds of ad valorem taxes paid to the DDA on behalf of itself as the named Plainti : `and the putative class for the tax year 2011. The City filed a Motion to Dismiss, The lawsuit is also dire -d against the City, the DDA, the tax collector, and the property appraiser, seeking declaratory judg► ent, challenging the authority to levy and collect a half -mill ad valorem tax on property within the DD; , seeking refunds, and claiming damages under 42 U.S.C. s. 1983 for violations of equal protection, depri tons of due process, and unconstitutional takings. The Motion challenged, inter alia, the merits and Plai . ff's ability to bring this case as a class action given the state's jurisdictional requirements for ad valorem tax .uits which were not followed by the putative class members. The other Defendants joined in the City's ►,'otion. Due to the denial of the City's Motion to Dismiss the Amended Complaint in Milan I, the City a ndoned the Motion to Dismiss in this case, and filed its Answer and Affirmative Defenses. At this time, t F e City cannot predict with certainty the final outcome of this lawsuit. 20. Scotty's Landing, LLC., and Grove Key Marin: LLC vs. Fernando; Casamayor, as Tax Collector of Miami -Dade County vs. City of Miami; Miami-D e County Circuit Court, Case No.: 12-37171 CA 10. This is a dispute between Grove Key Marina, LLC (a t-.�`ant of the City and the operator of a marina on City -owned land), its manager, Scotty's Landing LLC (a res ,'urant operator)(collectively the "Plaintiffs"), and the County Tax Collector concerning the alleged wrong attempt by the Tax Collector to collect ad valorem real property taxes, assessed against the property s ce 1995, but to date unpaid and delinquent, by threatening to revoke their occupational licenses an corporate charters. Plaintiffs contend that since the property is not owned by the them, ad valorem real . operty taxes have never been assessed against them, the property is not on the tax rolls in either of their n..' es, and the tax notice has never been sent to them, the Tax Collector does not have the legal authority to lect the delinquent ad valorem real property taxes from the Plaintiffs. They further allege that the Gro Key Marina's lease with the City does not contain a "pass - through" with respect to ad valorem taxes, d thus, as between Grove Key Marina and the City, Grove Key Marina does not have the contractual obl' - ation to pay the ad valorem taxes assessed against the property. The alleged amount of ad valorem taxes in d'pute is $3,041,214.51. Plaintiffs are seeking a declaratory judgment that the Tax Collector has no author': to collect the ad valorem taxes from them, and that the taxpayer who actually owes the delinquent taxes the City. They further seek injunctive relief to prohibit the Tax Collector from taking the actions threaten::. In turn, the Tax Collector has sued the City via a Third Party Complaint, seeking a determination as to rich party, the City, the Lessee or both, is/are responsible for payment of the ad valorem taxes for tax years 95 through 2011, and an order requiring such party or parties to pay the taxes due and owing. If the C rt were to find the City responsible, approximately 1/3 of the tax due (or $1 million) would be reture -d to the City as the municipal portion. At this time, the City cannot predict with certainty the final out :.me of this lawsuit. 21. M ie Severe v. City of Miami; Miami -Dade County Circuit Court, Case No.: 10-49932 CA 10. Plaintiff was ,' employee of the City, assigned to the Auditor General's Office, with the position of Senior Staff Auditor, nder the supervision of Victor Igwe, Auditor General. Plaintiff allegedly filed a workers' compensatio claim on November 2, 2006, and then advised her supervisor of her anxiety and depression diagnosis. ^' ortly thereafter, she alleges that her employment was terminated by her supervisor. Thereafter, Plaintiff F` ed a charge of discrimination with the FCHR and the EEOC, and was not hired for a position in the Budgeepartment as an Accountant/Budget Analyst. Plaintiff alleges violations of the FORA because of an alle;; ' d disability discrimination termination, perceived disability discrimination, retaliation, failure to hire, a violation of the Workers Compensation Law. At this time, the City cannot predict with certainty the final tcome of this lawsuit. I-5 SUBSTITUTED 22, The Sieger Suarez Architectural Partnership, Inc. v. Flagstone Island Gar. ns, LLC, and the City of Miami; Miami -Dade County Circuit Court, Case No.: 10-17467 CA 08. Sieger -Suarez Architectural Partnership, Inc. ("Sieger Suarez") alleges that it was hired by developer`Flagstone Island Gardens, LLC ("Flagstone") to render architectural services for the Island Gardens Pr ect on City -owned property on Watson Island. Plaintiff further alleges that it has not been paid $1,7 7,990.79 for services provided. Plaintiff is requesting declaratory relief that the "Agreement to Enter Into round Lease" between the City and Flagstone, without conditions precedent having been met for a u ound lease but with an unexecuted "form of Ground lease" attached thereto, nonetheless constitutes a va 'd ground lease and interest in real property upon which it's claim can be enforced, that Flagstone is an "o er" as that term is defined in s, 713.01(23), F.S., and that its claim of lien does not apply to the City's fee si ,'.le interest in the Property, and is therefore not invalid, Plaintiff also asserts claims for breach of contract d foreclosure of construction lien against Flagstone; unjust enrichment against both Flagstone and the Cit , and an equitable Iien against both Flagstone and the City. The parties have selected a mediator, but no m diation date has been scheduled yet. At this time, the City cannot predict with certainty the final outcom of this lawsuit. 23. Robert Suarez, et al. v. City of Miami; Miami-►ade County Circuit Court, Case No,: 06- 06973 CA 20.. Four Police employees assigned as detectives to t Economic Crimes Unit have brought suit in State Court alleging violation of the Florida Public Sector istleblower Act, s. 112,3187. The detectives allege that they were requested to investigate an alleged ide ity theft outside the City. The detectives allege that they voiced an objection to conducting the investigion, and then closed the case approximately 10 months later. They were subsequently transferred out o : the unit, and they claim the transfer was retaliatory due to their asserted objection. The detectives are seeking to be reinstated to their previous position, reimbursement of fringe benefits and. Lost wages, d seniority rights, compensatory damages for non- economic damages, and attorney's fees. The case ss in the discovery phase. The City's potential exposure could exceed $500,000. At this time, the City ca , ot predict with certainty the final outcome of this lawsuit. B. CIVIL LITIGATION - Lab o' Liti ation related to "Financial Ur • enc The Iegal challenges listed below elate to modifications made to the various union contracts by the City Commission's invocation of the "fi :ncial urgency" provisions of State law. Such modifications resulted inbudgetary reductions for wages, pensions, and health care costs in a total aggregate amount of approximately $76,943,905, In all cumstances, the unions are requesting the return of their respective budgetary reduction amounts res, sting from the modifications. The City cannot predict at this time the outcome of these legal challenga.. See "LIABILITIES OF THE CITY -Financial Urgency" herein. 1, In the matte ; of Armando Aguilar on behalf of himself and all Bargaining Unit Members; Fraternal Order of Police, : ss Action, Grievance No. 10-012. This is a labor arbitration filed as a grievance filed by Police Union, Fraternal Order of Police, claiming that the City violated the Collective Bargaining Agreement ("CBA") an past practice. Armando Aguilar claims the City breached the CBA by reducing wages, suspending b efits, altering supplemental pays, freezing step and longevity raises, and altering pension benefits. e Union seeks reinstatement of modifications to pension, wages, and health benefits pursuant to the C j 's financial urgency under s. 447.4095. An arbitration hearing date is pending. At this time, the City c• ot predict with certainty the final outcome of this matter. 2. Fraternal Order of Police, Walter E. Headley, Jr., Miami Lodge No. 20 v: City of Miami, Florida; M. mi-Dade .County Circuit Court, Case No.: 10-48397 CA 02. This is an action for declaratory judginen nd injunctive relief claiming that an executive session held on August 31, 2010, was conducted in violati.; of the Sunshine law, s. 286.011, F.S,, and seeking to declare as void ab initio any decisions made or predi -ed on the shade meeting, including modifications to the collective bargaining agreement. The fiscal I - 6 SUBSTITUTED impact to the City is in the millions of dollars. The case is set for trial beginning November 5, 20. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 3. Fraternal Order of Police (FOP) v. City of Miami and State of Florida; Mia -Dade County Circuit Court, Case No.: 10-4791.8 CA 01. The Union sued the City based on the City's, 'notation of the Financial: Urgency Statute, section 447.4095, F.S. The Second Amended Complaint .'allenges the facial constitutionality of s. 447,4095, F.S., by claiming that the statute unconstitutionall , `impairs the right to collectively bargain; that the statute is unconstitutionally vague; that the statute unconstitutionally impairs the obligation of contract; that the statute violates due process; and that the statut denied equal protection. The City has answered the Second Amended Complaint. At this time, the City : nnot predict with certainty the final outcome of this lawsuit. 4. Fraternal Order of Police, Walter E. Headley, Jr., Miam Florida District Court of Appeal, 1st District, Case No.: 1D12-2116, Thi Public Employees Relations Commission ("PERC") by the FOP Mia "Union") claiming that the City committed an unfair labor practice urgency pursuant to s, 447.4095, F.S. The Union alleged that i ("CBA") with the City, effective through September 30, 2010, tha successor agreement, and that the parties held several bargai during the several bargaining sessions, the City never'advis economic items expeditiously, or that the City intende process set forth in s. 447.4095, F,S, The Union contends the terms of an existing agreement. The Union furthe for a successor collective bargaining agreement, on or pensions, but on August 16, 2010, the City ad impact of the financial urgency, and any actio existed. The Union then alleged that on Aug and conditions of employment before Further, the Union alleged that, although closed door unnoticed "shade" meetin the failure of the City to have any dis bargaining in violation of s. 447. conditions of employment befor responding to a request for re below submitted a recomm 447.4095, F.S,, and that the Order affirming the Reco City correctly invoked modification of the a At this time, the Ci odge No. 20 v. City of Miami; is an appeal from a decision of the Lodge 20 (hereinafter "FOP" or the a result of its invocation of a financial aas a Collective Bargaining Agreement he parties exchanged initial proposals for a ng sessions. The Union further alleged that it that there was a need to reach settlement on o declare a "financial urgency" and invoke the at s. 447.4095, F.S., may only be invoked to modify Ileged that although the parties continued to bargain ugust 9 and 12, 2010, the parties never discussed wages sed the PERC that it had engaged in negotiations on the necessitated by the financial urgency, and that a dispute st 31, 2010, the City unilaterally took action to alter the terms ing impasse, in violation of ss. 447.501(1)(a) and (1)(c), F.S. ie changes were not discussed with them, they were discussed in a onducted in violation of s. 447.605, F.S. The Union contended that ssions with the Union on these matters constituted bad faith or surface 1(1)(a), F.S. It also asserted that by unilaterally altering terms and ompletion of the impasse procedure set forth in s. 447.403, F.S., and by not rds, the City violated ss, 447.501(1)(a) and (1)(c), F.S. The Hearing Officer ded order on July 1, 2011, finding that the City was in compliance with s. ity did not commit an unfair labor practice. The Commission issued its Final mended Order and finding that a financial urgency actually existed and that the 447,4095, demonstrating a compelling government interest requiring immediate eement with the FOP, The Union has appealed to the First District Court of Appeals. cannot predict with certainty the final outcome of this lawsuit. 5. raternal Order of Police v. City of Miami; Federal Mediation and Conciliation Service, Case No.:.1.10131-0,, 459-3. This is a labor arbitration, filed as a grievance, by the Fraternal Order of Police ("FOP"). The union eges the City violated the collective bargaining agreement ("CBA") by declaring a "financial urgency" nd demanding that the union participate in impact bargaining over modifications of the CBA. A hearin•, date is pending. The City's potential exposure is well in excess of $100,000. At this time, the City canna predict with certainty the final outcome of this lawsuit. I - 7 SUBSTITUTED 6. Miami Association of Firefighters Local 587 of the International Ass Firefighters, of Miami, Florida v. City of Miami; Miami -Dade County Circuit Court, Case No. 10. The IAF alleges that it was a party to a Collective Bargaining Agreement ("CBA") with t through September 30, 2011, that on April 30, 2010, the City invoked s. 447.4095, F,S., clai urgency", and insisted on pursuing negotiations to modify the existing agreement, and unilaterally took action to modify wages, insurance, pension benefits, and other bone alleges that the City took hostile legislative actions as a result of a "shade" meeting o failed to comply with s, 286.011, F.S., the Sunshine Law, The IAF claims that the un without complying with ss. 447.4095 and 447.403, F.S., constituted an abridgeme bargain in violation of Art. I, Section 6 of the Florida Constitution, impaired rights in violation of Art. 1, Section 10 of the Florida Constitution, and depriv without due process of law in violation of Art I, Section 9 of the Florida Co that the Cityviolated s. 286.011, F.S., by conducting a shade meeting w forth in s. 447.605, F.S., since the meeting was not conducted relative to ' purposes of deciding what action would be taken to resolve the "fina attendance, and by allowing the Mayor to attend, since he is not the body. The IAF seeks a declaration that this August 30, 2010 actio declared unconstitutionaland that it be enjoined as null and t PERC preemption was heard and the trial court dismissed th 3rd DCA, who affirmed the order of dismissal. At this tim outcome of this lawsuit. 7. International Association of Firefig of Appeal, 3rd Dist., Case No.: 3D12-1256. This is a Commission ("PERC")(Case No.: CA-2010-119), by committed an unfair labor practice. Specifica Agreement ("CBA") with the City, effective thr by the Union, the CBA was extended throug not to fund any year of the CBA except in t as, "the City must demonstrate that there fund the agreement for that year or y agreeing to the extension, on April "financial urgency," and on Augus benefits. The Union asserts that t in the CBA. Further, the Unio discussed in a closed door, u that the City failed to bang not providing the Union complete the process benefits (pension an July 7, 2011 and the City did not com entered its Fina City correctl immediate District C Fire iation of 0-49873 CA City binding ing a "financial aereafter, the City ts. The IAF further xecutive session" that ateral action of the City, of the right to collectively le IAF's members' contract d the IAF's members' property titution. Further, the IAF claims out meeting any exemptions set ollective bargaining", but rather for 'al urgency," the City Manager was in lief executive officer, nor the legislative of the City declaring financial urgency be d. The City's Motion to Dismiss based on entire case. The Union took an appeal to the the City cannot predict with certainty the final ers, Local 587 v. City of Miami; Florida District Court ppeal of a decision of the Public Employees Relations he IAF Local 587 (hereinafter "Union") claiming the City y, the union asserts that it had a Collective Bargaining ugh October 1, 2010, that in 2010, in exchange for concessions eptember 30, 2011, and that the City expressly waived its right e case of "true fiscal emergency", defined in the CBA (Article 18) s no other reasonable alternative means of appropriating monies to rs". The Union further alleged that less than six (6) months after , 2010, the City invoked the process under s, 447,4095, F.S., claiming 1, 2010, unilaterally took action to modify wages, insurance and pension e invocation of s. 447.4095, F.S., was improper and was waived by the City alleges that, prior to their enactment, the modifications to the CBA were oticed shade meeting in violation of s. 447.605, F.S. Finally, the Union asserted n collectively and in good faith by enacting the changes of August 31, 2010, by ith notice in advance, and by failing to discuss, bargain over, impact bargain, or s forth in ss. 447.403 and/or 447.4095, F.S. The Union seeks reinstatement of all vages) modified by the City Commission. A Recommended Order was received on ity was found in compliance with s. 447,4095, F.S. The Hearing Officer found that the t an unfair labor practice. On April 20, 2012, PERC affirmed the Recommended Order and der in favor of the City. PERC found that a financial urgency actually existed and that the invoked s. 447,4095, F.S., demonstrating a compelling governmental interest requiring odification of the agreement with the Union. The Union has filed an appeal with the Third rt of Appeal. At this time, the City cannot predict with certainty the final outcome of this lawsuit. 8. Miami Association of Firefighters Local 587 of the International Association of ghters, of Miami, Florida v. City of Miami; Miami -Dade County Circuit Court, Case No.: 11-28302 CA I - 8 SUBSTITUTED 06. The Firefighters Union alleges that it is a signatory to a Collective Bargaining Agreement City, effective October 1, 2009, through June 30, 2012, which contains a provision for arbitration. A grievance concerning the City's alleged failure to abide by the term emergency" funding provision of the CBA, found in Section 18.18, was submitted to Arbitration Association, Case No.: 32-390-00428-10), resulting in an award on June City. The Union alleges that the arbitrator exceeded his power defined and limited and modifying the CBA by nullifying a provision of the contract in violation which provides, "The Arbitrator shall have no authority to change, amend, add alter or supplement this Agreement or any part thereof or any amendment th seeks to vacate the arbitration award and seeks to have the contract enforce cannot predict with certainty the final outcome of this lawsuit. C. WORKERS' COMPENSATION BA") with the nal and binding of the "true fiscal itration (American , 2011, in favor of the y the CBA, by amending Section 15.7 of the CBA, subtract from or otherwise eto," Accordingly, the Union s written. At this time, the City Only those Workers' Compensation claims which are n covered by the availability of excess insurance purchased by the City to cover certain liabilities in exc- `s of a $500,000 self -insured retention are included herein: 1. Claimant: Randall Cason, v. City of Mia OJCC Case No.: 83-0001666AMK Claim No.: 000757-001087-WC-01 Claimant is a former City police officer who % s involved in on -the job accidents on May 2,1982 and May 18, 1983. He is receiving permanent total disc ,`ility benefits and has filed a recent petition for benefits seeking medical benefits. Those benefits will be ► ovided but there is a claim for attorney's fees and costs. The potential exposure for both the benefits and / e attorney's fees and costs may exceed be substantial if the City does not prevail. At this time, the City c. inot predict with certainty the final outcome of this lawsuit. 2. Claimant: Calvin Cleare OJCC Case No.: 07-017 Claim No.: 000757-05- . City of Miami 8HHH & 11-019913HHH 51-WC-01 The claimant is a solid wast collector for the City of Miami since November 24,1999, who alleged he was injured on on-the-job on July 2002, March 31, 2005, June 14, 2006, May 31, 2007, July 7, 2008, June 1, 2009, and November 9, 2010, int ilia, as a consequence of multiple accidents of various kinds. The accidents have been accepted as compeable and benefits have been provided. In the past numerous petitions for benefits have been filed for ,a merous accidents and all have been resolved. Recently, a petition for benefits had been filed on the acci ent of November 9, 2010, and this office filed a motion to dismiss which was granted but the claimant, trough his attorney, has filed a motion to re -address the petition for benefits under the May 31, 2007 dated accident. The PFB seeks authorization of additional medical care for injuries sustained to similar ..dy parts under both dates of accident. The combination all the various accidents constitute a significt possible future exposure for the City of Miami. This is a complex claim and the City may have signific t exposure. At this time, the City cannot predict with certainty the final outcome of this lawsuit I - 9 SUBSTITUTED 3. Claimant: Alma Cortes v. City of Miami OJCC Case No.: 07-029688GCC Claim No.: 000757-001421-WC-01 Claimant is a 63 year old former police officer who alleged she was injured ;gin or about August 18, 1984, when she was arresting a subject, and a resulting scuffle led to on-the-job injues that were accepted as cornpensable. Presently, all petitions for benefits have been dismissed but the clai ,% remains open because the parties are considering global settlement. The claimant is receiving permanent, otal disability and, with very recent medical developments, the future exposure could be substantial. At tl .:�s time, the City cannot predict with certainty the final outcome of this lawsuit. 4. Claimant: Leonard Linardos v. City of Miami OJCC Case No.: 11-029646SMS Claim No.: 000757-059576-WC-01 Claimant is a City police officer who suffered an occup:�'onal disease under s. 112.18(1), F.S., on or about May 26, 2010. The claim was accepted as compens.le and the claimant did receive workers' compensation benefits. Recently, the claimant filed a petiti for benefits seeking medical and indemnity benefits. The potential exposure may be substantial regar<s` ess of whether the City prevails on the instant litigation. At this time, the City cannot predict with cer .,nty the final outcome of this lawsuit 5. Claimant: Alberto Pena v. City of a'iami OJCC Case No,: 03-014420SMS Claim No.: 000757-043237-WC- Claimant is a former City police office �'' ho suffered a condition covered under F.S. Section 112.18(1) on or about November 1, 2000. The occuponal disease involved hypertension at the time of the initial report of claim. The claim was accepted as;ompensable and the claimant did receive workers' compensation benefits. Recently, the claimant filed a cl'in for permanent total disability benefits, among other things, and the City has accepted the claimant's e'dement to said benefits; however, there are still issues concerning attorneys' fees and costs, as well as a ,ossible contribution claim against the State of Florida under s. 440.42, F.S. The potential exposure may substantial if the City does not prevail. At this time, the City cannot predict with certainty the final oome of this lawsuit. D. ASSERTED ! AIMS - General Except as noted herein, claims not yet in litigation, and currently being investigated by the Risk Management Departme r', are not included within this letter. 1. In re .'etroleum Products Corporation; Claim No.: 001721-EO-01. An environmental claim is presently being ass ted by the United States of America involving an alleged disposal by the City of Miami Fire Department' ,` ervice garage of 83,055 gallons of waste oil to Petroleum Products Corporation ("PPC') on November 25, '72. PPC allegedly operated as a processor and broker of waste oil at a site located in Hollywood, F;.rida, and, during its period of operation, disposed of sludges generated from the oil refining process in fined pits on the site. Contamination assessment and initial remedial activities undertaken by the Unite States Environmental Protection Agency ('EPA) and the State Department of Environmental Regulat',n ("DER") during the past ten (10) years indicate that the soils and groundwater at the site are signif'. antly contaminated by waste oil and other hazardous wastes. T-10 SUBSTITUTED Based on an invoice, allegedly documenting the City's involvement in this matter, the advised that it considers the City a generator of hazardous wastes at the site and, therefore, severally liable for the cleanup and recovery costs at the site. EPA's preliminary estimate for costs of remedial activities at the site is approximately $26 million dollars. It should be note 1999, the EPA offered the City a cle mi.nimus settlement offer of $344,109, however, the City r; Outside counsel has re-evaluated this matter for the City and estimated the City's potenti cleanup activities to be $154,960. This sum was calculated by multiplying the City's alloc within the Cooperating Parties Group ("CPG") - 0.596%0 - against what counsel fo Counsel") has advised is one possible worst case cost scenario to the CPG - $20 mi The City has joined the group of Potentially Responsible Parties ("P Consent Decree with EPA on the first phase of a three -phased approach to th known as Operable Unit 1, 2 and 3. Following the execution of the Consent completion of the remedial design at the site, and after further negotiatio PRPs has taken a very aggressive technical posture at the site. The reme product recovery (OU-3), but also aims to achieve significant flushin A has intly and collective that in April, )ected the offer. exposure for soil ed share of liability the CPG ("Common ion. e s), and has entered into a leanup of the site, generally ecree by all settling PRPs, and with EPA, the group of settling ial design addresses not only free f impacted soils (OU-2). At this time, the City cannot predict with certainty the fin outcome of this matter. E. ASSERTED CLAIMS - Burt . Harris Act Cla': ` s Except as noted herein, all claims listed below were et seq., F.S. The Burt J. Harris Act has been interpreted to h (4) year statute of limitation. See Russo Assoc., Inc. v. Ci 4th DCA 2006). Except for those claims listed below no 21, at the earliest, all claims arguably accrued for sta date of adoption of Ordinance 13114, also know latest, arguably accrued on January 28, 2010, the implementation of Miami 21. Whether involv claims, and formally denied each. 1. In re The Most Reveren Inc. The claimant is the legal title holde as the "Genesis Parcel", located at 367 under Section 70,001, F.S. (the "Bert the property due to the City's enac and ambiguous, purportedly di to attain the reasonable inves seeks compensation for the action, which it claims is a either the final outcome 2. In re Inc. The claimant is as the "LaSalle P under Section 7 the property and ambig to attain seeks c esented under the Burt J. Harris Act, ss. 70.001, e both a pre -suit notice requirement, and a four of Dania Beach Code Enf. Bd., 920 So.2d 716 (Fla. nvolving the adoption and implementation of Miami e of limitations purposes on October 22, 2009, upon the s Miami 21, the Miami Zoning Ordinance; and, at the to of adoption of Ordinance 13138, which extended date of g Miami 21 or not, the City has investigated each of these homas G. Wenski, Archbishop of the Archdiocese of Miami, f the property located Folio #01-4114-005-0061, commonly known outh Miami Avenue, Miami, Florida. The claimant presents a claim Harris Act"), alleging that it has suffered a loss in fair market value of ng of Miami 21 Zoning Code, which, because it is allegedly so confusing ctly restricts or limits the use of the property such that the owner is unable ent-backed expectation for the existing use of the property. The claimant ctual loss to fair market value of the real property caused by the government ss appraised at $6,600,000,00. At this time, the City cannot predict with certainty this claim, or whether it will ripen into litigation. he Most Reverend Thomas G. Wenski, Archbishop of the Archdiocese of Miami, legal title holder of the property located Folio #01- 4114-005-0051, commonly known el", located at 3601 South Miami Avenue, Miami, Florida. The claimant presents a claim .001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of e to the City's enacting of Miami 21 Zoning Code, which, because it is allegedly so confusing us, purportedly directly restricts or limits the use of the property such that the owner is unable e reasonable investment -backed expectation for the existing use of the property. The claimant pensation for the actual loss to fair market value of the real property caused by the government SUBSTITUTED action, which it claims is a loss appraised at $63,300,000.00. At this time, the City -`nnot predict with certainty either the final outcome of this claim, or whether itwill ripen into litigation 3. In re The Most Reverend Thomas G. Wenski, rchbishop of the Archdiocese of Miami, Inc. The claimant is the legal title holder of the property 1.,cated Folio #01- 4114-005- 0050, commonly known as the "Youth Center Parcel", located at 3333 South Mr.;Ai Avenue, Miami, Florida. The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Ac,'', alleging that it has suffered a loss in fair market value of the property due to the City's enacting of Miami Zoning Code, which, because it is allegedly so confusing and ambiguous, purportedly directly restrict., or limits the use of the property such that the owner is unable to attain the reasonable investment-backe.r''expectation for the existing use of the property. The claimant seeks compensation for the actual loss to i it market value of the real property caused by the government action, which it claims is a loss appraised $45,900,000.00. At this time, the City cannot predict with certainty either the final outcome of this clai or whether it will ripen into litigation. 4. In re The Most Reverend Thomas G. Wenski ,i rchbishop of the Archdiocese of Miami, Inc. The claimant is the Iegal title holder of the property locate Folio #01- 4114-005-0063, commonly known as the "Carroll Manor Parcel", located at 3667 South Miami enue, Miami, Florida. The claimant presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), 1leging that it has suffered a loss in fair market value of the property due to the City's enacting of Mia ;'21 Zoning Code, which, because it is allegedly so confusing and ambiguous, purportedly directly restri or limits the use of the property such that the owner is unable to attain the reasonable investment-backe : expectation for the existing use of the property. The claimant seeks compensation for the actual loss fair market value of the real property caused by the government action, which it claims is a loss appred at $22,500,000,00, At this time, the City cannot predict with certainty either the final outcome of this im, or whether it will ripen into litigation.. 5. In re Aqua -Vista Holding, .' c. The claimant is the legal title holder of the property located at 7610 Biscayne Boulevard, Miami, Florida. e claimant presents a claim under Section 70,001, F.S. (the "Bert J. Harris Act"), alleging that it has suff ' ed a loss in fair market value of the property due to the City's enacting of Ordinance 13116, Section ,'which purportedly imposed a height limitation on the property by establishing a 35 foot height limitativ , and thus inordinately burdening the property. The claimant seeks compensation for the actual loss to °'air market value of the real property caused by the government action, which it claims is a loss appraise at $828,000.00. At this time, the City cannot predict with certainty either the final outcome of this claim, r whether it will ripen into litigation. 6. In re Chary° N. Allen and Susan D. Allen. The claimants are the legal title holder of the property located at 7111 B. cayne Boulevard, Miami, Florida. The claimants present a claim under Section 70.001, F.S. (the "Bert J. arris Act"), alleging that they have suffered a loss in fair market value of the property due to the C`'y's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the pro, erty by establishing a 35 foot height limitation, and thus inordinately burdening the property. The clai nts seek compensation for the actual loss to fair market value of the real property caused by the governme action, which they claim is a loss appraised at $660,000.00. At this time, the City cannot predict with ce ainty either the final outcome of this claim, or whether it will ripen into litigation. 7. In re Biscayne Inn and Apartments, LLC. The claimant is the legal title holder of the property 1► ated at 6730 Biscayne Boulevard, Miami, Florida. The claimant presents a claim under Section 70,001, F:. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the property due to e City's enacting of Ordinance 13116, Section 2, which purportedly imposed a height limitation on the p operty by establishing a 35 foot height limitation, and thus inordinately burdening the property. The claant seeks compensation for the actual loss to fair market value of the real property caused by the 1-12 SUBSTITUTED government action, which it claims is a loss appraised at $1,122,000, At this time, the City cannot pred. 't with certainty either the final outcome of this claim, or whether it will ripen into litigation. 8. In re Brickell Village Land Company. The claimant is the legal title holder of located at 302 SW 7th Street, 327 SW 8th Street, 324 SW 7th Street, 330 SW 7th Street, 337 SW 8th 8th Street, 311 SW 8th Street, and 301. SW 8th Street, Miami, Florida. The claimant prese Section 70.001, F.S. (the "Bert J. Harris Act"), alleging that it has suffered a loss in fair property due to the City's enacting of Ordinance 13114 also known as Miami 21, which height and developable square footage limitations on the property The claimant see actual loss to fair market value of the real property caused by the government acti, loss appraised at $6,660,000. No appraisal of value was submitted with the subsequently submitted its appraisal. At this time, the City cannot predict outcome of this claim, or whether it will ripen into litigation. 9. In re Charles Tavares/Brickell. Commerce Plaza, Inc. the property at 1995 NW 11th Street, 1142 NW 21st Street, 2000 N.W.11th NW 11th Street, Miami, Florida. The claimant presents a claim unde Act"), alleging that it has suffered a loss in fair market value of t Ordinance 13114, also known as Miami 21. The claimant seeks c value of the real property caused by the government action. claim. At this time, the City cannot predict with certainty eit will ripen into litigation. 10. In re Chirav Corporation. The clai Biscayne Boulevard, Miami, Florida. The claimant Harris Act"), alleging that it has suffered a loss in f of Ordinance 13116, Section 2, which purportedl a 35 foot height limitation, and thus inordinat for the actual loss to fair market value of the a loss appraised at $888,420,00, At this ti this claim, or whether it will ripen into 11. In re Chocron, LLC 5501 Biscayne Boulevard, Miami, J. Harris Act"), alleging that it enacting of Ordinance 13116, establishing a 35 foot heigh compensation for the actu which it claims is a loss the final outcome of t cl 1e property treet, 319 SW a claim under arket value of the urportedly imposed compensation for the 1, which they claim is a 'm; however, the claimant th certainty either the final claimant is the legal title holder of treet, 1975 NW 11th Street, and 2051 ection 70,001, F.S. (the "Burt J. Harris property due to the City's enacting of pensation for the actual loss to fair market appraisal of value was submitted with the er the final outcome of this claim, or whether it nt is the legal title holder of the property at 6150 resents a claim under Section 70.001, F.S. (the "Bert J. r market value of the property due to the City's enacting imposed a height limitation on the property by establishing y burdened the property. The claimant seeks compensation property caused by the government action, which it claims is the City cannot predict with certainty either the final outcome of igation, al he claimant is the legal title holder of the property located at 5445 8r orida. The claimant presents a claim under Section 70.001, F.S. (the' Bert as suffered a loss in fair market value of the property due to the City's ction 2, which purportedly imposed a height limitation on the property by imitation, and thus inordinately burdening the property. The claimant seeks loss to fair market value of the real property.caused by the government action, praised at $2,328,000.00. At this time, the City cannot predict with certainty either s claim, or whether it will ripen into litigation. 12. In,- e Elisa Diaz, Victor A. Diaz and Shirley Diaz. The claimants are the legal title holders of the properties lo'`. ted at 6500 Biscayne Boulevard, 6580 Biscayne Boulevard, 570 N.E. 66th Street, and 589 N.E. 65th Street, Mi.. i, .Florida. The claimants present a claim under Section 70.001, F.S. (the "Burt J. Harris Act"), alleging tha hey have suffered a loss in fair market value of the properties due to the City's enacting of Ordinance 3116, Section 2, which purportedly imposed a height limitation on the properties by establishing a 35 foo 'zeight limitation, and thus inordinately burdening the properties. The claimants seek compensation for th actual loss to fair market value of the real properties caused by the government action, which they I-13 SUBSTITUTED assert is a loss appraised at $2,212,140,00, At this time, the City cannot predict with certaint ` either the final outcome of this claim, or whether it will ripen into litigation. 13. In re Empire Plaza, LLC. The claimant is the legal title holder of the pr 1, 2 & 3, Block 2, Aqua Marine, Miami, Florida. The claimant presents a claim under "Bert J. Harris Act"), alleging that it has suffered a loss in fair market value of the enacting of Ordinance 13116, Section 2, which purportedly imposed a height lii establishing a 35 foot height limitation, and thus inordinately burdening the p compensation for the actual loss to fair market value of the real property cau which it claims is a loss appraised at $576,000.00. At this time, the City ca the final outcome of this claim, or whether it will ripen into litigation. 14. In re Fiftystreet Investment, LLC. The claimant is t located at Lot 1, Block 6, Bayshore Plaza Unit No. 4, and Lot 19, Blo Florida. The claimant presents a claim under Section 70.001, F.S, (t suffered a loss in fair market value of the properties due to the Ci which purportedly imposed a height limitation on the propert', and thus inordinately burdens the properties. The claiman market value of the real properties caused by the govern $1,723,680. At this time, the City cannot predict with c whether it will ripen into litigation. 15. In re God Bless Investment and En property located at 7150 Biscayne Boulevard, Mia 70:001, F.S. (the "Bert J. Harris Act"), alleging th due to the City's enacting of Ordinance 13116, the property by establishing a 35 foot height claimant seeks compensation for the actu government action, which it claims is a 1 with certainty either the final outcome 16. In re Infinite Race, 5212 Biscayne Boulevard, Miami, J. Harris Act"), alleging that it enacting of Ordinance 13116, establishing a 35 foot height compensation for the actu which it claims is a loss a the final outcome of th. 17. In Biscayne Bouleva Harris Act"), all of Ordinance a 35 foot hei for the ac a loss ap of this erty located at Lots ection 70.001, F,S. (the operty due to the City's tation on the property by operty. The claimant seeks ed by the government action, of predict with certainty either legal title holder of the properties 6, Bayshore Plaza Unit No. 5, Miami, "Bert J. Harris Act"), alleging that it has s enacting of Ordinance 13116, Section 2, s by establishing a 35 foot height limitation, eeks compensation for the actual loss to fair nt action, which it claims is a loss appraised at tainty either the final outcome of this claim, or rprises, Inc. The claimant is the legal title holder of the i, Florida. The claimant presents a claim under Section it has suffered a loss in fair market value of the property ection 2, which purportedly imposed a height limitation on mitation, and thus inordinately burdening the property. The loss to fair market value of the real property caused by the ss appraised at $855,000.00. At this time, the City cannot predict f this claim, or whether it will ripen into litigation. c. The claimant is the legal title holder of the property located 5201 and orida. The claimant presents a claim under Section 70.001, F.S. (the "Bert as suffered a loss in fair market value of the property due to the City's ction 2, which purportedly imposed a height limitation on the property by mitation, and thus inordinately burdening the property. The claimant seeks loss to fair market value of the real property caused by the government action, aised at $1,676,400.00. At this time, the City cannot predict with certainty either claim, or whether it will ripen into litigation. Milano, Inc. The claimant is the legal title holder of the property located at 7500 Miami, Florida. The claimant presents a claim under Section 70,001, F.S. (the "Bert J. ing that it has suffered a loss in fair market value of the property due to the City's enacting 116, Section 2, which purportedly imposed a height limitation on the property by establishing t limitation, and thus inordinately burdening the property. The claimant seeks.compensation loss to fair market value of the real property caused by the government action, which it claims is aised at $2,801,700.00. At this time, the City cannot predict with certainty either the final outcome aim, or whether it will ripen into litigation. I-14 SUBSTITUTED 18, In re Morningside Deveiopment LLC. Morningside Development L regard to the property located at 5301-5501 Biscayne Blvd., Miami, Florida. The cia" reduction by the City for an approved land development permit that was granted b from what was requested for the structure. The Applicant did not prevail in ap the height decision. The appraisal letter served with the claim alleges a fair property by 80% or $6,380,000. At this time, the City cannot predict with cert this claim, or whether it will ripen into litigation. 19, In re Morningside Properties, a Florida general partne holder of the property located at Lots 3 & 4, Block 12, Bayshore Uni presents a claim under Section 70.001, F.S. (the "Bert J. Harris Act"), market value of the property due to the City's enacting of Ordin imposed a height limitation on the property by establishing a 35 burdening the property. The claimant seeks compensation for property caused by the government action, which it claims is City cannot predict with certainty either the final outco litigation. 20. In re Shima V., Ltd. The claimant 2, Acadia, Miami, Florida, The claimant presents a alleging that it has suffered a loss in fair market va 13116, Section 2, which purportedly imposed a height limitation, and thus inordinately burd actual loss to fair market value of the real pr appraised at $547,140.00. At this time, the claim, or whether it will ripen into liti has filed a claim in arises from a height t with a reduced height llate litigation contesting rket value reduction of the my either the final outcome of ship. The claimant is the legal title `vo, Miami, Florida. The claimant eging that it has suffered a loss in fair ce 13116, Section 2, which purportedly of height limitation, and thus inordinately e actual loss to fair market value of the real loss appraised at $920,280.00. At this time, the e of this claim, or whether it will ripen into s e legal title holder of the property located at Lots 1 & aim under Section 70.001, F.S. (the "Bert J. Harris Act"), e of the property due to the City's enacting of Ordinance eight limitation on the property by establishing a 35 foot ing the property. The claimant seeks compensation for the erty caused by the government action, which it claims is a loss ty cannot predict with certainty either the final outcome of this on. I-15 t SUBSTITUTED EXHIBIT D FORM OF CONTINUING DISCLOSURE AGREEMENT (TO BE COMPLETED AT BOND CLOSING) D-1 SUBSTITUTED to 8- e -p Li-r b 0A1 G iAJ - CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of 2012, is executed and delivered by the City of Miami, Florida (the "Issuer") and Digital Assuranc ,_' ertification, L.L.C., as the exclusive Disclosure Dissemination Agent (the "Disclosure •Disseminon Agent" or "DAC") for the benefit of the Holders (hereinafter defined) of the Bonds (hereinaft ;- defined) and in order to provide certain continuing 'disclosure with respect to the Bonds. The services provided under this Disclosure Agreement relate to the - {ecution of instructions received from the Issuer through use of the DAC system and do not cons 'tute "advice" within the meaning of the Dodd -Frank Wall Street Reform and Consumer Protection •.'t (the "Act"). DAC will not provide any advice or recommendation to the Issuer or anyone on thgf'f ssuer's behalf regarding the "issuance of municipal securities" or any "municipal financial product"defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary. SECTION 1. Definitions. Capitalized terms not ,• therwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule ar, to /' e extent not in conflict with the Rule, in the Official Statement (hereinafter defined), The capitalized ��rrns shall have the following meanings: "Annual Report" means an Annual Report de,ribed in and consistent with Section 3 of this Disclosure Agreement. "Annual Filing Date" means the date, set ' `Sections 2(a) and 2(f), by which the Annual Report is to be filed with the MSRB. "Annual Financial Information" ' ns annual financial information as such term is used in paragraph (b)(5)(i) of the Rule an pecifled in Section 3(a) of this Disclosure Agreement, "Audited Financial Statemen`' means the financial statements (if any) of the Issuer for the prior fiscal year, certified by a/ independent auditor as prepared in accordance with generally accepted accounting pri /iples or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in S'ction 3(b) of this Disclosure Agreement. "Bonds" means th-"bonds as listed on the,attached Exhibit A, with the 9-digit CUSIP numbers relating thereto. "Certificatio r" means a written certification of compliance signed by the Disclosure Represent.''ive stating that the Annual Report, Audited Financial Statements, Notice Event notice, F, ilure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure deliv ed to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Sta ments, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies. "Disclosure Representative" means the [Finance Director] of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information ,to the Disclosure Dissemination Agent. SUBSTITUTED "Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C, acting in s capacity as Disclosure Dissemination Agent hereunder, or any successor Disci: ure Dissemination. Agent designated in writing by the Issuer pursuant to Section 9 hereof. "Failure to File Event" means the Issuer's failure to file an Annual Report on o efore the Annual Filing Date. "Force Majeure Event" means: (i) acts of God, war, or terrorist action; (ii) failu or shut -down of the Electronic Municipal Market Access system maintained by the MSRB; , r (iii) to the extent beyond the Disclosure Dissemination Agent's reasonable cont,ri', interruptions in telecommunications or utilities services, failure, malfunction or error ofj'ny telecommunications, computer or other electrical, mechanical or technological application, ; '`rvice or system, computer virus, interruptions in Internet service or telephone service (inclu%"ing due to a virus, electrical delivery problem or similar occurrence) that affect Internet user, enerally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is l., `ated, or acts of any government, regulatory or any other competent authority the effect of i hich is to prohibit the Disclosure Dissemination Agent from performance of its obligations �1der this Disclosure Agreement. "Holder" means any person (a) having the power, d;; `-ctly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bone` (including persons holding Bonds through nominees, depositories or other intermediaries or (b) treated as the owner of any Bonds for federal income tax purposes. "Information" means the Annual Reports he Audited Financial Statements (if any), the Notice Event notices, the Failure to File Ev-<° t notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures. "MSRB" means the Municipal ;,=curities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchge Act of 1934. "Notice Event" means an,of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed in Section 4(a) of t / s Disclosure Agreement. "Obligated Person" ,G� jeans any person, including the Issuer, who is either generally or through an enterprise, fu ;r', or account of such person committed by contract or other arrangement to support payme. ` of all, or part of the obligations on the Bonds (other than providers of municipal bond, insura .'`e, letter of credit, or other liquidity facilities), as shown on Exhibit A. "Official :'tatement" means that Limited Offering Memorandum prepared by the Issuer in connect on with the Bonds, as listed on Exhibit A. "R; `'e" means Rule 15c2-12 of the United States Securities and Exchange Commission under the curities Exchange Act of 1934, as the same may be amended from time to time. "Trustee" means the institution, if any, identified as such in the document under which the Bonds were issued. "Voluntary Event Disclosure" means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(11) of Section 2 of this Disclosure Agreement that is accompanied by a SUBSTITUTED Certification of the Disclosure Representative containing the infor s;' ation prescribed by Section 7(a) of this Disclosure A.greement. "Voluntary .Financial Disclosure" means information of th:' category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of t s Disclosure Agreement that is accompanied by a Certification of the Disclosure Repres %'tative containing the information prescribed by Section 7(b) of this Disclosure Agreement. SECTION 2. Provision of Annual Reports. (a) The Issuer shall provide, annually, an ele ,'ionic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, togethe ' with a copy for the Trustee, not later than 30 days prior to the Annual Filing Date. Promptly upon eceipt of an electronic copy of the Annual Report and the Certification, the Disclosure DisseminatioirAgent shall provide an Annual Report to the MSRB not later than June 30 of each year, commencing ith the fiscal year ending September 30, 2012. Such date and each anniversary thereof is the Annual Fing Date. The Annual Report may be submitted as a single document or as separate documents con :rising a package, and may cross-reference other information as provided in Section 3 of this Disclosur,•° Agreement. (b) If on the fifteenth (15th) day ,,prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy .rf the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may 'be by e-mail) to remind the Issuer of its und•,,-taking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosur Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic cop; of the Annual Report and the Certification no later than two (2) business days prior to the Annual Fili,'g Date, or (ii) instruct the Disclosure Dissemination Agent in Writing that the Issuer will not be able,o file the Annual Report within the time required under this Disclosure Agreement, state the date .°' which the Annual Report for such year will be provided and instruct the Disclosure Disseminati ' Agent that a Failure to File Event as has occurred and to immediately send a notice to the MS, 'B in substantially the form attached as Exhibit B, accompanied by a cover sheet completed by the Disci ,'ure Dissemination Agent in the form set forth in Exhibit C-1. (c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 12:00 noon onhe first business day following the Annual Filing Date for the Annual Report, shall have occurred d the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to he MSRB in substantially the form attached as Exhibit B. (d) If Audite Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the "ssuer shall, when the Audited Financial Statements are available, provide in a timely manner an elect 'onic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, for filing with the MS (e) Tho;'iisclosure Dissemination Agent shall: verify the filing specification of the MSRB each year prior to the Annual Filing Date; (ii) upon receipt, promptly file each Annual Report received under.Sections 2(a) and 2(b) with the MSRB; SUBSTITUTED (iii) upon receipt, promptly file each Audited Financial Statement re ; ived under Section 2(d) with the MSRB; (iv) upon receipt, promptly file the text of each Notice Event recei ed under Section 4(a) and 4(b)(ii) with the MSRB, identifying the Notice Event instructed by the Issuer pursuant to Section 4(a) or 4(b)(ii) (being any of tre categories set forth below) when filing pursuant to Section 4(c) of this Disclo- re Agreement: 1. "Principal and interest payment delinquencie 2. "Non -Payment related defaults, if material." 3. "Unscheduled draws on debt servireserves reflecting financial difficulties;" (v) 4. "Unscheduled draws on credit enhancements reflecting financial difficulties;" 5. "Substitution of credit or liquiss ity providers, or their failure to perform;" 6. "Adverse tax opinions or r' ents affecting the tax-exempt status of the security;" 7, "Modifications to right' of securities holders, if material;" 8, "Bond calls, if mate, al;" 9. "Defeasances;" 10. `Release, sub itution, or sale of property securing repayment of the securities, i, aterial;" 11. `Ratings; anges;" 12, "Ten offers;" offers;" 13, "B kruptcy, insolvency, receivership or similar event of the obligated rsons;" 14. "Merger, consolidation, or acquisition of the obligated person, if material;" and "Appointment of a successor or additional trustee, or the change of name of a trustee, if material;" upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB, identifying the filing as "Failure to provide annual financial information as required" when filing pursuant to Section 2(b)(ii) or Section 2(c) of this Disclosure Agreement; (vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received under Section 7(a) with the MSRB, identifying the Voluntary Event Disclosure as instructed, by the Issuer pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement: 1. "amendment to continuing disclosure undertaking;" SUBSTITUTED 2. "change to obligated person;" 3, "notice to investors pursuant to bond documents;" 4. "certain communications from the Internal Revenue Servic 5. "secondary market purchases;" 6. "bid for auction rate or other securities;" 7. "capital or other financing, plan;" 8, "litigation/enforcement action;" 9. "change of tender agent, remarketing agent r other on -going party;" 10. "derivative or similar transactions;" and 11. "other event -based disclosures;" (vii) upon receipt, promptly file the text of ach Voluntary Financial Disclosure received under Section 7(b) with the M .''B, identifying the Voluntary Financial Disclosure as instructed by the Issuer ursuant to Section 7(b) (being any of the categories set forth below) when fill b pursuant to Section 7(b) of this Disclosure Agreement: 1. "quarterly/monthly fin-.''cial information;" 2. "change in fiscal ye• "`timing of annual disclosure;" 3. "change in accou ing standard;" 4, "interim/addit'nal financial information/operating data;" 5, "budget;" 6. "invest ,=nt/debt/financial policy;" 7. "info ;` ation provided to rating agency, credit/liquidity provider or oth third party;" 8. ' onsultant reports;" and 9. "other financial/operating data;" ide the Issuer evidence of the filings of each of the above when made, which all be by means of the DAC system, for so long as DAC is the Disclosure ssemination Agent under this Disclosure Agreement. (f) Th Issuer may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of uch change and the new Annual Filing Date to the Disclosure Dissemination Agent, Trustee (if any and the MSRB, provided that the period between the existing Annual Filing Date and new Annual ''fling Date shall not exceed one year. Any Information received by the Disclosure Dissemination Agent before 6:00 p.m. Easter ime on any business day that it is required to file with the MSRB pursuant to the terms of this Disc sure Agreement and that it is accompanies by a Certification and all other information required by th- erms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with the SRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure SUBSTITUTED Dissemination Agent shall have no liability for any delay in filing with the MSRB is such delay is cau-'-d by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable eff... s to make any such filing as soon as possible. SECTION 3. Content of Annual Reports. (a) Each Annual Report shall contain Annual Financial Information wits respect to the Issuer including the information in the tables provided in (b) Audited Financial Statements prepared in accordance wit,;! generally accepted accounting principles ("GAAP") as described in the Official Statement will be,'ncluded in the Annual Report. If such Audited Financial Statements are 'unavailable at the Ann ,,1 Filing Date, unaudited financial statements, prepared in accordance with GAAP as described in e Official Statement will be included in the Annual Report. Audited Financial Statements (if any), `will be provided pursuant to Section 2(d). Any or all of the items listed above may be included by sp-,��`fic reference from other documents, including official statements of debt issues with respect to whic ;' he Issuer is an "obligated person" (as defined by the Rule), which have been previously filed with, ach of the National Repositories or the Securities and Exchange Commission. If the document i �'orporated by reference is a final official statement, it must be available from the MSRB. The Issu will clearly identify each such document so incorporated by reference. Any Annual Financial Information containi ;,'modified operating data or financial information is required to explain, in narrative form, the reason for the modification and the impact of the change in the type of operating data or financial informati.. being provided. SECTION 4. Re.ortin• of Noti= Events. (a) The occurrence of any c,` the following events with respect to the Bonds constitutes a Notice Event: 1. Principal and inter =st payment delinquencies; 2. Non-payment slated defaults, if material; 3. Unschedul, draws on debt service reserves reflecting financial difficulties; 4. Unsche. led draws on credit enhancements relating to the Bonds reflecting financial diffic " ies; 5. Su C titution of credit or liquidity providers, or their failure to perform; 6. dverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determination of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; Modifications to rights of Bond holders, if material; 8. Bond calls, if material and tender offers; 9. Defeasances; 10, Release, substitution, or sale of property securing repayment of the Bonds, if material; SUBSTITUTED 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the Obligat-°. Persons; 13. The consummation of a merger, consolidation, or acquisition volving an Obligated Person or the sale of all or substantially all of the assets of th Obligated Person, other than in the ordinary course of business, the entry into definitive agreement to undertake such an action or the termination of a definitiv%% agreement relating to any such actions, other than pursuant to its terms, if material, .; `d 14. Appointment of a successor or additional trustee or tr'e change of name oftrustee, if material. 15. Notice of any failure on the part of the Issuer t'meet the requirements of Section 2 hereof, The Issuer shall, in a timely manner not in excess of t:r' business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the .fcurrence pursuant to subsection (c) and shall be accompanied by a Certification. Such notice or Certi,cation shall identify the Notice Event that has occurred (which shall be any of the categories set forth; n Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desir ' to make, contain the written authorization of the issuer for the Disclosure Dissemination Agent to di,:eminate such information, and identify the date the Issuer desires for the Disclosure Dissemination A•,=nt to disseminate the information (provided that such date is not later than the tenth business day after;"e occurrence of the Notice Event). (b) The Disclosure Disseminatio%'' Agent is under no obligation to notify the Issuer or the Disclosure Representative of an event that ,� ay constitute a Notice Event, In the event the Disclosure Dissemination Agent so notifies the Discl.r:ure Representative, the Disclosure Representative will within five business days of receipt of such not but in any event not later than the tenth business day after the occurrence of the Notice Event, of the,+''ssuer determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that, ) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and th `Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c) of this Section together with a Certification. Such Certification shall identify the Notice Event that has occurred /which shall be any of the categories set forth in section 2(e)(iv) of this Disclosure Agreement), inclu.r`- the text of the disclosure that the Issuer desires to make, contain the written authorization of tl. Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify he date the Issuer desires for the Disclosure Dissemination Agent to disseminate the informa(provided that such date is not later than the tenth business day after the occurrence of the Notic.;' vent). (c) If thisclosure Dissemination Agent has been instructed by the Issuer as prescribed in subsection (a) or ;)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Ae -nt shall promptly file a notice of such occurrence with the MSRB inaccordance with Section 2 (e)(iv) ereof. SEC ON 5. CUSIP Numbers. Whenever providing information to the Disclosure Dissemina '.n Agent, including but not limited to Annual Reports, documents incorporated by reference to the A ual Reports, Audited Financial Statements, Notice Event notices, Failure to File Event notices, SUBSTITUTED Voluntary Event Disclosures and Voluntary Financial Disclosures, the Issuer shall indicate tha%fu11 name of the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided informa on relates. SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges that other state and federal laws, including but not limited to the Securities Act of 19 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, a duties and responsibilities of the Disclosure Dissemination Agent under this Dis not extend to providing legal advice regarding such laws. The Issuer acknowl that the duties of the Disclosure Dissemination Agent relate exclusively to ex tasks of disseminating information as described in this Disclosure Agreement. SECTION 7. Voluntary Filing. d understands and Rule 10b-5 that the failure of sure Agreement do dges and understands ution of the mechanical (a) The Issuer may instruct the Disclosure Disseminatio /Agent to file a Voluntary Event Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall indentify the Voluntary Event Disclosure ( ` ich shall be any of the categories set forth in Section 2(e)(vi) of this Disclosure Agreement), include t`e text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer r the Disclosure Dissemination Agent to disseminate the information and indentify the date the Issu�� desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Di emination Agent has been instructed by the Issuer as prescribed in this Section 7(a) to file a Voluntary,` vent Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Event Disclure with the MSRB in accordance with Section 2(e)(vi) hereof. This notice will be filed with a cove, sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-2. (b) The Issuer may instruct the Disc.sure Dissemination Agent to file a Voluntary Financial Disclosure with the MSRB from time to time p!`suant to a Certification of the Disclosure Representative. Such Certification shall indentify the Volunt / Financial Disclosure (which shall be any of the categories set forth in Section 2(e)(vii) of this Disclosu ' Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and ind;`tify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the informatio ,, If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Sect'n 7(b) to file a Voluntary Financial Disclosure, the Disclosure Dissemination Agent shall pro ptly file such Voluntary Financial Disclosure with the MSRB in accordance with Section 2(e)(v;;' hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Ag- �t in the form set forth in Exhibit C-2. (c) The partie hereto acknowledge that the Issuer is not obligated pursuant to the terms of this Disclosure Agreemet to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any Voluntary Financial Di closure pursuant to Section 7(b) hereof. (d) No ,+` ing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating an, other information through the Disclosure Dissemination Agent using the means of dissemination s ` forth in this Disclosure Agreement or including any other information in any Annual Report, Audi ;'d Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement. If the Iss r chooses to include any information in any Annual Report, Audited Financial Statements, Notice ent notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disci e ure in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall SUBSTITUTED have no obligation under this Disclosure Agreement to update such information e include it in any future Annual Report, Audited Financial Statements, Notice Event notice, Failure o File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure. SECTION 8. Termination of Reporting Obligation. The obligatins of. the Issuer and the Disclosure Dissemination Agent under this Disclosure Agreement shall ter` inate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all .f the Bonds, when the Issuer is no longer an obligated person with respect to the Bonds, or up delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of unseI expert in federal securities laws to the effect that continuing disclosure is no longer required. SECTION 9. Disclosure Dissemination Agent. The I ' uer has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Age ` under this Disclosure Agreement. The Issuer may, upon thirty days written notice to the Disclosu Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Ag 4t. Upon termination of DAC's services as Disclosure Dissemination Agent, whether by notice of the > suer or DAC, the Issuer agrees to appoint a successor Disclosure Dissemination Agent or, alterna j%ly, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure,Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appoi ent of a successor, the Issuer shall remain liable until payment in full for any and all sums owed an payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at an time by providing thirty days' prior written notice to the Issuer. SECTION 10. Remedies in Evei of Default. In the event of a failure of the Issuer or the Disclosure Dissemination Agent to comply . ith any provision of this Disclosure Agreement, the Holders' rights to enforce the provisions of thi , Agreement shall be limited solely to a right, by action in mandamus or for specific performan , to compel performance of the parties' obligation under this Disclosure Agreement. Any failure b a party to perform in accordance with this Disclosure Agreement shall not constitute a default on th, Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limit:. to those expressly stated herein. SECTION 11. Duts Immunities and Liabilities of Disclosure Dissemination A• ent. (a) The Disclo ` re Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure ; `greernent. The Disclosure Dissemination Agent's obligation to deliver the information at the time :' and with the contents described herein shall be limited to the extent the Issuer has provided such i ormation to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or not e made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or oblig ion to review or verify any information or any other information, disclosures or notices provided to it 'y the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Holders .f the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibi for the Issuer's failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to e termine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determ e, or liability for failing to determine, whether the Issuer has complied with this Disclosure Agre ent. The Disclosure Dissemination Agent may conclusively rely upon certifications of the Issuer at times. SUBSTITUTED The obligations of the Issuer under this Section shall survive resignation or removal of tl: Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult.'ith legal counsel (either in-house or external) of its own choosing in the event of any disagreeme , ` or controversy, or question or doubt as to the construction of any of the provisions hereof or its respee"ive duties hereunder, and the Disclosure Dissemination Agent shall not incur any liability and shall be/ully protected in acting in good faith upon the advice of such legal counsel. The fees and reasonabl expenses of such counsel shall be payable by the Issuer. (c) All documents, reports, notice, statements, information r°' d other materials provided to the MSRB under this Agreement shall be provided in an electric format and accompanies by indentifying information as prescribed by the MSRB. SECTION 12, Amendment; Waiver. Notwithstandi , any other provision of this Disclosure Agreement, the Issuer and the Disclosure Dissemination Age » may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be ` aived, if such amendment or waiver is supported by an opinion of counsel expert in federal securiies laws acceptable to both the Issuer and the Disclosure Dissemination Agent to the effect that such aendment or waiver doesnot materially impair the interests of Holders of the Bonds and would not, n and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver ha, `.een effective on the date hereof but taking into account any subsequent change in or official inte ,retation of the Rule; provided neither the Issuer nor the Disclosure Dissemination Agent shall be .,.ligated to agree to any amendment modifying their respective duties or obligations without their csent thereto. Notwithstanding the preceding p. agraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disci .' ure Agreement necessary to comply with modifications to and interpretations of the provisions of th ule as announced by the Securities and Exchange Commission from time to time by giving not less an 20 days written notice of the intent to do so together with a copy of the proposed amendment to th:. ssuer. No such amendment shall become effective if the Issuer shall, within 10 days following the giv',,'g of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such endment. SECTION 13. Issuer, the Trustee of th from time to time of th neficiaries. This Disclosure Agreement shall inure solely to the benefit of the nds, the Disclosure Dissemination Agent, the Underwriters, and the Holders ands, and shall create no rights in any other person or entity. SECTION ;' . Governing Law. This Disclosure Agreement shall be governed by the laws of the State of New ,- ork (other than with respect to conflicts of laws). SECTIN 15. Counterparts. This Disclosure Agreement may be executed in several counterpar each of which shall be an original and all of which shall constitute but one and the same instrume SUBSTITUTED The Disclosure Dissemination Agent and the Issuer have caused this Continui ,u Disclosure Agreement to be executed, on the date first written above, by their respective officers duly,-uthorized, DIGITAL ASSURANCE CERTIFICA :'ON, L.L.C., as Disclosure Dissemination Agent By: Name: Title: THE CITY OF MI as Issuer I, FLORIDA By: Na Johnny Martinez T. City Manager ATTEST: Dwight S. Danie City Clerk APPROVED AS TO FORM AND CORRECTNESS: Julie O. Bru, Esq. City Attorney APPROVED AS TO IN : RANCE REQUIREMENTS: Calvin Ellis Risk Mana2r` ent Director SUBSTITUTED b j 7• `. 04)-n P f-- '^ p Name of Issuer: Obligated Person(s): Name of Bond Issue: EXHIBIT A NAME AND CUSIP NUMBERS OF BONDS City of Miami, Florida City of Miami, Florida Special Obligation Non -Ad Valorem .°venue Refunding Bonds Series 2012 (Port of Miami Tunnel Pr >ject) Date of Issuance: 2012 Date of Official Statement: 2012 Maturity PrincipalInitial CUSIP .(March 1) Amou ��Number i SUBSTITUTED OE, c-r PGAi 010 dV 5M / EXHIBIT B NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL ORT Name of Issuer: City of Miami, Florida Obligated Person(s): City of Miami, Florida Name of Bond Issue: Special Obligation Non -Ad Valorem Reve o e Refunding Bonds Series 2012 (Port of Miami Tunnel Proje Date of Issuance: 2012 NOTICE IS HEREBY GIVEN that the Issuer 1,'s not provided an Annual Report with respect to the above -named Bonds as required by the Disclos e Agreement, dated as of 2012, between the Issuer and Digital Assurance Certification, L L C,' as Disclosure Dissemination Agent. The Issuer has notified the Disclosure Dissemination Agent tl ;,�°' it anticipates that the Annual Report will be filed by Dated: Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the Issuer L cc: Issuer Obligated Pers