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HomeMy WebLinkAbout1993 12 16 - Closing DocumentsSARAH M. BLEAKLEY MAUREEN MaCARTHY DAUGHTON VIRGINIA SAUNDERS DELEGAL L THOMAS GIBLIN MARK G. LAWSON STEVEN E. MILLER MARK T. MUSTIAN ROBERT L.NABORS GEORGE H. NICKERSON. JR. RANI T. PARTRIDGE GREGORY T. STEWART JOHN R. STOKES WILLIAM D. TYLER MICHAEL L. WATKINS JEAN E- WILSON NABORS, GIBLIN & NICKERSON, P. A. ATTORNEYS AT LAW THE POINTE, SUITE 1060 2502 ROCKY POINT DRIVE TAMPA, FLORIDA 33607 TELEPHONE (813) 281-2222 TELECOPY (613) 281-0129 February 7, 1994 VIA FEDERAL EXPRESS Ms. Kathyrn O'Halloran Acting City Manager 1225 Main Street Sebastian, Florida 32958 BARNETT BANK BUILDING, SUITE BOO 315 SOUTH CALHOUN STREET TALLAHASSEE, FLORIDA 32301 (904)224-4070 TELECOPY (904) 224-4073 SIGNATURE PLAZA, SUITE 1060 201 SOUTH ORANGE AVENUE OR LANDO. FLORIDA 32801 (407) 426-7595 TELECOPY (407) 426-8022 Re: $5,000,000 City of Sebastian, Florida Utilities Revenue Bonds, Series 1993. Dear Ms. O'Halloran: Please find enclosed one loose original of the transcript of closing documents from the above -referenced issue. If we can be of any further assistance, please do not hesitate to contact us. Enclosure Sincerely, taAA44 "41 Doris J. B rgamini Legal Assistant $5,000,000 CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS SERIES 1993 List of Closing Documents December 16, 1993 I. BASIC DOCUMENTS 1.1 Preliminary Official Statement, dated December 6, 1993, relating to the sale of the Series 1993 Bonds. 1.2 Official Statement, dated December 16, 1993, relating to the sale of the Series 1993 Bonds. - 1.3 Bond Purchase Contract, dated December 16, 1993, between the City and the Underwriter, relating to the Series 1993 Bonds. 1.4 Consulting Engineer's Report, dated November 30, 1993. 1.5 Water and Sewer System Purchase and Sale Agreement dated as of October 12, 1993, between the City and Florida/ General Development Utilities, Inc. (without exhibits). II. CITY OF SEBASTIAN, FLORIDA 2.1 Certified copy of Resolution No. R-93-67, adopted on December 8, 1993, authorizing the issuance of the Bonds. 2.2 Certified copy of Resolution No. R-93-68, adopted on December 8, 1993, awarding the sale of the Bonds. 2.3 Certified copy of Resolution No. R-93-76, adopted on December 15, 1993, amending Resolution No. R-93-67. 2.4 Certified copy of Resolution No. R-93-59 adopted on December 1, 1993, regarding water and wastewater rates. 2.5 Incumbency Certificate. 2.6 Signature Certificate. 2.7 No -Litigation Certificate. 2.8 Certificate as to Arbitrage and Certain Other Tax Matters. 2.9 General Certificate. 2.10 Certificate as to Specimen Bonds. 2.11 City's Certificate as to Delivery and Payment with respect to the Series 1993 Bonds. 2.12 Certificate as to No Prior Pledge. 2.13 MBIA Municipal Bond Insurance Policy. 2.14 Rating Agency Letters. 2.15 Internal Revenue Service Forms 8038-G. 2.16 Division of Bond Finance Forms. 2.17 MBIA Certificate as to No Default. 2.18 Certificate of the Consulting Engineers. 2.19 Accountants' Certificate. 2.20 DTC Letter of Representations. III. PAYING AGENT AND REGISTRAR 3.1 Registrar and Paying Agent Agreement, dated as of December 1, 1993, between the City and Barnett Banks Trust Company, N.A. 3.2 Certificate of Paying Agent and Registrar. IV. UNDERWRITER 4.1 Underwriter's Certificate as to Delivery and Payment. 4.2 Underwriter's Disclosure Certificate. 4.3 Preliminary Blue Sky Survey 4.4 Supplemental Blue Sky Letter 4.5 Legal Investments Memorandum V. LEGAL OPINIONS 5.1 Approving Opinion of Nabors, Giblin & Nickerson, P.A., Bond Counsel. 5.2 Supplemental Opinion of Nabors, Giblin & Nickerson, P.A., Bond Counsel. 5.3 Reliance letter of Bond Counsel. 5.4 Opinions of Frese, Nash & Torpy, P.A., Counsel to the City. 5.5 Opinion of Squire, Sanders & Dempsey, Counsel. 5.6 Opinion of Counsel to MBIA. 5.7 Opinion of Counsel to Florida .General Utilities, Inc. Underwriter's Development 1.5 CITY OF SEBASTIAN, FLORIDA/ GENERAL DEVELOPMENT UTILITIES, INC. WATER AND SEWER SYSTEM PURCHASE AND SALE AGREEMENT �t H AGREEMENT is made and entered into this L— day of Ili (J �s _ , 1993, by and between the CITY OF SEBASTIAN, FLORIDA ("CITY"), and GENERAL DEVELOPMENT UTILITIES, INC., a corporation authorized to do business in the State of Florida ("UTILITY"). RECITALS 1. UTILITY is the owner of a water production, storage, treatment, transmission, and distribution system, and a wastewater treatment, transmission, collection and effluent disposal system (hereinafter referred to collectively as the "Sebastian Water and Wastewater System" or the "System") known as the Sebastian Highlands Water and Sewer System located primarily within the boun- daries of the CITY OF SEBASTIAN, FLORIDA. 2. Pursuant to the governmental powers provided in Chapters 163, 166, and 180, Florida Statutes, and other applicable laws, CITY is authorized to preserve and enhance present advantages, encourage the most appropriate use of land, water and resources, consistent with public interest, facilitate the adequate and efficient provision of water and sewerage facilities, and conserve, develop, utilize, and protect natural resources within its jurisdiction. 3. UTILITY agrees to sell the System to CITY. 4. CITY has examined UTILITY's Water and Wastewater System Assets, has examined its existing financial structure, has examined the long-range needs and goals of CITY relative to the provision of water and wastewater service to its present and future citizens, and has determined that the execution of a purchase and sale agreement for the acquisition of the Water and Wastewater System Assets is in the public interest. 5. CITY desires to acquire the System upon the terms and conditions hereinafter set forth in this Agreement. ACCORDINGLY, in consideration of the above Recitals and bene- fits to be derived from the mutual observation of the covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows: SECTION 1. RECITALS. The above Recitals are true and cor- rect, and form a material part of this Agreement. SECTION 2. PURCHASE AND SALE OF WATER AND WASTEWATER SYSTEM. UTILITY agrees to sell and CITY agrees to buy the complete System, consisting of all real, personal and mixed property used or held for use in connection with the System, hereinafter referred to as the "Purchased Assets" or the "Water and Wastewater System Assets" or the "System." The Purchased Assets shall not include any cash derived from monthly rates of UTILITY received by UTILITY, except as set forth in Sections 3 and 11 hereof. SECTION 3. PURCHASED ASSETS. On the Closing Date, as defined below, UTILITY shall sell, assign, transfer, convey and deliver to CITY, and CITY shall purchase, accept and pay for all of the right, title and interest, in and to:the following property and assets: 3_1. Real Property. All real property (the "Property owned by UTILITY in fee simple, as described in Exhibit 113.1" attached hereto and made a part hereof, whereupon all water production, storage, treatment, transmission, and distribution facilities and wastewater treatment plant, wells, pumping stations, effluent disposal 'areas and all other water and wastewater service facilities are located. 3_2. Plant and Other Facilities. All right, title and interest of UTILITY in and to the following assets owned by UTILITY: all, water production, treatment plant, storage, treatment, transmission, distribution, pumping, and other water facilities, including, without limitation, water wells and fire hydrants, and all wastewater treatment plant, wastewater collection, transmission, pumping, and disposal facilities of every kind and description whatsoever including, without limitation, all trade fixtures, leasehold improvements, lift stations, pumps, generators, controls, collection and transmission pipes or facilities, valves, meters, service connections, and all other water and/or wastewater service connections, and all other water and wastewater physical facilities and property installations in use in connection with the operation of the System by UTILITY. - 3.3. Machinery and Equipment. All machinery, equipment vehicles, tools (other than non -motorized hand tools), laboratory equipment, office equipment and other personal property (other than inventory as described in Paragraph 3.13), owned by UTILITY located on the Property or utilized by UTILITY exclusively in the operation of the System, including, but not limited to, those items more particularly described in Exhibit 113.3" attached hereto and incorporated into this Agreement. 3_4. Other Rights. All rights, privileges, easements, licenses, prescriptive rights, rights -of -ways, and rights to use public and private roads, highways, streets, and other areas owned by UTILITY for the construction, reconstruction, maintenance and operation of the System of UTILITY and the Purchased Assets (collectively referred to as the "Easements"). The Easements are more particularly described in Exhibit 113.4" attached hereto and incorporated in this Agreement. CITY and UTILITY acknowledge and agree that, as additional consideration for UTILITY entering into this Agreement, CITY shall convey to UTILITY within five (5) days following the execution of this Agreement by both parties hereto, those certain Easements set forth and described in Exhibit 113.4" attached hereto and incorporated in this Agreement. Such conveyance shall be a conveyance by the CITY of all of its right, title and interest in those certain Easements, collectively referred to herein as the "CITY Easements". The CITY Easements shall be signed by authorized representatives of CITY and delivered to UTILITY in the form attached to this Agreement as Exhibit 113.4" and UTILITY shall be entitled to immediately record the CITY Easements, at its expense, in the Public Records of Indian River County, upon receipt thereof. Upon closing, UTILITY shall reconvey to CITY the CITY Easements; provided, however, UTILITY shall not be required to reconvey to CITY the CITY Easements if the transaction contemplated in this Agreement fails to close for any reason other than fault on the part of UTILITY. 3_5. Customer Records. UTILITY shall provide CITY with all records associated with its current customers of the System, including customer files containing information such as service applications and correspondence, and all billing information, and all information pertaining to billing of customers, including names, addresses, account numbers and payment history contained in the UTILITY's master files. 3_6. Business Records. All current business records of UTILITY as described in Exhibit 113.6" attached to this Agreement and incorporated by reference herein. UTILITY may make and retain copies of all records delivered to CITY pursuant to this Agreement, at its expense, before transferring the original or (if the original is not available, copies of the records) to CITY. CITY agrees that UTILITY may have reasonable access after closing to all records delivered' pursuant to this Agreement. The provisions of this paragraph shall survive the closing. In addition, UTILITY shall deliver to CITY all as -built surveys, water and sewer design plants, plats, engineering and other drawings, designs, blue- prints, plans and specifications for the System to CITY. 3_7. Permits and Approvals. Subject to all necessary regulatory approvals and to all conditions, limitations or restrictions contained therein, and the transferability thereof, all permits and other governmental authorizations and approvals necessary to operate and maintain the System in accordance with all governmental requirements, as described in Exhibit "3.7" attached hereto and incorporated by reference herein. UTILITY shall, at its expense, be responsible for renewing any operating permits and any 3 other permits essential to the operation of the System which may have expired or will expire prior to the transfer of the System to CITY. UTILITY shall also be responsible for correcting any deficiencies, at its expense (provided, however, that in no event shall UTILITY be required to bring suit or expend any sum in excess of $50,000, in the aggregate, to cure such deficiencies), which are specifically documented by any regulatory agency prior to the date on which the System is to be transferred to CITY. CITY agrees to sign all forms required by governmental agencies to transfer the permits and approvals from UTILITY to CITY. 3_8. Choses in Action. All choses in action pertaining to the System or the Purchased Assets, including, but not limited to, warranty claims, claims for damages, the right to sue for any past infringement, or other cause of action. 3_9. Customer Deposits. Cash to be paid by cashier's check or wire transfer in an amount which represents the customers' water and sewer service security deposits and accrued interest held by UTILITY. UTILITY shall provide CITY with a detailed written description of each customer deposit and any interest accrued thereon, including the name of the customer, the account number for the customer, the date on which the deposit was received by UTILITY from the customer, the amount of interest accrued on each deposit, the amount of any additional deposits received from the customer and the date such deposit was received. In the event UTILITY provides any inaccurate or erroneous information concerning the customer deposits to CITY, UTILITY shall defend, indemnify and hold CITY harmless from any claims, actions, expenses or damages, including costs and reasonable attorneys' fees at trial and/or appeal, to which CITY may be exposed in the future as a result of UTILITY providing such inaccurate or erroneous information to CITY. In consideration for the transfer by UTILITY of these customers' deposits to CITY, CITY agrees to continue to provide utility services to those customer for which a deposit is held and, to the extent consistent with §768.28, Florida Statutes, to indemnify and hold UTILITY harmless for any claims, actions, expenses or damages, including costs and reasonable attorneys' fees at trial and/or appeal, to which UTILITY may be exposed in the future as a result of the transfer of such customer deposits to CITY. This provision shall survive closing. 3.10. Unbilled Revenue. Unless otherwise agreed by UTILITY and CITY, there shall be no unbilled Revenues paid by CITY because UTILITY shall bill each customer through the Closing Date. 3.11. Contracts and Agreements. UTILITY agrees to assign to CITY, and CITY agrees to assume, all of UTILITY's right, title and interest in and to those certain contracts and agreements listed in Exhibit "3.11" attached to and incorporated in this Agreement. CITY shall not be obligated to assume any contracts and agreements except only those listed in Exhibit 113.11". 4 3.12. Computer Software. Subject to all applicable licensing agreements and to all applicable copyright laws, non- proprietary computer software which is used or was used, in the course of the day to day operations of UTILITY for the System, including, without limitation, billing programs and accounting programs, except any computer software that CITY does not desire to receive or to sub -license. Any license assignment fees payable to the licensor with respect to any computer software that CITY expressly elects to receive assignment for, shall be paid by CITY. 3.13. Inventory. All right, title and interest of UTILITY in and to all inventory specifically described in Exhibit 113.13" attached hereto and made a part of this Agreement. For purposes of this Agreement, the term "inventory" shall include items such as hand tools, parts, chemicals, operating supplies, pipes, nuts, bolts, fittings, screws, meters and meter boxes. Exhibit 113.13" is separated into two parts, Part A and Part B for purposes of Paragraph 11.1(7) of this Agreement. CITY, at its expense, shall conduct a physical inventory of all items of inventory as soon as practical after the signing of this Agreement by the parties hereto. UTILITY shall cooperate and make available to CITY and its representatives all items of inventory in order to facilitate the conducting of the physical inventory by CITY. SECTION 4. ADDITIONAL RESPONSIBILITIES OF UTILITY. UTILITY shall provide CITY with up to eighty (80) person hours of general support services for a period commencing upon the signing of this Agreement by the parties hereto and ending on the date that is sixty (60) days -after the Closing Date, on an as -needed basis. If all time is not utilized by CITY within such period, no future obligation with respect thereto shall exist on behalf of UTILITY. In addition, UTILITY agrees to assist CITY in aid of transition following the closing by providing, at the request of CITY, assistance in billing services and transfer of files at no expense to CITY, other than any out-of-pocket costs. CITY shall, in making requests pursuant to this Section 4, avoid any unnecessary disruption of the normal business operations of UTILITY. The provisions of this Section shall survive the closing. SECTION 5. PURCHASE PRICE AND PAYMENT. CITY agrees to pay to UTILITY on the Closing Date, and UTILITY agrees to accept as the complete and full Purchase Price for the System, a total Purchase Price in the amount of THREE MILLION SIX HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($3,650,000), subject to any adjustments provided hereinafter. Said Purchase Price shall be paid at Closing in federal or other immediately available funds by wire transfer to a bank and bank account designated by UTILITY. Prior to Closing UTILITY shall deliver wiring instructions to CITY. SECTION 6. STATUS OF TITLE. Within twenty (20) days following the signing of this Agreement by UTILITY and CITY, UTILITY shall deliver to CITY's attorney an updated title commitment (the "Commitment") for an Owner's Title Insurance Policy issued by First American Title Insurance Company in favor of CITY 5 insuring the fee simple title to the Property listed in Exhibit 113.111. UTILITY shall provide CITY with an Owner's Title Insurance Policy which is an Owner's ALTA Form B Marketability Policy in favor of CITY in the amount of THREE MILLION SIX HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($3,650,000). UTILITY shall bear the cost of the title insurance policy, including all costs associated with procuring the Commitment. 6_1. Exceptions to Title. The Commitment shall show UTILITY to be vested with fee simple title to the Property shown on Exhibit 113.1" subject to the following (the "Permitted Exceptions"): (1) Ad valorem real estate taxes and assessments for the year 1993 and subsequent years; (2) Restrictions set out in the recorded plats of subdivisions covered by the System; (3) Easements for utilities and drainage set out in such recorded plats of subdivisions; provided, however, that none of the restrictions or easements set out in such recorded plats of subdivisions shall prevent, hinder or restrict the present use of the Property; (4) Restrictions of record (except liens, encum- brances, or mortgages) that do not impair, restrict, or inhibit the present use of or improvement to the property as permitted by applicable zoning and land use regulations presently in effect and that are not coupled with a forfeiture or reversionary provision; (5) All laws, ordinances, and governmental regula- tions, including, but not limited to, all applicable building, zoning, land use and environmental ordinances, regulations, restrictions, prohibitions and other requirements, none of which will prevent or hinder the present use of the Property; and (6) All matters which would be disclosed by an accurate survey of the Property, unless a survey is provided to UTILITY in. a form acceptable to the title insurer in accordance with recognized standards for surveys in connection with the issuance of an Owner's Title Insurance Policy. 6_2. Status of Title. If the status of title shown on said Title Insurance Commitment does not reflect the status of title as herein set out, then, in that event, upon written noti- fication thereof to UTILITY which notice shall be given by CITY within twenty (20) days after receipt of said commitment, UTILITY agrees to use all due diligence to perfect title and shall have a period of twenty (20) days from notification of such defects within which to do so. If CITY shall fail to notify UTILITY within the aforesaid twenty (20) days, CITY shall, for the purposes of this Agreement, be deemed to have accepted the status of title as set forth in the Commitment. In the event that defects are specified 5 and UTILITY, after exercising'all due diligence, cannot clear same within the time provided in the preceding sentence, then, in that event, CITY shall have the right to purchase the Property in its then existing condition of title, or to rescind and terminate this Agreement without liability by any party to the other(s). Although UTILITY shall use its reasonable efforts to cause any defects to be cured prior to the Closing Date, in no event shall UTILITY be required to bring suit or to expend any sum in excess of $50,000 in the aggregate to cure title defects, exclusive of mortgages against the Property which are in a liquidated amount or which UTILITY has the obligation to discharge on or before the Closing Date under the terms of this Agreement. Notice of such election shall be given by CITY to UTILITY, in writing, by either registered or certified mail, within the time herein prescribed. SECTION 7. SURVEY. CITY shall have the option, at its ex- pense, to prepare and provide a current survey of all the Property set out in Exhibit 113.1" prepared by a Florida licensed surveyor in accordance with applicable law, which survey will be prepared in accordance with, and certified to UTILITY, CITY, UTILITY's and CITY's attorneys and the title insurer in accordance with the minimum detail standards adopted by the Florida Society of Professional Land Surveyors. Any defect reflected on such survey including, but not limited to, encroachments of improvements across a boundary line or onto a utility strip, evidence of overlaps along a property line, violation of restrictions, set back lines, possession inconsistent with the Property boundaries or any other such defect, shall be treated as a title defect under Subsection 6.2. above. CITY shall have twenty (20) days after receipt of said survey to furnish notice to UTILITY of any title defect shown on the survey which does not conform to the status of title described in Section 6 of this Agreement. If CITY shall fail to notify UTILITY within the aforesaid twenty (20) days, CITY shall be deemed to have accepted the status of title shown on the survey. SECTION 8. REPRESENTATIONS AND WARRANTIES OF UTILITY. To induce CITY to enter into this Agreement, UTILITY represents and warrants that, as of the Closing Date: ,8_1. Organization. Standing And Power. UTILITY is a corporation, duly organized, validly existing, and in good standing under the laws of the state of its formation, and is authorized to do business in the State of Florida. UTILITY has all requisite power and authority to own and lease its properties and the Water and Wastewater System Assets, and to conduct its business as it is currently being conducted. 8_2. Authority for Agreement. UTILITY has the power and authority to execute and deliver this Agreement and to carry out its obligations hereunder. This Agreement has been duly authorized by all action required to be taken by UTILITY has been duly executed and delivered by UTILITY and constitutes a valid and legally binding obligation of UTILITY, enforceable in accordance with its terms. 8_3. Good and Marketable Title. Subject to the Per- mitted Exceptions, UTILITY has good and marketable title to the Purchased Assets. Notwithstanding anything contained herein to the contrary, the Property shown on Exhibit 113.4" as easement parcels are not subject to the fee simple ownership requirements as set forth in Subsection 6 hereof. UTILITY shall transfer, convey and assign to CITY at Closing an enforceable easement interest for each of the easement parcels shown on Exhibit 113.4" so that the present use of the easement parcels may be continued by CITY for the operation of the System. The easement interests shown on Exhibits ^3.4" conveyed to CITY shall not be subordinate to any superior interests which could result in CITY losing the right to use the easement parcel for utility purposes. Any such superior interests shall be deemed a title defect under Subsection 6.2 hereof and shall be cured by UTILITY as set forth in that Subsection. At Closing, UTILITY shall assign to CITY all of its easement interests in the Property regardless of whether such easement is listed on Exhibit 113.411. 8_4. No Liens or Encumbrances. Except as otherwise specifically set forth herein or as may be released prior to the Closing Date, there are no liens, claims or encumbrances of any type or nature upon or against the Purchased Assets including, but not limited to, financing statements or security instruments filed under the Uniform Commercial Code either in the County where the land is located or with the Florida Secretary of State. 8_5. Litigation. There are no actions, suits, or proceedings at law or in equity, pending against UTILITY before any federal, state, municipal or other court, administrative or governmental agency or instrumentality, domestic or foreign, which affect the System or any of the Purchased Assets or UTILITY's right and ability to make and perform this Agreement; nor is UTILITY aware of any facts which to its knowledge are likely to result in any such action, suit or proceeding. The UTILITY is not in default with respect to any order or decree of any court or of any administrative or governmental agency or instrumentality affecting the System or any of the Purchased Assets. UTILITY agrees and warrants that it shall have a continuing duty to disclose up to and including.the Closing Date the existence and nature of all pending judicial or administrative suits, actions, proceedings, and orders which in any way relate to the operation of the System. Any such matters now known to UTILITY shall be initially disclosed within ten (10). days following execution of this Agreement, and UTILITY agrees to notify CITY of any new actions, suits or proceedings within ten (10) days after UTILITY receives notice thereof. 8_6. New Agreements. UTILITY shall not enter into any extension, developers' agreement, agreement concerning the opera- tion of the Water and Wastewater System, agreement concerning water and/or wastewater service capacity, or cause any agreement to be modified after the date of execution of this Agreement without the prior written approval of CITY, which approval shall not be n unreasonably withheld. Notwithstanding anything to the contrary set forth in this paragraph 8.6, UTILITY need not obtain CITY's approval to enter into service agreements with individuals that do not commit in excess of five (5) equivalent residential connections of water or wastewater service capacity. 8_7. Agreements for Construction. With respect to any outstanding agreements for construction under which UTILITY has previously received cash deposits or cash contributions in exchange for UTILITY's willingness to authorize the planning, permitting, construction, installation or extension of the water and/or wastewater system located in Sebastian, UTILITY has fully discharged all obligations on its part for such planning, permitting, construction, installation or extension, and UTILITY has no further obligations, liabilities or expenses for the future planning, permitting, construction, installation or extension of said system under said agreements. 8_8. Leases. Except as may be listed in Exhibit "3.11" hereof, none of the Purchased Assets are subject to any interest of any lessor or lessee and will not be so subject as of the Closing Date. 8_9. No Contracts in Default. UTILITY is not aware of any defaults of any parties to any agreements set forth or listed in any of the Exhibits annexed to this Agreement. 8.10. No Governmental Violations. UTILITY is not aware and has not been notified of the existence of any violations of any governmental rules, regulations, permitting conditions or other governmental requirements applicable to the ownership, maintenance or operation of the System. 8.11. No Record Violations. The use of the System on the property set out in Exhibits 113.1" and "3.4" is consistent with and does not violate any restrictions or conditions of record. 8.12. Absence of Changes. After the date of execution of this Agreement, UTILITY shall not: (1) undergo any change in its condition of properties, assets, liabilities, business or operations other than changes in the ordinary course of business which have not been, either in any case or in the aggregate, materially adverse to the operation of the System; (2) acquire or dispose of any of the System's assets or properties of material value (having a value in excess of $2,000), except in the ordinary course of business or with the consent of CITY, which shall not be unreasonably withheld; (3) subject to available administrative remedies pursuant to Chapter 120, Florida Statutes, or any administrative or judicial procedures or proceedings applicable to particular 0 permits, or intentionally fail to comply with all of the System permit requirements; (4) fail to seek or obtain any permit extensions or renewals reasonably necessary to insure that all permits related to the System are valid, extended, or in the process of being extended, as of the Closing Date. 8.13. Disclosure. No representation or warranty made by UTILITY, to the best of UTILITY's knowledge, in this Agreement contains or will contain any untrue statement of material facts or omits or will omit to state any material fact required to make the statements herein contained not misleading. 8.14. Survival of Covenants. UTILITY agrees that its representations and warranties set forth herein are true and correct as of the date of the execution hereof, shall be true and correct at the time of Closing, and shall survive the Closing for a period of two (2) years. 8.15. FIRPTA. UTILITY is not a "foreign person" within the meaning of the United States tax laws and to which reference is made in Section 1445(b)(2) of the Internal Revenue Code of 1986, as amended. On the Closing Date, UTILITY shall deliver to CITY a certificate to such effect. SECTION 9. CONDUCT PENDING CLOSING. UTILITY covenants that pending the closing: 9_1. Business Conduct. Except as otherwise consented to in writing by CITY, which shall not be unreasonably withheld, for the period beginning on the date of execution of this Agreement and ending on the Closing Date, UTILITY shall: (1) operate the System in, and only in, the usual, regular and ordinary course and nevertheless comply with and uphold all applicable governmental requirements and laws; (2) maintain all of the System's material structures, equipment and other tangible personal property in good repair, order and condition, except for depletion, depreciation, ordinary wear and tear and damage by unavoidable casualty; (3) keep in full force and effect insurance com- parablein amount and scope of coverage to insurance now carried by it for the System; (4) perform in all material respects all of its obligations under agreements, contracts and instruments relating to or affecting the System's properties, assets and operation; (5) maintain its books of account and records as to the System in the usual, regular and ordinary manner; IM (6) subject to available administrative remedies pursuant to Chapter 120, Florida Statutes, or any administrative or judicial proceeding or proceeding applicable to particular permits, comply in all material respects with all statutes, laws, ordinances, rules and regulations applicable to it and to the operation of the System; (7) promptly advise CITY, in writing, of any material adverse change in the operation of System; and (8) not enter into any transaction, including, without limitation, the purchase, sale or exchange of property, the value of which exceeds $2,000, which relates to the System except in furtherance of this Agreement with the UTILITY, or the rendering of any service to UTILITY, except in the ordinary course of and pursuant to the reasonable requirements of the business of UTILITY. 99_2. Risk of Loss. UTILITY shall bear the risk of loss, damage or destruction of the Purchased Assets by fire or other casualty prior to Closing Date. If any material portion of the Purchased Assets is damaged by fire, "Act of God" or other casualty prior to the Closing Date, CITY shall have the option of (1) closing and accepting the Purchased Assets "as is", without reduction of the Purchase Price, together with UTILITY's assignment to CITY of all rights under UTILITY's insurance policies and all of the insurance proceeds, if any, relating thereto, but without any further claim by CITY against UTILITY; or (2) cancelling this Agreement in which event the parties shall be released from all further obligations to each other. If any immaterial portion of the Purchased Assets is so damaged, UTILITY shall either (1) repair or replace same, or (2) assign UTILITY's insurance proceeds covering same to CITY at closing (or if there are no adequate proceeds available, UTILITY shall credit CITY at closing for the reasonable uninsured value of the damaged property). 9_3. No Encumbrances. Except as otherwise permitted in this Agreement, from and after the date of the execution of this Agreement, UTILITY shall not, without the prior written consent of CITY, which shall not be unreasonably withheld, dispose of or encumber any of the Purchased Assets. 9_4 Access to Records. At all times, UTILITY will coop- erate by opening records and by providing access, upon prior notice, to records and facilities to CITY and CITY's representatives to assist in acquainting CITY'S operating and administrative personnel in the operation of the System; provided that no such inspection shall materially interfere with the operation of the System. 9_5. Performance of Closing Conditions. UTILITY shall perform all of the conditions to closing which should be performed by UTILITY prior to closing as provided herein. 11 9_6. Insurance. Prior to closing, UTILITY shall maintain existing fire and extended coverage insurance to cover the cost of any repairs to the Purchased Assets that may be necessitated by casualty damage. CITY shall not be obligated to assume or continue to maintain any policy of insurance that was originally obtained by UTILITY after the Closing Date. 9_7. Examination and Inspection. UTILITY will permit examination by CITY'S authorized representatives of all existing contractual obligations, physical systems, assets, real estate, rights-of-way, easements and inventories utilized by UTILITY in connection with the System. Such facilities will be properly maintained by UTILITY within the custom and usage of the industry up until the Closing Date and shall not otherwise utilize any items of inventory other than for the operation of the System for the period ending on the Closing Date. SECTION 10. REPRESENTATIONS AND WARRANTIES OF CITY. To induce UTILITY to enter into this Agreement, CITY represents and warrants as follows: 10.1. Organization. Standing and Power of CITY. CITY is a municipal corporation duly organized and validly existing under the laws of the State of Florida and has all requisite municipal power and authority to enter into this Agreement, and to carry out and perform the terms and provisions of this Agreement. 10.2. Authority for Agreement. CITY has the authority and power to execute and deliver this Agreement and to carry out its obligations hereunder. This Agreement has been duly authorized by all municipal action required to be taken by CITY, including holding all required public hearings, has been duly executed and delivered by CITY, and constitutes a valid and legally binding obligation of CITY, enforceable in accordance with its terms. 10.3. Disclosure. No representation or warranty made by CITY, to the best of CITY's knowledge, in this Agreement contains or will contain any untrue statement of material facts or omits or will omit to state any material fact required to make the statements herein contained not misleading. 10.4. Service. Upon closing the transaction contemplated in this Agreement, CITY shall, to the extent allowable by law, continue to provide existing: (i) water and sewer service to the UTILITY's customers consistent with or superior to the services currently being provided by UTILITY to its customers; and (ii) water and wastewater service to Atlantic Gulf Communities Corporation, its successors and/or assigns ("Atlantic Gulf"), and properties owned by Atlantic Gulf, in a uniform and non- discriminatory manner with other property and property owners served by CITY. 12 10.5. Performance of Closina Conditions. CITY shall perform all of the conditions to closing which should be performed by CITY prior to the Closing Date as provided herein. 10.6. Survival of Covenants. CITY agrees that its representation and warranties set forth herein are true and correct as of the date of the execution hereof, shall be true and correct at the time of the Closing Date, but shall only survive for two (2) years following the Closing Date. SECTION 11. ADJUSTMENTS AND PROBATIONS. 11.1. Adiustments. At the time of closing, the parties covenant and agree that the following adjustments to the Purchase Price shall be made: (1) Real and personal property taxes on all real and personal property which is being conveyed by UTILITY to CITY, shall be prorated as of the Closing Date based on the most current tax bills available, with the understanding that if tax bills for the current year are not available, CITY will assume responsibility for all taxes for the current year but will be entitled to a reproration when available. (2) All rates, fees and charges for water and sewer service shall be prorated and adjusted between the parties as of 11:59 p.m. of the Closing Date. No later than twenty (20) days after the closing, CITY shall reimburse and credit UTILITY for ninety-five percent (95%) of all accounts receivable zero (0) to sixty (60) days old as of the Closing Date. UTILITY shall retain all accounts receivable which are delinquent for more than sixty (60) days (entitling UTILITY to the proceeds thereof if and when paid). CITY shall promptly turn over to UTILITY any such delinquent receivables that may be subsequently paid to CITY and shall use reasonable efforts to assist UTILITY in the collection of same, including, without limitation, discontinuing service to nonpaying customers. CITY agrees to pay UTILITY for ninety-five percent (95%) of all unbilled revenue, which shall be prorated as of the Closing Date and paid by CITY to UTILITY within thirty (30) days of billing. All rates, fees, and charges for water and sewer service after the Closing Date shall be the property of CITY. (3) CITY shall reimburse and credit UTILITY for the cost of all additional capital improvements made to the System by or on behalf of UTILITY prior to the Closing Date provided CITY has consented to said improvements. (4) UTILITY shall request all of its suppliers and vendors to submit final invoices for services, materials, and supplies, including electricity for the period up to and including the Closing Date. UTILITY shall be responsible for, and shall provide to CITY, upon request, evidence of the payment of all such invoices. 13 (5) For all those customers who are connected to and receiving service (water, wastewater, or water and wastewater) from UTILITY on the Closing Date and have paid connection, plant capacity, main extension, and/or capital charges ("Connection Charges") to UTILITY, the Connection Charges previously paid that specifically apply to the service being received (water, wastewater, or water and wastewater) shall be retained by UTILITY. For all those customers who, on the Closing Date, are not connected to and receiving service from UTILITY and have paid Connection Charges to UTILITY, and to whom UTILITY has extended completely all pipelines necessary to provide service, UTILITY may retain main extension charges previously paid that specifically apply to the pipelines extended (water main extension charges for water pipelines, wastewater main extension charges for wastewater pipelines), and UTILITY shall pay to CITY and CITY shall. receive from UTILITY all other Connection Charges (including impact fees) paid by such customers. All other Connection Charges received prior to the Closing Date by UTILITY from customers of the System who have not connected to the System, shall be deemed the property of CITY, and shall be paid to CITY. Except as otherwise provided in this Agreement, CITY will not accept or recognize any obligations regarding prepaid or discounted unconnected customers. Nothing contained in this Agreement shall be construed to require CITY to exercise the police power in the allocation of water and/or wastewater service capacity (hereby deemed to be a governmental function) other than in accordance with CITY's current or future service allocation or extension rules. CITY agrees, to the extent consistent with §768.28, Florida Statutes, to indemnify and hold UTILITY harmless for any claims, actions, expenses or damages, including costs and reasonable attorneys' fees at trial and/or appeal to which UTILITY may be exposed in the future as a result of any transfer of the Connection Charges by UTILITY to CITY. (6) The date of closing shall, for purposes of adjustments and prorations, be deemed to be a seller ownership day. (7) At closing, UTILITY shall receive a credit in an amount equal to UTILITY's actual cost of certain inventory listed in Exhibit 3.13, Part B, to this Agreement. A final inventory of the foregoing shall be taken not earlier than five (5) days or later than the day prior to Closing by representatives of the parties to prepare the final list of such inventory. 11.2. Payment of Fees and Taxes. UTILITY shall pay CITY all franchise fees and utility taxes due through the Closing Date. SECTION 12. CLOSING EXPENSES. The cost of recording any releases, satisfactions, or corrective instruments, along with the documentary stamps and surtax, if any, on the Deed shall be paid by UTILITY. The cost of recording the Deed shall be paid by CITY. Certified, confirmed and ratified special assessments or municipal liens as of the Closing Date shall be paid by UTILITY. Notwithstanding the foregoing, to the extent any of the foregoing certified, confirmed or ratified liens are payable in installments, 14 CITY shall take title subject to such liens and assume the balance of such installment payments, subject to appropriate prorations. SECTION 13. ENVIRONMENTAL NATTERS. 13.1. UTILITY warrants that the Property described in Exhibit 113.1" and the Purchased Assets are in a clean and healthful condition, free of environmental contamination or potentially harmful physical conditions, other than such contaminants or harmful conditions permitted by law. No hazardous substance has been improperly stored upon, disposed of, spilled or otherwise released to the environment on or in the Property or Easements by UTILITY or, to the best of the knowledge of UTILITY after due inquiry, by any other party. For purposes of this Agreement.the definition of the term- "hazardous substance" shall be that set out in Section 101(4) of the Federal Comprehensive Environmental Response, Compensation and Liability Act, except that for purposes of this Agreement, the term shall also include (1) petroleum (crude oil) and natural gas (whether existing as a gas or a liquid); and (2) any substance defined as hazardous or toxic by any state or local regulatory agency having jurisdiction over the operations of UTILITY. 13.2. The operation by UTILITY of its utility business complies in all material respects with all applicable federal, state and local environmental and occupational health and safety statutes and regulations. 13.3. UTILITY warrants that any tanks (whether above or below) on or at the Property or Easements installed or used by UTILITY are in sound conditions, free of corrosion or leaks which could permit any release of stored material. 13.4. None of the Property has been used by UTILITY or by any other party for the processing, storing, or otherwise utilizing asbestos, polychlorinated byphenyls ("PCB's"), or radioactive substances. UTILITY has received no notice that any of the foregoing materials are present on or at any Property or Easements. 13.5. All hazardous waste resulting from the operations of UTILITY on or at the Property or Easements have been disposed of in an environmentally sound manner. None of those wastes have been disposed.of in any site where there has been, is, or, due to the manner of disposition by UTILITY, will be released into the environment requiring corrective action, nor has UTILITY received notice from any state or federal environmental agency of its possible involvement with any disposal site under investigation by such agency. SECTION 14. INDEMNITY. 14.1. UTILITY shall, and hereby agrees to defend, indemnify and hold harmless, CITY at all times from and after the 15 Closing Date against and in respect to any damages, as hereinafter defined, from claims of any person or entity not a party to this Agreement which arise out of facts or circumstances occurring on or prior to the time of the Closing. CITY shall notify UTILITY of any such claims within thirty (30) days of its receipt of notice thereof. Damages, as used herein, shall include any obligations, losses, costs, expenses, injunctions, suits, fines, liabilities, penalties, and damages, including reasonable attorneys' fees at trial and all appellate levels, whatsoever that CITY incurs as a result of judgment or order rendered by a Court or agency of competent jurisdiction, that arise from, (1) any materially inac- curate representation made by UTILITY in or under this Agreement; (2) breach of any of the warranties made by UTILITY in or under this Agreement; (3.) breach or default in the performance by UTILITY of any of the covenants, conditions, commitments, agreements, duties or obligations to be performed by it hereunder; (4) any debts, liabilities or obligations of UTILITY, whether accrued, absolute, contingent or otherwise, due or to become due, except those obligations specifically assumed by CITY pursuant to this Agreement; (5) the breach by UTILITY or the failure of any act or action to occur that is the subject of any duty, obligation, covenant, condition, commitment, agreement, representation or warranty undertaken or made by or on behalf of UTILITY pursuant to this Agreement; and (6) the ownership and operation of the Water and Wastewater Utility System or the Water and Wastewater System Assets by UTILITY prior to the Closing Date. UTILITY agrees to defend, indemnify and hold CITY harmless from and pay any costs, fees, penalties, or fines that are imposed by a court or agency of competent jurisdiction, _upon CITY or UTILITY, by reason of UTILITY's failure to fully comply with any EPA, FDEP, or Water Management District order, rule, or statute, which may arise before, during, or after the Closing out of facts or circumstances occurring on or prior to the Closing Date. 14.2. CITY shall, and hereby agrees to defend, indemnify and hold harmless, UTILITY at all times from and after the Closing Date against and in respect to any damages, as hereinafter defined, from claims of any person or entity not a party to this Agreement which arise out of facts or circumstances occurring on or after the time of the Closing. UTILITY shall notify CITY of any such claims within thirty (30) days of its receipt of notice thereof. Damages, as used herein, shall include any obligations, losses, costs, expenses, injunctions, suits, fines, liabilities, penalties, and damages, including reasonable attorneys' fees at trial and all appellate levels, whatsoever that UTILITY incurs as a result of judgment or order rendered by a Court or agency of competent jurisdiction, that arise from, (1) any materially inaccurate representation made by CITY in or under this Agreement; (2) breach of any of the warranties made by CITY in or under this Agreement; (3) breach or default in the performance by CITY of any of the covenants, conditions, commitments, agreements, duties or obligations to be performed by it hereunder; (4) any debts, liabilities or obligations of CITY, whether accrued, absolute, contingent or otherwise, due or to become due, except those 16 obligations which were not assumed by CITY pursuant to this Agreement; (5) the breach by CITY or the failure of any act or action to occur that is the subject of any duty, obligation, covenant, condition, commitment, agreement, representation or warranty undertaken or made by or on behalf of CITY pursuant to this Agreement; and (6) the ownership and operation of the Water and Wastewater Utility System or the Water and Wastewater System Assets by CITY after the Closing Date. CITY agrees to defend, indemnify and hold UTILITY harmless from and pay any costs, fees, penalties, or fines that are imposed by a court or agency of competent jurisdiction, upon UTILITY or CITY by reason of CITY's failure to fully comply with any EPA, FDEP, or Water Management District order, rule, or statute, which may arise after the Closing out of facts or circumstances occurring after the Closing Date. SECTION 15. COVENANT NOT TO ENGAGE COMPETING IN UTILITY BUSINESS. UTILITY agrees that it shall not engage (the words "shall not" being used in a mandatory definition) in the business of providing water or wastewater service to any land located within CITY including any land annexed into CITY, for the next ten years. This provision will only become effective upon Closing. SECTION 16. CITY'S INVESTIGATION. CITY has previously reviewed and considered the nature of this transaction and has, or will have, on or before the Closing Date, acted in due diligence to investigate the System and all aspects of this transaction. Except only as to those matters which UTILITY has provided for the representations or warranties in this Agreement, in electing to proceed with this transaction, CITY shall have determined as of the Closing Date that the System is satisfactory to CITY in all respects and is purchasing the System in "as is" condition. CITY has and will rely solely on CITY's own independent investigations and inspections, except to the extent of any representations or warranties made by UTILITY in this Agreement. CITY further acknowledges and agrees that, except for the specific representations made by UTILITY in this Agreement, UTILITY has made no other representations, is not willing to make any representations and has not held out any inducements to CITY other than those specifically set forth in this Agreement. SECTION 17. CLOSING. Provided that all conditions precedent to closing have, in fact, been so performed, the place of closing shall be at the City Hall of the City of Sebastian, Florida, or at such other location selected by CITY in order to accommodate the closing of any municipal bonds being issued to finance this transaction pursuant to this Agreement and such closing shall occur on November 29, 1993 (the "Closing Date"), or such earlier date as the parties mutually agree in writing. Any party shall have the right to extend the Closing Date thirty (30) days beyond November 29, 1993, by sending written notice to the other parties at least fifteen (15) days prior to November 29, 1993. Immediately following the Closing Date, CITY shall have full right to the possession of all of the Water and Wastewater System, all of which shall be located in Sebastian, Florida. 17 SECTION 18. CLOSING DOCUMENTS AND PROCEDURES. 18.1. Deliveries from UTILITY. At least twenty (20) days prior to the Closing Date, UTILITY shall deliver to CITY: (1) True, correct and complete copies of the Articles of Incorporation and Bylaws of General Development Utilities, Inc., all as amended and in effect on the Closing Date; (2) Warranty deeds to all of the Property owned by UTILITY as described in Exhibit 113.1" conveying to CITY all of UTILITY's right, title and interest in all such property and warranting that such property is free and clear of all liens, claims and encumbrances other than the Permitted Exceptions, as that term is defined herein. (3) Instruments of conveyance, in appropriate recordable form, of all the Easements as described in Exhibit 113.4" hereof, conveying to CITY all of its right, title and interest in all such property, together with all utility improvements thereto, and warranting that such easement rights and rights to use dedicated rights-of-way are free and clear of all superior interests which could result in CITY losing the right to use the easement parcel for utility purposes. (4) Bills of sale or other documents of assignment and transfer, with full warranties of title, to all Water and Wastewater System Assets, other than those assets covered by Paragraphs 18.1(2) and 18.1(3) hereof; (5) All business records sold to CITY hereby; (6) Title insurance policies in the form called for in Section 6 of this Agreement; (7) All permits, governmental authorizations and approvals as described in Exhibit 113.711; (8) Standard mechanics lien affidavit in a form required by the title company as to realty and personalty insuring against any liens, claims or encumbrances upon the Purchased Assets; and (9) All existing customer deposits for service to CITY as required hereunder. 18.2. CITY Deliverables. On the Closing Date, CITY shall send a wire transfer of federal funds to the account identified by UTILITY or shall deliver a cashier's check in the amount due to UTILITY as provided in Section 5 of this Agreement. In addition, CITY shall sign and provide to UTILITY at closing all assumption agreements provided to CITY by UTILITY prior to closing in a form acceptable to CITY's attorney with respect to all contracts being assumed by CITY to which UTILITY was a party prior M to closing and, thereby, being assigned by UTILITY to CITY pursuant to this Agreement. Furthermore, CITY shall deliver to UTILITY a certified copy of the Resolution of the CITY Council which approved the transaction pursuant to this Agreement. 18.3 Conditions Precedent to Closing. The obligations of CITY pursuant to this Agreement are contingent upon satisfaction and UTILITY's performance of the following conditions set forth.in Paragraphs 18.3(a) through 18.3(d) prior to closing (or as otherwise provided below). If any of the contingencies specified below are not satisfied prior to closing, CITY shall have the right, at its option, but not the obligation, to declare this Agreement null and void by written notice to UTILITY and all parties shall be released of any further obligations and responsibilities pursuant to this Agreement. (a) CITY obtaining, at CITY's expense, a level one environmental audit indicating that the Property and the Purchased Assets are in a clean and healthful condition, free of environmental contamination or potentially harmful physical conditions, other than such contaminants or harmful conditions permitted by law. CITY and its agents, contractors or employees shall have the right to enter upon the Property for the purpose of performing such audit, providing said activities shall not any way damage the Property or any part thereof or disrupt the normal business operations of the Property. Such audit shall be performed not less than thirty (30) days prior to closing. CITY's failure to obtain such audit or, in the event CITY shall close this transaction after having obtained such an audit, shall in no way relieve UTILITY of any liability with respect to the breach of any warranty or representation contained in Section 13 of this Agreement. (b) CITY determining, in its sole and absolute discretion, that all contracts or agreements, including, but not limited to, all leases, service agreements and developers' agreements, which CITY is to assume pursuant to this Agreement or which shall affect or obligate CITY at any time after the Closing Date, shall be suitable to CITY. For a period of thirty (30) days commencingupon delivery of all applicable contracts and agreements to CITY, CITY shall be entitled to inspect said contracts and agreements and UTILITY shall give to CITY and its agents, contractors or employees full access to all such contracts and commitments and shall furnish to CITY all information concerning such contracts and commitments as CITY may reasonably request. In the event CITY fails to notify UTILITY, in writing, of CITY's election to terminate this Agreement due to the unsuitability of any contract or agreement within the foregoing thirty (30) day period, this condition shall be deemed waived. (c) All UTILITY's representations and warranties contained in this Agreement shall be true as of the Closing Date as if such representation and warranties were made at 19 such time, and all such representations of warranties shall survive the Closing for a period of two (2) years. (d) All corporate, governmental and other proceedings to be taken by UTILITY and CITY in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in form and substance to CITY, and to UTILITY, and to their respective attorneys, and CITY and UTILITY shall have received from each other all such counterpart originals or certified or other copies of such documents as CITY or UTILITY may reasonably request. SECTION 19. RESPONSIBILITY FOR PROFESSIONAL FEES AND COSTS. Each party hereto shall be responsible for its own reasonable attorneys' fees, engineering fees, accounting fees and other costs in connection with the preparation and execution of this Agreement. SECTION 20. INTENTIONALLY BLANK SECTION 21. COMMISSIONS. UTILITY and CITY warrant to the other that the transaction contemplated by this Agreement is_a direct, private transaction between UTILITY and CITY without the use of a broker or commissioned agent. SECTION 22. FURTHER ASSURANCES. Each of the parties hereto agrees that, from time to time, upon the reasonable request of the other party and at the expense of the requesting party, without further consideration, it shall execute and deliver to the requesting party any and all further instruments, affidavits, conveyances and transfers as may be reasonably required to carry out the provisions of this Agreement. SECTION 23. NOTICES; PROPER FORM. Any notices required or allowed to be delivered hereunder shall be in writing and be deemed to be delivered when (1) hand delivered to the person hereinafter designated, (2) upon receipt of such notice when deposited in the United States mail, postage prepaid, certified mail, return receipt requested, addressed to a party at the address set forth opposite the party's name below, or at such other address as the party shall have specified by written notice to the other party delivered in accordance herewith, or (3) sent by a recognized overnight courier, such as Federal Express, addressed to a party at the address set forth opposite the party's name below, or at such other address as the party shall have specified by written notice to the other party delivered in accordance herewith: W8 CITY: City Manager City of Sebastian, Florida City Hall 1225 Main Street Sebastian, Florida 32958 (407) 589-5330 Fax (407) 589-5570 with a copy to: Charles Ian Nash, Esquire City Attorney Frese, Nash & Torpy, P.A. 930 S. Harbor City Blvd. Suite 505 Melbourne, Florida 32901 (407) 984-3300 Fax (407) 951-3741 UTILITY: Charles E. Fancher, Jr., President General Development Utilities, Inc. 2601 South Bayshore Drive Miami, Florida 33131 (305) 859-4331 Fax (305) 859-4657 with a copy to: Marcia H. Langley, Esq. Atlantic Gulf Communities Corp. 2601 South Bayshore Drive Miami, Florida 33133-3461 (305) 859-4231 Fax (305) 859-4524 SECTION 24. NO INTERFERENCE WITH EMPLOYMENT. UTILITY will not interfere with CITY hiring any of the present operational staff of the Water and Wastewater System. CITY shall notify UTILITY thirty (30) days prior to the Closing Date as to which existing employees of UTILITY to whom CITY will be extending offers of employment. SECTION 25. ENTIRE AGREEMENT. This instrument and the Exhibits annexed hereto constitute the entire Agreement between the parties and supersedes all previous discussions, understandings, and agreements between the parties relating to the subject matter of this Agreement. SECTION 26. AMENDMENT. Amendments to and waivers to the provisions herein shall be made by the parties only in writing by formal amendment. 01 SECTION 27. DISCLAIMER OF THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of the formal parties herein, and no right or cause of action shall accrue upon or by reason hereof, to or for the benefit of any third party not a formal party hereto. SECTION 28. BINDING EFFECT. All of the provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by legal representatives, successors and nominees of CITY and UTILITY. SECTION 29. TIME OF THE ESSENCE. Time is hereby declared of the essence to the performance of this Agreement. SECTION 30. APPLICABLE LAW. This Agreement shall be con- strued, controlled, and interpreted according to the laws of the State of Florida, and the venue for any action or suit brought to interpret or enforce any of the provisions of this Agreement shall be filed and maintained in Indian River County, Florida. SECTION 31. CORROBORATION OF PAYMENT AFTER CLOSING. In each instance in which any party to this Agreement is to receive money from another party to this Agreement after the Closing Date, the party who is entitled to receive the money under the terms of this Agreement shall have the right to inspect, at its own expense, those books and records of the other party as may be necessary to corroborate the accuracy of the amount of money received from the party, within thirty (30) days of receipt of the payment. The provisions of this Section shall survive the closing. SECTION 32. CONSTRUCTION. All of the parties to this Agreement have participated fully in the negotiation and preparation hereof, and accordingly, this Agreement shall not be more strictly construed against any of the parties hereto. In construing this Agreement, the singular shall be held to include the plural, the plural shall be held to include the singular, the use of any gender shall be held to include any other and all genders, and the captions and paragraph headings shall be disregarded. SECTION 33. SEVERABILITY. In the event any term or provision of this Agreement is determined by the appropriate judicial authority to be illegal or otherwise invalid, such provision shall be given its nearest legal meaning or be construed as deleted as such authority determines, and the remainder of this Agreement shall be construed to be in full force and effect. SECTION 34. COUNTERPARTS. This Agreement may be executed in several counterparts, and each such counterpart shall be deemed an original, but all such counterparts will constitute one agreement. SECTION 35. SPECIFIC PERFORMANCE. In the event any party to this Agreement fails to close on the Closing Date (without any default by another party), time being of the essence, or in the ►xa event of any other default by any party of its obligations hereunder which continues for a period of fifteen (15) days following written notice thereof from another party, the non - defaulting shall be entitled to seek all rights and remedies available at law or equity, including specific performance. SECTION 36. SURVIVAL OF INDEMNIFICATIONS. All agreements of indemnity made by any party to this Agreement shall survive the closing for a period of two (2) years. SECTION 37. RADON GAS. RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written. Signed, sealed and delivered CITY: in the presence of: THE CITVOFEBASTIAN, FLORIDA By: Lonnie R. Powell, M or (x) Name: Wendy B. Widmann (x) Name: Richard B. Votapka Attestf�l��c-x _ }Y% �Yld1��v. Kathy M. O'Halloran, CMC/AAE, City Clerk Approved as to Form and Legal Suff'cie y (SEAL) 'Richard E. Torp Assistant City Attorney 23 Signed, sealed and delivered in the presence of: (X)///D1�,�i Name: Ni]f7n2 L. W ,c.w'--- Name: (_je2 i . ZAt A r -a n/(. STATE OF FLORIDA COUNTY OF INDIAN RIVER UTILITY: GENERAL DEVELOPMENT UTILITIES, INC., a corpprat�on By: eaY . V.114L LGO G. President [Corporate Seal] The foreg ing instrument was acknowledged before me this _ day of 1993 by Lonnie R. Powell, the Mayor of THE CITY OF SEBASTIAN, FLORIDA, on behalf of THE CITY OF SEBASTIAN. z!Cr*is personally known to me or has produced /-)/Iq as identification. State of Florida SALLY A. MAIC Notary Pubk-Stara or ;:bnda My Cmwftalon Ezptrm OCT 05.1991 COMM 0 CC 655906 & o Name of A knowledger Typed, Printed or Stamped CC 04; 0o Commission Number 24 STATE OF FLORIDA COUNTY OF JCAy\\ he forego ng in rument was acknowledged before me this day of ('G -76�n , 1993 by Charles E. Fancher, Jr., President of GENERAL DEVELOPMENT UTILITIES, INC., a Florida Corporation, on behalf of the corporation. He is personally known to me or has produced as identification. JL Al� tary Public State of Florida ApP'' � .Y.•FIC:AL NOTARY SEAL _ HANNAH L WP SON 2 CONMI WN NUMBER e CC174107 TAOF FVO MYFEB. N'8 996XP. Name of Acknowledger Typed, Printed or Stamped Commission Number O�pPY P`e' OrMc'AL NOTAH- e,u . r IT) n HANNAH L W!E 7_a,Y T < COY`Y,198N)1: 'A'CF �CaTO my CO�i,4lS3 • •. FHP, ' 4P. 25 "LIST OF EXHIBITS TO CITY OF SEBASTIAN, FLORIDA/ GENERAL DEVELOPMENT UTILITIES, INC. WATER AND SEWER SYSTEM PURCHASE AND SALE AGREEMENT 3.1 Land 3.3 Equipment 3.4 Easements, ROWS, and other similar real estate rights and assets 3.6 Business Records 3.7 Permits and Approvals 3.11 All Assigned and Assumed 3.13 Inventory Part A and Part c:\wp\cin\sebasgdu.RE2 Contracts and Agreements B 1.3 $5,000,000 CrrY OF SEBASTIAN, FLORIDA Utilities System Revenue Bonds, Series 1993 BOND PURCHASE CONTRACT THIS IS A BOND PURCHASE CONTRACT, dated December 8, 1993 (the "Purchase Contract'), by and between Raymond James & Associates, Inc., Boca Raton, Florida (the "Underwriter"), and the City of Sebastian, Florida (the "City"). Upon execution and delivery of this Purchase Contract, it shall be binding upon the City and the Underwriter. Any capitalized term not conventionally capitalized and not defined herein shall have the meaning indicated in the Official Statement (hereinafter defined). 1. Purchase and Sale of the Bonds. Upon the terns and conditions and upon the basis of the representations and agreements set forth herein, the Underwriter hereby agrees to purchase from the City for offering to the public, and the City hereby agrees to sell and deliver to the Underwriter for such purpose, all (but not less than all) of the City's $5,000,000 aggregate principal amount of Utilities System Revenue Bonds, Series 1993 (the "1993 Bonds"). The 1993 Bonds shall be issued in such principal amounts, shall mature on such dates and in such amounts, shall bear such rates of interest, and shall be subject to redemption, all as set forth in Exhibit A attached hereto and incorporated herein by this reference. The purchase price to be paid by the Underwriter to or for the account of the City upon delivery of the 1993 Bonds is $4,929,049.00 (the aggregate principal amount of the 1993 Bonds, less Underwriter's discount of $62,500.00 and original issue discount of $8,451.00) plus accrued interest on the 1993 Bonds from the dated date thereof to the date of the payment for and delivery of the 1993 Bonds pursuant to Section 8 hereof. The payment and delivery and the other actions contemplated hereby to take place at the time of such payment and delivery are referred to as the "Closing". 2. Official Statement. As soon as practicable after the date hereof, and, in any event, no later than the earlier of (a) 7 business days after the date hereof or (b) 5 business days prior to the date of Closing, the City shall, so as to enable the Underwriter to comply with the provisions of SEC Rule 15c2-12, deliver to the Underwriter a sufficient number (not to exceed 200) of printed copies (as requested by the Underwriter) of the final Official Statement (including the cover page and appendices contained therein, the "Official Statement"), dated the date hereof, with respect to the 1993 Bonds, executed (manually or conformed) by the City in substantially the form of the Preliminary Official Statement (as hereinafter defined) with such changes thereto as may be approved by the Mayor (his execution thereof evidencing approval of any such changes) and the Underwriter. 1 3249/IAM13.005.BPA412/W93 2:46pn 3. The 1993 Bonds. The 1993 Bonds shall be as described in, and shall be issued and secured under the provisions of, Resolution No. R-93-58, adopted by the City Council of the City on November 3, 1993, as restated, amended and supplemented (collectively, the "Bond Resolution"), approving the issuance of the 1993 Bonds. 4. Disclosure Statement, Good Faith Deposit. The City acknowledges receipt from the Underwriter of the disclosure statement of the Underwriter required by Section 218.385(6), Florida Statutes, substantially in the form attached hereto as Exhibit B. The City further acknowledges receipt of a corporate check of Raymond James & Associates, Inc., St. Petersburg, Florida in the amount of $50,000 (the "Good Faith Check"), and the City agrees to hold the Good Faith Check uncashed as security for the performance by the Underwriter of its obligation to accept and pay for the 1993 Bonds at the Closing in accordance with the provisions of this Purchase Contract. Upon compliance by the Underwriter with such obligation, the City shall return the Good Faith Check (uncashed) to the Underwriter at the Closing. If the City does not accept this offer, the City shall immediately return the Good Faith Check to the Underwriter. In the event: (a) the City fails to deliver the 1993 Bonds at the Closing, (b) the City shall be unable at or prior to the Closing to satisfy all of the conditions to the obligations of the Underwriter contained herein, or (c) the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, then the City shall immediately return the Good Faith Check (uncashed) to the Underwriter. If the Underwriter fails (other than for a reason permitted hereunder) to accept and pay for the 1993 Bonds upon tender thereof by the City at the Closing as herein provided, the City may cash the Good Faith Check and retain the proceeds as and for full liquidated damages for such failure and for any and all defaults hereunder on the part of the Underwriter, and the cashing of the Good Faith Check shall constitute a full release and discharge of all claims and rights of the City against the Underwriter for damages for such failure and for any and all such defaults. 5. Public Offering. It shall be a condition to the City's obligations to sell and to deliver the 1993 Bonds to the Underwriter and to the Underwriter's obligations to accept delivery of and to pay for the 1993 Bonds that the entire aggregate principal amount of the 1993 Bonds be sold and be issued and delivered by the City at the Closing. The Underwriter agrees to make a bona fide initial public offering of all the 1993 Bonds, plus interest accrued thereon from the dated date of the 1993 Bonds. At the Closing the Underwriter shall deliver to the City a certificate to the effect that (i) all of the 1993 Bonds have been the subject of an initial offering to the public as herein provided, and (ii) not less than ten percent (10%) of the 1993 Bonds of each maturity were sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of Underwriter or wholesalers) at initial offering prices not greater than the respective prices shown on the cover of the Official Statement. 2 3248/JAM13.005.BPA4-1V14/93 2:46pn 6. Use of Documents. The City hereby authorizes the use by the Underwriter in connection with the public offering, sale and distribution of the 1993 Bonds of the following documents: (a) the Bond Resolution, (b) City of Sebastian, Florida/General Development Utilities, Inc., Water and Sewer System Purchase and Sale Agreement, dated October 12, 1993, between the City and GDU (the "Purchase Agreement"), and Resolution No. R-93-63, duly adopted by the City on November 10, 1993, authorizing execution of the Purchase Agreement (the "Purchase Agreement Resolution"), (c) Rate Resolution No. R-93-59, adopted by the City Council on December 1, 1993, establishing water and wastewater rates which will become effective upon the Acquisition (the "Rate Resolution"). (d) the Official Statement (including any supplements or amendments thereto) dated the date hereof, (e) the Preliminary Official Statement, dated December 6, 1993 (the "Preliminary Official Statement"), and (f) any other documents related to the transactions contemplated in the Official Statement in connection with the authorization, issuance and delivery of the 1993 Bonds to the Underwriter, the Acquisition and the 1993 Project, and public offering and distribution of the 1993 Bonds by the Underwriter on behalf of the City. In this Purchase Contract, the Bond Resolution, the Rate Resolution and the Purchase Agreement Resolution are referred to collectively as the "Resolution". 7. Representations and Agreements. The City hereby represents and agrees as follows: (a) the City is, and will be at the date of Closing, duly organized and validly existing as a municipal corporation of the State of Florida (the "State") with the powers and authority set forth in Chapter 166, Florida Statutes, the Charter of the City, and other applicable laws (herein collectively referred to as the "Act"); (b) the City has full legal right, power and authority to: (i) issue the 1993 Bonds for the purpose of providing moneys to finance the costs of (1) acquiring, pursuant to the Purchase Agreement, certain water production, storage and distribution facilities, wastewater collection and treatment facilities, and 3 3248/IAMI3.WS.BPAL12/14193 2A6p" effluent disposal facilities presently owned by GDU and located predominantly within the City limits (the "Acquisition"), and the combining of such facilities with the City's currently owned and operated water and sewer utility system (the "System"), (2) certain improvements to the System (the "1993 Project"), (3) funding a deposit to the Reserve Subaccount, (4) capitalizing interest on the 1993 Bonds, and (5) paying costs of issuance of the 1993 Bonds, all as provided in the Bond Resolution, (ii) adopt the Bond Resolution, the Purchase Agreement Resolution and the Rate Resolution, and perform its obligations thereunder, (iii) enter into and perform its obligations under this Purchase Contract and the Purchase Agreement, (iv) sell, issue and deliver the 1993 Bonds to the Underwriter as provided herein, and (v) carry out and consummate the transactions contemplated by this Purchase Contract, the Bond Resolution, the Rate Resolution, the Purchase Agreement Resolution, the Purchase Agreement, and the Official Statement; (c) by all necessary official action taken at meetings of the City Council duly called and held in accordance with applicable law, at which a quorum was present and acting throughout, the City has: (i) approved and adopted, the Bond Resolution, the Rate Resolution, and the Purchase Agreement Resolution, (ii) approved and authorized the Preliminary Official Statement and its distribution in connection with the offering of the 1993 Bonds and approved the execution, delivery and distribution of the Official Statement in connection with the delivery of the 1993 Bonds, (iii) duly authorized and approved (1) the execution and delivery of, and the performance by the City of, its obligations in connection with the issuance, of the 1993 Bonds contained in the 1993 Bonds, the Bond Resolution, the Purchase Agreement, and this Purchase Contract, and (2) the consummation by it of all other transactions contemplated to be performed by the City under this Purchase Contract in connection with the issuance of the 1993 Bonds; (d) the City, at the time of Closing, will have performed all of its obligations under this Purchase Contract, the Resolutions, and the Purchase Agreement required to be performed at or prior to Closing; 0 3246/JAM13.005.BPA412)14/93 2:46pm (e) the City has complied, and at the Closing will be in compliance in all respects, with the terms of the Act, the Resolutions, the Purchase Agreement, and this Purchase Contract; (f) the Resolutions, the Purchase Agreement, and this Purchase Contract constitute the legal, valid and binding obligations of the City, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and subject to the exercise of judicial discretion in appropriate cases; (g) the 1993 Bonds, when issued, authenticated and delivered to the Underwriter in accordance with the Bond Resolution, and this Purchase Contract, will constitute legal, valid and binding obligations of the City, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and subject to the exercise of judicial discretion in appropriate cases; (h) with regard to the issuance of the 1993 Bonds, the Acquisition of the System, and the transactions contemplated in the Official Statement, to the best of the undersigned's knowledge: (i) the City is not in material breach of or default under: (A) any applicable constitutional provision, law or administrative regulation of the City, the State or the United States of America, or any board, commission or agency, if any, thereof, (B) any applicable judgment or decree of any court, board, commission or agency of the City, the State, or the United States of America; or (C) any loan agreement, indenture, bond, note, resolution, agreement or other material instrument to which the City is a party or to which the City or any of its property or assets is otherwise subject, including the Resolutions, the Purchase Agreement, or this Purchase Contract; (ii) no event has occurred or is continuing which, with the passage of time, the giving of notice, or both, would constitute a material breach of or event of default under any such provisions, laws, regulations, judgements, decrees, or instruments; (iii) the execution and delivery of the 1993 Bonds, the Purchase Agreement, this Purchase Contract, and the adoption of the Resolutions and compliance with the provisions on the City's part contained therein, will not: 3748/3AM13.005.BPA417/14/93 2:46pm (A) conflict with or constitute a breach of or default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other material instrument to which the City is a parry or to which the City or any of its property or assets is otherwise subject, or (B) 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 or under the terms of any such law, regulation or instrument, except as provided in the 1993 Bonds, the Bond Resolution, and as set forth in the Official Statement; and (iv) no event has occurred or is continuing which, with the passage of time or the giving of notice, or both, would constitute a default by the parties to the Purchase Agreement, other than the City, or the Acquisition of the System, or the transactions contemplated in the Official Statement, or other material instrument to which the City is a party; all with regard to the issuance of the 1993 Bonds. (i) all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission, which are required for the due authorization by, or 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 in connection with the issuance of the 1993 Bonds under the Bond Resolution, pursuant to this Purchase Contract, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the 1993 Bonds, have been duly obtained or are reasonably obtainable in the ordinary course of business; 0) the 1993 Bonds, when issued, executed and delivered in accordance with the Bond Resolution and sold to the Underwriter as provided herein, will be validly issued and outstanding obligations of the City, entitled to the benefits of the Bond Resolution; and upon such issuance, execution and delivery, the Bond Resolution, will provide, for the benefit of the Holders from time to time of the 1993 Bonds, a legally valid and binding pledge of and lien on the Pledged Funds pledged to the payment thereof, subject only to bankruptcy, insolvency or other laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and subject to the exercise of judicial discretion in appropriate cases; (k) the descriptions of the 1993 Bonds, the Resolutions and the Purchase Agreement, contained in the Official Statement conform in all material respects to the 1993 Bonds, the Resolutions, and the Purchase Agreement. (1) except as disclosed in the Official Statement, to the best knowledge of the City, as of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in 0 3248/1AM13.005.BPA4-12114/93 2:46Pm equity, before or by any court, government agency, public board or body, pending or threatened against the City, (i) affecting or seeking to prohibit, restrain or enjoin (A) the sale, issuance or delivery of the 1993 Bonds or (B) the collection of the Pledged Funds pledged to pay the principal of and interest on the 1993 Bonds, or (C) the pledge of and lien on such Pledged Funds to secure payment of the 1993 Bonds; or (ii) contesting or affecting (A) the adoption, validity or enforceability of the Resolutions, (B) the execution, delivery and enforceability of the Purchase Agreement or this Purchase Contract, or (C) the ownership and operation of the System and the collection of rates, fees and charges for the product and services of the System; or (iii) contesting the exclusion from gross income for federal income tax purposes of interest on the 1993 Bonds; or (iv) contesting the completeness or accuracy of the Official Statement or any supplement or amendment thereto; or (v) contesting the existence or powers of the City or its authority (A) to own and operate the System, (B) to enact or adopt, as the case may be, enter into, execute and deliver, and perform its obligations under, as the case may be, the Resolutions, the Purchase Agreement, and this Purchase Contract, or (C) to issue the 1993 Bonds, (m) the City will furnish such information, execute such instruments and take such other action not inconsistent with law or the established policy of the City in cooperation with the Underwriter as the Underwriter may reasonably request in order to: (i) determine the eligibility of the 1993 Bonds for investment under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate, (ii) qualify the 1993 Bonds for offer and sale under the laws of such states and other jurisdictions, and (iii) use its best efforts to continue such qualifications in effect so long as required for the distribution of the 1993 Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction; 7 32489AM13.005.BPA412/14193 2:46pv (n) as of its date, the Preliminary Official Statement was deemed "final" by the City for purposes of SEC Rule 15c2 -12(b)(1) by execution of the appropriate certificate by a duly authorized officer of the City; (o) at the time of the City's acceptance hereof and (unless an event occurs of the nature described in paragraph (q) of this Section (7)) at all times subsequent thereto up to and including the date of the Closing, other than as disclosed in the Official Statement: (i) the City will not have incurred any long-term debt obligations secured by the Pledged Funds or relating to the System, (ii) the City will not have suffered any material adverse change in its financial position, (iii) the System will not have suffered any material adverse change in its operations or facilities, and (iv) the Official Statement does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (p) if the Official Statement is supplemented or amended pursuant to paragraph (q) of this Section 7, 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 up to and including the date of the Closing, the Official Statement as so supplemented or amended, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (q) if between the date of this Purchase Contract and the date of the closing the City is notified or becomes aware of the occurrence of any event which might or would cause the Official Statement, as then printed, supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall immediately notify the Underwriter thereof, and, if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will, at its own expense, supplement or amend the Official Statement in a form and in a manner approved by the Underwriter and will provide the Underwriter with a sufficient number of copies (not to exceed 200) of such supplement or amendment as requested by the Underwriter so as to enable the Underwriter to comply with the provisions of SEC Rule 15c2-12; 11 324&/JAMI3.0D5.)3PA4-12JI4/93 2:46pm (r) all proceedings of the City Council relating to (i) the adoption of the Resolutions, (ii) the authorization of the Purchase Agreement and this Purchase Contract, (iii) the approval and authorization of the issuance and sale of the 1993 Bonds, (iv) the execution of the 1993 Bonds, the Purchase Agreement, this Purchase Contract, and the Official Statement, were conducted at duly convened public meetings of the City Council with respect to which (A) all notices were duly given to the public, (B) the public was free to attend and (C) quorums were at all pertinent times present and acting; (s) the City will prepare and submit the information reports concerning the 1993 Bonds required by Section 149(e) of the Code and any then existing or proposed regulations thereunder, by registered mail, return receipt requested, to the Secretary of the Treasury within the time limit provided in the Code; and thereafter, the City will prepare and submit or cause to be submitted any supplement to the information reports which is deemed by Bond Counsel to be necessary or advisable in order to preserve or restore the status of the 1993 Bonds under the Code; and the information included in the information reports and any supplement thereto will be true and complete for the purposes for which intended; and (t) when delivered to and paid for by the Underwriter at the Closing in accordance with the provisions of this Purchase Contract, the 1993 Bonds will have been duly executed, authenticated and delivered pursuant to the Bond Resolution and will be entitled to the benefit and security of the Bond Resolution. 8. Closing. At 12:55 p.m., New York City time, on December 16, 1993, or at such other time as may be mutually agreed upon by the City and the Underwriter, the City will, subject to the terms and conditions hereof, deliver the 1993 Bonds to The Depository Trust Company ("DTC") in New York, New York, in such denominations and payable to such parties as shall be requested by the Underwriter (not less than five business days prior to Closing, otherwise in the discretion of the City, to be made payable to the Underwriter in such denominations as the City shall determine), duly executed and authenticated, together with the other documents hereinafter mentioned, and, subject to the terms and conditions hereof, the Underwriter will accept delivery of and pay the purchase price for the 1993 Bonds as set forth in Section 1 hereof in immediately available funds to the order of the City; and thereupon, the City shall deliver the Good Faith Check (uncashed) described in Section 4 hereof to the Underwriter. Delivery and payment shall be made at such place as may be mutually agreed upon by the City and the Underwriter. 0 3248/JAM13.005.BPA4-12/14/93 2:46pm The definitive 1993 Bonds shall be in such form as shall be acceptable to DTC (which shall include printed or typewritten Bonds if and to the extent required by DTC, registered in the name of such nominee of DTC as DTC shall require) and shall be delivered to DTC in New York, New York, at least 24 hours prior to the time set for Closing. 9. Closing Conditions. The Underwriter has entered into this Purchase Contract in reliance upon: (i) the representations and agreements of the City contained herein, (ii) the representations and agreements to be contained in the documents and instruments to be delivered at the Closing, and (iii) 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 obligation under this Purchase Contract to purchase, to accept delivery of, and to pay for the 1993 Bonds is (i) 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, including, without limitation, Acquisition of the System, and (ii) subject to the following additional conditions, which must be satisfied at or prior to the Closing: (a) the representations of the City contained herein shall be true, complete and correct (i) on the date hereof and (ii) on and as of the date of the Closing, as if made on the date of the Closing; (b) the Resolutions and the Purchase Agreement shall be in full force and effect in accordance with their respective terns and shall not have been amended, modified or supplemented, and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter; (c) all official actions of the City relating to this Purchase Contract, the 1993 Bonds, the System and the 1993 Project (i) shall be in full force and effect in accordance with their respective terms and (ii) shall not have been amended, modified or supplemented in any material respect, except in each case as may have been agreed to by the Underwriter; and (d) the Underwriter shall have received fully executed originals, or copies, certified under seal of the official custodian of the records in which such documents are filed, of each of the following documents: 10 32481JAMI3.005.BPA4.12/14M 2:46pn (1) this Bond Purchase Contract; (2) the Official Statement and each supplement, amendment or modification, if any, thereto; (3) the Bond Resolution and the Rate Resolution; (4) the Purchase Agreement and Purchase Agreement Resolution; (5) the Consulting Engineer's Report in substantially the form and delivered by the firm as shown in Appendix A to the Official Statement; (6) a certificate, dated the date of closing, signed by the Mayor and the Interim City Manager, or other appropriate officials satisfactory to the Underwriter and its counsel, to the effect that to the best of their knowledge: (i) the representations of the City herein are true and correct in all material respects as of the date of closing; (ii) the City has performed all obligations to be performed hereunder as of the date of closing; (iii) proceeds from the sale of the 1993 Bonds will be used as contemplated in the Official Statement and Bond Resolution; (iv) the City has not, since September 30, 1992, incurred any material liabilities other than in the ordinary course of business or as disclosed in the Official Statement; and (v) the Official Statement did not as of its date, and does not as of the date of Closing, contain any untrue statement of a material fact or omit to state a material fact which should be included therein for the purposes for which the Official Statement is to be used, or which is necessary in order to make the statements contained therein, in light of the circumstances in which they were made, not misleading; (7) a certificate (herein sometimes referred to as the "Tax Compliance Certificate") of the City executed by the Mayor, dated as of the date of Closing, setting forth facts, estimates and circumstances concerning the use or application of the proceeds of the 1993 Bonds, and stating in effect that on the basis of such facts, estimates and circumstances in existence on the date of Closing, it is not expected that the proceeds of the 1993 Bonds will be used in a manner that would cause such 1993 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the "Code"); (8) a certificate executed by an authorized officer of Barnett Banks Trust Company, N.A., Jacksonville, Florida (the "Bank"), as Bond Registrar and Paying Agent to the effect that: 11 324/3AM13.005.BPA4-IN14193 2:46{m (a) the Bank is a national banking association duly organized, validly existing under the laws of the United States of America and is duly authorized to exercise trust powers in the State of Florida; (b) the Bank has all requisite authority, power, licenses, permits and franchises, and has full corporate power and legal authority to perform its functions under the Bond Resolution and the Registrar and Paying Agent Agreement, dated the date of Closing, by and between the Bank and the City (the "Paying Agent Agreement"); (c) the performance by the Bank of its functions under the Bond Resolution and the Paying Agent Agreement will not result in any violation of the Articles of Association or Bylaws of the Bank, any court order to which the Bank is subject or any agreement, indenture or other obligation or instrument to which the Bank is a party or by which the Bank is bound, and no approval or other action by any governmental authority or agency having supervisory authority over the Bank is required to be obtained by the Bank in order to perform its functions under the Bond Resolution and the Paying Agent Agreement; and (d) to the best of such authorized representative's knowledge, there is no action, suit, proceeding or investigation at law or in equity before any court, public board or body pending or, to their knowledge, threatened against or affecting the Bank wherein an unfavorable decision, ruling or finding on an issue raised by any party thereto is likely to materially and adversely affect the ability of the Bank to perform its obligations under the Bond Resolution and the Paying Agent Agreement; (9) an approving opinion relating to the 1993 Bonds, dated the date of the Closing and addressed to the City, of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel to the City, in substantially the form included in the Official Statement as Appendix E; (10) an opinion, dated the date of the Closing and addressed to the Underwriter, of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel to the City, to the effect that (i) the foregoing opinion addressed to the City may be relied upon by the Underwriter and it counsel to the same extent as if such opinion was addressed to them; (ii) this Purchase Contract has been duly authorized, executed and delivered by, and assuming due authorization, execution and delivery thereof by the Underwriter, constitutes a legal, valid and binding agreement of the City in accordance with its terms except that the binding effect and enforceability are subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, readjustment of debt and other laws in effect from time to time affecting the rights of creditors generally and except to the extent that enforceability thereof may be limited by the application of principles of equity; (iii) the 1993 Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Bond Resolution and the Paying 12 3248/JAM1I0M.BPA4-12/14/93 2:46Pm Agent Agreement are exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (iv) they have reviewed statements contained in the Official Statement under the captions "DESCRIPTION OF THE 1993 BONDS", "SECURITY FOR THE 1993 BONDS", "COVENANTS REGARDING RATES AND ADDITIONAL BONDS", "SUMMARY OF CERTAIN BOND RESOLUTION PROVISIONS", "VALIDATION", "ADVISORS AND CONSULTANTS - BOND COUNSEL", AND "APPENDIX D - FORM OF BOND RESOLUTION" (collectively, the "Document Summaries"), and on the cover page thereof relating to their opinion and therein under the heading "TAX EXEMPTION"; (v) the Document Summaries (insofar as such statements constitute a summary of certain provisions of the Bond Resolution and the 1993 Bonds) and the information on the cover page and in "APPENDIX E - FORM OF BOND COUNSEL OPINION" relating to their opinion and under the caption "TAX EXEMPTION" fairly present the information purported to be summarized; provided, however, that the Document Summaries referred to do not purport to summarize all the provisions of, and are qualified in their entirety by, the complete documents which are summarized; and (vi) the Official Statement has been duly authorized, executed and delivered by the City; (11) an opinion of Charles Ian Nash, Counsel to the City, dated the date of Closing, and addressed to the City, the Underwriter and its counsel to the effect that (i) this Purchase Contract, the Bond Resolution, the Rate Resolution, the Purchase Agreement Resolution, and the Purchase Agreement have been duly adopted, or authorized, executed and delivered by the City and, assuming due authorization, execution and delivery thereof by the other parties thereto, constitute binding and enforceable obligations of the City in accordance with their terms, except that the binding effect and enforceability are subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, readjustment of debt and other laws in effect from time to time affecting the rights of creditors generally and except to the extent that enforceability thereof may be limited by the application of principles of equity; (ii) the information in the Official Statement under the captions "PURPOSE OF THE 1993 BONDS", "THE ACQUISITION PROGRAM", "THE CITY," "LITIGATION," "LEGAL MATTERS," and statements of fact under the caption "DISCLOSURE MATTERS - Required by Florida Blue Sky Regulation", is correct in all material respects and does not omit any statement which, in his opinion, should be included or referred to therein in order to make the statements made therein, in light of the circumstances under which there were made, not misleading; (iii) based upon his review of the Official Statement and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, as of the date of the Closing nothing has come to his attention which would lead him to believe that the Official Statement when taken as a whole, contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading (except for the financial information and statistical data contained in the Official Statement or in the Appendices thereto, as to all of which no view need be expressed); (iv) the adoption of the Bond 13 3248/3AM13.805.BPA4-12114/93 2:46pm Resolution, the Rate Resolution, and the Purchase Agreement Resolution, and the execution and -delivery of the 1993 Bonds, this Purchase Contract, and the Purchase Agreement, and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a breach of or default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or to which the City or any of its property or assets is 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 or under the terms of any such law, regulation or instrument, except as expressly provided in the 1993 Bonds and the Bond Resolution; (v) to the best of his knowledge and except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, pending or, threatened against or affecting the City, nor to the best of his knowledge is there any basis for such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would have a materially adverse effect upon the transactions contemplated by this Purchase Contract and the Official Statement or the validity of the 1993 Bonds, the Bond Resolution, the Rate Resolution, the Purchase Agreement Resolution, and the Purchase Agreement; and (vi) the City has obtained, as contemplated in the Purchase Agreement, fee simple title or other appropriate possessory interest to the facilities constituting the System, subject only to such liens, encumbrances, administrative orders or proceedings, as are specifically disclosed in such opinion or in any policy of title insurance delivered in connection with the acquisition of the System as may be acceptable to the City; (12) a letter of Hartman & Associates, Inc., Orlando, Florida, (the "Consulting Engineers"), dated the date of Closing, addressed to the Underwriter and its counsel, to the effect that (i) they are a firm of professional engineers registered in the State and they consent to the use of their name and reference to them as the "Consulting Engineers" in the Official Statement, and the inclusion therein as Appendix A of their Report of Consulting Engineers dated November 30, 1993 (the "Engineer's Report"); (ii) the Engineer's Report was prepared in accordance with generally accepted engineering practices; (iii) nothing has come to their attention which would cause them to believe the Engineer's Report was, as of its date, or as of the date of Closing, inaccurate in any material respect; (iv) they are retained by the City to act as Consulting Engineers and financial feasibility consultants in regard to the Acquisition of the System to be financed with the proceeds of the 1993 Bonds; (v) the statements contained in the Official Statement under the headings "THE ACQUISITION PROGRAM," "SOURCES AND USES OF FUNDS," "RESULTS OF OPERATIONS: HISTORICAL AND PROJECTED," "THE SYSTEM", "THE 1993 PROJECT", "CONSULTING ENGINEERS' REPORT", "INVESTMENT CONSIDERATIONS", "ADVISORS AND CONSULTANTS - Consulting Engineers" and "APPENDIX A - CONSULTING ENGINEER'S REPORT", as of its date or as of the date of such certificate, do not 14 3748/JAN13.00MA442114/93 1:46pm contain an untrue statement of a material fact or failure to include any statement necessary to make the other statements made therein, in light of the circumstances in which they were made, not misleading; (vi) in the course of their engagement as Consulting Engineers, nothing has come to their attention which would lead them to believe that the Official Statement, when taken as a whole, contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and (vii) a project certificate, referred to in the Official Statement, stating the portion of 1993 Bond debt service legally payable from Impact Fees; (13) a letter from Hoyman, Dobson & Company, P.A., Melbourne, Florida, addressed to the Underwriter and its counsel, to the effect that: (i) they are independent certified public accountants engaged by the City, (ii) they consent to the use of their name and the inclusion of their report in the Official Statement as Appendix B thereto, and (iii) nothing has come to their attention which would cause them to believe the financial condition of the City has materially changed subsequent to September 30, 1992; (14) letters of Moody's Investors Service and Standard & Poor's Corporation to the effect that the 1993 Bonds have been assigned a rating no less favorable than "Aaa" and "AAA", respectively, which rating shall be in effect as of the date of Closing; (15) an ALTA title insurance policy acceptable to the City and the Insurer insuring the City's unencumbered (except for certain restrictions and reservations on the property as to which the City and the Insurer shall have received an opinion of counsel to the effect that such restrictions and reservations will not interfere with the City's ownership and operation of the System) marketable title or other appropriate possessory interest in the real property of the System and the improvements thereon; (16) An opinion relating to the Official Statement, dated the date of Closing and addressed to the Underwriter, of Squire, Sanders & Dempsey, Jacksonville, Florida, Underwriter's Counsel, to the effect that, based upon their participation in the preparation of the Official Statement, and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, as of the date of the Closing, nothing has come to their attention causing them to believe that (A) the Official Statement as of its date contained an untrue statement of a material fact or omitted to state a 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 (except for the financial information and statistical data contained in the Official Statement or in the Appendices thereto, as to all of which no view need be expressed), or (B) the Official Statement (as supplemented or amended pursuant to paragraph (q) of Section 7 hereof, if applicable) as of the date of the Closing 15 324811AM13.005.BPA4-12/14/93 2:46pm contains an untrue statement of a material fact or omits to state a 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 (except as aforesaid); (17) evidence of compliance by the City with the conditions set forth in the Commitment for Municipal Bond Insurance issued by Municipal Bond Investors Assurance Corporation (the "Insurer") to the City, dated on or about December 9, 1993, and delivery to the City of the executed municipal bond insurance policy (the "Policy") of the Insurer in substantially the form attached to the Official Statement as Appendix F thereof, insuring the timely payment of principal of and interest on the 1993 Bonds, accompanied by a certificate of the Insurer and an opinion of counsel to the Insurer in such form as is customary and acceptable to the Underwriter; (18) an opinion, dated the date of Closing and addressed to the Underwriter and its counsel, relating to the Purchase Agreement and substantially in the form of Exhibit C hereto, with only such modifications thereto as may be agreed to by the Underwriter; (19) evidence satisfactory to the Underwriter that $3,650,000 (as adjusted for certain proration and adjustments pursuant to the Purchase Agreement) in current funds shall have been wired to GDU in accordance with the Purchase Agreement; (20) such additional legal opinion, certificates, instruments and other documents as 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 contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City on or prior to the date of Closing of all the agreements then to be performed and condition then to be satisfied by it. All the opinion, letters, certificates, instruments and other documents mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance set forth herein. Opinions concerning the validity, binding effect and enforceability of the various agreements referred to above will in each case be deemed to assume and be premised upon the fact that the validity, binding effect and enforceability of the agreement referred to therein may be limited or otherwise affected by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar statutes, rules, regulation or other laws affecting the enforcement of creditors' rights and remedies generally and (b) the unavailability of or limitation on the availability of, a particular right or remedy, (whether in a proceeding in equity or at law) because of an equitable principle. 16 3248/JAM I3.00S.BPA417J14/97 144M 10. Truth in Bonding Statement. The City is proposing to issue $ 5,000,000 of debt or obligations for the purposes of (i) financing the costs of the Acquisition, (ii) and the 1993 Project, (iii) funding a deposit to the Reserve Subaccount, (iv) capitalizing a portion of the interest on the 1993 Bonds, and (v) paying certain expenses relating to the issuance and sale of such obligations. This debt or obligation is expected to be repaid over a period of thirty (30) years. At interest rates shown on the cover page of the Official Statement, dated December 8, 1993, total interest paid over the life of the debt or obligation will be $5,243,721.25. The source of repayment or security for the City's obligation is the Pledged Funds which consist of (1) the Net Revenues derived from the ownership and operation of the System, (2) Impact Fees, if any, and to the extent permitted by law, (3) until released in accordance with the provisions of the Bond Resolution, the Half -Cent Sales Tax Revenues, and (4) until applied, the moneys, including investment earnings, on deposit in the funds and accounts established under the Bond Resolution (except (a) for amounts on deposit in the Rebate Account, (b) to the extent moneys in such funds and accounts are required to pay Operating Expenses of the System, and (c) to the extent moneys in a subaccount of the Reserve Subaccount shall be pledged solely for the payment of a Series of Bonds for which it was established) each as more specifically described in the Bond Resolution. Authorizing this debt or obligation will not result in any adverse change in the amount of City moneys available to finance the other services of the City. 11. Termination. (a) If the City shall be tenable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the 1993 Bonds contained in this Purchase Contract, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the 1993 Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract 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 Section 12 hereof shall continue in full force and effect. (b) The Underwriter shall have the right to terminate its obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the 1993 Bonds by notifying the City of its election to do so if, after the execution hereof and prior to the Closing, (i) the marketability of the 1993 Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation (A) enacted by the United States, (B) recommended to the Congress for passage by the President of the United States, or (C) 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, or by any decision of any court of the United States or by any ruling or regulation (final, temporary or proposed) on behalf of the Treasury Department of the United States, the Internal Revenue Service or any other authority of the United States affecting the federal income tax status of the City, its property or income, or the interest on its bonds (including the 1993 Bonds); (ii) the United States shall have become engaged in hostilities which have resulted in declaration of war or a national emergency and such action will, in the opinion I 4/ 324s7nm13.00$.srn4-12/14ro3 2:46Fn of the Underwriter, materially adversely affect the marketability of the 1993 Bonds or the market price thereof; (iii) there shall have occurred the declaration of a general banking moratorium by any authority of the United States or the states of New York or Florida and such action will, in the opinion of the Underwriter, materially adversely affect the marketability of the 1993 Bonds or the market price thereof; (iv) an event described in paragraph (q) of Section 7 hereof shall have occurred which, in the opinion of the Underwriter, requires the preparation and publication of a supplement or amendment to the Official Statement and such action will, in the opinion of the Underwriter, materially adversely affect the marketability of the 1993 Bonds or the market price thereof; (v) any rating of the City shall have been downgraded by Standard & Poor's Corporation or Moody's Investors Service and such action, in the opinion of the Underwriter, will materially adversely affect the marketability of the 1993 Bonds or the market price thereof, (vi) there has been an adverse change of a material nature in the financial position, results of operations or condition, financial or otherwise, of the City, in either case other than in the ordinary course of its business and such action will, in the opinion of the Underwriter, materially adversely affect the marketability of the 1993 Bonds or the market price thereof; (vii) between the date hereof and the Closing, legislation shall be enacted or any action shall be taken by the Securities and Exchange Commission which, in the opinion of the Underwriter, has the effect of requiring the contemplated distribution of the 1993 Bonds to be registered under the Securities Act of 1933, as amended, or of requiring the Bond Resolution or the Paying Agent Agreement to be qualified under the Trust Indenture Act of 1939; (viii) an order, decree or injunction of any court of competent jurisdiction, or any order, ruling, regulation or administrative proceeding by any governmental body or board, shall have been issued or commenced, or any legislation enacted, with the purpose or effect of prohibiting the issuance, offering or sale of the 1993 Bonds as contemplated hereby or by the Official Statement or prohibiting the enactment or performance of the Bond Resolution; or (ix) the State of Florida shall take any action, or threaten to take any action which shall question the existence or powers of the City. 12. Expenses. (a) The Underwriter shall be under no obligation to pay, and the City shall pay, such expenses, if any, incident to the performance of the City's obligations hereunder including, but not limited to: (i) the cost of preparation, printing and delivery of all of the documents referred to in Section 9 hereof including, but not limited to, the Preliminary Official Statement and the Official Statement, but excluding the items set forth in paragraph (b) below, (ii) the cost of preparation and printing of the 1993 Bonds, including any temporary 1993 Bonds; (iii) the fees and disbursements of Nabors, Giblin & Nickerson, P.A., Bond Counsel; (iv) the fees and disbursements of Hoyman, Dobson & Company, P.A.; (v) the fees and disbursements of Charles Ian Nash, Counsel to the City; and (vi) the fees and disbursements of any other engineers, accountants, attorneys, and other experts, consultants or advisors retained or utilized by the City in connection with the issuance of the 1993 Bonds including preparation thereof. (b) The Underwriter shall pay expenses related to the initial purchase and sale of the 1993 Bonds as follows: (i) all advertising expenses; (ii) the fees and expenses of Squire, Sanders & Dempsey, Counsel to the Underwriter; (iii) the cost of preparation and printing the 18 3248/1AM13.0Q5.BPA4-12/14M 2:46pm blue sky and legal investment surveys with respect to the 1993 Bonds; and (iv) all other expenses incurred by them in connection with the public offering of the 1993 Bonds. 13. Notices. Any notice or other communication to be given to the City under this Purchase Contract may be given by delivering the same in writing to the Interim City Manager of the City of Sebastian, Florida, 1225 Main Street, Sebastian, Florida 32958, Attention: City Manager, with a copy to Charles Ian Nash, Counsel to the City, Frese, Nash & Torpy, P.A., 930 South Harbor City Boulevard, Suite 505, Melbourne, Florida 32901, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Raymond James & Associates, Inc., 2255 Glades Road, Suite 120A, Boca Raton, Florida 33431, Attention: Arthur Ziev. 14. Parties in Interest. This Purchase Contract is made solely for the benefit of the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the City's representations and agreements contained in Section 7 of this Purchase Contract shall remain operative and in full force and effect, regardless of: (i) any investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the 1993 Bonds pursuant to this Purchase Contract; and (iii) any termination of this Purchase Contract. 15. Effectiveness. This Purchase Contract shall become effective upon the acceptance hereof by the City and the execution by the appropriate representative of the Underwriter and the designated City officials and shall be valid and enforceable at the time of such execution. 16. Applicable Law. This Contract shall be construed under the laws of the State of Florida applicable thereto. 17. Headings. The headings of the sections of this Purchase Contract are inserted for convenience only and shall not be deemed to be a part hereof. 18. Execution in Counterparts. This Purchase Contract may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. 19. Severability. The invalidity or unenforceability of any provision of this Purchase Contract shall not affect the validity or enforceability of the balance of this Purchase Contract. 20. Waiver or Modification. No waiver or modification of any one or more of the terms and conditions of this Purchase Contract shall be valid unless in writing and signed by the party or parties making such waiver or agreeing to such modification. 19 3248/JAM13.005.BPA4-12/14/93 2:46pm IN WITNESS_WIiEREOF, the undersigned hereby agree to the terms and provisions of this Bond Purchase Contract all as of the day and year first above written. RAYMOND JAMES & ASSOCIATES, INC. BOCA RATON, FLORIDA, Underwriter By: Vice Presi ent CITY OF SEBASTIAN, FLORIDA By I�L (�� 6?'Z1z e R. Powell, Mayor ATTEST: Kathryn A O'Halloran, CMC/AAE, City Clerk (SEAT,) APPROVED AS/TO FORM AND CONTENT: 0 Ian Nash, City Attorney 20 31481JAM13.006.8PA412114193 2:46,m NAME: f711Ma1IA INTEREST PAYABLE: DENOMINATIONS: MATURITY (October 1) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 EXHIBIT A $5,000,000 Utilities System Revenue Bonds, Series 1993 December 1, 1993 April 1 and October 1 of each year, commencing April 1, 1994 $5,000 and integral multiples thereof PRINCIPAL INTEREST PRICE AMOUNT RATE OR YIELD $ 50,000.00 3.40% 100% 75,000.00 3.60 100 100,000.00 3.70 3.75 100,000.00 3.90 4.00 105,000.00 4.00 4.10 110,000.00 4.20 4.25 115,000.00 4.30 4.40 120,000.00 4.45 4.55 125,000.00 4.60 4.70 130,000.00 4.75 4.85 135,000.00 4.90 5.00 145,000.00 5.00 5.10 $1,035,000 5.40% Term Bonds due October 1, 2013 - Price 100% $2,655,000 5.45% Term Bonds due October 1, 2023 - Price 100% REDEMPTION PROVISIONS Mandatory Redemption. The 1993 Bonds maturing on October 1, 2013, are subject to mandatory redemption prior to maturity, in part, by lot, through Amortization Installments by operation of the Term Bonds Redemption Account, at a redemption price equal to the unpaid principal amount of the 1993 Bonds to be redeemed, plus interest accrued thereon to the date of redemption, on October 1 in the following years and in the following Sinking Fund Installments: *Maturity. Sinking Fund Year Installments 2008 $150,000 2009 160,000 2010 170,000 2011 175,000 2012 185,000 2013* 195,000 A-1 The 1993 Bonds maturing on October 1, 2023, are subject to mandatory redemption prior to maturity, in part, by lot, through Amortization Installments by operation of the Term Bonds Redemption Account, at a redemption price equal to the unpaid principal amount of the 1993 Bonds to be redeemed, plus interest accrued thereon to the date of redemption, on October 1 in the following years and in the following Sinking Fund Installments: Sinking Fund Year Installments 2014 $205,000 2015 220,000 2016 230,000 2017 240,000 2018 255,000 2019 270,000 2020 285,000 2021 300,000 2022 315,000 2023* 335,000 *Maturity. Optional Redemption. The 1993 Bonds maturing in the years 1996 to 2003, both inclusive, are not redeemable prior to their stated dates of maturity. The 1993 Bonds maturing in the years 2004 and thereafter are redeemable prior to their stated dates of maturity, at the option of the City, as a whole on October 1, 2003, or on any date thereafter, or in part in such maturities as the City in its discretion shall select and by lot within a maturity if less than a full maturity, on October 1, 2003, or on the first business day of any month thereafter, from moneys which may be available for such purpose and deposited with the Paying Agent on or before the date fixed for redemption, at the following redemption prices (expressed as percentages of the principal amount thereof) as set forth in the table below, together with accrued interest on such principal amount to the Redemption Date, if redeemed in the following periods: Redemption Period Both Dates Inclusive) Redemption Price October 1, 2003 through September 30, 2004, 102% October 1, 2004 through September 30, 2005, 101 October 1, 2005, and thereafter 100 A-2 December 8, 1993 Mayor and City Council City of Sebastian, Florida RE: City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 Gentlemen: In connection with the proposed issuance by the City of Sebastian, Florida (the "City) of $5,000,000 original aggregate principal amount of its Utilities System Revenue Bonds, Series 1993, referred to above (the "1993 Bonds"), Raymond James & Associates, Inc., Boca Raton, Florida (the "Underwriter") is underwriting a public offering of the 1993 Bonds. Arrangements for underwriting the 1993 Bonds will include a Bond Purchase Contract (the "Purchase Contract") between the City and the Underwriter, which will embody the terms in respect thereof. The purpose of this letter is to furnish, pursuant to the provisions of Section 218.385(6), Florida Statutes, certain information with respect to the arrangements contemplated for the underwriting of the 1993 Bonds as follows: (A) The nature and estimated amounts of expenses to be incurred by the Underwriter in connection with the purchase and reoffering of the 1993 Bonds are as set forth in Schedule 1 attached hereto. (B) No person has entered into an understanding with the Underwriter, or to the knowledge of the Underwriter, with the City, for any paid or promised compensation or valuable consideration, directly or indirectly, expressly or implied, to act solely as an intermediary between the City and the Underwriter or to exercise or attempt to exercise any influence to effect any transaction in the purchase of the 1993 Bonds. (C) The Underwriting Spread (the difference between the price at which the 1993 Bonds will be initially offered to the public by the Underwriter and the price to be paid to the City for the 1993 Bonds, exclusive of accrued interest in both cases) will be $12.50/$1,000 (which includes a management fee of $2.50/$1,000, risk of $0.00, takedown of $6.04/$1,000 and expenses of $3.96/$1,000). (D) No -other fee, bonus or other compensation is estimated to be paid by the Underwriter in connection with the issue of the 1993 Bonds, to any, person not regularly employed or retained by the Underwriter (including any "finder" as defined in Section 218.386(1)(a), Florida Statutes), except as specifically enumerated as expenses to be incurred by the Underwriter, as set forth in Paragraph (A) above. (E) The name and address of the Underwriter is: Raymond James & Associates, Inc. 2255 Glades Road Suite 120A Boca Raton, Florida We understand that you do not require any further disclosure from the Underwriter, pursuant to Section 218.385(6), Florida Statutes. Very truly yours, RAYMOND JAMES & ASSOCIATES, INC. BOCA RATON, FLORIDA By: (.1A Vice Pr dent B-2 SCHEDULEI TO EDIT B LIST OF EXPENSES UNDERWRITER'S EXPENSES Per $1,000 BREAKDOWN OF UNDERWRITING SPREAD: Management Fee $ 2.50 Risk 0.00 Takedown 6.04 Expenses 3.96 TOTAL SPREAD 112.50 EXPENSES: Counsel $3.00 Clearance 0.00 Federal funds .15 Good faith check and day loan 0.00 MSRB, PSA, CUSIP A0 DTC 08 Communication, travel and out-of-pocket .23 Computer _40 TOTAL EXPENSES 3.96 w EXHMIT C [Letterhead of Counsel to General Development Utilities, Inc.] December 16, 1993 City of Sebastian Sebastian, Florida Raymond James & Associates, Inc. Boca Raton, Florida Squire, Sanders & Dempsey Jacksonville, Florida Re: City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 (the "1993 Bonds") We have acted as counsel to General Development Utilities, Inc. ("GDU"). In connection with the sale and delivery of the above -captioned Bonds to Raymond James & Associates, Inc. (the "Underwriter"), I have reviewed a copy of the City of Sebastian Florida/General Development Utilities, Inc., Water and Sewer System Purchase and Sale Agreement, dated October 12, 1993, between General Development Utilities, Inc., and the City of Sebastian, Florida (the "Agreement"), relating to Sebastian's acquisition of certain water and sewer facilities from GDU. I am of the opinion that: (a) GDU is a duly organized Florida corporation in good standing within the State of Florida; (b) The Agreement has been duly authorized, executed and delivered by GDU and constitutes a valid, binding and enforceable agreement of GDU in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, readjustment of debt and other laws in effect from time to time affecting the rights of creditors generally and except to the extent that enforceability thereof may be limited by the application of principles of equity; C-1 (c) To the best of my knowledge, there is no 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 of my knowledge, threatened against or affecting GDU, nor is there any basis for such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would have a materially adverse effect upon the transactions contemplated by or the validity of the Agreement; and (d) All authorizations, consents, approvals and reviews of governmental bodies or regulatory authorities then required for the execution or performance of the Agreement by GDU have been obtained or effected and I have no reason to believe that GDU will be unable to obtain or effect any such additional authorization, consent, approval or review that may be required in the future for performance of the Agreement by GDU. I am furnishing this opinion to you solely for your benefit in connection with the original delivery of the 1993 Bonds by the City of Sebastian, Florida, to the Underwriter, and this opinion may not be relied upon by any other person for any purpose. This opinion is not to be used, circulated, quoted or otherwise referred to in any other connection other than as may be required by law. Respectfully submitted, C-2 1.4 CITY OF SEBASTIAN, FLORIDA CONSULTING ENGINEER'S REPORT UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 APPENDIX A November, 1993 engineers, hydrogeologists, surveyors & management consultant ORLANDO • JACKSONVILLE • TALLAHASSEE a FT. MYERS HAR7CMAN & ASSOCIATE$ INC. engineers, hydrogeologists, surveyors & management consultants November 30, 1993 HAI #92-023.06 Honorable Mayor and Members of the City Council City of Sebastian 1225 Main Street Sebastian, FL 32958-8697 Subject: Consulting Engineer's Report Utilities System Revenue Bonds, Series 1993 Gentlemen: Presented herein is our Consultant Engineer's Report (the "Report") for inclusion in the Official Statement which summarizes our analysis and studies with regard to the proposal by the City of Sebastian (the "City") to issue not to exceed $5,000,000 aggregate principal amount of Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"). The primary purposes of the Series 1993 Bonds is to i) fund the Acquisition of the assets which comprise the water and wastewater system of General Development Utilities, Inc. (GDU) serving the City (the "Sebastian Highlands System"); ii) to consolidate the Sebastian Highlands System with the City's existing utility system (the "Combined System"); and iii) to fund certain capital improvements to the Combined System for the purpose of providing water and wastewater service to the existing and anticipated customers of the City. The Report includes a general discussion of the Acquisition, the Combined System and service area, capital needs of the Combined System, and projections of customer growth and capacity needs. Also included is a projection of Combined System operations which details the estimated financial operating results and the ability of the Combined System to meet the rate covenant requirements of the Bond Resolution. The Acquisition of the GDU-Sebastian Highlands facilities located in the City has been based on the terms and conditions of the Water and Sewer System Purchase and Sale Agreement between GDU and the City. Included in the Executive Summary and our Report is a delineation of our opinions and conclusions regarding the Combined System. Such opinions and conclusions are subject to the assumptions and considerations reflected in the Report and 201 EAST PINE STREET • SUITE 1000.ORLANDO, FL 32801 TELEPHONE (407) 839-3955 • FAX (407) 8393790 PRINCIPALS: JAMESE. C11RIST01-11 iR • CHARLES VV. DRAKE . GERALD C. HARTMAN -MARK 1. LUKE . MARK A. RYNNING • IIAROI.0 E. sciaim-r. IR. Honorable Mayor and Members of the City Council ` November 30, 1993 Page 2 information i) obtained during the negotiations between the City and GDU associated with the Acquisition of the GDU facilities; and ii) provided by GDU, the City, and others. As such, the Report should be read in its entirety and must be qualified as provided herein due to the nature of the Acquisition. Respectfully submitted, Hartman & Associates, Inc. Yll:�„C�JL�aa4 = Ri I O L -i pl T I n a HS/RJO/cl/dt/R-S-1/CITY.ro Hartman & Associates, Inc. FW-�- C.� Robert J. Ori Manager of Rates and Finance CITY OF SEBASTIAN, FLORIDA CONSULTING ENGINEER'S REPORT UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 EXECUTIVE SUMMARY The City of Sebastian (the "City") is acquiring certain water and wastewater facilities of General Development Utilities, Inc. ("GDU") located within the incorporated City limits (the "GDU-Sebastian Highlands System"). The facilities being acquired by the City include the 0.670 million gallons per day ("MGD") Water Treatment Plant; water transmission and distribution facilities; a 0.300 MGD wastewater treatment facility; effluent disposal facilities; and wastewater collection and transmission system. It is anticipated by the City that subsequent to the acquisition of the GDU - Sebastian Highlands System, the City will interconnect the existing City -owned system with the GDU system to create a single consolidated system (the "Combined System"). The City retained Hartman & Associates, Inc. ("HAI" or the "Consulting Engineer") to perform an engineering evaluation of the GDU system assets. and assist in any transitional activities to transfer the GDU system to the City. As part of the transitional activities, HAI has prepared this Consulting Engineer's Report (the "Report") to be included in the Official Statement associated with the issuance of the Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"). The following is a summary of the observations, recommendations, and conclusions developed during our investigations, analyses, and preparation of the Report, which should be read in its entirety: 1. The City's existing water system presently serves the Park Place/Palm Lakes Club (PP/PLC) residential developments and as of September 30, 1993 provided retail service to 203 accounts representing approximately 207 equivalent residential units (ERU's). Of this amount, approximately 99% of the customers are considered as residential. For the purposes of this Report, a water ERU is considered to have a daily capacity requirement of 250 gallons per day. 2. The City's existing wastewater system provided service as of September 30, 1993 to approximately 317 accounts representing approximately 1,055 ERU's. The customer base is larger than that of the water system due to additional customers located within the City limits (in addition to PP/PLC wastewater customers) which receive wastewater -only service from the wastewater facilities of the Indian River County (the "County") which are not connected to the water system. For the purposes of this RIO/cl/mg/R-S-1/ExecSum. rpt HAI #92-023.06 1 Report, a wastewater ERU is considered to have a daily capacity requirement of 200 gallons per day. 3. The City's existing water and wastewater customers were received from the County on May 1, 1993 pursuant to the provisions of an Interlocal Utilities Agreement between the City and the County dated April 21, 1991 (the "Interlocal Agreement"). 4. Pursuant to the terms and conditions of the Interlocal Agreement, the City's existing wastewater system currently has two classes of customers for which bulk wastewater service is charged by the County. These classifications as of September 1993 are summarized below: Accounts ERU's Class I - Connected Customers Park Plare/Palm Lake 203 203 Other Connected 22 183 Class I - Reserved/Unconnected 92 669 Totals 317 1,055 Unconnected customers of the City as shown above, are located within the City and have paid to the County impact or system capacity fees for the reservation of capacity from the County's wastewater treatment and effluent disposal facilities. As such, the County charges to the City bulk rates for these customers (essentially for the cost of reserving this capacity through the County) which the City subsequently charges. Although reflected in the Report, these customers are essentially revenue neutral. 5. The GDU-Sebastian Highlands water system as of September 30, 1993 provided retail service to 1,238 accounts and approximately 1,421 ERUs. Of this amount, approximately 96% of the customers are considered as residential. 6. The GDU-Sebastian Highlands wastewater system as of September 30, 1993 provided retail service to 582 accounts and approximately 597 ERUs. Of this amount, approximately 99% of the customers are classified as residential. 7. The primary purpose associated with the issuance of the Series 1993 Bonds is for the acquisition of the water production, treatment and transmission and the wastewater collection, transmission, treatment and effluent disposal facilities from GDU-Sebastian Highlands system (the "Acquisition") and the consolidation of the City's existing PP/PLC system and GDU-Sebastian Highlands system as one Combined System. RJO/cl/mg/R-S-1 /Execs um. rpt HAI #92-023.06 2 8. The purchase price of the Acquisition as established through negotiations between GDU and the City and as stipulated in the Water and Sewer System Purchase and Sale Agreement the ("Purchase and Sale Agreement") is $3,650,000. 9. It is anticipated by the City and subsequent to the Acquisition that the wastewater customers located in the Park Place/Palm Lake Club service area will be interconnected with the GDU-Sebastian Highlands wastewater system by October 1994, thus reducing the bulk wastewater purchases from the County. All other existing City wastewater customers (not located within the Park Place/Palm Lake Club service area) are anticipated to still require the use of the County's wastewater facilities and will be subject to the terms and conditions of the Interlocal Agreement. 10. The existing PP/PLC water system for the City consists of a 0.1 MGD water treatment plant and 2 groundwater supply wells. After the acquisition and interconnection of the City and GDU water systems, it is anticipated that these facilities will no longer be required and they are expected to be decommissioned. 11. The present water system for the GDU-Sebastian Highlands system consists of a 0.670 MGD water treatment plant and 2 shallow wells located at the plant site. The condition of these facilities is considered to be in average to good condition based upon general field observations and the intended use of the facilities, interviews with staff, and a review of water permits and operating reports. 12. The raw water supply for both the City and GDU existing water facilities is the surficial aquifer. Withdrawals of raw water from the aquifer is currently regulated by the St. Johns River Water Management District (SJRWMD). The GDU-Sebastian Highlands water treatment plant has a water use permit issued by the SJRWMD (Permit No. 2-061-0142UNR) which expires June 30, 1994. The permit allows for a maximum annual withdrawal from the surficial aquifer of 255.4 million gallons and a maximum day withdrawal of 1.690 million gallons per day (MGD) for the twelve months ending June 30, 1994. Based on discussions with SJRWMD, the City does not currently anticipate any problems in the renewal of the water use permit at consumption levels necessary to meet projected growth reflected in the Report. 13. Wastewater treatment and effluent disposal requirements for the City's existing wastewater system (i.e., PP/PLC customers and certain other wastewater only customers) is provided by the County pursuant to an Interlocal Utilities Agreement between the City and County dated April 21, 1992 (the "Interlocal Agreement"). Included in the Interlocal Agreement are, among other things, provisions for the determination of bulk wastewater rates to be charged to the City by the County for such service. RJO/cl/ mg/R-S-1 /ExecS u m. rpt HAI 1192-023.06 3 14. The GDU-Sebastian Highlands wastewater treatment facility has a design capacity of 0.300 MGD on an average daily flow basis and a permitted capacity of 0.142 MGD due to effluent disposal capacity limitations. The facility operates pursuant to an operating permit issued by the Florida Department of Environmental Regulation (now known as the Florida Department of Environmental Protection or FDEP) which expires on September 28, 1998. 15. The condition of the GDU-Sebastian Highlands wastewater treatment facilities based on i) an above ground facility inspection; ii) review of documents such as permits and monthly operating reports; and iii) interviews with staff is considered to be average to good. 16. Bulk wastewater charges paid to the County were based on the rates currently in effect as stipulated in the Interlocal Agreement, which includes a billing charge, base facility charge, and a consumption charge, and was escalated annually for inflationary allowances. 17. Effluent disposal from the GDU-Sebastian Highlands wastewater system is disposed in a series of three (3) percolation ponds with an overall rated capacity of 0.142 MGD which is less than the design capacity of the GDU-Sebastian Highlands wastewater treatment plant (i.e., 3.0 MGD). Effluent from the GDU-Sebastian Highlands wastewater treatment plant generally meets the requirements set forth in Chapter 17- 610.500 of the Florida Administrative Code with respect to Reuse Rapid Rate Land Application Systems. 18. Sludge from the GDU-Sebastian Highlands wastewater treatment plant is disposed by private haulers to agricultural and sod farm sites which are privately owned and are permitted and approved for use by the sludge haulers by the FDEP. It appears that the sludge would be designated as Class C sludge and would require upgrades to meet the new Sludge Rule, Title 40, code of Federal Regulations, Part 503. This anticipated system deficiency has been recognized by the City and the estimated costs to meet the sludge stabilization requirements has been recognized as a project to be funded from the Series 1993 Bonds. 19. As part of the Acquisition process, the City and the Consulting Engineers have identified additional capital improvements to be performed during the next 5 fiscal years to i) improve the condition of the System; ii) interconnect the existing City PP/PLC system and GDU-Sebastian Highlands system; and iii) provide for System growth. These projects are to be funded from the Series 1993 Bonds and Impact Fees. The capital improvement program which amounts to $1,169,300 as summarized below does not include allowances for recurring renewals and replacements: RJO/cl/mg/R-S-1/ExecS um. rpt HAI k92-023.06 4 Project Cost Construction Completion Date TTHM Control System(l) $22,000 June 1994 Miscellaneous Water Distribution and Transmission Improvements(') 300,000 October 1996 Water Use Permit Renewalll) 19,700 March 1994 Utility System Master Plan(') 60,000 September 1994 Miscellaneous Water Treatment Plant Improvements(') 45,700 September 1996 Watermain Inlercoanection(2) 54,000 June 1994 Sludge Stabilization and Wastewater Treatment Plant Improvements(l) 220,000 October 1995 Fuel Tank(') 17,400 June 1996 Forcemain Interconnect(2) 108,000 September 1994 Effluent Disposal Aerating, and Expansion (2) 322.500 September 1998 Total Capital Projects $1,169,300 1) Funded from Series 1993 Bonds. 2) Funded from Impact Fees and other sources. 20. Based on the forecast of customer growth and water sales and recognizing the consolidation of the City PP/PLC System and GDU-Sebastian Highland Systems, it is anticipated that 91 % of the existing water treatment plant capacity will be utilized by the Fiscal Year 1998. With respect to the wastewater system, 72% of the permitted treatment capacity is anticipated to be utilized by the Fiscal Year 1998. 21. Based on i) the condition of the System; ii) the proposed improvements identified in the Report; iii) the anticipation of permit renewal during the forecast period by the City based on discussions with the appropriate regulatory agencies; and iv) assuming that general renewals and replacements continue to be made, it is anticipated that no additional indebtedness will be required by the Combined System for the projected period reflected in the Report. 22. The System, together with the Capital Improvements Program, appears to be adequate to provide utility service through the projection period. The proposed sources of funding for the Capital Improvement Program appear to be sufficient to provide for the cost of the necessary capital improvements and expansions of the System. 23. To the best of the Consulting Engineer's knowledge, there appear to be no major material deficiencies in the Combined System which have not been provided for within the Capital Improvements Program. It is anticipated that additional minor items associated with the GDU - Sebastian Highlands System will be identified and addressed once the facilities have been acquired by the City. RJO/cl/mg/R-S-1/ExecSum. rpt HAI #92-023.06 5 24. The City plans to hire, as appropriate, the existing personnel of the GDU - Sebastian Highlands System and such personnel have the experience to operate the System in an economic and efficient basis. During the transition period following the Acquisition, the City will retain the Class "C" independent water treatment plant operator until such time that the services are no longer required. 25. The projection of customers and sales (usage) growth reflected in the Report was based on recent historical trends, discussions with the staff and management of the City and GDU, and the assumption that the current service area (i.e., where service is currently available) of the utility is not extended. As such, the Consulting Engineer is of the opinion that the projected growth in customers and usage of the Combined System represent reasonable projections for the purposes of this Report. 26. The City has adopted a schedule of rates and charges which will become effective at or before the time of Acquisition which includes a series of proposed rate adjustments. The Combined System revenue for the fiscal years ending September 30, 1994 through 1998 under the City approved rates, plus projected additional annual rate adjustments as adopted by the City and as contained in the Rate Resolution, will be sufficient to pay all projected expenses, pay the debt service on the anticipated revenue bonds coming due in such years, make the projected deposits to the Renewal and Replacement Account for additions, extensions, and improvements to the System, and meet the rate covenants of the Bond Resolution. The recently approved rates for water and wastewater service are comparable to -the rates charged by the County and are less than the rates approved for GDU to be effective as reflected in the rate application filed by GDU with the City. 27. The Impact Fees to be applied to new customers connecting to the System to be owned and operated by the City are reasonable and comparable to the fees charged by neighboring utilities. RJO/cl/mg/R-S-1/ExecSum. rpt HAI #92-023.06 6 CITY OF SEBASTIAN, FLORIDA CONSULTING ENGINEER'S REPORT UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 TABLE OF CONTENTS Page Description No. TRANSMITTAL LETTER EXECUTIVE SUMMARY CONSULTING ENGINEER'S REPORT General 1 Background 2 General 3 The GDU-Sebastian Highlands Water and Wastewater System 3 Existing City Owned PP/PLC Water and Wastewater System 4 The GDU-Sebastian Highlands Water System 6 General 6 Raw Water Supply 6 Water Treatment Facility 8 Water Distribution and Transmission Facilities 11 Condition of Water System 11 The GDU-Sebastian Highlands Wastewater System 12 General 12 Wastewater Treatment 12 Effluent and Sludge Disposal 14 Wastewater Collection Facilities 15 Condition of Wastewater System 15 The 1993 Projects 16 General 16 Water System 16 Wastewater System is RJO/cl/dt/R-S-1/toc.rpt HAIN92-023.06 -i- CITY OF SEBASTIAN, FLORIDA CONSULTING ENGINEER'S REPORT UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 TABLE OF CONTENTS (Con't) Page Description No. Additional Capital Planning Activities 19 System Operations 20 Historical and Projected System Sales and Customer Statistics 22 General 22 Water System 22 Wastewater System 25 Rates, Fees, and Charges 28 General 28 Water and Wastewater Rates 29 Impact Fees 31 Miscellaneous Service Charges 31 Price Index Rate Adjustment 33 Rate Comparisons 34 Historical Operating Results 35 General 35 Summary of Historical Operating Results 36 Projected Operating Results 36 General 36 Principal Considerations and Assumptions Regarding 37 Projected Operating Results Summary of Projected Operating Results 48 Conclusions 49 RJO/cl/d t/R-S-1 /toc. rpt HAI//92-023.06 ii- CITY OF SEBASTIAN, FLORIDA CONSULTING ENGINEER'S REPORT UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 LIST OF TABLE AND FIGURES List of Tables Table 1 Water and Wastewater System 5 -Year Estimated Capital Improvement Program Table 2 Summary of Historical and Projected Customer Statistics Table 3 Historical Operating Results for the GDU - Sebastian Highlands System Table 4 Projected Operating Results Table 5 Comparison of Typical Monthly Bills for Water Service With Other Utilities Table 6 Comparison of Typical Monthly Bills for Wastewater Service With Other Utilities Table 7 Comparison of Typical Monthly Bills for Water and Wastewater Service With Other Utilities Table 8 Comparison of Impact Fees for Residential Water and Wastewater Service List of Figures Figure 1 Existing GDU Franchise Area and Adjacent Franchise/Service Areas Figure 2 Existing GDU Potable Water Service Area Figure 3 Existing GDU Wastewater Service Area Figure 4 Sebastian Highlands WTP Process Flow Diagram Figure 5 Wastewater Treatment Plant Process Schematic and Hydraulic Profile RJO/cl/dt/R-S-1 /t&f. rpt HAIN93-023.06 iii CITY OF SEBASTIAN, FLORIDA CONSULTING ENGINEER'S REPORT UTILITY SYSTEM REVENUE BONDS, SERIES 1993 GENERAL Presented herein is our Consulting Engineer's Report (the "Report") which summarizes our analysis and studies with regard to the proposal by the City of Sebastian, Florida (the "City") to issue not to exceed $5,000,000 aggregate principal amount of Utility System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"). The Series 1993 Bonds are being issued under the authority of a Resolution which will be duly enacted by the City at the time of the award of the bonds, as amended and supplemented by the City (the "Bond Resolution"). For a more complete description of the Bond Resolution, please refer to Appendix F - Form of Bond Resolution in the Preliminary Official Statement relating to the Series 1993 Bonds. The Series 1993 Bonds are being issued by the City in order to provide funds: i) to acquire, pursuant to the Purchase and Sale Agreement and the Franchise Ordinance, and certain water production, treatment, storage, and distribution and transmission facilities, wastewater collection and transmission, treatment, and effluent disposal facilities presently owned by General Development Utilities, Inc. ("GDU") and located within the City limits (the "GDU - Sebastian Highlands System"); ii) the combining of the City's existing utility system that presently services the Park Place and Palm Lake Club ("PP/PLC") developments (the "PP/PLC System") and the establishment of such facilities as a separate City -owned and operated water and wastewater utility system (the "Combined System"); iii) to make certain capital improvements to the System; iv) for the expansion of the System through the acquisition and construction of new facilities (" 1993 Projects"); v) sufficient to meet the debt service Reserve Subaccount Requirement associated with the Series 1993 Bonds; vi) to pay for the legal, engineering, accounting and financial costs incurred by the City associated with the Acquisition; vii) for the payment of a portion of the interest expense of the Series 1993 Bonds for a period of twenty-four (24) consecutive months; and vii) to pay the cost of issuance associated with the Series 1993 Bonds. Hartman & Associates, Inc. ("HAI or Consulting Engineer") has been retained by the City to: i) prepare projections of the operating results of the Combined System for the five (5) fiscal years commencing October 1, 1993 and ending September 30, 1998; ii) provide a description of the System, as well as capital projects and improvements, including the cost of construction, to be funded from Series 1993 Bond proceeds; and iii) perform field observations of the existing GDU - Sebastian Highlands System in order to Report on the condition, age and status of the GDU - Sebastian Highlands System. The field observations were visual, generally above -ground examinations and testing of the water supply and treatment facilities, and wastewater treatment and effluent disposal facilities, which we deemed sufficient to comment on the existing condition of the GDU - Sebastian Highlands System. Additionally, the general field observations did include a general review of the condition with respect to plant operations A 10 RJO/dIR-S-1/Bond. rpt HAI #92-023.06 I and a portion of the below -ground facilities. HAI was not engaged to perform an environmental audit of the GDU - Sebastian Highlands System with respect to determination of land contaminants located on the various GDU - Sebastian Highlands System sites, if any. Thus, the nature and extent of any items which might be discovered if and when such an audit were performed is unknown and not reflected in this Report. Pursuant to the terms and conditions of the Purchase and Sale Agreement, GDU warrants that the GDU-Sebastian Highlands System to be acquired by the City is in a clean and healthful condition, free of environmental contamination or potentially harmful physical conditions, other than such contaminants or harmful conditions permitted by law. Also, as a condition to closing, the City at its expense must have conducted a level one (or Phase 1) environmental audit relative to the property and assets to be purchased by the City. The City has hired Engineering Science, Inc. to prepare a Phase I Environmental Audit Report relative to the property and assets to be purchased from GDU. In preparation of this Report, we have relied upon financial, statistical and operational data regarding the GDU - Sebastian Highlands System, which have been derived from operating reports and records prepared by GDU and information reflected in the Annual Reports filed by GDU with the City of Sebastian which are the responsibility of GDU's management. In addition, we have been furnished information, assumptions and projections (other than engineering assumptions and/or projections) from the City and others including the estimated levels of debt service requirements, and we have utilized information obtained from other utility systems in Florida and other sources. While we believe the sources of such information, assumptions and projections to be reasonable for the purposes of this Report, we offer no assurances with respect thereto. The actual results achieved during the forecast period reflected in this Report may vary from those projected and such variations could be material. Such projections are, therefore, subject to adjustment and HAI can give no assurances that the projections will be realized This Report summarized the results of our studies and analyses up to the date of this Report. Prospective purchasers of the Series 1993 Bonds should not rely upon the information contained in this Report for a current description of any matters set forth herein as of any date subsequent to the date of this Report. Changed conditions occurring or becoming known after such date could affect the material presented herein to the extent of such changes. BACKGROUND GDU is a wholly owned subsidiary of General Development Corporation ("GDC"), a corporation who in March of 1992 successfully emerged from a reorganization proceeding under Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court, Southern District of Florida as Atlantic Gulf Communities corporation. GDC was the original, principal developer of the City of Sebastian and GDU has been providing potable water and wastewater service to a portion of the residents of the City of Sebastian since the early 1960's. In 1981, the City of Sebastian granted GDU a water and wastewater franchise area under Ordinance Nos. 0-81-8 and 0-81-9, respectively, which, in all general purposes, encompassed all lands M" ♦ M RIO/cl/R-S-1Bondapt HAI #92-023.06 2 within the City's incorporated boundaries, with the exception of a few out -parcels and the existing franchise areas. Between 1986 and December 12, 1990, the City and Indian River County entered into a series of agreements which defined the provisions for providing water and wastewater service within the City. As a result of the December 12, 1990 agreement, the City basically became the County's agent for the provision and regulation of water and wastewater service in the City. On April 21, 1992, the City and the County signed an Interlocal Utilities Agreement (the "Interlocal Agreement") whereby the County relinquished its right to provide retail water and wastewater service in the City. It should be noted that the County only provided wastewater service within the City limits as of the execution of the Interlocal Agreement. On September 15, 1993, a Public Hearing was held in accordance with Chapter 180.301 of the Florida Statutes (F.S.) recommending the purchase of the GDU-Sebastian Highlands water and wastewater system. As a result of negotiations between the City and GDU, and the Chapter 180.301 F.S. Public Hearing, the Water and Sewer System Purchase and Sale Agreement (the "Purchase and Sale Agreement") was executed by the City and GDU on October 12, 1993. General The City is the second most populated municipality in Indian River County, Florida, and is located in the northern area of the mainland, along the Indian River. The most significant land use feature of the City is the large number of vacant platted residential lots. There are approximately 13,000 platted residential lots in the City, of which approximately 4,600 lots have structures constructed on them. It is for this reason that the City is expected to become the most populous municipality in the County during the next 15 years. This suburban land pattern dominates the southern and western limits of the City. The second most dominant land use is the municipal airport, which is located in the northwest portion of the City. The land use east of the airport consists primarily of undeveloped land that is zoned industrial. Commercial uses are concentrated along the U.S. Highway 1 corridor in the northern portion of the City. The eastern boundary of the City is an irregular shape bordering the western shoreline of the Indian River. Land use consists primarily of residential uses outside the commercial uses that are present along the U.S. Highway 1 corridor or along the Indian River from the north to south City limits. The total available water and sewer service area of the System after the Acquisition by the City will encompass the entire incorporated limits of the City with the exception of wastewater service for a development known as Sebastian Lakes. The areas where utility service is currently provided are illustrated on Figure 1 at the end of this Report. The following is a detailed discussion of the water and wastewater facilities of the GDU - Sebastian Highlands and the City -owned PP/PLC System. The GDU - Sebastian Highlands Water and Wastewater System The water GDU - Sebastian Highlands System is comprised of a water supply, treatment, and transmission and distribution system which, as of September 30, 1993, provided service to approximately 1,238 retail accounts. The source of raw water supply is the surficial aquifer RJO/cl/R-S-1 B ond. rpt HAI 1192-023.06 3 and consists of two (2) raw water supply wells that are located on the GDU - Sebastian Highlands Water Treatment Plant ("WTP") site. The raw water is treated utilizing cascade tray aeration for removal of hydrogen sulfide, lime softening for reduction of water hardness and chlorination for disinfection. The GDU - Sebastian Highlands WTP has a rated capacity of 0.671 MGD. The water distribution system consists of over 31.3 miles of pipeline ranging in size from 2 to 16 inches in diameter. Central potable water service for the City of Sebastian that is presently provided by GDU, which currently holds a franchise agreement to provide Potable water service for a majority of the City, with the exception of Park Place/Palm Lake Club and Sebastian Lakes service areas. The existing service area for the Sebastian Highlands WTP includes Units 7, 9, 12, 14, 15 and portions of Units 8, 10, 11, 16 and 17 as illustrated in Figure 2. The existing franchise area includes all units from Unit 1 through 17, which consists of more than 13,000 platted lots within a 14 square mile area. The wastewater GDU - Sebastian Highlands System • comprises of a collection and transmission, treatment and effluent disposal system which, as of September 1993, provided wastewater service to 569 accounts, which comprises the population in Units 9, 16 and 17 of the development. The wastewater System presently does not provide any bulk or wholesale wastewater treatment or effluent disposal service to any other utilities. The overall wastewater service area of the wastewater System is coterminous with the GDU - Sebastian Highlands water System service area. However, the existing wastewater service area consists of Units 7, 9, 14, 15, 16 and 17 or approximately 3 square miles and is illustrated on Figure 3 at the end of this Report. The wastewater System consists of one (1) wastewater treatment plant ("WWTP") with a rated capacity of 0.3 MGD, effluent disposal facilities, approximately 69,100 linear feet of sewer lines, and six (6) sewage lift stations strategically located throughout the current wastewater service area. Existing City Owned PP/PLC Water and Wastewater System The City acquired the operation and maintenance of the Park Place/Palm Lake Club ("PP/PLC") water and wastewater System on May 1, 1993. The City assumed the operations of the PP/PLC systems from Indian River County pursuant to the terms and conditions of the Interlocal Agreement with the exception of the transmission of wastewater that discharges into the regional lift station owned by the County and subsequently treated at the North County Wastewater Treatment Plant. The City's existing PP/PLC System serves two (2) large mobile home developments in the southeast portion of the City as well as certain other wastewater -only customers which receive service from the County as discussed later in this Report. Park Place is a residential mobile home community which currently has 178 water and sewer customers with a potential of 684 total customers, one (1) for each residential unit. Palm Lake Club currently has 25 water and sewer customers with a potential of 136 total customers. RJO/d/R-S-1Bond.rpt HAI #92-023.06 4 The City presently operates and maintains the gravity sewer collection and force main systems installed in PP/PLC. In addition, the City operates and maintains one (1) sewage lift station located at the intersection of Brigadoon and East Lakeview Drive in Park Place. The wastewater collection and transmission facilities of the PP/PLC System consists of approximately 15,390 linear feet of 8 -inch gravity sewer, approximately 80 linear feet of 4 - inch force main, one (1) lift station, 62 manholes, miscellaneous sewer services and appurtenances. The wastewater collection and transmission system in the Palm Lake Club was installed in 1988 and Park Place was installed in 1985. The County owns and operates a regional lift station in between both developments which transmits the raw sewage to its North County WWTP. The City operates a 100,000 gallon per day prefabricated steel water treatment plant at Park Place. There are two (2) wells located on the plant property. The primary well is 6 -inches in diameter with a 3 -inch drop pipe and is capable of pumping 109,500 gallons per day (gpd). The secondary or backup well is 4 -inch in diameter with a 2 -inch drop pipe and capable of pumping 96,500 gpd. Raw water is pumped to a tray aerator on top of a 32,320 gallon groundwater storage tank where the water is chlorinated via a gas chlorination system. The plant consists of two (2) 20 hp high service pumps which pump the water into a 5,500 gallon hydropneumatic tank. Liquid levels and pressure in the system are maintained by pressure switches. Presently, the pressure in the system fluctuates between 42 psi and 62 psi. A contract Class "C" operator operates the plant. It is anticipated by the City that once the PP/PLC and GDU-Sebastian Highland utility systems are interconnected, the City's water treatment plant will be decommissioned. The PP/PLC water distribution and transmission system was constructed in 1985 and 1988. The water distribution and transmission system consists of approximately 17,315 linear feet of water main ranging in diameter from 6 to 12 inches in diameter as sum below: Diameter Size Linear Feet 6 -inch 9,970 8 -inch 5,520 10 -inch 765 12 -inch 1.060 Total 17,315 In addition, the water distribution consists of 16 fire hydrants to provide fire protection, as well as isolation valves throughout the water distribution system for repairs and maintenance, blowoffs, meters and miscellaneous appurtenances. RJO/cl/R-S-1 Boad. rpt AAI 892-023.06 5 THE GDU-SEBASTIAN HIGHLANDS SYSTEM GDU - Sebastian Highlands Water System General The water GDU - Sebastian Highlands System is comprised of a water supply, treatment, and transmission and distribution system which, as of September 1993, provided service to approximately 1,238 retail accounts. Central potable water service for the City is presently provided by GDU with the exception of Park Place/Palm Lake Club and Sebastian Lakes service areas. The existing service area for the Sebastian Highlands WTP includes Units 7, 9, 12, 14, 15 and portions of Units 8, 10, 11, 16 and 17 as previously illustrated on Figure 2. The existing franchise area includes all units from Unit 1 through 17, which consists of more than 13,000 platted lots within a 14 square mile area. The original WTP for this area was located on Manly Avenue and was constructed in the 1960's. This WTP consisted of 6 -inch and 8 -inch artesian wells (both abandoned in 1988), a ground storage tank and a high service pump building. In 1982, the original WTP on Manly Avenue was abandoned and the existing facility was constructed on Filbert Street. The primary modes of water treatment include aeration, lime softening, filtration and disinfection. The GDU - Sebastian Highlands water system consists of two (2) groundwater supply wells, one (1) water treatment plant, and approximately 165,400 linear feet of water transmission and distribution lines ranging from 2 to 16 inches in diameter. The following is a discussion of the GDU - Sebastian Highlands water system. Raw Water Supply The source of raw water for the GDU - Sebastian Highlands water system is the surficial aquifer. Raw water supply for this facility is pumped from two (2) shallow wells that are located on the GDU-Sebastian Highlands WTP site. Raw water supply well no. 1 is located near the intersection of Filbert Street and Joy Haven Drive, and well no. 2 is located near the intersection of Filbert Street and Landover Drive. Each well is 10 inches in diameter, and approximately 100 feet deep, and equipped with a vertical turbine pump. The rated capacity of each well is approximately 600 gpm. With respect to raw water withdrawals, the GDU - Sebastian Highlands water system is currently regulated by the St. Johns River Water Management District ("SJRWMD"). The SJRWMD is a governmental agency created by the Florida Legislature which has the responsibility of managing the water resources within its boundaries (i.e., central and northeast Florida). The SJRWMD authorizes the use of the groundwater from the surficial aquifer pursuant to a water use permit that will expire during the forecast period reflected in this Report. The following table summarize the attributes of the water use permit for the GDU- Sebastian Highlands water treatment facilities. RJOMIR-S-I/Bond.cpt HAI 1192-023.06 6 As indicated in the table above, the GDU-Sebastian Highlands water use permit expires on June 30, 1994. However, based on discussions with the SJRWMD, it is not anticipated that the City would experience any difficulty with respect to the renewal of the water use permits at existing consumption levels reflected in the current permit, as well as for future consumption levels based on normal growth. Furthermore, the City will file an application with the SJRWMD to transfer the current water use permit to the City coincident with the Acquisition. The Governing Board of the SJRWMD has declared the entire district of the SJRWMD as a Water Conservation Area ("WCA") which requires action to address cumulative water withdrawals that are causing or may cause adverse impacts to the water and related resources or public interest. In accordance with the SJRWMD permit, the permittee, which in this case will be the City, must develop and submit to the SJRWMD a plan for water conservation within the Service Area during the permit renewal process. The plan must detail specific steps and time frames for implementation, and must be implemented immediately upon approval by the SJRWMD. The water conservation plan must be developed in accordance with the guidelines specified in the "St. Johns River Water Management District, Water Conservation Plan for Public Supply" manual. According to SJRWMD, the available water supply is of adequate quantity and quality and should provide a good long term supply of water, assuming proper water use planning. The water quality of the groundwater supply is such that it requires only aeration for removal of hydrogen sulfide, lime softening for removal of hardness, and chlorination for disinfection to meet the requirements of Rule 17-550, of the Florida Administrative Code ("FAC") as it relates to finished potable water quality standards and the Safe Drinldng Water Act of 1986. Based on discussions with representatives of the SJRWMD and the Florida Department of Environmental Protection ("FDEP"), it is reported by the agencies that the available water supply is adequate to meet the permitted capacity or withdrawal requirements allocable to the Water System. During the 21 -month period ended September 30, 1993, the average daily withdrawals of raw water to be treated at the GDU-Sebastian Highlands WT? averaged 0.350 MGD, and ranged from 0.260 MGD to 0.572 MGD on a daily basis as summarized below: AN RJO/cl/R-S- 1 Mond. rpt HAI /192-023.06 7 Authorized Withdrawal Maximum SIRWMD Penult Annual Maximum Water System Permit No. Source of Supply Expiration Year (MG) Day (MGD) GDU-Sebastian Highland& WCP 2-061-0142UNR Surficial Aquifer June 30, 1994 1987 106.8 0.706 1988 131_6 0.870 1989 156.3 1.030 1990 181.1 1.200 1991 205.9 1.360 1992 230.6 1.530 1993 255.4 1.690 As indicated in the table above, the GDU-Sebastian Highlands water use permit expires on June 30, 1994. However, based on discussions with the SJRWMD, it is not anticipated that the City would experience any difficulty with respect to the renewal of the water use permits at existing consumption levels reflected in the current permit, as well as for future consumption levels based on normal growth. Furthermore, the City will file an application with the SJRWMD to transfer the current water use permit to the City coincident with the Acquisition. The Governing Board of the SJRWMD has declared the entire district of the SJRWMD as a Water Conservation Area ("WCA") which requires action to address cumulative water withdrawals that are causing or may cause adverse impacts to the water and related resources or public interest. In accordance with the SJRWMD permit, the permittee, which in this case will be the City, must develop and submit to the SJRWMD a plan for water conservation within the Service Area during the permit renewal process. The plan must detail specific steps and time frames for implementation, and must be implemented immediately upon approval by the SJRWMD. The water conservation plan must be developed in accordance with the guidelines specified in the "St. Johns River Water Management District, Water Conservation Plan for Public Supply" manual. According to SJRWMD, the available water supply is of adequate quantity and quality and should provide a good long term supply of water, assuming proper water use planning. The water quality of the groundwater supply is such that it requires only aeration for removal of hydrogen sulfide, lime softening for removal of hardness, and chlorination for disinfection to meet the requirements of Rule 17-550, of the Florida Administrative Code ("FAC") as it relates to finished potable water quality standards and the Safe Drinldng Water Act of 1986. Based on discussions with representatives of the SJRWMD and the Florida Department of Environmental Protection ("FDEP"), it is reported by the agencies that the available water supply is adequate to meet the permitted capacity or withdrawal requirements allocable to the Water System. During the 21 -month period ended September 30, 1993, the average daily withdrawals of raw water to be treated at the GDU-Sebastian Highlands WT? averaged 0.350 MGD, and ranged from 0.260 MGD to 0.572 MGD on a daily basis as summarized below: AN RJO/cl/R-S- 1 Mond. rpt HAI /192-023.06 7 Note: 1. Data not available. Furthermore, since January 1990 to the present date, raw water withdrawals from the surficial aquifer have been well less than the authorized water use withdrawals by the SJRWMD as summarized below: Water System Year GDUSebastian Highlands WTP 1990 1991 1992 199311) SJRWMD Pcrmitted Water Demand and Percent of Authorized Withdrawal Raw Water Withdrawals (MGD) Maximum Annual Actual Water Demand (MG) Minimum 181.1 Maximum 205.9 Avenge 230.6 Month 1992 1993 1992 1993 1992 1993 January 0.271 0.301 0.347 0.406 0.310 0.332 February 0.272 0.316 0.348 0.394 0.312 0.345 March 0.279 0.292 0.416 0.495 0.337 0.358 April 0.276 0.298 0.400 0.501 0.333 0.364 May 0.310 0.299 0.492 0.572 0.401 0.413 June 0.260 0.277 0.413 0.480 0.304 0.361 July 0.281 0.304 0.533 0.570 0.387 0.380 August 0.269 0.305 0.458 0.460 0.350 0.382 September 0.275 0.286 0.373 0.489 0.321 0.360 October 0.290 (1) 0.437 (1) 0.343 (1) November 0.306 (1) 0.406 (1) 0348 (1) December 0.292 (1) 0.421 • (1) 0.336 (1) Note: 1. Data not available. Furthermore, since January 1990 to the present date, raw water withdrawals from the surficial aquifer have been well less than the authorized water use withdrawals by the SJRWMD as summarized below: Water System Year GDUSebastian Highlands WTP 1990 1991 1992 199311) SJRWMD Pcrmitted Water Demand and Percent of Authorized Withdrawal Authorized Withdrawal Maximum Annual Actual Water Demand (MG) (MG) Percent 181.1 111.9 61.8 205.9 112.1 54.4 230.6 124.6 54.0 255.4 100.0 52.2(2) Notes: 1. Annual raw water pumping data for the period from January through September. 2. Estimated Annualized Percentage based on actual raw water pumping for the period between January through September. Water Treatment Facility Raw water pumped from the surficial aquifer is treated at a WTP located on Filbert Street. The GDU - Sebastian Highlands WTP that utilizes aeration for removal of hydrogen sulfide, lime softening for reduction of water hardness and chlorination for disinfection. The GDU- �0-_ RJO/cl/R-S-1 /Bond. rpt HAI #92-023.06 8 Maximum Day Actual Maximum Day (MGD) Demand (MGD) Percent 1990 1.200 0.495 41.2 1991 1360 0.507 373 1992 1.530 0.533 34.8 1993(') 1.690 0.572 33.2 Notes: 1. Annual raw water pumping data for the period from January through September. 2. Estimated Annualized Percentage based on actual raw water pumping for the period between January through September. Water Treatment Facility Raw water pumped from the surficial aquifer is treated at a WTP located on Filbert Street. The GDU - Sebastian Highlands WTP that utilizes aeration for removal of hydrogen sulfide, lime softening for reduction of water hardness and chlorination for disinfection. The GDU- �0-_ RJO/cl/R-S-1 /Bond. rpt HAI #92-023.06 8 Sebastian Highlands WTP has a rated capacity on a maximum day basis of 0.671 MGD and a process schematic of this facility is illustrated on Figure 4. As the raw water enters the WTP, alum can be added prior to and/or after the natural draft tube/cascade aerator for improved water softening. The natural draft tube/cascade type aerator is utilized for hydrogen sulfide removal. From the cascade aerator, lime is added and the raw water flows to the solids contact precipitator to reduce the hardness in the raw water, as well as enhance the settling characteristics of the solids produced. The precipitator was manufactured by Permuttit and is 40 feet long by 12 feet wide, with a sidewater depth of approximately 9 feet. The precipitator was designed around a detention time of 70 minutes and on overflow rate of approximately 1.0 gallons per minute per square foot (gpm/s1) at average daily flow. The design capacity of the precipitator is rated at 466 gpm or approximately 671,000 gpd. Sludge from the precipitator is pumped to the precipitator and combined with the raw water to be treated, which then discharges into the influent to the precipitator. From the precipitator, the treated water flows by gravity to two (2) out of the three (3) gravity sand filters to remove the solids. One (1) filter is always used as a standby unit. Each filter is 12 feet in diameter with a media (gravel and sand) depth of 30 inches. Each filter has a capacity of 233 gpm and a hydraulic loading rate of approximately 2.06 gpm/sf. From the sand filters, the filtered water flows by gravity to a clearwell and is subsequently pumped to the 0.5 million gallon (MG) prestressed concrete ground storage tank, utilizing the transfer pumps located at the clearwell. Each transfer pump has a capacity of 700 gpm. Filter backwash is accomplished utilizing a 1,700 gpm centrifugal pump which obtains water for backwashing from the 0.5 MG ground storage tank. From the filters, the backwash water flows by gravity to the sludge lagoon, which- is subsequently pumped back to the precipitator for treatment. Chorine is added at three (3) points in the water treatment process. The three (3) chlorine addition points include the gravity filter influent, the ground storage tank influent and the discharge to the water distribution system. The treated water is then pumped from the ground storage tank to a 5,000 -gallon hydropneumatic tank and then to the distribution system utilizing the high service pumps. There are three (3) high service pumps with the following capacities: 250 gpm, 400 gpm and 600 gpm. The raw water pumped to the WTP is monitored utilizing a 4 -inch turbine meter located on the influent line to the precipitator. The potable water pumped to the distribution is monitored utilizing either of the two (2) turbine meters (6 -inch and 12 -inch) that are located on the high service pumps' discharge line. The raw water quality that is pumped to the GDU-Sebastian Highlands WTP is considered good, based on data obtained from the FDEP and the Indian River County Health Department (IRCHD). Of the data analyzed, the two (2) raw water supply wells did not violate any of the water quality standards that were in effect at the time of sampling. The FDEP Monthly Operating Report ("MOR") data indicates that the raw water that is treated at the GDU- Sebastian Highlands WTP is defined as generally hard in nature, averaging 266 milligrams per AM_ RJ 0/cl/R-S-1 /Bond. rpt HAI #92-023.06 9 liter (mg/1) as CaCO3 since January 1992, and has ranged from 252 mg/l to 288 mg/l as CaCO3. As previously mentioned, since January 1992, the raw water pumped from GDU- Sebastian Highlands WTP to customers ranged from 0.260 MGD (June, 1992) to 0.572 MGD (May, 1993), and averaged 0.350 MGD. The raw water pumped maximum day to average day ratio since January, 1992, has ranged from 1.10 to 1.50, and averaged 1.27. The finished water provided to the customers by the GDU-Sebastian Highlands WTP considered good quality product with the exception of total trihalomethanes ("TTHMs"), copper and bacteria. Moreover, there have been some complaints from customers regarding the finished water quality that have been primarily investigated by IRCHD. These problems are not alarming, since GDU does not practice TTHM control (ammoniation), the copper problems could be a result of improper operation of the WTP (i.e., pH low). Also, the bacteria concentrations appear to be a problem resulting from within a residential internal water system that was sampled by the IRCHD, rather than from the System. However, all three (3) problems can be eliminated fairly simply at a low cost by instituting a TTHM control program and operation modifications at the WTP, and increased flushing of problem area, and are considered to be corrected as part of the 1993 Projects discussed later in the Report. For the period between January 1992 and September 1993, the GDU-Sebastian Highlands WTP pumped approximately 0.322 MGD on an average daily basis, and ranged from 0.181 MGD to 0.453 MGD to its potable water customers as summarized below: Potable Water Pumped to the Distribution System (MGD) Month Minimum Avenge January 0.246 0.284 February 0.250 0.298 March 0.273 0.316 April 0.262 0.305 May 0.299 0.373 June 0.226 0.278 July 0.273 0.362 August 0.263 0.320 September 0.260 0.295 October 0.255 0.313 November 0.254 0.303 December 0.279 0.306 Note: 1. Data not available. Maximum Minimum Avenge Maximum 0.343 0.276 0.305 0.360 0.338 0.287 0.319 0.359 0.367 0.236 0.318 0.392 0.371 0.284 0.335 0.391 0.431 0.276 0.383 0.453 0.352 0.261 0.337 0.429 0.451 0.271 0.353 0.446 0.404 0.304 0.351 0.403 0.360 0.181 0.320 0.384 0.404 (1) (1) (1) 0.364 (1) (1) (1) 0.372 (1) (1) (1) The maximum day to average day ratio for water treated at the WTP ranged from 1.13 to 1.29, and averaged 1.21 over the period investigated. For the same period, the average finished water total hardness averaged 187 mg/1 as CaCO3 and ranged from 156 mg/1 to 248 mg/1 as CaCO3. Therefore, the treatment process removes approximately only 29.7 percent of the total hardness from the raw water. However, it should be noted that this type of water treatment process should be capable of reducing the raw water hardness to a concentration of =f= RJ0/cl/R-S-1/Bond. rpt HAI #92-023.06 to less than 100 mg/l as CaCO3, and it is proposed that operational modifications will be instituted after the acquisition to increase the hardness removal efficiency of the GDU- Sebastian Highlands WTP. Water Distribution and Transmission Facilities The water distribution and transmission system consists of over 31.3 miles (approximately 165,400 feet) of pipeline ranging in size from 2 to 16 inches in diameter and are constructed of either polyvinyl chloride (PVC), asbestos cement or ductile iron. The water distribution and transmission system was installed coincident with the growth and development of the utility system. The following table summarizes the quantity of water distribution and transmission pipelines for the water System: Diameter Size Linear Feet 16 inch transmission 14,400 12 inch transmission 25,826 10 inch transmission 1,700 8 inch transmission 7,780 6 inch transmission 2,200 6 inch distribution 101,537 4 inch distribution 10,500 3 inch distribution 840 2 inch distribution 600 Total 165.403 The pressure in the water distribution system is generally maintained between 53 and 63 pounds per square inch ("PSP') which meets the fire flow requirements of the City. The water distribution system is equipped with isolation valves throughout the water system for repairs and maintenance without shutting down significant portion of the water system at one time. The water distribution system also includes 133 fire hydrants to provide fire protection throughout the service area of the GDU - Sebastian Highlands water system. Condition of Water System Based upon the general field observations and the intended use of the facilities, interviews with staff, and a review of water permits and other miscellaneous GDU - Sebastian Highlands water system reports, the water supply and treatment facilities to be acquired by the City appear to be in average to good condition. As a result of the condition of the facilities and in order to ascertain a long term reliable source of water supply, it is recommended that the City refurbish and modify the operation of the GDU-Sebastian Highlands WTP to secure a long-term supply of finished water for the Combined System, as well as provide for reliability in the supply of water. In addition, to provide additional service to new areas of the City, the City should construct adequate facilities to "loop" the water transmission and distribution system on the MMAla RJO/cl/R-S-1 Bond. rpt HAI #92-023.06 11 eastern portion of the service area of the City as discussed hereinafter regarding the Capital Improvements Program. Based on the Capital Improvement Program reflected in this Report and assuming that the City continues to perform renewals and replacements and recommended capital improvements on the Combined Water System, it can be reasonably expected that the facilities will meet the water capacity requirements of the Combined System for the forecast period reflected in this Report. GDU - Sebastian Highlands Wastewater System General The GDU-Sebastian Highlands wastewater system comprises of a collection and transmission, treatment and effluent disposal system which, as of September 1993, provided wastewater service to 569 accounts, which comprises the population in Units 9, 16 and 17 of the development. The GDU - Sebastian Highlands wastewater system presently does not provide any bulk or wholesale wastewater treatment or effluent disposal service to any other utilities. The overall wastewater service area of the GDU - Sebastian Highlands wastewater system is generally coterminous with the GDU-Sebastian Highlands water system service area. However, the existing wastewater service area consists of Units 7, 9, 14, 15, 16 and 17 or approximately 3 square miles and was previously illustrated on Figure 3 at the end of this Report. The wastewater system consists of one (1) WWTP, effluent disposal facilities, approximately 69,100 linear feet of sewer fines, and six (6) sewage lift stations strategically located throughout the current wastewater service area. The following is a discussion of the GDU - Sebastian Highlands wastewater system. Wastewater Treatment The GDU-Sebastian Highlands WWTP is located at the west end of the Bailey Drive extension of Unit 9 and is an extended aeration activated sludge facility provided with screening, aeration, and secondary clarification. A process schematic of the wastewater treatment plant is shown on Figure 5 at the end of this Report. The WWTP has stand-by or auxiliary power supply in the event of power outages. The wastewater treatment facility has a design capacity of 0.300 MGD on an average day basis, but is limited to permitted capacity of 0.142 MGD on an annual average daily basis due to the rated capacity of the effluent disposal facilities. The facility operates pursuant to a FDEP operating permit (No. DO31-233039) which expires on September 28, 1998. Coincident with the Acquisition and as part of the transitional activities, the City will file an application with the FDEP to transfer the operating permit to the City. The wastewater is pumped to the WWTP and discharged into the two (2) aeration basins. The primary aeration basin has an effective treatment volume ("ETV") of approximately 204,000 gallons. The secondary aeration basin has an ETV of approximately 99,000 gallons. Based on a review of the available data regarding the WWTP, the aeration basins appear to be designed RIO/cl/R-S-1 Bond. rpt HAI #92-023.06 12 around a solids retention time ("SRT") of 14 days and an oxygen requirement of 1.15 pounds of oxygen (02) per pound of biochemical oxygen demand ("BOD") removed, and 4.6 lbs. 02/lbs. nitrogen removed. From the aeration basins, the mixed liquor suspended solids ("MLSS") flows by gravity to a secondary clarifier that has a surface area of approximately 586.5 square feet (so. The average surface loading rate for the clarifier is approximately 512 gpd/sf, which is considered excessive for an extended aeration process. Typically, the surface loading rates for extended aeration processes are generally in the range of 300 to 600 gpd/sf. However, on an average daily basis during the past 21 months, the surface loading rate averaged approximately 128 gpd/sf, which is considered below recommended values. Although the surface loading rate for the clarifier is below the recommended values, this is not a major concern since operational procedures can be implemented to reduce the impacts of low surface loading rates, and furthermore, as more customers are added to the system the surface loading rate will increase. The solids loading rate for the clarifier is designed around 15 lbs./sf/day, which is considered adequate. From the clarifier, the effluent flows by gravity to the chlorine contact basin where chlorine is added for disinfection. The chlorine contact basin has an effective volume of 12,070 gallons which equates to a detention time of approximately 58 minutes at average daily flow and approximately 23 minutes at peak flow. From the chlorine contact basin, the chlorinated effluent flows to one (1) of three (3) percolation ponds. For the period between January 1992 and September 1993, the wastewater system treated approximately 0.075 MGD on an average day basis. The monthly peak day flow for the same period ranged from 0.064 MGD to 0.182 MGD. However, it should be noted that the peak day flow of 0.182 MGD occurred during a 100 year storm event as reported by the City. In addition, until April 1993, the wastewater generated from the Reflections on the River condominium development was treated at the GDU-Sebastian Highlands WWTP. In April 1993, Indian River County began treating the wastewater generated at this development, and since that period the average day and peak day wastewater flows were reported to be 0.069 MGD and 0.182 MGD, respectively. Thus, for the period between April 1992 and September 1993, the wastewater treated represented approximately 48.8 % of the permitted capacity of the WWTP. Summarized below are the reported average day and peak day wastewater flows treated on a monthly basis at the WWTP: W RJO/ct/R-S-1Bond. rpt HAI #92-023.06 13 Notes: 1: 2. Wastewater flows for these months included wastewater generated within Reflections on the River Condominium development and treated at the GDU-Sebastian Highlands WWTP. 171ese wastewater flows were diverted to Indian River County in April 1993. Data not available. One of the projects anticipated to be funded from impact fees generated through growth of wastewater System includes the rerating and upgrade of the existing percolation ponds from an effluent disposal capacity of 0.142 MGD to 0.300 MGD. Once complete, the permitted capacity is anticipated to be 0.300 MGD. Based on this anticipated increase in capacity and the actual amount of wastewater treatment during the period between April 1992 to September 1993 (0.069 MGD), this would equate to approximately 23.0% of the anticipated capacity. Effluent and Sludge Disposal The disinfected effluent from the GDU-Sebastian Highlands WWTP is disposed of in a series of three (3) percolation ponds with a overall rated permitted capacity of 0.142 MGD. The permitted capacity of the individual percolation ponds are as follows: percolation ponds nos. 1 and 2 of 112,900 gpd and percolation pond no. 3 of 29,100 gpd. The effluent from the GDU-Sebastian Highlands WWTP must meet the requirements set forth in Chapter 17-610, Reuse of Reclaimed Water and Land Application, of the Florida Administrative Code (FAC). The effluent from the WWTP must meet secondary treatment levels (BOD: 20 mg/1 and TSS: 20 mg/1), or 90% removal, whichever is more stringent, with basic disinfection and a nitrate -nitrogen concentration of 12 mg/l as nitrogen. The GDU- Sebastian Highlands WWTP generally meets these standards on a continual basis. However, at times, the total suspended solids ("TSS") standard of 20 mg/1 is exceeded during a sampling event. The effluent TSS has equaled and/or exceeded a concentration of 20 mg/1 on four (4) occasions since January, 1988. The possible reasons for exceeding the effluent standard for TSS is the low surface loading rate in the clarifier and/or not wasting sludge properly. Both are possible reasons for sludge bullring, solids carry-over and pin floc and can be corrected RJO/cl/R-S-1 /Bond. rpt HAI 1/92-023.06 14 Wastewater Flows (MGD) 1992 1993 Month Average Maximum Average Maximum January 0.113(11 0.17001 0.055 0.076 February 0. 112(') 0.142"1 0.055 0.078 March 0.1001 0. 1460) 0.074 0.182 April 0.082 0.096 0.064 0.076 May 0.091 0.094 0.051 0.064 June 0.083 0.122 0.057 0.068 July 0.083 0. 102 0.060 0.068 August 0.084 0.100 0.065 0.092 September 0.091 0.124 0.080 0.134 October 0.081 0.108 (2) (2) November 0.053 0.070 (2) (2) December 0.052 0.068 (2) (2) Notes: 1: 2. Wastewater flows for these months included wastewater generated within Reflections on the River Condominium development and treated at the GDU-Sebastian Highlands WWTP. 171ese wastewater flows were diverted to Indian River County in April 1993. Data not available. One of the projects anticipated to be funded from impact fees generated through growth of wastewater System includes the rerating and upgrade of the existing percolation ponds from an effluent disposal capacity of 0.142 MGD to 0.300 MGD. Once complete, the permitted capacity is anticipated to be 0.300 MGD. Based on this anticipated increase in capacity and the actual amount of wastewater treatment during the period between April 1992 to September 1993 (0.069 MGD), this would equate to approximately 23.0% of the anticipated capacity. Effluent and Sludge Disposal The disinfected effluent from the GDU-Sebastian Highlands WWTP is disposed of in a series of three (3) percolation ponds with a overall rated permitted capacity of 0.142 MGD. The permitted capacity of the individual percolation ponds are as follows: percolation ponds nos. 1 and 2 of 112,900 gpd and percolation pond no. 3 of 29,100 gpd. The effluent from the GDU-Sebastian Highlands WWTP must meet the requirements set forth in Chapter 17-610, Reuse of Reclaimed Water and Land Application, of the Florida Administrative Code (FAC). The effluent from the WWTP must meet secondary treatment levels (BOD: 20 mg/1 and TSS: 20 mg/1), or 90% removal, whichever is more stringent, with basic disinfection and a nitrate -nitrogen concentration of 12 mg/l as nitrogen. The GDU- Sebastian Highlands WWTP generally meets these standards on a continual basis. However, at times, the total suspended solids ("TSS") standard of 20 mg/1 is exceeded during a sampling event. The effluent TSS has equaled and/or exceeded a concentration of 20 mg/1 on four (4) occasions since January, 1988. The possible reasons for exceeding the effluent standard for TSS is the low surface loading rate in the clarifier and/or not wasting sludge properly. Both are possible reasons for sludge bullring, solids carry-over and pin floc and can be corrected RJO/cl/R-S-1 /Bond. rpt HAI 1/92-023.06 14 utilizing modified operational techniques. Furthermore, the WWTP has had no problem meeting the basic disinfection requirements. No data was provided in the FDEP MOR's which indicated the effluent nitrate -nitrogen concentration in the WWTP effluent. With regards to sludge treatment and disposal, an aerobic digestion process is utilized for sludge stabilization (treatment) and storage with ultimate disposal by land application. The sludge is wasted directly from the clarifier to the aerobic digester for sludge stabilization. The aerobic digester has an effective treatment volume of approximately 25,000 gallons. The volume will result in a solids retention time ("SRT") ranging from 9 to 14 days, depending on the quantity of sludge wasted. The aerobically stabilized sludge is then pumped to the sludge sand drying beds for dewatering. Based on the above information, it appears that the sludge would be designated as a Class C sludge and would require upgrades to meet the new Sludge Rule, Title 40, Code of Federal Regulations ("CFR"), Part 503. Presently, a private hauler delivers the dewatered sludge to agricultural and sod farms for land application. Such sites are owned by private owners and are permitted and approved for use by the sludge haulers by the FDEP. Wastewater Collection Facilities The wastewater collection and transmission system has been installed coincident with the development of Units 9, 16 and 17. This system consists of approximately 9.2 miles (48,800 linear feet) of 8 -inch gravity sewer and approximately 3.8 miles (20,300 linear feet) of force mains ranging in size from 2 to 8 inches in diameter. Most of the gravity sewer and force mains are constructed of PVC. The gravity sewer system includes approximately 200 manholes for maintenance and operational access. In addition, the wastewater system has six (6) sewage lift stations located throughout the existing service area. Presently, only one (1) of the lift stations have emergency generator receptacles to receive power from a portable generator in case of pump station failure. Condition of Wastewater System Based upon the general field observations and the intended use of the facilities, interviews with staff, and a review of wastewater permits and other miscellaneous GDU - Sebastian Highlands System reports, the wastewater collection and transmission, treatment and effluent disposal facilities appear to be in average to good condition. As a result of the condition of the facilities and in order to continue to provide reliable levels of service, the City will need to make the Combined System wastewater improvements as discussed later in this Report. These improvements include upgrading the sludge stabilization facilities to meet the recently promulgated Title 40, CFR, Part 503 requirements and future effluent disposal needs of the System. Rio/d/R-S-1Bond.rpt HAI #92-023.06 is Based on the Capital Improvement Plan reflected in this Report and assuming that the City continues to perform renewals, replacements and capital improvements to the facilities as discussed earlier in the Report, it can be reasonably expected that the facilities will meet the capacity requirements of the wastewater system for the forecast period reflected in this Report. THE 1993 PROJECTS General The City has instituted the issuance of the Series 1993 Bonds primarily in order to finance Acquisition costs. In addition to the Acquisition, a portion of the proceeds of the Series 1993 Bonds as well as other legally available funds are intended to fund certain capital improvements, additions and extensions to the System for the purpose of providing improved water and wastewater service to the existing and anticipated customers of the City (the "1993 Projects"). The estimated project cost of the 1993 Projects, including contingency amounts and other applicable allowances, is $1,169,300. Table 1 at the end of this Report summarizes the anticipated 1993 Project capital improvements program for the three (3) fiscal year period ending September 30, 1996. The following is a description of the 1993 Projects. Water System 1. TTHM Control System. Although this project is not required by state or federal regulations, the City is committed to install TTHM control facilities at the GDU-Sebastian Highlands WTP due to public concerns. It is proposed that ammoniation facilities be constructed at the GDU-Sebastian Highlands WTP. The TTHM control facilities will consist of ammoniation injection equipment, a leased ammonia tank and miscellaneous piping, valves and appurtenances. The estimated cost for these improvements is approximately $22,000. It is anticipated that the design and permitting of these improvements will be completed by June 1994 and will be financed from the Series 1993 Bonds. 2. Miscellaneous Sebastian Water Distribution and Transmission System Improvements. In order to provide adequate supply to the Combined System water customers, we have identified additional improvements to the water distribution and transmission system. Improvements to the water distribution and transmission system are recommended to provide service to the commercial customers along the U.S. Highway 1 corridor, residential customers north of C.R. 512 and adequate fire protection will include the addition of approximately 15,000 linear feet of pipe ranging in size from 8 to 12 inches in diameter in order to properly loop the System. The estimated cost associated with the water distribution and transmission system improvements is $300,000. The work on the water distribution and transmission system is anticipated to RJo/cl/R-S-1 Bond. rpt HAI 1192-023.06 16 begin immediately and be completed by October 1996 and will be financed from the Series 1993 Bonds. 3. Water Use Permit Renewal. The water use permit for the GDU-Sebastian Highlands WTP expires on June 30, 1994. Therefore, the water use permit will need to be filed to the SJRWMD within 4 months of the permit expiration date, or about March 1994, to provide for sufficient review time by the SJRWMD and have it in place prior to the permit expiring. The water use permit renewal will need to include documentation of projected demands, impacts on groundwater, surface water and wetlands, a safe yield analysis and a water conservation plan. The estimated cost to prepare a water use permit inclusive of all the necessary documentation and modeling, is estimated to be $19,700 and will be financed from the Series 1993 Bonds. 4. Water System Master Plan. In order for the City to properly manage the Combined water System, maintain and provide sufficient supply, treatment and distribution of portable water to meet growth and future conditions, evaluate exiting conditions, develop a capital improvements plan to meet the future conditions, as well as a financial plan, a Water System Master Plan must be prepared. It is anticipated that the Water System Master Plan will be completed by September 1994, and the cost to prepare this plan is estimated to be $40,000 and will be financed from the Series 1993 Bonds. 5. Miscellaneous Water Treatment System Improvements. Some improvements are needed in order to improve water treatment operations, operating conditions, and improve levels of service to the Combined water System customers. These capital improvements include relocating the chemical feed points (i.e., chlorine, lime, etc.), an above ground diesel fuel storage tank and containment area, replacement of screen on the aerator, decommissioning of the Park Place/Palm Lake Club WTP, other miscellaneous improvements and upgrades. The total estimated cost for these improvements is approximately $45,700 and is anticipated to be completed by September 1996 and will be financed from the Series 1993 Bonds. 6. Barber Street Watermain Interconnection. This watermain interconnection will connect the Park Place/Palm Lake Club water distribution system with the GDU-Sebastian Highlands water system. The interconnection will include construction of approximately 2,000 linear feet of 8 -inch water main, fire hydrants, valves and miscellaneous appurtenances. This project is anticipated to be completed by June 1994 and is estimated to cost approximately $54,000. This project will not be financed by the Series 1993 Bonds, rather, it will be financed from impact fees collected from the Park Place/Palm Lake Club connections. RM®®_ RJO/cl/R-S-1Bond. rpt HAI #92-023.06 17 The total cost of the 1993 Projects for the consolidated water system is $481,400 of which $427,400 will be funded from the proceeds of the Series 1993 Bonds. Wastewater System 1. Sludge Stabilization And Wastewater Treatment Plant Improvements. In accordance with Chapter 17-640, Domestic Wastewater Residuals, and the recently promulgated Title 40 CFR Part 503, the City will have to construct additional sludge stabilization facilities to meet the increased stabilization (treatment) requirements for sludge treatment and disposal. This project involves the construction of a lime stabilization system to provide for the stabilization (treatment) of the sludge produced from the wastewater treatment process to meet the new regulations of FDEP regarding sludge stabilization for land application. This project is expected to -be completed by October, 1995 at an anticipated cost of $220,000 and will be financed from the Series 1993 Bonds. 2. Wastewater System Master Plan. In order for the City of Sebastian to properly manage the wastewater system, a Wastewater System Master Plan is recommended. The Master Plan will be developed in such a manner as to address the existing and future conditions to meet the System's future needs and level of service requirements, the development of a capital improvements program and financial plan to meet the future conditions, and staffing and management issues. The Wastewater System Master Plan will be conducted in conjunction with the Water System Master Plan and submitted as one (1) document. The estimated cost for this portion of the Master Plan is estimated to be $20,000 and is expected to be completed by September 1994 and will be financed from the Series 1993 Bonds. 3. Above Ground Fuel Storage Tank. It is recommended that the existing 2,000 gallon below ground fuel storage tank be replaced with an above ground fuel storage tank and spill containment structure. The estimated cost for this project is approximately $17,400 and is anticipated to be completed by June 1996 and will be financed from the Series 1993 Bonds. 4. Park Place Force Main Interconnect. This force main interconnection will connect the Park Place/Palm Lake Club wastewater collection system to the GDU-Sebastian Highlands wastewater system. The interconnection will consist of approximately 6,400 linear feet of 4 and 6 inch forcemain, a new lift station that will be dedicated to Indian River County, and miscellaneous appurtenances to divert the flow from the County's system to the City's System. The total estimated cost for this project is $108,000 and is expected to be completed by September 1994. This project will not be financed by the Series 1993 Bonds, RJ O/cl /R -S- I /Bond. rpt HAI /l92-023.06 18 rather, it will be financed from impact fees collected from the Park Place/Palm Lake Club connections. 5. Effluent Disposal Reratine and Expansion. As a result of the projected Combined System growth and due to the interconnection of the PP/PLC to the GDU-Sebastian Highlands facilities, the effluent disposal facilities at the GDU- Sebastian Highlands WWTP must be expanded by the Fiscal Year 1998. The expansion is planned to consist of evaluation of the effluent disposal facilities to determine the total available capacity of the existing percolation ponds and the expansion of the effluent disposal facility to achieve a permitted capacity of 0.300 MGD consistent with the design capacity of the GDU-Sebastian highlands WWTP. The estimated cost for this project is approximately $322,500 and is expected to be completed by September 1998. This project is anticipated to be funded from Impact Fees received by the -Combined System due to growth during the forecast period reflected in the Report as well as funds expected to be deposited into the Renewal and Replacement Account. The total cost of the 1993 Projects allocable to the wastewater system is $365,400 of which $257,400 will be funded from the Series 1993 Bonds. The overall Combined System cost of the 1993 Projects is $1,169,300 of which $684,800 will be funded from the Series 1993 Bonds. ADDITIONAL CAPITAL PLANNING ACTIVITIES As can be seen above, the 1993 Projects constitute expenditures primarily associated with renewals, replacements and betterments to the Combined System. In order to further identify needed capital improvements to the Combined System, the City is. anticipating conducting a water and wastewater system master plan which will determine any additional capital requirements for the Combined System for a ten year period. These future requirements may be attributable to system expansion, continued System renewals and betterments, utility and capacity purchases and other related requirements. As shown above with respect to the 1993 Projects description, the water and wastewater system master plan is a project anticipated to be funded from a portion of the Series 1993 Bonds. Pursuant to the terms and conditions of the Bond Resolution, the City must establish and maintain a Renewal and Replacement Account. With respect to the Renewal and Replacement Account, such amounts on balance within the Account shall be used by the City for the purpose of paying the costs of major extensions, improvements or additions to, or the replacement or renewal of capital assets of the Combined System, or for repairs of the Combined System not constituting an operation and maintenance expense. The required (minimum) annual deposit to such fund shall be equal to 5% of the Gross Revenues derived from the operation of the Combined System during the proceeding fiscal year. The balance of any revenues remaining in the Revenue Fund after the payment or funding of the cost of operation and maintenance, debt service and Reserve Subaccount Requirements, and renewals RJO/cl /R -S-1 /Bond. rpt HAI ff92-023.06 19 and replacements shall be deposited in the Utility Reserve Fund and used by the City to make improvements to the Combined System, purchase or redeem bonds prior to maturity or for any other lawful purpose in connection with the Combined System. It should be noted that the deposit to the Renewal and Replacement Account for the forecast period included in the projections reflects the minimum funding requirements as provided for in the Bond Resolution. In addition to the annual funding of capital related expenditures from rates (through deposits to the Renewal and Replacement Account), the City will also receive funds for capital expansion through the application of water and wastewater Impact Fees. As discussed more fully later in this Report, these fees are collected from new customers in order to assist the City in the funding of the cost of capacity utilized (e.g. treatment) to serve such customers and are restricted solely for such purpose (i.e., growth), which also includes the payment of Combined System indebtedness allocable to growth. Projects which are anticipated to be funded by Impact Fees include: i) system extensions of wastewater system force mains, pump stations, gravity interceptors, and the expansion of the wastewater treatment plant and effluent disposal facilities; and ii) extensions of water distribution, transmission mains and water treatment plant. SYSTEM OPERATIONS After the Acquisition, the Combined System will be managed as the Water and Sewer Utilities Department ("Utilities Department") and will be accounted for as a separate department of the City. As previously noted, the Utilities Department presently operates one (1) water supply, treatment, storage, and distribution and transmission facility, and one (1) wastewater collection and transmission facility, collectively called the PP/PLC water and wastewater System. The Utilities Department is operated under the direction of the Utilities Director, who is directly responsible to the City Manager. After the Acquisition, it is anticipated that the Utilities Department will consist of four (4) specific divisions which will report to the Utilities Director. The Utilities Department presently consists of three (3) employees; a director, a clerical assistant and a utility service worker. Customer service and billing are managed by an account clerk in the City's Finance Department. The PP/PLC WTP is currently operated by a Class "C" independent operator under contract with the City. After the Acquisition of the GDU-Sebastian Highlands system, it is anticipated that four (4) employees currently employed by GDU will be added to the utilities operation, including i) two (2) wastewater operators; ii) one (1) service worker currently employed by GDU; and iii) one (1) customer service account clerk which will be accounted for by the City in the General Fund. Based on our discussions with them, the employees will have the experience and training necessary to operate the Combined System. It is anticipated that one (1) of the wastewater operators will receive his WTP operator's license by December 12, 1993. During the transitional period following the acquisition of the GDU-Sebastian Highlands water and wastewater systems, the City will retain the Class "C" independent water treatment plant operator currently under contract to oversee operations at the GDU water plant until such time IMHA(I_ RJO/cl /R -S-1 /Bond. rpt HAI #92-023.06 20 as the operator's services are no longer necessary. Currently, the three (3) employees that GDU employs for the Sebastian Highlands System perform all operations of both the water and wastewater plants under their Division Manager's operator's license. Heavy construction work is and will be in the future performed by outside licensed contractors on an as -needed basis. A description of the individual divisions is summarized below: Administration. This functional unit will consist of two (2) employees, the Utilities Director and Clerical Assistant. They will be responsible for the supervision of the three (3) other divisions of the Utilities Department, as well as certain financial activities involved with the utilities. The administrative personnel will coordinate and supervise the operation and construction of improvements and expansion to the water and wastewater facilities. Regular reporting requirements of the various local, state and federal regulatory agencies involved in water and wastewater issues is a responsibility of the personnel, as is continued • monitoring and analysis of the infrastructure required for utilities operation. Customer Service. This division, after the Acquisition of the GDU-Sebastian Highlands water and wastewater system, will consist of one (1) employee in the Utilities Department and one (1) employee in the City's Finance Department and will be responsible for all customer relations and accounting. This division will also be responsible for preparing, mailing, and posting all bills, preparing financial reports and responding to customer complaints. Water and Wastewater Treatment Plant Qperations, This division, after the Acquisition of the GDU-Sebastian Highlands water and wastewater system, will have a total of two (2) employees which will be responsible for water and wastewater treatment plant operations. The operations division's function with respect to the water system will be responsible for the operations, maintenance regulatory reporting associated with the supply, treatment, and storage of water. This division will also be responsible for providing the City's water customers with a safe and reliable supply of drinking water which meets all local, state and federal standards for potable water quality. The operations division for the wastewater system will be responsible for the operation, maintenance, and regulatory reporting of such operations of the wastewater treatment facilities. This division will also be responsible for the operation and maintenance of the effluent disposal facilities. Line and Plant Maintenance. This division, after the Acquisition of the GDU-Sebastian Highlands water and wastewater system, consists of two (2) employees. This division is currently responsible for the maintenance of the existing 3.3 miles of water mains, 2.9 miles of gravity sewer, 510 linear feet of sewer force mains, 16 fire hydrants and the four (4) wastewater lift stations located throughout the City's existing PP/PLC water distribution and wastewater collection and transmission facilities. After acquisition, this division will also be responsible for the maintenance of more than 31.3 miles of water mains, 9.2 miles of gravity sewers and over 3.8 miles of sewer force RJO/d/R-S-1Bondapt HAI #92-023.06 21 mains within the City that currently make up the GDU-Sebastian Highlands water and wastewater system, as well as the 133 fire hydrants and six (6) wastewater lift stations located throughout the GDU - Sebastian Highlands System. This division will provide prompt repair and maintenance of leaks, major line breaks, new installations, lift station repairs, correction of sewer backups, general water and wastewater treatment plant maintenance and meter reading. In addition, this division will be assisted by employees of the existing GDU - Sebastian Highlands water and wastewater treatment plant operations and independent outside contractors, depending upon the manpower requirements of the job. The Utilities Department plans on utilizing the services of the Sebastian Public Works Department for assistance on any emergency repairs which warrant additional personnel and equipment beyond the current capability of the Utilities Department. HISTORICAL AND PROJECTED SYSTEM SALES AND CUSTOMER STATISTICS General This section of the Report summarizes the recent and projected trends in water and sewer customers, water production and wastewater treatment, and associated sales and usage characteristics for the Combined System. The historical period reflected in this Report for the GDU facilities is calendar years 1990 through 1992 and the Fiscal Year 1993. For the purposes of comparison and since the City has only operated the existing PP/PLC System for approximately five months, the historical results were subsequently annualized for the Fiscal Year 1993 to reflect an assumed full year of operation. The projected period covers the fiscal years 1994 through 1998 for the Combined System. Water System The water system of the GDU-Sebastian Highlands system has experienced an increase in customers and sales since 1990 due to continued growth and development located within the service area. As of September 1993, the GDU-Sebastian Highlands water system provided service to 1,238 accounts of which 1,186 or 95.8% were considered as single-family residential dwellings. The City's existing PP/PLC water system as of September 1993 consisted of 203 accounts located in two manufactured housing developments (known as Park Place and Palm Lakes Club) and are all essentially considered as residential units. Table 2 at the end of this Report delineates the historical and projected sales for the Water System for both the City (i.e., Park Place/Palm Lakes Club or PP/PLC) and GDU systems as summarized below: RJO/d/R-S-1/Bond.rpt HAI #92-023.06 22 Calendar Year Average Annual Number of Accounts Water Sales (000's) No. of Accounts Ended December 31 Development Presently Served (t) at Buildout Service Park Place (Historical) PP/PLC GDU Combined PP/PLC GDU Combined 1990 N/A 1,094 1,094 N/A 94,246 94,246 1991 N/A 1,138 1,138 N/A 86,393 86,393 1992 N/A 1,185 1,185 N/A 96,146 96,146 1993 (1) 190 1,215 1,405 8,595 99,818 108,413 Fiscal Year Average Annual Number of Accounts Water Sales (000's) Ending September 30 (2) (Projected) PP/PLC GDU Combined PP/PLC GDU Combined 1994 215 1,254 1,469 9,257 102,554 111,810 1995 240 1,293 1,533 10,243 105,460 115,702 1996 279 1,332 1,611 11,792 108,344 120,136 1997 316 1,371 1,687 13,244 111,206 124,451 1998 353 1,410 1,763 14,682 114,047 128,729 Average Annual Growth Rate 13_2% 3.02% 4.64% 11.3% 2.70% 3.49% (1) Reflects Fiscal Year ended September 30, 1993 results. City figures annualized for comparative purposes. (2) Although shown separately, assumes Combined System for operational purposes. As can be seen above, the average increase in water customers is projected to be approximately 4.6% annually for the Combined System. It is estimated that the growth in water utility customers would be derived primarily from infill development of the existing serviceable area (where lines currently exist) and expansion of the planned unit development (PUD) at the Park Place residential community. No customer growth associated with any anticipated expansion of the water system by the City subsequent to the Acquisition has been recognized. As can be seen below, the City has existing and planned residential development within the water system area which presently have service which should provide increased customer growth for the projection period. (1) Estimated number of accounts served as of September 1993. (2) Reflects total number of units (lots) where service is currently available as reported by GDU, not total lots of the utility service area of the GDU System. M M FM RJO/cl /R -S-1 Bond. rpt HAI 1192-023.06 23 Identified Residential Customer Growth No. of Accounts Total Accounts Development Presently Served (t) at Buildout Service Park Place 178 684 Water and Wastewater Palm Lake Club 25 136 Water and Wastewater Sebastian Highlands 1,238 2,823 (7) Water Sebastian Highlands 582 980 Cl) Wastewater (1) Estimated number of accounts served as of September 1993. (2) Reflects total number of units (lots) where service is currently available as reported by GDU, not total lots of the utility service area of the GDU System. M M FM RJO/cl /R -S-1 Bond. rpt HAI 1192-023.06 23 With respect to water sales gallons for the forecast period, it was assumed that the average use per account would decrease during the projected period. This decrease was assumed recognizing i) that the primary increase in the growth of the System would occur in the residential class which generally has lower water usage needs (per account) than general service or commercial customers, and ii) general conservation measures which may take place by the utility's customer base. As a result, the projected percentage increase in water sales for the Combined System for the forecast period is less than the projected customer growth. The net effect of this assumption in water use is to recognize a decreasing trend in the average revenue per account during the forecast period. With respect to water production and treatment, it is anticipated that the City will interconnect the City PP/PLC System and the GDU-Sebastian Highlands System by October, 1994. Once interconnected, the existing water production and treatment facilities at the GDU-Sebastian Highlands plant is anticipated to be utilized to meet 'the Combined System capacity requirements. Operating under the Combined System basis, it is anticipated that through the forecast period the Combined System will utilize approximately 78% to 91% of the total design capacity of the water treatment plant (expressed on an average daily flow basis). This is summarized below: For the Fiscal Year Ending September 30 (1) Presented on Combined System basis even though interconnection not anticipated to be complete. (2) Design capacity adjusted from maximum day plant design basis (0.670 mgd) to an Average Daily Flow basis for comparative purposes. For the projection period, miscellaneous losses and unaccounted for water averaging approximately 13.04% of the total water requirements was recognized. The allowance for losses or unaccounted for water, sometimes referred to as unbilled water, is due to a variety of factors, including water used in hydrant line flushing, water used for fire fighting, slow registering meters which understate water use, and losses due to leaks. The loss factor was based on an analysis of water production and sales requirements and is representative of the percentage of water unaccountability experienced by other Florida utilities (i.e., ranging from 10% to 15%). For the purposes of this Report, we have assumed that the Combined System water customers are expected to increase at growth rates consistent with recent historical trends of both utility RJO/cl/R-S-1/Bond. rpt HAI #92-023.06 24 1994(l) 1995 1996 1997 1998 Design Capacity of Water Treatment Plant (MGD-ADF)(2) 0.447 0.447 0.447 0.447 0.447 Anticipated Treatment Requirements (MGD-ADF) 0.352 0.365 0.379 0.392 0.406 Percent of Total 78.8 81.7 84.8 87.7 90.8 (1) Presented on Combined System basis even though interconnection not anticipated to be complete. (2) Design capacity adjusted from maximum day plant design basis (0.670 mgd) to an Average Daily Flow basis for comparative purposes. For the projection period, miscellaneous losses and unaccounted for water averaging approximately 13.04% of the total water requirements was recognized. The allowance for losses or unaccounted for water, sometimes referred to as unbilled water, is due to a variety of factors, including water used in hydrant line flushing, water used for fire fighting, slow registering meters which understate water use, and losses due to leaks. The loss factor was based on an analysis of water production and sales requirements and is representative of the percentage of water unaccountability experienced by other Florida utilities (i.e., ranging from 10% to 15%). For the purposes of this Report, we have assumed that the Combined System water customers are expected to increase at growth rates consistent with recent historical trends of both utility RJO/cl/R-S-1/Bond. rpt HAI #92-023.06 24 Systems. Based on discussions with City staff, the growth is expected to be based primarily in the residential class consistent with the land use requirements of the City. Wastewater System The wastewater system of the GDU-Sebastian Highlands system provides service to a smaller service area when compared to the GDU-Sebastian Highlands water system. As was the case with the water system, the GDU-Sebastian Highlands wastewater system has experienced an increase in customers and sales since 1990. This growth is due to continued development within the service area of the wastewater system. As of September, 1993, the GDU-Sebastian Highlands wastewater system provided service to 582 accounts of which 578 or 99% were categorized as single family residential. The City's existing wastewater system as of September, 1993, consisted of 317 accounts which was equivalent to approximately 1,055 Equivalent Residential Units (ERI). An ERU represents the equivalent usage requirements of a single family residential customer. Since commercial and multi -family customers are generally served by larger sized meters than the standard residential customer, it is useful to equate such customers on an equivalent basis to the residential class to present a more consistent amount of the total customer base being served. In addition to the wastewater customers located within the Park Place and Palm Lakes Club residential developments, the City's wastewater customer base also includes customers which were originally part of the County's system which are located in the City's service area. These customers were transferred to the City pursuant to the provisions of an Interlocal Utilities Agreement between the City and the County dated April 21, 1992 (previously defined as the "Interlocal Agreement"). Prior to the Interlocal Agreement, the City, pursuant to Resolution No. R-87-6, gave the County a 30 -year exclusive franchise for the provision of water and sewer services within the City. Effective on May 1, 1992 (referred to as the "Cancellation Date" in the Interlocal Agreement), the franchise and all of the rights granted to the County were canceled. As a result, the rights to purchase the GDU facilities, to provide service to the Park Place and Palm Lake Club units, as well as certain other wastewater customers which have reserved capacity in the County's wastewater treatment facilities, were assigned back to the City. The County transferred and the City received the customers effective May 1, 1993. As part of the terms of the Interlocal Agreement, certain classes of customers were defined as follows: Class I Units - Units in the CITY which are connected to or which have reserved capacity in the COUNTY wastewater system before the Cancellation Date and which have a collection system available to them, even if the physical connection to the unit has not been made. Class II Units - Units within the CITY which have reserved capacity in the COUNTY wastewater system before the Cancellation Date but which do not have a collection system available. Class III Units - Units within the CITY other than Class I and II Units. RJO/cl/R-S-1/Boad. rpt HAI 1192-023.06 25 The County presently provides all of the wastewater treatment and effluent disposal capacity for the City's existing wastewater customers (i.e., the Class I units which are connected). In addition to wastewater customers which are physically connected to the System and which are provided bulk or wholesale service from the County's facilities, there are additional customers which have paid an impact fee to the County and have reserved capacity in the wastewater treatment facilities. Although those customers are not physically connected to the wastewater system (i.e., primarily vacant lots), service from County facilities (i.e., collection and transmission lines) is available to the property and are considered by the County for bulk rate application purposes as a Class I customer. It should be noted that these customers essentially do not provide any additional rate revenue to the System, since the bulk rate charged to the City by the County pursuant to the Interlocal Agreements is almost equivalent to the City retail rates. As of September 1993, the breakdown of customers by class designation for the City's existing wastewater system as reflected in the Interlocal Agreement, was as follows: As of September, 1993 Accounts ERU's Class I Connected Park Place/Palm Lakes 203 203 Other Customers 22 183 Class I- Reserved/Unconnected 92 669 Class H and IQ — — Totals 317 1.055 Pursuant to the terms and conditions of the Interlocal Agreement, once the interconnection of the City's PP/PLC System and GDU-Sebastian Highlands wastewater systems are completed, it is anticipated that the County will transfer to the City all of the Class I designated units associated with the Park Place and Palm Lakes Club customers. The historical and projected customer and usage statistics for the combined wastewater system are shown on Table 2 at the end of this Report and is summarized as follows: Calendar Year Average Annual Number of Accounts Billed Sales (Gallons)m Ended December 31 (Historical) PP/PLCW GDU Combined PP/PLC GDU Combined 1990 N/A N/A N/A N/A N/A N/A 1991 N/A 558 558 N/A 34,900 34,900 1992 N/A 558 558 N/A 39,527 39,527 1993 (3) 304 565 869 15,375 36,392 51,767 RJO/cl/R-S- I Bond. rpt HAI #92-023.06 26 Fiscal Year Average Annual Number of Accounts Billed Sales (Gallons)(2) Ending September 30(4) (Projected) PP/PLC GDU Combined PP/PLC GDU Combined 1994 329 568 897 15,862 36,501 52,364 1995 354 571 925 16,462 36,511 52,974 1996 393 574 967 17,406 36,520 53,926 1997 430 577 1,007 18,290 36,529 54,818 1998 467 580 1,047 19,165 36,536 55,700 Average Annual Growth Rate 9.0% 0.5% 3.8% 4.5% 0.1% 1.5% (1) For PP/PLC System, includes Class I customers connected to County facilities. (2) Amounts shown based on metered water consumption and tate structure policies (i.e., residential sewer billing threshold gallons only). (3) Reflects Fiscal Year ended September 30, 1993 results. City figures annualized for comparative purposes. (4) Although shown separately, assumes Combined System for operational purposes. As can be seen above, it is estimated that the average annual increase in wastewater customers is projected to be approximately 3.8% annually. It is estimated that the growth in wastewater utility customers would be derived primarily from infill development of the existing serviceable area of the GDU-Sebastian Highlands system and the expansion of the PUD at the Park Place residential community. No customer growth associated with providing service (either treatment or collection as appropriate) to the remaining Class I customers or associated with any anticipated expansion of the wastewater system by the City has been recognized. As was previously summarized in the discussion regarding water system growth, the City has existing serviceable areas and planned residential development within the wastewater system service area which should provide increased customer growth for the projection period. With respect to the utilization of wastewater treatment capacity once the two (2) utility systems are interconnected by October 1994, it is estimated that the City will be utilizing between 61% and 72% of the permitted capacity of the Combined System treatment facilities during the forecast period. This capacity utilization does not take into account any wastewater flow or capacity reservation for Class I customers (other than Park Place and Palm Lakes customers) utilizing County -owned wastewater treatment facilities after the interconnection. All Class I customers of the City have paid an impact fee for treatment capacity utilization and therefore should have capacity allocable to such customers. The summary of the capacity utilization for the Combined System is summarized below: RJO/cl/R-S-1 B oad. rpt HAI X92-023.06 27 For the Fiscal Year Endine September 30 (1) Presented on combined basis even though interconnection not. anticipated to be complete. It should be noted that the design capacity of the wastewater treatment plant at the GDU-Sebastian Highlands System is 0.300 MGD. (2) Reflects City owned and operated facilities only, does not include treatment requirements provided by the County. RATES, FEES AND CHARGES General The Bond Resolution authorizing the issuance of the Series 1993 Bonds contains a covenant under which the City will fix, establish and maintain such fees, rates or other charges and revise whenever necessary as always to provide in each fiscal year sufficient funds to meet the rate covenant requirements as defined in the Bond Resolution. The rate covenant in the Bond Resolution requires that the rates, fees, and charges will always provide: ...(A) Net Revenues which at least equal (1) one hundred five percent (105%) of the Annual Debt Service on all Outstanding Bonds becoming due in such Fiscal Year plus (2) one hundred percent (100%) of (a) any amounts required by the terms hereof to be deposited or credited to the Reserve Subaccount or with any issuer of a Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy as a result of a withdrawal from the Reserve Subaccount, (b) any amount required to be deposited in the Renewal and Replacement Account pursuant to Section 4.05 (B) (5) of the Bond Resolution, and (c) any amounts required by the terms of Sections 4.07(A) and 4.00(A) of the Bond Resolution to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account in such Fiscal Year, respectively, or (B) (1) Net Revenues, Water Impact Fees and Sewer Impact Fees in each Fiscal Year adequate to pay at least one hundred twenty percent (120%) of the Annual Debt Service becoming due in such Fiscal Year on all Outstanding Bonds plus (2) one hundred percent (100%) of any amounts (a) required by the terms hereof, to be deposited or credited to the Reserve Subaccount or with any issuer of a Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy as a result of a withdrawal from the Reserve Subaccount, (b) any amount required to be deposited in the Renewal and Replacement Account pursuant to Section 4.05(B)(5) of the Bond Resolution, and (c) any amount required by the terms of Sections 4.07(A) and 4.08(A) of the Bond Resolution to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account, respectively, in such Fiscal Year,- provided, however, net Revenues shall, at RIO/cl/R-S-1/Bond, rpt HAI //92-023.06 28 1994 0) 1995 1996 1997 1998 Actual Permitted Capacity of Wastewater Treatment Plant (MGD-ADF)Ot 0.142 0.142 0.142 0.142 0.142 Anticipated Treatment Requirements - City Facilities (MGD-ADF)0> 0.086 0.089 0.093 0.097 0.102 Percent of Total 60.6% 62.7% 65.6% 68.3% 71.7% (1) Presented on combined basis even though interconnection not. anticipated to be complete. It should be noted that the design capacity of the wastewater treatment plant at the GDU-Sebastian Highlands System is 0.300 MGD. (2) Reflects City owned and operated facilities only, does not include treatment requirements provided by the County. RATES, FEES AND CHARGES General The Bond Resolution authorizing the issuance of the Series 1993 Bonds contains a covenant under which the City will fix, establish and maintain such fees, rates or other charges and revise whenever necessary as always to provide in each fiscal year sufficient funds to meet the rate covenant requirements as defined in the Bond Resolution. The rate covenant in the Bond Resolution requires that the rates, fees, and charges will always provide: ...(A) Net Revenues which at least equal (1) one hundred five percent (105%) of the Annual Debt Service on all Outstanding Bonds becoming due in such Fiscal Year plus (2) one hundred percent (100%) of (a) any amounts required by the terms hereof to be deposited or credited to the Reserve Subaccount or with any issuer of a Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy as a result of a withdrawal from the Reserve Subaccount, (b) any amount required to be deposited in the Renewal and Replacement Account pursuant to Section 4.05 (B) (5) of the Bond Resolution, and (c) any amounts required by the terms of Sections 4.07(A) and 4.00(A) of the Bond Resolution to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account in such Fiscal Year, respectively, or (B) (1) Net Revenues, Water Impact Fees and Sewer Impact Fees in each Fiscal Year adequate to pay at least one hundred twenty percent (120%) of the Annual Debt Service becoming due in such Fiscal Year on all Outstanding Bonds plus (2) one hundred percent (100%) of any amounts (a) required by the terms hereof, to be deposited or credited to the Reserve Subaccount or with any issuer of a Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy as a result of a withdrawal from the Reserve Subaccount, (b) any amount required to be deposited in the Renewal and Replacement Account pursuant to Section 4.05(B)(5) of the Bond Resolution, and (c) any amount required by the terms of Sections 4.07(A) and 4.08(A) of the Bond Resolution to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account, respectively, in such Fiscal Year,- provided, however, net Revenues shall, at RIO/cl/R-S-1/Bond, rpt HAI //92-023.06 28 all times, equal at least one hundred percent (100%) of the Annual Debt Service on all Outstanding Bonds becoming due in such Fiscal Year. Water and Wastewater Rates The sales revenues from rates as reflected on Table 4 at the end of this Report, associated with the projected operating results for the Combined System, were developed based on rates and charges which were adopted by the City Council on December 1, 1993 pursuant to Resolution No. R-93-59 and Ordinance No. 0-93-19 (as it relates to Impact Fees and customer service charges) (collectively the "Rate Ordinance"). The City's existing rates for water and wastewater service includes: i) a monthly billing charge applicable to each account; ii) a monthly base facility charge applied on a "per ERU" or meter equivalent basis applicable to each individual account; and iii) a consumption or volume charge based on the amount of metered water delivered to each account which, for the water system, has a unit price which increases based on water usage. In addition for the wastewater system, the volume charge is based on 100% of the metered water use with the residential class having a maximum monthly billing threshold of 10,000 gallons. The following is a summary of the effective rates which were adopted by the City pursuant to the Rate Ordinance prior to the Acquisition. Residential Class: Monthly Base Rate (1): Billing Charge Base Facility Charge Usage Rate: 0 - 3,000 gallons 3,001- 7,000 gallons 7,001-13,000 gallons Over 13,000 gallons General Class: Monthly Base Rate (1): Billing Charge Base Facility Charge 1" 1112- 2" 3' 4" 6" RJO/cl/R-S-I Bond. rpt HAI 892-023.06 Approved Consumption Charge Approved Monthly Base Rate (per 1,000 Gallons) $2.25 per bill 11.25 per ERU $2.25 per bill 11.25 per meter 28.15 per meter 56.26 per meter 90.00 per meter 180.00 per meter 281.25 per meter 562.50 per meter Fb7 $1.51 1.85 2.20 4.20 1_7 Residential Class: Usage Rate: Block 1 (2) Block 2 (2) Block 3 (2) Block 4 (2) Residential Class: Monthly Base Rate (1): Billing Charge Base Facility Charge Usage Rate: General Class: Monthly Base Rate (1): Billing Charge Base Facility Charge 5/8" 1" 1'h' 2- 3- 4- 6- Usage "3- 4- 6"Usage Rate: Water Rate Schedule (Continued) Approved Consumption Charge Approved Monthly Base Rate (per 1,000 Gallons) $1.51 1.85 2.20 4.20 Wastewater Rate Schedule Approved Consumption Charge Approved Monthly Base Rate (per 1,000 Gallons) $3.75 per bill 13.00 per ERU $13.00 per meter 32.50 per meter 65.00 per meter 104.00 per meter 208.00 per meter 325.00 per meter 650.00 per meter (1) Amounts shown reflect the minimum monthly bill. (2) General service blocks are categorized by meter size as follows: Meter Size 3/4 inch 1 inch 11/2 inch 2 inch 3 inch 4 inch 6 inch General Service First Block Usage Threshold 3,000 7,500 15,000 24,000 48,000 75,000 150,000 General Service Second Block Usage Threshold 7,000 17,500 35,000 56,000 112,000 175,000 350,000 General Service Third Block Usage Threshold 13,000 32,500 65,000 104,000 208,000 325,000 650,000 $2.75(3) $2.75 General Service Fourth Block Usage Threshold Above 13,000 Above 32,500 Above 65,000 Above 104,000 Above 208,000 Above 325,000 Above 650,000 (3) Monthly billing threshold or cap exists at 10,000 gallons metered water consumption. RJO/cl/R-S-1Bond. rpt HAI 1192-023.06 30 Impact Fees In addition to the monthly rates for water and wastewater service, the City currently charges an Impact Fee based upon an equitable and proportionate share of the cost of financing capital improvements for water production and wastewater treatment and disposal capacity of the System. The obligation for the payment of these charges by a new customer or developer arises prior to development or construction. If an existing customer requests an increase in water or wastewater capacity due to increased development, an additional capacity charge will be charged prior to the development consistent with the net increase in demand. The following table summarizes the water and wastewater system Impact Fees for each respective utility customer. Impact Fees Water System Rate per ERU $1,100 Wastewater System Rate per ERU $1,650 The charges shown are based on an equivalent residential unit (ERU) basis. An ERU is representative of the average daily capacity of a single-family residential customer and generally represents the lowest level and the most common level of use. As shown below and on Table 8, the City's Impact Fees are comparable with the utility average reflected on the comparison. Rate per ERU City Other Utility Average (*) (*) Based on utility survey shown on Table 8. Miscellaneous Service Charges Water Wastewater Total $1,100 $1,650 $2,750 1,124 1,288 2,398 The City has also adopted pursuant to the Rate Ordinance a schedule of fees, charges and deposits which are applicable to miscellaneous or customer requested services which will be in effect concurrent with the Acquisition. The fees generally are imposed to recover the cost of specific services such as water and sewer taps and utility turn -on fees or a deposit to defray the risk for nonpayment of System services. The following is a discussion of the miscellaneous service fees, charges and deposits which have been approved by the City which will become effective at the time of Acquisition: RJO/cl/R-S- I Bond. rpt HAI 7192-023.06 31 Approved Charge Customer Deposits (1): Residential and Commercial Service $50.00 per ERU Hydrant Meter 345.00 Returned Check Charge: $20.00 or 5% of the face amount of check, which ever is greater Issuance of Duplicate Bill: $2.50 per Bill Sewer Tao: Cost plus Overhead Meter Replacement: Meter Size 5/8" $100.00 1" 125.00 1 rh • 300.00 2" and Larger Cost plus Overhead Meter Removal Meter Size $500.00 5/8" $30.00 1" 30.00 1 Ih" and Larger 40.00 Water Service Connection: Meter Size 5/8" $400.00 1" 460.00 11h" 810.00 2" and Larger Cost plus Overhead Sewer Service Connection: Residential $500.00 Commercial and Other Cost plus Overhead Meter Installation: Meter Size 5/8" $130.00 1" 200.00 lrh" 500.00 2" 630.00 3" and Larger Cost plus Overhead Fire Hydrant Meter 25.00 Water Service Reconnection: During Working Hours $18.00 After Working Hours 25.00 Meter Rereads and Leak Inspection: $15.00 RJO/cl/R-S-1/Bond.rpt HAI #92-023.06 32 Bill Delinquency Charge: General Service Calls: Meter Test: Meter Size 5/8" 1" 1 V2 Damage Repair: Line Location: Site Plan Review: Under 40 Units and Without Lift Station Under 40 Units or With Lift Station Inspection Fee: per Water Connection per Sewer Connection Hydrant Flow Test: Fire Protection Charge: (1) Prevailing interest rate on State Board paid on Deposits. Price Index Rate Adjustment Approved Charge $2.00 plus 1.59 per Month Cost plus Overhead $20.00 20.00 Cost plus Overhead $100.00 plus Cost plus Overhead Cost plus Overhead Cost plus Overhead $50.00 Minimum Cost plus Overhead $150.00 Minimum $75.00 25.00 $170.00 per year Pursuant to the Rate Ordinance, the City has adopted an annual rate indexing adjustment clause whereby the rates will be adjusted annually effective with utility bills rendered on and after October 1st of each fiscal year. As referenced in the Rate Ordinance, the annual rate index shall be the greater of either the Consumer Price Index (CPI) or a minimum of 3.0% per year for the fiscal years ending September 30, 1995 through and including September 30, 1998 and equivalent to the CPI factor thereafter. This annual rate index factor is to be applied to the monthly rates for utility service, impact fees, and the miscellaneous services charges as discussed above. Pursuant to the covenant requirements of the Bond Resolution, the City will not render any free services of any nature by its Combined System nor will preferential rates be established for users of the same class. The City shall also diligently enforce the payment of rates, fees and other charges for services of the System. Accordingly, the City plans to establish a policy s s s RIO/cl/R-S-I /Bond. rpt HAI #92-023.06 33 for the disconnection from the System of any customers who fail to pay for services rendered by the System. Rate Comparisons Tables 5 through 7 provides a comparison of the cost of providing water and wastewater service for a 3/4 inch or smaller water meter at various usage levels calculated under the City's rates which were approved pursuant to the Rate Ordinance. Also included on the comparison are bills calculated under the rates of other neighboring Florida utilities as of the billing month of October 1993. The monthly bills for the various Florida utilities used for the comparison are exclusive of local taxes, surcharges for outside city service, if any,. or other rate adjustments. As an example, for customers receiving water or wastewater service from a municipality which are located outside the corporate limits, the rates for service may be twenty-five percent (25%) to fifty percent (50%) higher as allowed pursuant to Florida Statute 180.191. The 3/4 inch or smaller comparison was prepared since this represents the majority of the utility's water and wastewater residential customers and the majority of the customers for the other utilities included on the comparison. As can be seen in the comparison, the current rates produce bills for the City which are comparable to the rates charged by the County and are less than the rates approved for GDU to be effective as reflected in the rate application filed by GDU with the City. The typical residential customer of the Combined System uses approximately 5,000 gallons per month. The bills for services at this usage level on a monthly basis are summarized below: RJO/dIR-S-t/Bond. rpt AAI 992-023.06 34 5,000 Gallons per Month of Residential Water and Wastewater Service City of Sebastian Other Florida Utilities Brevard County Charlotte County City of Cocoa City of Cocoa Beach City of Coral Springs City of Daytona Beach City of Edgewater Fort Pierce Utilities Authority City of Holly Hill Indian River County Martin County North System South System West System City of Melbourne City of New Smyrna Beach City of Ormond Beach Palm Bay Utility Corporation City of Port Orange St. Lucie County City of Sunrise City of Vero Beach City of West Melbourne Water Wastewater Total $21.73 $30.50 $52.23 $11.44 $27.68 $39.12 25.93 21.54 47.47 9.70 20.00 29.70 12.16 17.00 26.16 18.24 25.05 43.29 16.50 23.43 39.93 16.74 19.09 35.83 12.12 17.15 29.27 17.16 27.36 44.52 20.75 29.74 50.49 17.06 30.75 42.81 13.76 21.05 34.81 23.21 33.97 57.18 10.50 18.45 28.95 19.93 22.85 42.78 16.02 17.29 33.31 18.00 24.91 42.91 15.45 24.75 40.20 16.52 35.21 51.73 11.45 15.38 26.83 12.50 20.90 33.40 22.60 23.50 46.10 HISTORICAL OPERATING RESULTS General The historical operating results for the GDU-Sebastian Highlands System for the calendar years ended December 31, 1991 through 1992 are shown on Table 3 at the end of this Report. The GDU operating results were prepared based on financial information compiled by GDU and represent only the estimated net operating results of the System (i.e., system revenues less operating expenses). This is due to the fact that GDU is an investor-owned utility regulated by the City and, as such, there are certain expenses allocable to GDU which would not normally be incurred by a public utility. Examples of these expenditures would include property taxes, regulatory assessment fees, sales taxes, and state and federal income taxes. In general, the historical operating results (which details net available revenues) have been prepared in a manner consistent with the requirements of the Bond Resolution. RJO/cl /R -S-1 /Bond. rpt HAI #92-023.06 35 With respect to the presentation of historical operating results for the City's existing PP/PLC water and wastewater facilities, insufficient data existed due to the City receiving ownership of the utility from the County pursuant to the Interlocal Agreement effective May 1993. Summary of Historical Operating Reports The following tabulation sets forth summary of the historical operating results for the GDU- Sebastian Highland System for the two year period ended December 31, 1992: Historical Operating Results(1) Sales Revenue Miscellaneous Income (2) Subtotal Operating and Maintenance Expenses(3) Net Revenues Available for Other Purposes (4) For the Year Ended December 31, 1991 1992 $450,158 $476,723 35.233 31.312 485,391 508,035 290.438 255.397 $194,953 $252,638 (1) Derived from Table 3. (2) Amounts shown do not include interest earnings on any available funds of the utility. (3) Amounts shown do not include depreciation or amortization expenses and other expenses such as takes or regulatory assessment fees. (4) Amounts shown include funds available for the payment of indebtedness of the System and/or other purposes. PROJECTED OPERATING RESULTS General HAI has prepared projections of the operating results of the Combined System for the five Fiscal Years (October 1 through September 30) 1994 through 1998. Projections for Fiscal Year 1994 were based on: i) historical information of utility operating results as provided by the City and GDU; ii) adopted budgetary information for the City's existing PP/PLC water and sewer system for Fiscal Year 1994; iii) discussions with City staff regarding current and future utility trends of the Combined System; and iv) other information provided by the City and others. It should be noted that the amounts shown for Fiscal Year 1994 reflect 10 months of operations consistent with the acquisition of the GDU-Sebastian Highlands System by the City. Shown on Table 4 at the end of this Report are projections for the Combined System. The table includes annual projections of revenue, projected operation and maintenance expenses, RJO/cl/R-S-1 /Bond. rpt HAI #92-023.06 36 debt service, renewals and replacements, and balances available for capital outlay and other lawful purposes. Projected revenue includes those from sales (rate revenue), investment income on all funds except the Water and Sewer Impact Fees Account, Project Fund, and the Capitalized Interest Account and other miscellaneous revenues. The projected sales revenue have been presented based on revenue derived from rates in effect as of November 17, 1993. Pursuant to the Bond Resolution, projections of Net Revenues and debt service and coverage on the Series 1993 Bonds are shown on a Combined System basis. The projected debt service shown on Table 4 is subject to change based upon the actual terms of the sale of the Series 1993 Bonds. Projected rate revenue for the Combined System was based on the growth projections in customers and usage as illustrated on Table 2. These forecasts were based on historical growth and usage trends coupled with data provided by the City relating to projected residential and commercial development within the utility service area. Interest income has been estimated on balances in certain funds created by the Bond Resolution, including balances in the Revenue Account, Operation and Maintenance Account, Renewal and Replacement Account, and debt service Reserve Subaccount. Projected operating expenses are based on various factors such as projected expense increases due to inflation and projected changes in expenses due to anticipated changes in operations. Revenue from Water and Sewer Impact Fees from the Combined System have been assumed, for the purposes of this Report not to be available to pay operating expenses or utilized to meet debt service requirements. The major expenses of the water and sewer systems include wages and salaries and associated benefits, the cost of utility services (e.g., power), chemicals expenses and purchased wastewater treatment services from the County. For the Combined System in Fiscal Year 1994, these expense components are estimated to account for approximately 68.3 % of the total projected operating expenses. These percentages are consistent with recent historical operating levels of the water and sewer system. As discussed previously, Table 4 presents a breakdown of sales revenue for the Combined System. Included in the forecast of Combined System operating revenue is additional rate revenue associated with assumed rate adjustments which are anticipated to meet the projected operating requirements of the Combined System, as well as maintain the rate covenants as defined in the Bond Resolution. The rate increases, as adopted by City pursuant to the Rate Ordinance amount to price index adjustments of approximately 3.0% annually to be applied to the approved water and sewer rates and implemented by October 1st of each successive fiscal year over the next four fiscal years. Principal Considerations and Assumptions Regarding Projected Operating Results In the preparation of this Report and the conclusions that follow, we have made certain assumptions with respect to conditions which may occur in the future. While we believe these assumptions are reasonable for the purpose of this Report, they are dependent upon future events, and actual conditions may differ from those assumed. In addition, for our projections, ee— RIO/cl/R-S-UBond. rpt HAI #92-023.06 37 estimates and studies, we have used and relied upon certain information and assumptions provided to us or prepared by others, including: i) information and assumptions provided to us by the City, such as data regarding recent historical financial information and historical customer and sales statistics of the City's existing PP/PLC water and wastewater system; ii) information contained in the GDU Rate Filing; iii) information provided by the City's Managing Underwriter with respect to assumptions regarding the issuance of the Utilities System Revenue Bonds, Series 1993; and iv) information provided by the City and GDU with respect to System growth. While we believe use thereof to be reasonable for the purpose of this Report, we offer no further assurances with respect thereto, other than the purpose of this Report. To the extent that actual conditions differ from those assumed by us herein or from information or assumptions provided to us, or prepared by others, the actual results will vary from those estimated and projected herein. In making the projections and estimates summarized' in this Report, the principal considerations and assumptions made by us and the principal information and assumptions provided to us, or prepared by others, include the following: 1. For the City's existing PP/PLC system, the Fiscal Year 1994 Budget as provided by the City served as the baseline for the expenditure projections and the underlying assumptions therein are reasonable and reflect anticipated operations. Such amounts were incorporated into the Fiscal Year 1994 components of the study period, except for adjustments as hereinafter discussed. Utility costs for the GDU-Sebastian Highlands system were based on various data prepared by the management of GDU, including, but not limited to, information regarding operating results contained within the GDU Rate Filing. In addition, other data for the calendar year 1992 received from the management of GDU in association with the City's acquisition of the GDU facilities have also been relied upon. The revenue requirements of both utility systems were consolidated based on the estimated Fiscal Year 1994 operational requirements and categorized according to anticipated budgetary departments by utility function. The estimated Fiscal Year 1994 expenditures were subsequently escalated for the projected period reflected in the Report. It was further assumed that the acquisition would occur on or about December 1, 1993. Therefore, for the Fiscal Year 1994, the revenues and expenditures of the combined City and GDU systems reflect ten (10) months of operation in order not to overstate the estimated Net Revenue and debt service coverage ratio of the Combined System when compared to the amount of debt service paid in such year. 2. The expenditure projections reflected for the Fiscal Year 1994 were subsequently allocated between the Combined System water and wastewater utilities in order to design utility rates for each system which are on a self RJO/d/R-S-1/Bond. rpt HAI #92-023.06 39 sufficient basis (cost of service). The allocation of utility expenditures for the Fiscal Year 1994 between the two utility systems was based on the nature of the cost incurrence of such expenditures. 3. In order to properly project operating expenses for the Combined System, certain analyses and adjustments were made to the GDU-Sebastian Highlands Calendar Year 1992 expenditure summary for the water and wastewater systems as provided by the management of GDU. These adjustments are as follows: a. A comparison of calendar years 1991 and 1992 operating expenses was conducted to see if any material variations in expense were identified. Based on our comparison, it appeared that the two years of operating expenses were generally comparable. The calendar year 1992 operating expenses as reported by GDU were then escalated to recognize inflationary allowances and system growth in order to reflect estimated Fiscal Year 1994 results such that the budgetary estimates of the City's system could be consolidated with the projected GDU operating expenses. b. Salaries and wages and associated benefits were adjusted to recognize the hiring of the GDU employees, which includes the reclassification of one employee to the City's General Fund (reference assumption 11). C. Administrative and General Expenses and Utility Management Fees reported by GDU were not recognized as an operating expense for the City in order to recognize the management and administration of the System being overseen by the City staff (e.g., Utilities Director, City management such as Finance Director) and that such expenses were reflected in the City's budget for the existing PP/PLC water and wastewater system. d. Sales taxes, property taxes and Franchise Taxes are not an expenditure which will be incurred by the City from the operation of the utility, due to the non-profit, exempt status from such taxes. As a result, such expenses have not been recognized in the development of the Combined System operating results assuming public ownership. e. Contractual Services - Engineering was increased by $11,000 to recognize increased costs in providing general assistance for utility consolidation as a result of the expansion of the Combined System operations, due to the Acquisition. f. Building rent expenses for utility personnel were assumed not to be required because the City will own such facilities. RIO1cI/R-S-11Bond. rpt HAI #92-023.06 39 g. Based on discussions with the City staff, the City will not pay interest on customer deposits but will utilize such earnings to meet the expenditure requirements of the utility. 4. Materials and supplies expenses, other contractual services expenses, repair and maintenance expenses, and certain other operating expenses, have been projected to increase, in general, from historical and current budgetary levels at a rate equal to inflation ranging from 2.4 to 3.6 percent based on the nature of the expenditure. These escalation factors were based on a seven year analysis of historical price indices used by many utilities for financial forecasting and the rate setting process. These indices included: i) the Gross National Product Implicit Price Deflator Index which is used by the Florida Public Service Commission in the establishment of price indexes for operating costs, as required pursuant to Section 367.081(4)(a), Florida Statutes, in the regulation of private or investor-owned utilities; ii) the Consumer Price Index; iii) indices derived from the Engineering News Record, a publication which tracks trends in construction and material costs; and iv) indices reflected in the Handy -Whitman Index of Public Utility Construction Costs for the South Atlantic Region. 5. As a result of the Acquisition of the GDU-Sebastian Highlands utilities system and pursuant to prudent utility practices, the City will need to hire a sufficient number of employees to meet operational and regulatory requirements - associated with the System. In order to meet the operating needs of the Combined System, the City expects to i) utilize existing personnel from its utility system, and ii) hire additional utility employees to operate and maintain the acquired facilities from GDU. These additional personnel are anticipated to be transferred from the GDU staff but may be hired from outside sources. The estimated cost of the total personnel services, including employee benefits, to meet Combined System needs is approximately $206,000 for the combined utility system on an annualized basis in Fiscal Year 1994. Based on discussions with the City staff, it was assumed that the required water and wastewater operators, the field service personnel, and customer service workers of the GDU-Sebastian Highlands System (total of 4 additional employees) would become employees of the City effective upon the Acquisition. It was further assumed, for the purposes of this Report, that such employees would maintain essentially their current salaries and begin to receive the employee pensions and benefits of the City. Any potential liabilities resulting from previous employment with GDU (e.g., accrued vacation or sick leave) would not be included as part of the employment and compensation requirements of the City and have not been recognized in this analysis. RJO/d/R-S-1/Bond. rpt HAI #92-023.06 40 6. Based on discussions with the City staff, the escalation of wages and salaries above Fiscal Year 1994 recognized amounts was increased by 4.0% annually to reflect increases due to inflation and allowances for salary adjustments such as merit increases and/or cost of living adjustments. Personal benefits (i.e. contributions toward retirement, health insurance, FICA, etc.) were projected to remain at the same percentage relationship to total salaries as was reflected in the Fiscal Year 1994 budget for the City's existing PP/PLC system, based on discussions with the City staff. Finally, no additional personnel were assumed to be required or added during the forecast period of the study after the Acquisition of the GDU-Sebastian Highlands System. 7. The cost of power and chemicals for the Combined System was escalated for the forecast period based on i) an analysis of the electrical and chemical requirements of the facilities based on a review of historical bills and usage rates, and other factors; ii) recognition of an allowance for inflation applied to the per unit cost of the expense consistent with recent historical trends; and iii) the projection of flow requirements estimated for the Combined System as shown on Table 2. 8. An allowance for bad debt expenses or uncollectable accounts has been reflected as a utility expenditure to recognize that a certain amount of revenues would be considered as uncollectable and written off throughout the year. This expenditure item reflects an adjustment to the Fiscal Year 1994 budget and was projected based on trends incurred by utilities statewide and discussions with City personnel. A bad debt ratio estimated at 0.5 % of sales revenues was subsequently applied to the level of sales revenue projected for the forecast period in the study to estimate the amount of expense to recognize. The increase in the Fiscal Year 1994 revenue requirements recognizing this expense item is $4,210. 9. Pursuant to the Interlocal Agreement between the City and the County, the County provides wholesale or bulk wastewater treatment and effluent disposal service to the City. Based on the capital improvement plans of the City, it is anticipated that once the existing wastewater facilities of the City and GDU are interconnected, the need for bulk wastewater service to the Park Place and Palm Lakes Club utility customers will not be required since the City will have the ability to provide wastewater treatment services. For the remaining wastewater customers currently serviced by the County, it was assumed that i) the customers will continue to be serviced or require capacity at the County's facilities; ii) the customers will not require any additional service requirements (flow) above existing requirements; and iii) for customers who reserved capacity but have not yet connected, such customers will not connect to wastewater facilities, thus not contributing any flow to the County's facilities. MM®®— RJO/d/R-S-1Bond.pt HAI #92-023.06 41 Additionally, it was further assumed that the rates for wastewater treatment capacity from the County would escalate annually at 3.6% to recognize increases for inflationary allowances. Based on these assumptions, the costs associated with the purchases from the County for bulk wastewater service are as follows: Bulk Wastewater Expense (r) Fiscal Year Billing Charges Base Facility Charges Flow Charges Total 1994 0) $7,296 $150,247 $57,703 $215,246 1995 (2) 2,834 126,787 39,349 168,970 1996 2,937 131,352 40,765 175,054 1997 3,042 136,080 42,233 181,355 1998 3,152 140,979 43,753 187,884 (1) The projected operating results shown on Table 4 for the Fiscal Year 1994 reflects 10 months of annual estimated expense; amount shown in the tabulation above reflect an annualized amount for comparative purposes only. (2) Decrease due to interconnection of the PP/PLC System with the GDU-Sebastian Highlands system. 10. Based on uncertainties regarding changes in operation as a result of the Acquisition and consolidation of the Combined Systems, the potential for operating changes as a result of future regulatory action, changes in water use due to increased conservation measures, and discussions with the utility staff, it was determined that the contingency allowance equal to approximately 3.0% of operating expenses should be reflected as an operating expense for financial projection purposes. For the fiscal years 1994 through 1998, the contingency allowance was escalated in proportion to the increase in utility operating expenses projected for the System and averaged approximately $20,500 annually. 11. The City has allocated operating expenses to the PP/PLC System which are accounted for in the City's General Fund or included as part of the management function of the City. These costs include such operating expenses as legal fees, the pro -rata share of the annual audit, and customer service and accounting expenses. These expenses have been recognized as an Administrative Allocation and are included as an operating expense. In addition, the City anticipates hiring an additional employee (expected to be an existing employee of GDU) who will perform utility enterprise fund accounting needs for the City. This function will also be accounted for in the City's General Fund and included in the administrative allocation of the Combined System. Based on the City's 1994 budget, the cost of the additional employee to be added for utility accounting, and the recognition of employee related benefits, the assumed cost RMA®_ RJO/cl/R-S-I Bond. rpt HAI #92-023.06 42 recognized allocated to the utility on an annualized basis for the Fiscal Year 1994 was $65,122 of which $31,122 was attributable to the additional salary burden for performing the necessary accounting functions of the utility enterprise fund. This expense was escalated during the forecast period to recognize general inflationary allowances. 12. On July 11, 1989, the County and the initial owner of the Park Place water and sewer system (the "seller"), which is now owned by the City, entered into an agreement for the County take-over of the utility system (the "Take-over Agreement"). Pursuant to the Take-over Agreement, the County agreed, among other things, to: i) purchase the Park Place water and sewer system from the seller, and ii) would pay the seller $777,000, which was equivalent to the initial capital investment to construct the Park Place water and sewer system. The payment of the initial capital investment 'was to be collected based on a surcharge applied to the existing customers at the Park Place development at a rate of $10.00 per ERU per month until payment is made in full or within ten years from the date of the Take-over Agreement, whichever comes first. As a result of the Interlocal Agreement, this utility system was transferred to the City effective as of May 1993. Based on discussions with the City staff, the City acts solely as an agent for the County in the collection and remittance of the surcharge money from the affected customers. As such, no revenues or expenditures associated with the application of the surcharge was recognized in this analysis. 13. In order to fund the cost of the Acquisition, as well as certain capital improvements to the System, the City will be issuing in the principal amount not to exceed $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"). Based on debt service assumptions provided by the City's Managing Underwriter, the Series 1993 Bonds reflect: i) a principal amount of bonds of $5,000,000 and that such bonds will be dated December 1, 1993; ii) an annual average annual interest rate of 5.33 %; iii) a term of 30 years with essentially level debt service payments for the last 26 years of the issue; iv) interest expense associated with the financing of certain capital improvements to the System being funded from bond proceeds (capitalized interest); v) the deferral of bond principal payments for two years after the issuance of the Series 1993 Bonds; vi) the funding of the Reserve Subaccount in order to fully satisfy the Reserve Subaccount Requirement as defined in the Bond Resolution; and vii) the funding of the cost of issuance of the Series 1993 Bonds. Based on the projects funded from and the uses of the proceeds of the Series 1993 Bonds, the annual debt service requirements were allocated between the water and wastewater utilities of the Combined System for ratemaking considerations as follows: RJO/ct/R-S-1 /Bond. rpt HAI #92-023.06 43 Water Wastewater Series 1993 Bonds 66.38% 33.62% 14. In order to continually fund the cost of major extensions, improvements or additions to, or the replacement or renewal of capital assets of the Combined System, an allowance for the transfer of monies to a Renewal and Replacement Account on an annual basis has been recognized. The annual deposit to the Renewal and Replacement Account was based on the funding of the Renewal and Replacement Account Requirement as defined in the Bond Resolution authorizing the issuance of the Series 1993 Bonds which is equal to 5% of the previous year's Gross Revenues or such other amount as determined by the Consulting Engineer. It was assumed that monies in the Account would be continually utilized (or appropriated) and that the balance maintained in the Account would not equal the Renewal and Replacement Account Requirement (i.e., the City would annually use the moneys for capital projects or needs of the System), thus necessitating annual deposits to the Account. Based on this assumption, the annual transfer to the Renewal and Replacement Account for the forecast period is estimated as follows: Fiscal Year System Funding Requirement 1994 $38,566 (*) 1995 46,279 1996 48,911 1997 52,027 1998 55,233 (*) Reflects ten months of funding requirements. 15. Interest income has been recognized as an available revenue source to fund the expenditure needs of the Combined System. For the forecast period, interest income was based on estimated balances in certain funds, as defined in the Bond Resolution (i.e., Reserve Subaccount and Payment Subaccount), and other available fund balances (e.g., Customer Deposit Account) accounted for by the City. Thus, for the determination of the revenue requirements from rates, no earnings have been reflected on balances in the Water and Wastewater Impact Fees Account or the Project Account, which are defined in the Bond Resolution. Additionally, for the Fiscal Year 1994, the amounts shown do not include interest earnings on funds held in the Capitalized Interest Account. Based on assumptions provided by the City's Managing Underwriter, the capitalized interest requirements (Reference Assumption 13) are assumed to be partially RIO/cl/R-S-1Bond. rpt AAI #92-023.06 44 met by earnings accruing in the Capitalized Interest Account which are not available for utility operations. In the development of estimated interest earnings, an average interest rate of 3.5% during the forecast period was assumed, based on a review of available rates of interest in the current market, average fund balances in available funds and discussions with other utilities regarding recent earnings performance results. 16. with respect to the Fiscal Year 1994, a transfer from the General Fund in the amount of $33,619 has been recognized in order to have sufficient funds to meet utility expenditure needs. This transfer is being made as an interfund loan and is required because i) the acquisition of the GDU-Sebastian Highlands System will not be in effect for a full fiscal year, thus lowering the ability of the Combined System to fully recover cost, and ii) the City has planned and budgeted the need of the transfer based on the expenditure requirements of the Combined System relative to the existing customer base. It should be noted that i) no other transfer or loan from the General Fund to the Combined System is recognized during the remainder of the projected period in the Report other than the Fiscal Year 1994 and ii) such moneys were not considered as a revenue of the System in the analysis of the debt coverage compliance as defined in the Bond Resolution for the ten months ending September 30, 1994. 17. Pursuant to the Bond Resolution, the City will be creating a Rate Stabilization Account to provide flexibility in utility operations. For the forecast period, no deposits or use of the Rate Stabilization Account has been recognized which generally would be available in order to i) meet the expenditure needs and debt service covenant requirements or ii) to assist in the phasing in of utility rate adjustments associated with the anticipated adoption of a price index adjustment clause. 18. Revenues from retail rates for the water and sewer utility system were based on the rates currently in effect for the City pursuant to the Rate Ordinance adopted by the City Council on December 1, 1993 and the customer and sales forecast presented on Table 2, which was predicated on recent historical trends and relationships derived from detailed customer billing information provided by the City and GDU. 19. Based on discussions with the City staff, it was determined that the City should adopt and implement a price index escalation or adjustment factor in order to have annual rate adjustments commensurate with the escalation of utility operating expenditures and inflation. This adjustment is generally adopted by utilities in order to maintain rates sufficient to always meet the operating expenses of the utility and to comply with bond resolution covenants relative to JAEN- ®® RJO/cl/R-s-lBond. rpt HAI d92-023.06 45 the flow of funds and rate covenant requirements. Pursuant to the Rate Ordinance, a price index adjustment factor equivalent to the Consumer Price Index (CPI) (but not less than 3.0% through the Fiscal Year 1998) was recognized in the development of rate revenues. The CPI has averaged approximately 3.8% annually over the past seven years. In order to recognize the application of the index adjustment factor yet not overstate rate revenues, an annual price index rate adjustment equivalent to 3.0% per year was recognized effective October 1st of each year. The assumed rate adjustment of 3.0% is less than the average inflation factor of 3.6% used in the escalation of operating expenses for the forecast period. With respect to the projection of rate revenues, the compound effects of the application of the price index adjustment was estimated to increase System revenues as by the following amounts: Fiscal Year Water Wastewater Total 1994 $ $ $ 1995 14,328 14,164 28,492 1996 30,307 29,424 59,731 1997 47,972 45,768 93,740 1998 68,067 63,253 131,320 20. Water meter installation fee revenue was estimated based on the total anticipated additional water system connections to be installed which are attributable to customer growth of the System, an analysis of historical revenue derived from such services based on historical data and the fees currently in service. Such fees are associated with the physical connection to the water system and are considered as a revenue of the System and not a component of the Impact Fees as defined in the Bond Resolution. 21. Other miscellaneous revenues which accrue to the System (e.g., turn -on and turn-offs, delinquent penalties, etc.) were based on recent historical and budgeted amounts and were assumed to remain constant during the forecast period. 22. For the purposes of this analysis, no funds from available Impact Fees have been included in the development of the projected operating results as shown on Table 4 because such amounts are available only for capital projects for new customer growth and expansion and do not serve to effectively reduce rate revenue requirements. It should be noted that the use of such funds have been recognized to fund growth related capital projects, thus reducing the amount of capital project costs funded from utility revenues or future debt service costs, etc., which are paid from rates of the water and wastewater systems. The use of these funds for the capital projects has the effect of dampening monthly RIO/cl/R-S-1/Bond. rpt HAI #92-023.06 46 service charges because such projects do not need to be funded from rate revenues. Based on the i) purpose for the issuance of the Series 1993 Bonds (principally the acquisition of the System by the City); ii) the capacity utilization relationship at the time of the GDU-Sebastian Highlands system Acquisition; iii) the functional plant account balances (e.g., treatment-related) for the assets purchased; and iv) the estimated cost of the capital improvements to be funded from the Series 1993 Bonds and the purpose of such costs, it is estimated that the expansion percentage to determine the impact fees debt service component is 50.34% of the total projected Bond Service Requirement. For the projected period shown, the amount of net Impact Fees recognized as a Pledged Revenue of the Combined System, for the determination of the rate covenant analysis (reference Table 4) is the result of the product of the expansion percentage applied to the estimated amount of the debt service requirement in each respective Fiscal Year. As a result, the Impact Fees recognized as a Pledged Revenues for the purposes of this Report were assumed as follows: (*) Reflects ten months of operation. With respect to the collection of Impact Fees due to normal growth, it was assumed that all customers would be charged a fee (i.e. - no prepaid fees reflected). It should be noted that there generally is a lag in the recognition of when a customer becomes an active account after the payment of the Impact Fee due to the time differential that may exist from the time of issuance of the building permit and the receipt by the City of the Impact Fee revenue and when a customer physically connects to the System. 23. All contracts, agreements, statutes, rules and regulations which have been relied upon by us in preparing this financial analysis and the projected operating results contained herein will be fully enforceable and remain in effect in accordance with their terms and conditions, and such terms and conditions will be complied with by the parties involved throughout the projection period. We make no representations or warranties and provide no opinion concerning the enforceability or legal interpretation of such contractual and legal requirements. MMAM- RJO/cl/R-S-1 B ond. rpt HAI 7/92-023.06 47 Total System Debt Service with Estimated Impact Fees Fiscal Estimated Expansion Impact Fees Recognized as Year Debt Service percentage Applied Collected Pledged Revenue 1994(*) $196,317 $98,826 $78,936 $78,936 1995 235,581 118,591 94,724 94,724 1996 303,313 152,688 124,572 124,572 1997 326,513 164,367 120,308 120,308 1998 348,663 175,517 120,308 120,308 (*) Reflects ten months of operation. With respect to the collection of Impact Fees due to normal growth, it was assumed that all customers would be charged a fee (i.e. - no prepaid fees reflected). It should be noted that there generally is a lag in the recognition of when a customer becomes an active account after the payment of the Impact Fee due to the time differential that may exist from the time of issuance of the building permit and the receipt by the City of the Impact Fee revenue and when a customer physically connects to the System. 23. All contracts, agreements, statutes, rules and regulations which have been relied upon by us in preparing this financial analysis and the projected operating results contained herein will be fully enforceable and remain in effect in accordance with their terms and conditions, and such terms and conditions will be complied with by the parties involved throughout the projection period. We make no representations or warranties and provide no opinion concerning the enforceability or legal interpretation of such contractual and legal requirements. MMAM- RJO/cl/R-S-1 B ond. rpt HAI 7/92-023.06 47 Summary of Projected Operating Results As shown in Table 4 at the end of this Report and summarized below, projections have been prepared of the operating results for the Combined System for the fiscal years ending September 30, 1994 through 1998. Such projections were prepared in accordance with our understanding of the flow of funds prescribed by the Bond Resolution and the assumptions and considerations used in the projections as described earlier. Proiected Operating Results Operating Expenses 528,467 Fiscal Years Ending September 30, 0) 633,569 660,901 1994(2) 1995 1996 1997 1998 Rate Revenue: Replacement Account 38.566 46.279 48.911 Water Sales - City Rates $383,907 2477,590 $497,651 $517,351 $542,327 Wastewater Sales - City Rates 387,410 472,144 483,148 493,580 503,974 Additional Rate Revenue (3) 0 28.492 59.731 93.740 131.320 Total Rate Revenues 771,317 978,226 1,040,530 1,104,671 1,177,621 Other Operating Revenue 9,383 11,260 11,260 11,260 11,260 Other Revenue 11.633 14.303 14.896 15.099 15.293 Total Revenues 792,333 1,003,789 1,066,686 1,131,030 1,204,174 Operating Expenses 528,467 607,317 633,569 660,901 689,475 Transfer to Renewal and Replacement Account 38.566 46.279 48.911 52.027 55.233 Net Operating Revenues 225,301 350,193 384,206 418,102 459,466 Impact Fee Revenue 78.936 94.724 124,572 120.308 - 120.308 Net Revenue Including Impact Fees 304,237 444,917 508,778 538,410 579,774 Debt Service 196,317 235,581 303,313 326,513 348,663 Debt Service Covcmge(4) Without Impact Fees 1.15 1.49 1.27 1.28 1.32 With Impact Fees 1.55 1.89 1.68 1.65 1.66 Net Funds Available After Required Payments per Bond Resolution to Without Impact Fees $28,983 $114,612 $80,894 $91,590 $110,804 With Impact Fees $107.919 $209,336 $205,466 $211,998 $231,112 _ (1) Amounts shown derived from Table 4. (2) Amounts shown based on 10 months of operations consistent with the acquisition of the GDU-Sebastian Highlands System. (3) Amounts shown reflect additional rate revenues resulting from an annual price indexing adjustment of 3.0%. (4) Amount shown reflect debt service coverage analysis after the funding of the Renewal and Replacement Account; the debt service coverage ratio would be higher if the deposits to Renewal and Replacement Account were recognized after the payment of debt service. (5) Amounts shown reflect monies available for additional capital outlay, payments of administrative allocation expenses to the City's General Funds and other purposes of the Combined System. RJO/cl/R-S-1Bond. rpt HAI #92-023.06 48 CONCLUSIONS Based upon the principal considerations and assumptions and the results of our studies and analyses, as summarized in this Report, which Report should be read in its entirety in conjunction with the following, we are of the opinion that: 1. Based upon general field observations and the age and intended use of the facilities, the water production, transmission, and distribution facilities and the wastewater treatment, effluent disposal and collection facilities to be acquired from GDU by the City appear to be in average to good condition. The Combined System appears to be adequately operated and maintained in accordance with prudent utility practice, and can reasonably be expected to provide sufficient and reliable service to meet the existing requirements of the System. 2. The existing facilities of the Combined System, together with planned renewals, replacements and additions, can reasonably be expected to meet the projected requirements of the Combined System at least through the fiscal year ending September 30, 1998. 3. The projected growth in customers and usage of the water and wastewater utilities of the Combined System represent reasonable projections for the purposes of this Report. 4. The Combined System revenue for the fiscal years ending September 30, 1994 through 1998 under the City approved rates, plus revenue anticipated to be received from the application of the projected annual index adjustments as shown on Table 4, which will require timely and appropriate increases in the rates, will be sufficient to: i) pay all projected expenses; ii) pay the estimated debt service on the Series 1993 Bonds coming due in such years, iii) make the projected deposits to the Renewal and Replacement Account for additions, extensions, and improvements to the System; and iv) meet the rate covenants of the Bond Resolution. 5. The cost estimates associated with the 1993 Projects which are anticipated to be funded from a portion of the proceeds of the Series 1993 Bonds are reasonable and required by the City to meet the operating, regulatory, and capital needs of the Combined System. 6. As a result of funding the 1993 Projects from the Series 1993 Bonds, recognizing the funding of the Renewal and Replacement Account, Combined System operations available for capital needs, and the estimate of Impact Fees which are anticipated to be received from new customer growth, the City should not require the issuance of any additional Combined System indebtedness RJO/cl/R-S-1 /Bond. rpt HAI H92-023.06 49 reflected in the Report except as may be required to meet Combined System expansion above the amounts projected in the Report. 7. The organizational structure and management plan of the City associated with the operation of the Combined System as described and presented in this Report are capable to meet the operational needs of the Combined System during the forecast period. 8. The recently approved rates for water and wastewater service are generally higher when compared to charges for similar service provided by other utilities. 9. The Impact Fees are comparable to the fees charged by neighboring utilities. WO/cl/R-S-1/Bond. rpt HAI #92-023.1 So -1— ---- �lj--. -- - LEGEND X7295 40 ROSEt 0 e \�� GDU FRANCHISE AREA \s \`�` �%,�;' � o, r.•�• fff„ f, °y r. v., OTHER WATER/SEWER... SERVICE AREAS _ �l: �( ,,°Stip t•,. �:` _4 � 7..` ,, re :..�ti 7 �[• \r s['nl\ Y q T a° C .2 1(115111.E CE. N wom"ll s�� a 107- � tuna CITY LIMIT eE 7 w9.1 Y - VILLAGES OF LAKE DELORES SERVICE AREA (PARK PLACE) OUTSIDE CITY LIMITS ,-/-/Ir 4 lsuxo a 1�� ` G•enl.iN `^ 9 ¢uruf. �\\�•��� � ef1LSNRlee e001[YlLT 11e �\ � YA 1rLDlRRf911Ct n1C`_ WYI{GM rAuu r. � fVV1tA EtEAND i BREEZY VILLAGE SERVICE AREA LAMPLIGHTER SERVICE AREA \. \w ( . u = ~i 20 _ 11.,N21 PELICAN POINTE SERVICE AREA PMPMA ® HARTMAN & ASSOCIATES, INC. EXISTING GDU FRANCHISE engineers, hYErogeobgala, w»qm @ m nop"nl COnwlecEr AREA AND ADJACENT FIGURE ®® 201 EAS1 MM: S1REE3 - WTE 1000 - ORW100, R 32801 FRANCHISE/SERVICE AREAS 1 TEl8P ME (.02) 839-0955 - RAA (407) 839-3790 /.N. I.; 1 EXISTING GDU POTAB�.L111\-1tATER < N'� I'SERVICE AREA F A N /SEB. 2 9 5 8 c e% l7t -B SPAr f:j UNICIPAL FORT lit 10 it ItMR-0-41v — - - f ZG .3 1 30 MIM !M HARTMAN & ASSOCIATES, INC. A �qimm, Wtdroqicl"ist% mm�qm & ;;;..t ---At-t. EXISTING GDU POTABLE WATER FIGURE mmT mw i wirt - wK - omflm. ft 32901 SERVICE AREA 2 HOMN Ta9410K (407) 839-3955 F9 (407) 539-3]90 I 1 1, OUC-M U00 xW - %K -are (t(!) 3N[FIMII V3HV 331Aa3S haze v'00"() - =I 3m - M, a IWI wz 3a(1J1� j31VM31SVM nai) ONLLSIX3 sjm, °' j au Bo ou V � 'l .Iwa '3NI `S31V130SSV I NVWIHVH ®® n TYI, ,A �� jl _e..a-• or „ BI sz sz T{ � 11 '.`_ I.,.. x,•^I: , o' l\ 1 .uxu... C=. .^ `• v rn••f E'S, .......... 01 6 •�\, .I__ .��6\ •� �?;_ w �'. FI 'zel .1.� '. ._Y...w �:r YLLS, IT n. ....., .. I 111 f. ,,i • _ :.y .'.,iii :ni`�•••�, I � ,� Imo: `- I �% y✓' a, Y\J 91YW -c.' 41 CJ sZE\� II Y, t :• NV t13�l�1t/ 3D1A13S �i31;t/�Q1��1SWA (1aJ JNIlSI.C3 aN303-1� .1 ��FIYAAO,YI \ 5�\ 7Y�,!T��11,nlM cxrilllL 19t •� mv.• ! or „ BI sz sz T{ � 11 '.`_ I.,.. x,•^I: , o' l\ 1 .uxu... C=. .^ `• v rn••f E'S, .......... 01 6 •�\, .I__ .��6\ •� �?;_ w �'. FI 'zel .1.� '. ._Y...w �:r YLLS, IT n. ....., .. I 111 f. ,,i • _ :.y .'.,iii :ni`�•••�, I � ,� Imo: `- I �% y✓' a, Y\J 91YW -c.' 41 CJ sZE\� II Y, t :• NV t13�l�1t/ 3D1A13S �i31;t/�Q1��1SWA (1aJ JNIlSI.C3 aN303-1� .1 92-033.00 Eg a a SUPERNATANT 3 a / s Z SLUDGE LAGOON-/ SOLIDS SUPERNATANT 4 Q, CONTACT RETURN PUMP y PRECIPITATOR STATION CA R o ALUM ALUM R.s LIME LIME y SILO g RAW WATER z FROM WELLS _n AERATOR CI 2 , CLEARWELL AND TRANSFER FIL7VE PUMPS0m m CONTROL & HIGH SERVICE TO SLUDGEJmPUMP allILDING LAGOONS n —y ACKWASHz UMPo 0 12zn 0 m HYDROPNEUMATIC I' 3 * TANK CI 2 v TO DISTRIBUTIONM SYSTEM FLOWMETER m AC m I -n G) nc m 40.0 .35.0 Y N 30.0 8.5 G F 26.5 Oil 11 25.0 23.5 PERCOLATION POND 20.0 N0. 3 0 25.0 40.0 Tr I 35.0 U I5 o� ds 37.5 28.5 v23.s 23.5 v v \ 23.5 PERCOLATION POND PERCOLATION POND NO. 1 N0. 2 SLUDGE DISPOSAL 22.5 - �_ = IY� SLUDGE DRYING 20.0 t BEDS 28.5 TO SLUDGE FILTRATE RETURN TABLE 1 CITY OF SEBASTIAN, FLORIDA WATER AND WASTEWATER SYSTEM 5 -YEAR ESTIMATED CAPITAL IMPROVEMENT PROGRAMM Fiscal Year Ending September 30 Descriptions 1994 1995 1996 1997 1998 Totals Water System CapUd Needs TTHM Control System(2) $22,000(2) SO SO SO So $22,000(2) Miscellaneous Sebastian Water Distribution and $125,000(2) $100,000(2) $75,000(2) SO $0 $300,000(2) Transmission Improvements(2) Water Use Permit Renewal(2) 519,700(2) $0 $0 SO $0 $19,700(2) Water System Master Plan(2) 540,000(2) $0 50 SO $0 $40,000(2) Miscellaneous Water System Improvements(2) $0 $25,000(2) $20,700(2) $0 50 $45,700(2) Barber Street Water Man Improvements(3) 554,000(31 $0 $0 SO SO 554,00001 Total Water System Capital Needs $260,700 $125,000 $95,700 $0 So $481,400 Wastewater System Capital Needs Sludge Stabilization and WWCP Improvements(2) $90,000(21 $130,000(2) $0 $0 So $220,000(2) Wastewater System Master Plan(2) $20,000(2) SO $0 $0 $0 $20,000(2) Above Ground Fuel Storage Tank(2) $0 $0 $17,400 SO $0 $17,400(2) Park Place Force Main intemonnect(3) $[08,000(3) SO $0 $0 SO $108,000(31 Effluent Disposal Aerating and Expansion(3) SO $0 SO $106,425(3) $216,075(3) 5322,500(3) Total Wastewater System Capital Needs $219,000 $130,000 $17,400 5106,425 216,075 $687,900 Notes: 1. Amounts shown include all major capital projects which are anticipated over the next 5 -years. 2. Amounts shown are anticipated to be funded from the proceeds of the Series 1993 Bonds. 3. Amounts shown are to be funded from Impact Fees, Renewal and Replacement Account, and/or surplus revenues. HES/cl/d t/R-S-1 /Table. l HAI #92-023.06 Table 2 City of SebaNao, Fluid - water and Wutewter System Summuy of FTi-ta5u1 sad Pm)acted Cmtamer5t-tl Ncs Pa the Com¢Iod City, Sebntlao and GDU-S b HI h d Uulit S tm-f11 Page 1 of J 12 -Nov -03 CCT/B-d/CmtSta2.W1A Hinurid E-dmated me Qev . len der Year Eded Deamb 3 PY tided Se te�mber30. Find Y<a ndin Se comber JO 1 1 998 Line Desai Oon 1 1991 1 lY`LS 1 1"6 icb 1 Reddentld Cmtoners Avenge AtmuYWsterCwwmm 1,053 1,094 1,139 1357 1413 5,121 1,475 5,081 1.551 5.022 1,625 4.968 1,699 4.917 2 Av&. MomhIv Use per Aa:ount (8w1 ) 5,831 73,649 5,190 68,152 5.458 74567 5,209 84.415 86,915 89,9117 97441 96,855 100277 3 Total Billed Saler low.) 4 General SerN,e Cmtmm42 Av Annual WatesCml9mm 0 16 38,811 N 36.807 56 36,828 58 36.851 60 36,872 62 36,892 61 36.911 5 r5 pv8.81on0ily Use per Account (gollom) 41359 20,597 15,146 18,241 21,579 27.998 24,893 25.795 26,695 27,595 28,495 6 Tod Billed Saler (000'x) 7 Tool Avera6e MnuY WaterCmtmm 1,094 1,138 86393 1,185 96,146 1,405 108,113 1,469 111,810 1537 115,702 1,611 120,136 1,687 124,151 1,763 128,729 8 9 ToW Water Billed Sale -(000'x) Avg MouthlyUsepa Amount( allow) 91216 7,179 6329 6,762 6,471 126,823 6343 128582 6290 173,058 6215 138,156 6,118 10,118 6,085 148,038 10 Wow( Pump TOW flnbh<d Wales Pumped (0800'x) TOW Fl 107,836 0295 104,071 0285 111505 0313 0347 0352 0365 0379 0392 0.406 11 Daily 12 Wow Gallon- Unbilled (000'.) 13390 17,678 18,159 18,409 16,772 17.355 18,020 law 19,309 Water GYlau Unbilled u • Percent 1599!6 1152!6 13,04%f3.04Rr 13.01,8, 13.01,8 17.4 13 of"t. Pumped - I%) 17.6096 16.9996 WASTEWATER SERVICE Watar a WanewaterCustamm 14 ReidesUACustmm: Avera5t. Mmol Wartew-terCmwmm N/A 334 351 719 4.404 777 805 4 817 887 92 3,913 15 Ay. MonthlYSolerya Amount(gallonx) NNIA /A 5.10 77,9%7 5.170 74567 39592 10799 4010 B09 4124 ,761 3.651 OS35 16 Total Billed Sales (000'-) General Customer; (Cemmerdal @ Mold-famlly): 4 6 6 6 6 6 17 Aver�aBg, Annual Wartenter Cu.wmm N/A NIA 4 19,978 97558 25,N6 28,009 28,009 28,009 25,009 28,009 2,045 18 AYS.MonthlySdexper Aeownt(gallom) N/A 957 5,160 T,05S 1,045 2,015 2,045 2,045 19 Total Bllied Sales (000000. W.n<nter, OnlyCmtmeta General Cmtmm (Commercial @ Mold-famlly): NIA NIA T2 22 22 22 22 22 20 Avenge Annual W.-tentarCnrwmna N/A N/A N/A N/A 187 183 183 187 183 183 21 Average Annual Woetmter ERU's N/A N/A N/A 78335 78535 78375 78,735 18535 38335 1'609 22 AvS. Monthly Sale' per Account(6Blom) ERU1(gril0m) N/A NIA N/A 1.609 1.609 4.609 4.609 4'609 10,120 10,120 23 Avg, MonNlYSdn va N/A N/A NIA 10,120 10,120 10,120 10,120 24 Total Billed Soles (000'.) General Sella customers - Ummnnead Clea I N/A N/A 92 92 92 92 92 92 25 A.,&,waterCurtmm A.,&, Annual Wt.te N/A N/A NIA NIA 669 669 669 669 669 669 26 Average Annual Wanenta ERU-s 27 Toth Wa-tanlahy-tem TaW Avm6e Annuli W--taalt"Cmwmen N/A $58 $58 869 897 52364 925 52,971 96] 53,926 1.007 54.818 1.04 55,700 28 TeW BIII-d Salso (R,vnw Goltons - 000'.) N/A 71.900 5,215 39�527 5,900 51,767 3550 3,119 5,298 3,134 1.991 1,859 29 Avg Monthly Salayyer Altman(gallons) N/A 7225 7,225 Toth Watenter'hused ((000'.) (37 N/A NIA N/A 14,885 7225 7225 7225 33.574 37154 30 31 Treated By Indian Riwrnty(3) Sabsod.n Hfgd GDU-Sebaadan Hted NIA 41 .343 31118 �� J�I T 311.23' 32 36 37995 32 000x)(3) Total Wa (0001) (3) N/A 0.085 0.102 0.105 0.108 dA 0.117 0.122 33 Average Duly Flw (MGD) NIA 0.117 enw page 2 led 3 of J. (2) Reneua the mlomcc-defee east fa ate revenue p-rpmll. be Qutdatafannentertruted atthe County Wanenter Tresonent Plant w+.unevetable for the)ean 1990da ugh 199E Fa the fes,entpaiod.amwnb rbown rcnea e.timeta baad on binarid reaaa<nt (3) Itabould noted rdauomhips per ERU at the GDU fedlidex and are not uproentadw of der as Inwiced by IRC for w tenter fens provided to the City. 12 -Nov -03 CCT/B-d/CmtSta2.W1A oommcm (1) Amououshownd<rid flogs Information proJded by theCiryfor the months of June,Jul% August nd September of 1993 adjusted to ncaanannu.find value far the fiaml 1.11"3 bead on the. (..months of dm. (2) Re0em the molester miss foremost lot fate tmeoue purpose& (3) Anneals Amsft lxld<vtar flood b r lip Rushin4 hydrant testing Bre fighting and ole. lossss(rstem Iota{e). all of wblob arc wbllkd. (4) Acmdint to she laterbeal A4reemeot between the City of Sebastian sod Indian RlserCeunp the County wep ill transfer to the City treatment Puo gas then customers ebo haw1rshn.4 permnm,su cspecify fmm the County and e,ho amt' rt bated who the Cg. M. am asof the Cancellation Data u.pe<ifa I. the Agre<n mmTben fulsome. are <Insifiad as either pm 1, Clan tl or dal It cause men. A Gass I cause mer is mac which bus avtewat-rwtleaian aptem milabb (npdku of ebcther er not cwtomet Is pbpindly connected or o0O whams • Class It euaomerdo s not have say eestee.ter mllectiom system svailablu A Clam III cumomcr r<len to til ether customers lie Clry<urrratlyonly bat Clan i summers. (5) Amounts shewn nflect the amouot of watrancetreated at l odiso River County, fasl{tie$(welch Is then billed tothe City of Sebastian) pureness to the laterbcd A{reemmt hftwf<m the Ciryof Sebastian sod lodlam River Ceunry. ' 12-Nev-03 CCT/S-0</CuatSta2.Wa3 Table 2 pap 2 o 3 City of Sebastian, Florida City of Sebastian Utility System Water sod Wa.tev.ter3yanm Summire f H03torical and Pfoie<td Cu"a tninicr H".0r.1 st mud 1 "Mi P ed Rl U., _� Cticeder Year Ended Dceember7l °lust September 0 1 Yssr Emil. Se tembe I e No. Darer{ tion 1 2 A 1 Residmthl Cunma A.entcAmuu Wasa Cutomen N/A N/A N/A 188 3,616 213 3,130 238 3,03 277 3,116 314 3,399 351 3,382 2 Avg Moothlrr U.e per Acmuot(tdbw) N/A N/A N/A N/A N/A N/A 0.150 0.D11 9JW 11,347 8799 11,236 3 Total Billd Sate. (007.) / Oearnl Serdce Cuatemen Asen{e Anowl Water Customers N/A N/A NIA N/A N/A N/A 3 1 4560 2 10.560 2 14560 2 18,560 2 10.560 18,560 115 S An Mcothlyy UK per Aemunt(talbas) N/A NIA N/A 115 115 e&3 115 115 6 Teal Billed Sale.(00Pa) 7 Total Annte Annual Water Customers N/A N/A N/A N/A 190 0.595 215 9,257 240 10,213 279 1 1,792 316 13,211 333 6D2 14,3,561 D ToniWua Billed Sales (000'.) N/A N/A N/A N/A 3,773 3.391 1,559 3,521 3,195 3 .888 9 Ary Monthly UK per Aemuet(talbea) N/A N/A N/A N/A 9,883 10,615 11.072 1 1 S,231 16.846 10 Total Finished Water Pump of IWO N/A N/A N/A 0.027 0.029 0.032 0.017 0.012 0.016 11 Avagg. Dally Fbw NO D) N/A NIA N/A 1,289 1.389 1,536 1,769 1.987 2,202 12 Water Galbw Unbilled (000'x)(3) Water Oslbn. Unbilled as • Panent N/A ❑.was I3.BI56 0.01!9 11.019: U."% 1 AI 13 or Oalbw pumped - (R) Nln NIA WASTEWATERSERVICE WaterB WastaamrCut-mm t 11 R.M..4.1 Cautomen: Aven{e Annual Wuneanr Customers NIA N/A N/A 188 ;161 217 ;100 238 ;090 2A ;0]9 311 ;069 ;OSd If Avg Mombl)Sde. par Acmuot({aibw) N/A N/A N/A N/A N/A 4,876 3,363 S,%3 4907 7,791 8.666 16 Taut Blind Sale. (007.) N/A 17 Omenl S.M., Cuetomen: Awrate Annual Wntrnr ter Customers N/A NIA N/A 2 15,]]6 3 11,7]6 2 15,A6 2 15,7]6 Z 15379 15,776 18 Avg MocthlYSales per Acmuot(talbo.) N/A N/A N/A N/A N/A N/A 379 379 379 3]9 3]0 l]9 19 Total Billd Sala (007.) Waate'Ater Onty L'wlomen 22 General SeMce Customers- C000ect<d Cie. 1 (1) N/A N/A N/A 22 22 22 22 33 183 20 fawa Me{e Annual Wastewater Customs" N/A N/A N/A 183 187 183 143 183 21 Aeenif Annual Wall.'-' ERV. N/A NIA N/A 30.335 38.315 38,335 34335 38.335 38.3639 22 Avg Monthly5des per Aemuot Italian-) N/A N/A N/A 1,6p 1.609 1.600 I,Qp 23 Avg MonWtySda par BRV.({atbo.) N/A N/A NIA IM20 10,120 10,120 10.120 0.12D 10.120 10.120 24 Tout Billed Saks(007.) Oeoenl Schee Customer, - Uncnnneated C...1(/)92 v2 92 92 v2 92 25 Av nate Annual Wsstraatss Cult- men NIA N/A NIA 669 669 669 669 669 26 Asente Annual Wasteearer ERV- N/A N/A N/A 669 27 T.n",re.te Annual Wssmagn, Cut -men N/A N/A N/A 304 15.375 329 15.662 354 16.462 393 17,106 430 10.298 167 19.165 28 Tend Billed Selss - (Rcreaue Gelb., -000'.) N/A N/A NIA Avg Mambly8s1ss per Commuted N/A N/A N/A 6,018 5,581 5.339 1.822 4,512 1.261 21,721 29 Aaanmt (talbw11 NIA N/A N/A 14883 15.872 16,839 14399 iv,860 0.051 0.058 30 31 Total Wntc.t.&ud (007.) (5) Arent. Daily plan (MOD) NIA N/A N/A 0.011 0.00 0.016 0.030 oommcm (1) Amououshownd<rid flogs Information proJded by theCiryfor the months of June,Jul% August nd September of 1993 adjusted to ncaanannu.find value far the fiaml 1.11"3 bead on the. (..months of dm. (2) Re0em the molester miss foremost lot fate tmeoue purpose& (3) Anneals Amsft lxld<vtar flood b r lip Rushin4 hydrant testing Bre fighting and ole. lossss(rstem Iota{e). all of wblob arc wbllkd. (4) Acmdint to she laterbeal A4reemeot between the City of Sebastian sod Indian RlserCeunp the County wep ill transfer to the City treatment Puo gas then customers ebo haw1rshn.4 permnm,su cspecify fmm the County and e,ho amt' rt bated who the Cg. M. am asof the Cancellation Data u.pe<ifa I. the Agre<n mmTben fulsome. are <Insifiad as either pm 1, Clan tl or dal It cause men. A Gass I cause mer is mac which bus avtewat-rwtleaian aptem milabb (npdku of ebcther er not cwtomet Is pbpindly connected or o0O whams • Class It euaomerdo s not have say eestee.ter mllectiom system svailablu A Clam III cumomcr r<len to til ether customers lie Clry<urrratlyonly bat Clan i summers. (5) Amounts shewn nflect the amouot of watrancetreated at l odiso River County, fasl{tie$(welch Is then billed tothe City of Sebastian) pureness to the laterbcd A{reemmt hftwf<m the Ciryof Sebastian sod lodlam River Ceunry. ' 12-Nev-03 CCT/S-0</CuatSta2.Wa3 Table 2 City of Sebastian, Florida CDU - Sebastian Highlands Utility System Water and Wastewater System S f Wistorical and Prof.med Customer Sted-tin Page 3 of 3 12 -Nov -03 CCT/S-04/CustSM2. Wk3 Historical fol ee,ev Calender Yaer Ended Decemb t ed Se temberJ Fiscal Year E. Se «mbcr30 7 Una 1 1 1 1 4 1 199 199 No. Desai Bon A ERS RVK 1 R.idenBal Customers Average Annual Water Cu.tomen 1,053 1.094 5,190 I.1J9 5,158 1.167 5,466 1,125 5,$98 5200 1,298 1171 5 $71 IJII 5.344 1.348 5.317 2 Avg. Monthly Use per Account (gala.) 5,671 73,619 68.152 74567 76.265 78,104 80,110 82.094 81,056 85.997 3 Tout Billed Sales (000'•) General Serv)ce Customers 43 46 52 54 56 58 60 62 4 Average Annual WaterCustomm 42 11,159 )3,116 78,811 97$05 37$00 37$00 77300 27$00 3] 00 28.050 5 Av. Monthlyy U•eper Amount(gYlon• ) 20$97 18.241 21$79 23$53 24,450 25,750 26,230 27,150 6 Total Billed Salas (0001) 7 Toted Avm66e Annual WaterCust®en 1,094 1,138 1,185 1,215 99,818 1254 102$54 1293 103460 1932 108944 1,371 111206 1,410 114,047 e ToW Warareilled Salo (0001) 94246 86,393 6,329 96,146 6,762 6,846 6.815 6,796 6,778 6,759 6,7d0 9 Avg, Mamhly Use par Aroma, ((ppil1.) 7,179 107,676 104,071 114.305 116,938 117,937 121279 124$96 1271887 131,154 10 Total Flnisbed Wader Pumped 0295 0285 OJ73 0320 OJ23 OJ32 OJ41 OJ50 OJ59 11 Average Dally Flow (MG 12 Water Galow Unbilled (000'•)(3) 17$90 17,678 18,159 17,120 13.383 151819 16232 16.681 17,107 Water Gallon• Unbilled as a Percent 11.619b 11.04% 13.044E 13.041E 1104% 1 . 4 13 of Galom Pumped - (R) 12.6091 16.99°6 15,89% WASTEWATER SERVICE Reidendal Customm Cunomm N/A 554 554 561 564 567 570 573 576 5,04 14 Average Annual Wastewater N/A 5,109 5,170 5,151 5,144 3,118 5,894 5,067 34,870 15 Avg. Moraddoa(per;ceount(gallons) N/A 33,943 34,367 34,716 34,675 34,815 34,854 34,863 ]6 ToW Billed SSaallas 000000• General Savin Cmtomm / 4 4 4 4 4 4 17 Avmg6c Annual WastewstaTCWm tem N/A N/A 1 19,978 97,138 74201 34,000 34,000 71,000 J1,� 000 31"6 18 Avg. M onthly Sale•par Acoount(gallons) N/A 957 5,160 1,676 1.666 1,666 1,666 1, 19 Total Billed Sales (000'•) 20 ToW AveraR Annual WastewsterCustomm N/A 558 558 39$27 SO 36,392 368 36$01 571 36$11 574 36$20 577 36$29 580 36$36 21 TOW Billed Silo(Revame Gal. -000'.) N/A N/A 31,900 5215 5,900 3,364 5,151 5,125 5298 5272 5246 22 Avg. Monthly Silas erAc um(gallon•) 31,116 22,466 T2$81 22,702 22421 12,940 27.038 2J Total Wastewater tested (000'•)(4) N/A 41,14J 0.062 0.062 0.06E 0.069 0.063 6069 24 Avmg<DYly flow(MGD N/A 0.113 0.085 co natIv (1) UOle.amberv4w noted, amounts howndedvd from dam prepared by the management cfGDU asmdated with the aoIdsition ofthe utlitybythe City. (2) Reflects the rueomer saladerarnt far r.tcravenuepapo.as. (3) Atowntashownindude watarused For line nusbing, hydrant testing, Bre righting and wamrlm.a(•ystem leakages all ofwhich are considered as unbilled water. (4) Amountashosnreflea the mount ofwastewaterweatd at the GDU- Sebastian Highland's facilities. 12 -Nov -03 CCT/S-04/CustSM2. Wk3 Table 3 City of Sebastian, Florida Water and Wastewater System Historical Operating Results for GDU — Sebastian Highlands System Line No. Description Operating Revenues 1 Sates Revenue 2 Miscellaneous Income Calendar Year Ending December 31, % Increase/ 1991(1) 1992(2) —Decrease $450,158 $476,723 5.90% 35,233 3012 —11.13% 3 Total Operating Revenue 485,391 508,035 4.67% Operating Expenses 4 Salaries 103,684 80,471 —2239% 5 Pensions and Benefits 22,086 21,870 0.00% 6 Public Relations 72 0 —100.00% 7 Fuel or Power Purchased — Water 15,374 18,043 1736% 8 Fuel or Power Purchased — Wastewater 25,050 28,352 13.18% 9 Contractual Services — Legal 111 115 3.60% 10 Contractual Services — Engineering 0 0 0.00% 11 Treatment — Chemicals (Water) 7,120 9,046 27.05% 12 Treatment — Chemicals (Wastewater) 2,812 2,728 —2.99% 13 Treatment Expenses 18,444 20,037 8.64% 14 Uncollectable Accounts 5,357 3,145 —4129% 15 Customer Accounting Expenses 5,968 5,762 —3.45% 16 A and G — Expenses 7,888 11,790 49.47% 17 Management Fees 15,484 15,000 —3.13% 18 Property Insurance 21,597 5,394 —75.02% 19 Miscellaneous General Expenses 429 256 —4033% 20 Transportation Expenses 2,091 1,918 —827% 21 Maintenance Treatment Plant Expenses 24,182 17,267 —28.60% 22 Maintenance of Services Expenses 435 600 37.93% 23 Maintenance of Meters Expenses 2,708 125 —9538% 24 Maintenance — Source of Supply 215 458 113.02% 25 Maintenance of Pump&.S. Expenses 1,650 1,648 —0.12% 26 Rent 0 2,000 N/A 27 Payroll Taxes 7,681 7,062 —8.06% 28 Other Miscellaneous Expenses 0 2,310 N/A 29 Total GDU Operating Expenses 5290.438 5255,397 —12.06% 30 Net Revenue 5194.953 5252,638 2959% (1) Amounts shown derived from information contained in the Application for an Increase in Rates and Charges as filed by GDU to the City ( the "GDU Bate Filing"). (2) Amount shown based on information provided by the management o[GDU relative to the aquisition of the Sebastian Highlands System by the City. CCT/S-02/HistOpEx.Wk3 Pagel 12—Nov-93 Table 4 City of Sebastian, Florida Water and Waateaaler Systea Proiecled Operating Resells CCT/S-04/DbtServ.W k3 12 -Nov -93 Fiscal Year Ending September 30 Line No. Description 1994(l) 1995 1996 1997 1998 Rate Revenues 1 Water Sala (2) $383,907 5477590 $497,651 SS17,351 2542,327 2 Wastewater Sala (2) 387,410 472,144 483,148 493,580 503,974 3 Additional Rate Revenue (3) 0 28,492 59,731 93,740 131,320 4 Total Rate Revenues 774317 978,226 1,040,530 1,104,671 1,177,621 Other Revenue 5 lateral Income (4) 11,633 14,303 14,896 15,099 15,293 6 Other Operating Revenue (5) 91383 11,260 11,260 11,260 11,260 7 Total Other Revenues 21,017 25,563 26,156 26,359 26553 8 Total Operating Revenues 5792,333 $1,003,789 51,066,686 51,131,030 SI,204,174 Operating Expenses (6) 9 Utilities Ad ministration Expenses 78,675 97,861 102,323 107,006 111,922 10 Water Treatment Expenses 85,899 107,808 113,253 118,924 124,853 11 Wastewater Treatment Expenses 229,076 231,172 240,294 249,739 759557 12 Collection, Distribution, Lift Station Expenses 79,513 102,801 106,676 110,716 114,929 13 Customer Services Expenses 38,102 47,745 50,2S7 52,851 55,671 14 Non -Departmental Expenses(7) 17,203 19,930 20,766 21,635 22,543 15 Total Operating Expense 528,467 607,317 633569 660,901 689,475 Other Required Transfers (8) 16 Transfer to Renewal and Replacement Account (9) 38,566 46,279 48,911 52,027 55,233 17 Transfer to Reserve Subaccount(10) 0 0 0 0 0 Net Operating Revenue after Other 18 Required Transfers 5715,301 $350,193 5384,206 5418,102 $459,466 19 Impact Fees (11) 78,936 94,724 124,572 120,308 120,308 20 Net Revenue Including Impact Fees 5304,237 5444,917 5508,778 5538,410 5579,774 Debt Service (12) 21 Series 1993 Bonds 196,317 235.581 303,313 326,513 348,663 Debt Service Coverage (13) 22 Without Impact Pees 1.15 1.49 1.27 1.28 1.32 23 With Impact Feel 1.55 1.89 1.68 1.65 1.66 Net Funds Available After Required Payments per Bond Resolution (I4) 24 Without Impact Pees $28,983 $114,612 580,894 S91590 $110,804 25 With Impact Fee 5107,919 5209,336 5205,466 5211 999 5731,112 Footnote on page 2 of 2 CCT/S-04/DbtServ.W k3 12 -Nov -93 Table 4 City of Sebaalian, Florida Water and Wastewater Syslcv Projected Operatio[ Results FOOTNOTFS (1) Amounts shown based on ten (10) months of operation consistent with the acquistion of the GDU—Sebaslion lfighlaod System. (2) Amounushown reflect revenues derived from the application of the City's existing rales pursuant to the Rale Resolution to the customers (billing determinants) of the combined System. (3) Amountsshown represent additional rale revenues from the application of the price index adjustments assumed to be 3.0% annually pursuant to the Rale Resolution. The additional rate revenuesdo not recognize anyadditional income from aoybase rate adjustments in the future, other than the assumed price index adjustments. (4) Amounts shown do not include earnings on Impact Fee or Project Fund balanus. These earnings were not included as an available revenue in The analysis of revenues available to meet debt coverage but were considered to be restricted to the applicable Fund balances. (5) Amounts shown include other operating revenues such as meter installation fees, inspection fees and other miscellaneous charges. (6) Amounts shown do not include depreciation or amortization expenses which are non—cash in nature and not recognized as an operating expense pursuant io the Bond Resolution. (7) Pursusnt to the Bond Resolution, operating expenses classified as an Administrative Allocation which is accounted for in the Cily'a General Fund are considered subordinate to the payment of debt service and other required transfers and are not reflected as an operating expense for debt coverage analysis. Amounts shown do include contingency allowances for additional unanticipated expenditures or changes in revenue which maybe incurred by the System. (8) Pursuaul to the Bond Reolulion, in addition to the debt service requirements, rales must be sufficient to meet all required deposits as defined in the covenants for the issue. For the purposes of this analysis, such required deposits have been identified as a requirement prior to the payment of debt service (for coverage calculation purposes only). (9) Amount shown reflects minimum deposit to meet the Renewal and Replacement Account Requirement. Any funds for additional betterments, renewals, replacements, and additions above the funding of the Renewal and Replacement Account Requirement is to be provided by surplus monies available from the operation of the System. (10) The Reserve Subaccouol is anticipated to be fully funded from the proceeds of the Series 1993 Bonds, thus no additional transfers assumed. (11) Amount shown for Impact Fees reflects only that amount relative to the amount of debt service on the Series 1993 Bonds which has been estimated to be attributable to growth or expansion of the System (estimated at 5034% of the lout debt service). (12) Reflects amount of debt service for the Series 1993 Bonds required to be funded from rate revenues during such fiscal year (recognized on an accuralbasis). (13) Amounts shown reflect debt coverage analysis after the funding of the Renewal and Replacement Account; the debt coverage ratio would be higher if the deposits to the Renewal and Replacement Account were recognized after the payment of Debt Service. (14) Includes funds for additional capital outlay, payments of administrative allocation expenses to the City's General Fund, and for other purposes of the System. CCT/S-04/DbtServ.Wk3 12—Nov-93 Table 5 City of SebastiarL Florida Water System 11/12/93 03:13 PM Comparison of Typical Monthly Bills for Water Service with Other U112 Footnotes on page 2 of 2. (•) Utility currently hese rate study In progress or anticipates a rate Increase In the near future. C CT/5-04/iTTCom p, W k3 Chames for Monthly Water Service (1) 5/8" or 3/4' Meter (2) 0 2,000 5,000 6,000 7,000 10,000 15,000 20,000 Una Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons No. Present Rates 1 City of Sebastian (3) (11) ........................................... $11.20 $14.70 $20.75 $22.90 $25.05 532.70 $50.05 974.30 2 GDU - Sebastian Highlands (Existing) (3) (11) ........ 13.05 15.53 19.25 20.49 21.73 25.45 33.20 40.95 3 GDU - Sebastian Highlands (Proposed) (3) (11) ..... 16.52 22.92 32.52 35.72 38.92 49.58 68.23 86.88 4 Proposed Rates City of Sebastian - Alternative 1 (Combined System) 11.20 14.70 20.75 22.90 25.05 32.70 50.05 74.30 5 City of Sebastian - Alternative 2 (Combined System) 13.50 16.52 21.73 23.58 25.43 32.03 47.03 68.03 Other Florida Utilities, 6 Brevard County (4) 6.22 8.22 11.44 13.05 14.66 19.49 27.54 35.59 7 ..................................................... Charlotte County(3) 11.01 16.99 25.93 28.91 31.89 40.83 55.73 70.63 e ................................................... Cltyof Cocoa(6)(11)(•)............................................ 5.25 7.03 9,70 10.59 11.48 14.15 19.10 24.05 9 CIry of Coasts Beach (8) (11) ..................................... 8.50 8.80 12.16 13.26 14.40 17.78 23.91 30.06 10 City of Conu Springs (10) (11) ................................... 13.59 15.45 18.24 19.17 20.10 23.47 29.57 35.67 11 City of Daytona Beach(8)........................................... 7.35 11,01 16.50 18.33 20.18 25.65 34.80 43.95 12 City of Edgewater (8) ................................................. 8.55 8.55 16.74 19.47 22.20 30.39 44.04 57.69 13 Fort Pierce Utilities Authority (4) (11) (•) .................... 9.20 9,20 12.12 13.58 15.04 19,42 26.72 34.02 14 City of Holly Hili(6).................................................... 7.23 7.23 17.16 20.47 23.78 33.71 50.26 66.81 15 Indian Fllver County (3) (11) ....................................... 11.20 14.70 20.75 22.90 25,05 32,70 50.05 74.30 16 City of Jupiter (4) 9.02 11.54 15.32 16.58 17.84 21.62 27.92 34.22 17 ....................................................... City of lake Helen (9) ................................................. 6.67 6.67 12.67 14.67 16.67 22.67 32.67 42.67 18 Mahn County: North System (3) .................................................... 11.00 11.00 17.06 19.08 21.10 27,16 43.85 59.00 19 South System (3) ................................................... 11.00 11.00 13.76 14.08 15.60 18.36 25.95 32.85 20 West System (3) ..................................................... 15.89 15.89 23.21 25.65 28.09 35.41 55.54 73.84 21 City of Melbourne (3) (12) ..................»...................... 2.60 5.76 10.50 12.08 13.66 18.40 26.30 34.20 22 City of New Smyrna Beach(3).................................... 14.39 16.60 19.93 21.03 2214 25.46 31.00 36.53 23 City of Ormond Beach (8) (•) ..................................... 6.82 10.50 16.02 17.86 19.70 25.72 34.42 43.62 24 Palm Say Utility Corporation(3)................................. 6.75 11.25 18.00 20.25 2250 29.25 43.90 56.55 25 City or Port Orange (e)(11) ........................................ 7.25 8.75 15.45 17.95 20.45 27.95 40.45 52.95 26 St. Lucie County (3) (•).............................................. 4.67 9.41 16.52 18.89 21.26 28.37 40.22 5207 27 City of Sunrea(3)........................................................ 5.80 8.06 11.45 12.58 13.71 17.10 2275 28.40 28 Cly of Vero Beach (4) (11) (•) ................................... 9.30 9.30 12.50 14.10 15,70 20.50 28.50 36.50 29 City of West Melbourne (3) r)......• ...................•• ••..•.. 8.50 14.14 2260 25.42 28.24 36.70 50.80 64.90 30 Other Florida U6111"'Aversge................................... $8.66 $10.71 $16.07 $17.94 $19.81 $25.49 538.08 $46.79 Footnotes on page 2 of 2. (•) Utility currently hese rate study In progress or anticipates a rate Increase In the near future. C CT/5-04/iTTCom p, W k3 Table 5 City of Sebastian, Florida Water System Comparison of Typical Monthly Bills for Water Service with Other Utilities Footnotes (1) Unless otherwise noted, amounts shown reflect standard residential and commercial rates In effect during October 1993 and are exclusive of takes or franchise fees, 8 any, and reflect rates charged for inside the city service. All rates are as reported by the respective utility. This comparison Is Intended to show comparable charges for similar service for comparison purposes only and Is not Intended to be a complete listing of all rates and charges offered by each listed utility. (2) Reflects smallest water meter or service size available. (3) These utilities have no minimum water gallon usage reflected in their minimum bill. (4) This utility has a minimum water gallon usage of up to 3,000 gallons which Is reflected In the minimum bill. Any water usage metered in excess of the minimum quantity Is billed according to the utility's currently authorized rate. (5) This utility has a minimum water gallon usage of up to 5,000 gallons which is reflected in the minimum bill. Any water usage metered In excess of the minimum quantity Is billed according to the utility's currently authorized rate. (6) The rate for a 5/8 Inch meter size customer Includes an Inverted rate structure with the following characteristics: usage of 0 to 10,000 gallons per month — $.89 per 1,000 gallons usage of over 10,000 gallons per month — $.99 per 1,000 gallons (n Water service for the City of Cocoa Beach Is provided under a different rate schedule by the City of Cocoa. (8) This utility has a minimum water gallon usage of up to 2,000 gallons which Is reflected In the minimum bill. Any water usage metered in excess of the minimum quantity Is billed according to the utility's currently authorized rate. (9) This utility has a minimum water gallon usage of up to 6,000 gallons which Is reflected In the minimum bill. Any water usage metered In excess of the minimum quantity Is billed according to the utility's currently authorized rate. (10) The rate for a 5/8 Inch meter size customer Includes an Inverted rate structure with the following characteristics: usage of 0 to 11,000 gallons per month — $.75 per 1,000 gallons usage of over 11,000 gallons per month — $.98 per 1,000 gallons (11) These utilities Implement an Inverted rate structure. (12) This Ultility charges an addition SBWA charge to its customer in the amount of $.104 per thousand gallons. CCT/S-04/RTComp.Wk3 11/12/93 03:13 PM Table 6 City of Sebastian, Florida Wastewater System Comoarison of TVDical Monthly Bills for Wastewater Service with Otter Utilities 11/12/93 03:13 PM 4 Pr000sed Rates City of Sebastian - ABernatIve 1 (Combined System) 15.50 21.20 Charoes for Monthly Wastewater Service (1) 35.43 43.98 43.98 43.98 5 City of Sebastian - Alternative 2 (Combined System) 16.75 5/e• or 3/4" Meter (2) 30.50 33.25 36.00 44.25 Line 44.25 0 2,000 5,000 6,000 7,000 10,000 15,000 20.000 No. Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons 33.38 Present Rates 47.63 47.63 7 Charlotte County (5) ................................................... 12.39 16.05 21.54 1 City of Sebastian (5) ................................................... $15.50 $21.20 $29.74 53259 535.43 $43.98 $43.98 $43.98 2 GDU - Sebastian Highlands (E)dstng) (4) ................ 15.12 17.26 20.47 21.54 2261 25.82 27.96 27.96 3 GDU - Sebastian Highlands (Proposed) (13) ........... 2200 30.74 43.85 48.22 52.59 56.96 56.96 56.96 4 Pr000sed Rates City of Sebastian - ABernatIve 1 (Combined System) 15.50 21.20 29.74 32.59 35.43 43.98 43.98 43.98 5 City of Sebastian - Alternative 2 (Combined System) 16.75 2225 30.50 33.25 36.00 44.25 44.25 44.25 Other Florida Utilties 6 Brevard County (4) ..................................................... 13.43 19.13 27.68 30.53 33.38 41.93 47.63 47.63 7 Charlotte County (5) ................................................... 12.39 16.05 21.54 23.37 25.20 30.69 30.69 30.69 8 City of Cocoa (4) V) ................................................... 8.00 11.60 20.00 22.80 25.60 34.00 39.60 39.60 9 City of Cocoa Beach (8) ............................................. 11.00 11.00 17.00 20.45 23.90 34.25 51.50 68.75 10 City of Coral Springs (9) ............................................. 18.40 21.06 25.05 26.38 27.71 31.70 38.35 45.00 11 City of Daytona Beech (3) .......................................... 7.73 14.01 23.43 26.57 29.71 39.13 54.63 70.53 12 City of Edgewater (6) ................................................. 9.55 9.55 19.09 2227 25.45 34.99 50.89 66.79 13 Fort Pierce Utilities Authority (5)(•) ........................... 5.60 10.22 17.15 19.46 21.77 28.70 28.70 28.70 14 City of Holy Hill (6) ........ . .......................................... 8.31 15.93 27.36 31.17 34.98 46.41 65.46 84.51 15 Indian RiverCounty (5) .............................................. 15.50 21.20 29.74 3259 35.43 43.98 71.92 94.17 16 Martin County: North System(5).................................................... 15.00 21.30 30.75 33.90 37.05 46.50 46.50 46.50 17 South System (5) ................................................... 8.80 13.70 21.05 23.50 25.95 33.30 33.30 33.30 18 West System (5) ..................................................... 16.77 23.65 33.97 37.41 40.85 51.17 51.17 51.17 19 Cly of Melbourne(3).................................................. 4.00 9.78 18.45 21.34 24.23 32.90 47.35 61.80 20 City of New Smyrna Beach(3)................................... 15.40 18.38 22.85 24.34 25.83 30.30 37.75 45.20 21 Cly of Ormond Beach (6) (•)..................................... 9.55 9.55 17.29 19.87 22.45 30.19 43.09 55.99 22 Palm Bay Utility Corporation ...................................... 10.06 16.00 24.91 27.88 30.85 39.76 39.76 39.76 23 Cly of Port Orange (8) (•).......................................... 8.50 15.00 24.75 28.00 31.25 41.00 57.25 73.50 24 Sf. Lucia County (12) (-)............................................ 10.26 20.24 35.21 40.20 40.20 40.20 40.20 40.20 25 City of Sunrise(3)....................................................... 9.03 11.67 15.38 16.65 17.92 21.73 28.08 34.43 26 City of Vero Beach (5) (8) (-) ... ...........................•••••• 15.80 15.80 20.90 23.45 26.00 33.65 33.65 33.65 27 City of West Melbourne (11) (0).. ............................... 11.00 16.00 23.50 26.00 28.50 36.00 48.50 61.00 28 Other Florida UtilHes' Average ................................... $11.00 $15.49 $23.50 $26.28 $28.83 936.48 $44.83 852.40 Footnotes on page 2 of 2 (•) Utility currently has a rate study In progress or anticipates a rate Increase in the near future. CCT/S-04/RTComp.Wk3 Table 6 City of Sebastian, Florida Wastewater System 11/12/93 03:13 PM Comparison of Tvpi I Monthly Bills for Wastawatef Service with Other Utilities Footnotes (1) Unless otherwise noted, amounts shown reflect standard residential and commercial rates In effect during October 1993 and are exclusive of taxes or franchise fees, If any, and reflect rates charged for Inside the city service. All rates are as reported by the respective utility. This comparison Is intended to show comparable charges for similar service for comparison purposes only and Is not Intended to be a complete listing of all rates and charges offered by each listed utility. (2) Reflects smallest water meter or service size available. (3) These utilities have no minimum wastewater gallon usage reflected in their minimum bill. (4) This utility charges a maximum of 12,000 gallons of metered water consumption for residential wastewater service. (5) This utility charges a maximum of 10,000 gallons of metered water consumption for residential wastewater service.- (6) ervice:(6) This utility has a minimum wastewater gallon usage of up to 2,000 gallons which Is reflected In the minimum bill. Any wastewater usage metered In excess of the minimum quantity Is billed according to the utility's currently authorized rate. (7) This utility charges a maximum of 15,000 gallons of metered water consumption for residential wastewater service. (8) This utility has a minimum wastewater gallon usage of 3,000 gallons of metered water service, which Is reflected In the minimum bill. Any wastewater usage metered In excess of the minimum quantity Is billed according to the utility's authorized rate. (9) The rate for a 5/8 Inch meter size customer Includes an Inverted rate structure with the following characteristics: usage of 0 to 11,000 gallons per month — $.75 per 1,000 gallons usage of over 11,000 gallons per month — $.98 per 1,000 gallons (10) This utility charges a maximum of 15,000 gallons of metered water consumption for residential wastewater service. (11) This utility currently Implements no base rate, but they do require a minimum payment of $11.00 which Is approximately 4,600 gallons. For every thousand gallons over 4,600, this utility charges $2.32. (12) This utility charges a maximum of 6,100 gallons of metered water consumption for residenflel wastewater service. (13) This utility charges a maximum of 8,010 gallons of metered water consumption for residents] wastewater service. CCT/S-04/RTComp.Wk3 Table 7 City of Sebastian, Florida Water and Wastewater Systems Comparison of Typical Monthly Bills for Water and Wastewater Service with Other Utilities 11/12/93 03:13 PM (•) Utility currently has a rete study In progress or anticipates a rate Increase In the near future. CCT/S-04/RTComp.Wk3 Charges for Monthly Water and Wastewater Service (1) 5/8' or 3/4" Meter (2) line 0 2,000 5,000 6,000 7,000 10,OOD 15,000 20.000 No. Gallons Gallons Gallons Gallons Gallons Gallons Gallons Gallons Present CIN Rates 1 City of Sebastian ...................................... _................ S26.70 $35.90 550.49 $55.49 $60.48 $76.68 $94.03 S118.28 2 GDU - Sebastian Highlands (Existing) .................... 28.17 32.79 39.72 42.03 44.34 5127 61.16 6851 3 GOU - Sebastian Highlands (Proposed) .................. 38.52 53.66 76.37 83.94 91.51 108.54 125.19 143.84 Proposed Rates 4 City of Sebastian - Alternative 1 (Combined System) 26.70 35.90 50.49 55.49 60.48 76.68 94.03 118.28 5 City of Sebastian - Alternative 2 (Combined System) 30.25 38.77 5223 56.83 61.43 76.28 9128 11228 Other Florida Utilities 6 Brevard County......................................................... 21.65 27.35 39.12 43.58 48.04 61.42 75.17 8322 7 Charlotte County ....................................................... 23.42 33.04 47.47 52.28 57.09 7152 86.42 101.32 8 City of Cocoa (•)........................................................ 11.25 18.63 29.70 33.39 37.08 48.15 58.70 63.65 9 City of Cocoa Beach ................................................... 1756 19.80 29.16 33.73 38.30 52.01 75.41 98.81 10 City of Coral Springs .................................................. 3159 36.51 4329 45.55 47.81 55.17 67.92 80.67 11 City of Daytona Beach ............................................... 15.08 25.02 3953 44.90 49.67 64.78 89.63 114.48 12 City of Edgewater....................................................... 18.10 18.10 35.83 41.74 47.65 65.38 94.93 124.48 13 Fort Pierce Utilities Authority (•)................................ 14.80 19.42 2927 33.04 36.81, 48.12 55.42 62.72 14 City of Holly Hill.......................................................... 1554 23.16 4452 51.64 58.76 80.12 115.72 151.32 15 Indian River County .................................................... 26.70 35.90 50.49 55.49 60.48 76.68 121.97 168.47 Martin County. 16 North System......................................................... 26.00 32.30 47.81 52.98 58.15 73.66 90.35 105.50 17 South System........................................................ 19.80 24.70 34.81 38.18 41.55 51.66 5925 66.15 18 West System.......................................................... 32.66 39.54 57.18 63.06 68.94 86.58 106.71 125.01 19 City of Melbourne....................................................... 6.60 15.54 28.95 33.42 37.89 51.30 73.65 96.00 20 City of New Smyrna Beach ........................................ 29.79 34.98 42.78 45.37 47.97 55.76 68.75 81.73 21 City of Ormond Beach (•).......................................... 16.37 20.05 33.31 37.73 42.15 55.41 77.51 99.61 22 Palm Bay Utility Corporation ...................................... 16.81 2725 4251 48.13 53.35 69.01 83.66 98.31 23 City of Pon Orange ..................................................... 15.75 23.75 4020 45.95 51.70 68.95 97.70 126.45 24 St. Wale County (-).................................................... 1453 29.65 51.73 59.09 61.46 68.57 80.42 9227 25 City of Sunrise............................................................ 14.83 19.63 26.83 2923 31.63 38.83 50.83 62.83 26 City of Vero Beach (')................................................ 25.10 25.10 33AO 3755 41.70 54.15 62.15 70.15 27 City of West Melbourne (-)......................................... 19.50 30.14 46.10 51.42 56.74 72.70 99.30 125.90 28 Other Florida Utilities' Average .................................. $19.74 $26.34 $39.76 $44.43 $48.87 $6227 $81.43 $99.96 (•) Utility currently has a rete study In progress or anticipates a rate Increase In the near future. CCT/S-04/RTComp.Wk3 Table 8 Page 1 of 3 City of Sebastian, Florida Water and Wastewater System Comparison of Impact Fees for Residential Water and Wastewater Scrvice(1) Line No. Description Water Wastewater Total Existing Rates 1 City of Sebastian ........................ .............._.............._.............. $973.00 $1,159.00 $2,132.00 2 GDU — Sebastian Highlands ............ .............._..................... 752.50 775.00 1,527.50 Proposed Rates 3 City of Sebastian (Combined Sustem)............. ........... I ... ....... 1,100.00 1,650.00 2,750.00 Other Florida Utilities 4 Brevard County (2) ............... ............... ................................... $1,903.00 $2,257.00 $4,160.00 5 City of Cocoa (0) (2) ......... .............................._.............._........ 650.00 N/A 650.00 6 City of Cocoa Beach (4)($) ..............................._ ..................... N/A 1,300.00 1,300.00 7 City of Edgewater(2)........... .............................................. .... 1,000.00 1,425.00 2,425.00 8 Ft. Pierce Utilities Authority (11)(•) ............._ ....................... 1,481.00 1,027.00 2,508.00 9 Indian River County(2)... ..... ............... .............. .... _......... ... 1,570.00 - 2,551.00 4,121.00 10 City of Jupiter (6) .......... —............. ................ ....... —................ 1,134.00 N/A 1,134.00 Martin County: 11 North System (2) .... _........... ».... ................ ......................... 1,060.00 1,300.00 2,360.00 12 South System(2) ......... .............._......................................... 1,200.00 1,200.00 2,400.00 13 West System (2)............. .............. ............................... ........ 700.00 925.00 1,625.00 14 City of Melbourne (7) .......... _.:............_.............._.............._..... 870.00 1,425.00 2,295.00 15 City of New Smyrna Beach(2)............................. — ............. ... 996.00 1,074.00 2,070.00 City of Ormond Beach: 16 General (5) (•) ............... .............. ............................. _........ 1,006.00 1,183.00 2,189.00 17 West Ormond (5)(•).......................................................... 1,252.00 1,427.00 2,679.00 18 North Mainland (5)(•)..............._...................................... 1,252.00 1,427.00 2,679.00 19 Palm Bay Utility Corp.(2).... .......... ............... ......... .............. 750.00 1,650.00 2,400.00 20 City of Port Orange(10)............... ............... ........................... 1,050.00 1,068.00 2,118.00 21 St. Lucie County (2) (-) _......... ................ . ........... 1,350.00 2,700.00 4,050.00 22 City of Sunrise(2)....... _„............................... __....._._...._.... 1,030.00 1,070.00 2,100.00 23 City of Tamarac(2)...... ........ ............... ................. _... _.......... 1,205.00 1,550.00 2,755.00 24 City of Vero Beach (8) (•) .............. ............... ......................... 1,016.00 1,330.00 2,346.00 25 Other Florida Utilities' Average ............... .................. .......... $1,123.75 $1,287.58 $2,398.29 Footnotes on Page 2 of 2- (*) Utility currently has a rate study in progress or anticipates a rate i ncrease in the near future. CCT/S-04/ImpctFee.Wk3 12—Nov-93 Table 8 City of Sebastian, Florida Water and Wastawalor System Comparison of Impact Foes for Resldential Water and wastevmtor Service FOOTNOTES 11. The Clry lmpllments impact fees; according to class and meter sizes. Rates are as follows: Meter Size Wale( Wastewater Residential: 5/8'or 314' 51,481.00 $1,027.00 1' 3,702.00 2,567.00 1 12' 7,405.00 5,135.00 2' 11,848.00 6,216.00 3' 23.698.00 16,432.00 General: 5/8' or 3/4' 1,481.00 1,027.00 1. 3.702.00 2.567.00 112' 7,405.00 5,135.00 7 11,648.00 8,216.00 3' 23,690.00 18,432.00 4- 37,025.00 25,875.00 G 74,050.00 51,350.00 6' 118,480.00 82,180.00 10* 170,315.00 118,105.00 Pr1e 2e(1 CCT/5-04/ImpctFee.Wk3 12-N,M 2.1 CLERK'S CERTIFICATE REGARDING AUTHORIZING RESOLUTION I, Kathryn M. O'Halloran, the undersigned City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that attached hereto is a copy of the City of Sebastian Resolution No. R-93-67 entitled "A RESOLUTION RESTATING, AMENDING AND SUPPLEMENTING RESOLUTION NO. R-93-58 OF THE CITY OF SEBASTIAN, FLORIDA; AND PROVIDING AN EFFECTIVE DATE," adopted at a meeting of the City Council of the City of Sebastian duly called and held on December 8, 1993, at which meeting a quorum was present and acting throughout, which resolution has been compared by me with the original thereof recorded in the Minute Book of said City and that said resolution is a true, complete and correct copy thereof, and said resolution has been duly adopted and has not been further modified, amended or repealed, and is in full force and effect on and as of the date hereof in the form attached. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 16th day of December, 1993. (SEAL) City Clerk, City of Sebastian, Florida CITY OF SEBASTIAN, FLORIDA RESTATED UTILITIES SYSTEM REVENUE BOND RESOLUTION ADOPTED DECEMBER 8, 1993 TABLE OF CONTENTS PAGE ARTICLE I GENERAL SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . 1 SECTION 1.02. AUTHORITY FOR RESOLUTION.. . . . . . 16 SECTION 1.03. RESOLUTION TO CONSTITUTE CONTRACT. . . . . . . 16 SECTION 1.04. FINDINGS . . . . . . . . . . . . . . . . . . . 16 SECTION 1.05. AUTHORIZATION OF INITIAL PROJECT. . . . . . . 17 SECTION 2.01 SECTION 2.02 SECTION 2.03 SECTION 2.04 SECTION 2.05 SECTION 2.06 SECTION 2.07 SECTION 2.08 SECTION 2.09 ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND REGISTRATION OF BONDS AUTHORIZATION OF BONDS. . . . . . . . . . . . 18 AUTHORIZATION AND DESCRIPTION OF SERIES 1993 BONDS . . . . . . . . . . . . . . . . . . 18 APPLICATION OF SERIES 1993 BOND PROCEEDS. . . 19 EXECUTION OF BONDS . . . . . . . . . . . . . . 20 AUTHENTICATION . . . . . . . . . . . . . . . . 20 TEMPORARY BONDS . . . . . . . . . . . . . . . . 21 BONDS MUTILATED, DESTROYED, STOLEN OR LOST. 21 EXCHANGE AND TRANSFER . . . . . . . . . . . . . 22 FORM OF BONDS . . . . . . . . . . . . . . . . . 23 ARTICLE III REDEMPTION OF BONDS SECTION 3.01. PRIVILEGE OF REDEMPTION. . . . . . . . . . . . 31 SECTION 3.02. SELECTION OF BONDS TO BE REDEEMED. . . . . . . 31 SECTION 3.03. NOTICE OF REDEMPTION . . . . . . . . . . . . . 31 SECTION 3.04. REDEMPTION OF PORTIONS OF BONDS. . . . . . . . 33 SECTION 3.05. PAYMENT OF REDEEMED BONDS. . . . . . . . . . . 33 ARTICLE IV SECURITY, SPECIAL FUNDS AND APPLICATION THEREOF SECTION 4.01. BONDS NOT TO BE INDEBTEDNESS OF ISSUER. . . . 34 SECTION 4.02. SECURITY FOR,BONDS. . . . . . . . . . . . . . 34 SECTION 4.03. PROJECT ACCOUNT . . . . . . . . . . . . . . . . 34 SECTION 4.04. CREATION OF ACCOUNTS . . . . . . . . . . . . . 36 SECTION 4.05. DISPOSITION OF REVENUES. . . . . . . . . . . . 37 SECTION 4.06. REBATE ACCOUNT . . . . . . . . . . . . . . . . 48 SECTION 4.07. WATER IMPACT FEES ACCOUNT. . . . . . . . . . . 48 SECTION 4.08. SEWER IMPACT FEES ACCOUNT. . . . . . . . . . . 49 SECTION 4.09. RATE STABILIZATION ACCOUNT . . . . . . . . . . 50 SECTION 4.10. HALF -CENT SALES TAX REVENUE ACCOUNT. . . . . . 50 SECTION 4.11. RELEASE OF HALF -CENT SALES TAX REVENUES. . . . 51 SECTION 4.12. INVESTMENTS . . . . . . . . . . . . . . . . . . 51 SECTION 4.13. SEPARATE ACCOUNTS . . . . . . . . . . . . . . . 52 ARTICLE V COVENANTS SECTION 5.01. GENERAL . . . . . . . . . . . . . . . . _ . . . 54 SECTION 5.02. OPERATION AND MAINTENANCE .• . . . . . . . . . . 54 SECTION 5.03. ANNUAL BUDGET . . . . . . . . . . . . . . . . . 54 SECTION 5.04 RATES . . . . . . . . . . . . . . . . . . . . . 54 SECTION 5.05. BOOKS AND RECORDS . . . . . . . . . . . . . . . 56 SECTION 5.06. ANNUAL AUDIT . . . . . . . . . . . . . . . . . 56 SECTION 5.07. NO MORTGAGE OR SALE OF THE SYSTEM. . . . . . . 56 SECTION 5.08. INSURANCE . . . . . . . . . . . . . . . . . . . 57 SECTION 5.09. NO FREE SERVICE . . . . . . . . . . . . . . . . 58 SECTION 5.10. NO IMPAIRMENT OF RIGHTS. . . . . . . . . . . . 58 SECTION 5.11. COMPULSORY SEWER CONNECTIONS. . . . . . . . . 58 SECTION 5.12. ENFORCEMENT OF CHARGES. . . . . . . . . . . . 58 SECTION 5.13. COVENANTS WITH CREDIT BANKS AND INSURERS. 59 SECTION 5.14. CONSULTING ENGINEERS._ 59 SECTION 5.15. UNIT WATER AND SEWER BILLS. . . . . . . . . . 59 SECTION 5.16. COLLECTION OF IMPACT FEES. . . . . . . . . . . 59 SECTION 5.17. COLLECTION OF HALF -CENT SALES TAX REVENUES. 60 SECTION 5.18. FEDERAL INCOME TAXATION COVENANTS; TAXABLE BONDS . . . . . . . . . . . . . . . . . . 60 ARTICLE VI SUBORDINATED INDEBTEDNESS AND ADDITIONAL BONDS SECTION 6.01. SUBORDINATED INDEBTEDNESS. . . . . . . . . . . 61 SECTION 6.02. ISSUANCE OF ADDITIONAL BONDS. . . . . . . . . 61 SECTION 6.03. BOND ANTICIPATION NOTES. . . . . . . . . . . . 65 SECTION 6.04. ACCESSION OF SUBORDINATED INDEBTEDNESS TO PARITY STATUS WITH BONDS. . . . . . . . . 65 SECTION 6.05. ISSUANCE OF OBLIGATIONS SECURED BY HALF -CENT SALES TAX REVENUES . . . . . . . . . . . . . . 65 ii ARTICLE VII DEFAULTS AND REMEDIES SECTION 7.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . 67 SECTION 7.02. REMEDIES . . . . . . . . . . . . . . . . . . . 67 SECTION 7.03. DIRECTIONS TO TRUSTEE AS TO REMEDIAL . . . 77 SECTION 9.04.. PROCEEDINGS . . . . . . . . . . . . . . . . . . 68 SECTION 7.04. REMEDIES CUMULATIVE . . . . . . . . . . . . . . 68 SECTION 7.05. WAIVER OF DEFAULT . . . . . . . . . . . . . . . 68 SECTION 7.06. APPLICATION OF MONEYS AFTER DEFAULT. . . . . . 69 SECTION 7.07. CONTROL BY INSURER . . . . . . . . . . . . . . 70 ARTICLE VIII SUPPLEMENTAL RESOLUTIONS SECTION 8.01. SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS' CONS ENT . . . . . . . . . . . . . . . 71 SECTION 8.02. SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' AND INSURER'S CONSENT. . . . . . . . . . . . 72 SECTION 8.03. AMENDMENT WITH CONSENT OF INSURER ONLY. . . . 73 SECTION 8.04. TRANSCRIPT OF DOCUMENTS TO INSURERS. . . . . . 74 ARTICLE IX MISCELLANEOUS SECTION 9.01. DEFEASANCE. . . . . . . . . . . . . . . . . . 75 SECTION 9.02. CAPITAL APPRECIATION BONDS. . . . . . . . . . 76 SECTION 9.03. SALE OF BONDS. . . . . . . . . . . . . . . 77 SECTION 9.04.. SEVERABILITY OF INVALID PROVISIONS. . . . . . 77 SECTION 9.05. VALIDATION AUTHORIZED . . . . . . . . . . . . . 77 SECTION 9.06. EFFECTIVE DATE . . . . . . . . . . . . . . . . 77 EXHIBIT A -- DESCRIPTION OF THE INITIAL PROJECT iii RESOLUTION NO. R-93-67 A RESOLUTION RESTATING, AMENDING AND SUPPLEMENTING RESOLUTION NO. R-93-58 OF THE CITY OF SEBASTIAN, FLORIDA; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA: SECTION 1. RESTATEMENT OF RESOLUTION NO. R-93-58. Resolution No. R-93-58 of the City Council of the City of Sebastian, adopted November 3, 1993, is hereby amended, supplemented and restated in its entirety to read as follows: "A RESOLUTION AUTHORIZING THE ISSUANCE BY THE CITY OF SEBASTIAN, FLORIDA OF NOT EXCEEDING $5,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF UTILITIES SYSTEM REVENUE BONDS, SERIES 1993, TO FINANCE THE COST OF THE ACQUISITION OF AND THE CONSTRUCTION AND ACQUISITION OF CERTAIN ADDITIONS, EXTENSIONS AND IMPROVEMENTS TO THE GENERAL DEVELOPMENT UTILITIES WATER AND SEWER SYSTEM; PLEDGING THE NET REVENUES OF THE UTILITIES SYSTEM TO SECURE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SAID BONDS; PROVIDING FOR SEVERABILITY; AUTHORIZING THE INSTITUTION OF VALIDATION PROCEEDINGS; AND PROVIDING FOR AN EFFECTIVE DATE FOR THIS RESOLUTION. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA: ARTICLE I GENERAL SECTION 1.01. DEFINITIONS. When used in this Resolution, the following terms shall have the following meanings, unless the context clearly otherwise requires: "Accreted Value" shall mean, as of any date of computation with respect to any Capital Appreciation Bond, an amount equal to the principal amount of such Capital Appreciation Bond (the principal amount at its initial offering) plus the interest accrued on such Capital Appreciation Bond from the date of delivery to the original purchasers thereof to the Interest Date next preceding the date of computation or the date of computation if an Interest Date, such interest to accrue at a rate not exceeding the legal rate, compounded semiannually, plus, with respect to matters related to the payment upon redemption or acceleration of the Capital Appreciation Bonds, if such date of computation shall not be an Interest Date, a portion of the difference between the Accreted Value as of the immediately preceding Interest Date and the Accreted Value as of the immediately succeeding Interest Date, calculated based on the assumption that Accreted Value accrues during any semi-annual period in equal daily amounts on the basis of a 360 -day year. "Act" shall mean Chapter 166, Florida Statutes, the City Charter of the City of Sebastian and other applicable provisions of law. "Additional Bonds" shall mean the obligations issued at any time under the provisions of Section 6.02 hereof on a parity with the Series 1993 Bonds. "Additional Project" shall mean any structure, property or facility for public use which the Issuer from time to time may determine to construct or acquire as part of the System, together with all equipment, structures and other facilities necessary or appropriate in connection therewith which are financed in whole or in part with the indebtedness secured by this Resolution. This term is to be broadly construed as including any lawful undertaking which will accrue to the benefit of the System, including, without limitation, joint ventures and acquisition of partial interests or contractual rights, and including modification, disposal, replacements or cancellation of a Project previously authorized, should such modification, disposal or cancellation be permitted under this Resolution. "Administrative Expenses" shall mean those expenses for administration of the System properly allocable as an operating expense to the System, including audit fees, legal fees and financial expenses. "Amortization Installment" shall mean an amount designated as such by Supplemental Resolution of the Issuer and established with respect to the Term Bonds. "Annual Audit" shall mean the annual audit prepared pursuant to the requirements of Section 5.06 hereof. "Annual Budget" shall mean the annual budget, balanced as to revenues and expenses, prepared pursuant to the requirements of Section 5.03 hereof. "Annual Debt Service" shall mean, at any time, the aggregate amount in the then current Fiscal Year of (1) interest required to be paid on the Outstanding Bonds during such Fiscal Year, except to the extent that such interest is to be paid from amounts in the Payment Subaccount derived from Bond proceeds, (2) principal of Outstanding Serial Bonds maturing in such Fiscal Year, (3) the 2 Amortization Installments herein designated with respect to such Fiscal Year and (4) any amounts owed by the Issuer to the issuer of such Reserve Subaccount Credit Instrument as a result of a draw thereon or a claim thereunder; provided that in computing such Annual Debt Service for any future period, any Variable Rate Bonds shall be deemed to bear interest at all times to the maturity thereof at a constant rate of interest equal to the lesser of (i) the interest rate for 30 -year revenue bonds published by The Bond Buyer no more than two weeks prior to the sale of the additional parity Variable Rate Bonds, plus fifty (50) basis points or (ii) the Maximum Interest Rate. For purposes of this definition, all amounts payable on a Capital Appreciation Bond shall be considered a principal payment due in the year it becomes due. "Authorized Investments" shall mean any of the following, if and to the extent that the same are at the time legal for investment of funds of the Issuer: (1) Direct obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of Treasury, CATS and TGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America; (2) Bonds, debentures, notes or obligations or evidences of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself), including: - U.S. Export -Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership - Farmers Home Administration (FHA) Certificates of beneficial ownership - Federal Financing Bank - Federal Housing Administration Debentures (FHA) - General Services Administration Participation certificates - Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) - U.S. Maritime Administration Guaranteed Title XI financing 3 U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds (3) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): Federal Home Loan Bank System Senior debt obligations Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation Certificates Senior debt obligations - Federal National Mortgage Association (FNMA or "Fannie Mae") Mortgage-backed securities and senior debt obligations - Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations - Resolution Funding Core. (REFCORP) obligations - Farm Credit System Consolidated systemwide bonds and notes (4) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's Corporation of AAAm-G; AAAm; or AAm. (5) Certificates of deposit secured at all times by collateral described in (1) and (2) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. (6) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC or FSLIC. (7) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's Investors Service and "A-1" or better by Standard & Poor's Corporation. 4 (8) Bonds or notes issued by any state or municipality which are rated by Moody's Investors Service and Standard & Poor's Corporation in one of the two highest rating categories assigned by such agencies. (9) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or 11A3" or better by Moody's Investors Service and "A-1" or "A" or better by Standard & Poor's Corporation. (10) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. (11) Repurchase Agreements must satisfy the following criteria: (A) Repos must be between the municipal entity and a dealer bank or securities firm; (i) Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard & Poor's Corporation and Moody's Investors Service, or (ii) Banks rated "A" or above by Standard & Poor's Corporation and Moody's Investors Service. (12) Units of participation in the Local Government Surplus Funds Trust Fund established pursuant to Part IV, Chapter 218, Florida Statutes, or any similar common trust fund which is established pursuant to law as a legal depository of public moneys; (13) certificates of deposit or time or demand deposits with a "qualified public depository" (as defined in Section 280.02(12), Florida Statutes) secured in the manner required by Chapter 280, Florida Statutes; and (14) Any other investments (including, without limitation, investment contracts and GICs) approved in writing by the Insurers and the Credit Banks. (15) Units of participation in. the Local Government Surplus Funds Trust Fund established pursuant to Part IV, Chapter 218, Florida Statutes, or any similar common trust fund which is established pursuant to State law as a legal depository of public moneys. 5 "Authorized Issuer officer" shall mean the Clerk or, his designee, or, when used in reference to any act or document, any person authorized by resolution of the Issuer to perform such act or sign such document. "Bond Counsel" shall mean Nabors, Giblin & Nickerson, P.A. or any other attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the Federal tax exemption of interest on obligations issued by states and political subdivisions, and duly admitted to 'practice law before the highest court of any state of the United States of America. "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy or policies issued by an Insurer guaranteeing the payment of the principal of and interest on any portion of the Bonds. "Bond Year" shall mean the period commencing on and ending on the dates specified by Supplemental Resolution of the Issuer. "Bondholder" or "Holder" or "holder" or any similar term, when used with reference to a Bond or Bonds, shall mean any person who shall be the registered owner of any Outstanding Bond or Bonds as provided in the registration books of the Issuer. "Bonds" shall mean the Series 1993 Bonds, together with any Additional Bonds issued pursuant to this Resolution and any Subordinated Indebtedness which accedes to the status of Bonds pursuant to Section 6.04 hereof. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which the Insurance Trustee is authorized by law to remain closed. "Capital Appreciation Bonds" shall mean those Bonds so designated by Supplemental Resolution of the Issuer, which may be either Serial Bonds or Term Bonds and which shall bear interest payable at maturity or redemption. In the case of Capital Appreciation Bonds that are convertible to Bonds with interest payable prior to maturity or redemption of such Bonds, such Bonds shall be considered Capital Appreciation Bonds only during the period of time prior to such conversion. "Clerk" shall mean the Clerk of the Governing Body and such other person as may be duly authorized to act on his or her behalf. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations and rules thereunder in effect or proposed. "Consulting Engineers"• shall mean any engineering firm of favorable reputation for skill and experience with respect to the construction and operation of facilities similar to the System, G which is duly licensed under the laws of the State and designated by the Issuer to perform the duties of the Consulting Engineers under the provisions hereof. "Cost," when used in connection with a Project, shall mean (1) the Issuer's cost of physical construction; (2) costs of acquisition by or for the Issuer of such Project; (3) costs of land and interests therein and the cost of the Issuer incidental to such acquisition; (4) the cost of any indemnity and surety bonds and premiums for insurance during construction; (5) all interest due to be paid on the Bonds and other obligations relating to the System during the period of construction of such Project; (6) engineering, legal and other consultant fees and expenses; (7) costs and expenses of the financing, including audits, costs of ratings and bond insurance fees and expenses of any Paying Agent, Registrar, Insurer, Credit Bank or depository; (8) amounts, if any, required by this Resolution to be paid into the Payment Subaccount upon the issuance of any Series of Bonds; (9) -payments, when due (whether at the maturity of principal or the due date of interest or upon redemption) on any indebtedness of the Issuer (other than the Bonds) incurred for a Project for the System; (10) costs of machinery, equipment and supplies required by the Issuer for the completion of such Project; and (11) any other costs properly attributable to such construction or acquisition, as determined by generally accepted accounting principles applicable to water and sewer utility systems, and shall include reimbursement to the Issuer for any such items of Cost heretofore paid by the Issuer. Any Supplemental Resolution may provide for additional items to be included in the aforesaid Costs. "Credit Bank" shall mean as to any particular Series of Bonds, the Person (other than an Insurer) providing a letter of credit, a line of credit or another credit or liquidity enhancement facility, as designated in the Supplemental Resolution providing for the issuance of such Bonds. "Credit Facility" shall mean as to any particular Series of Bonds, a letter of credit, a line of credit or another credit or legal liquidity enhancement facility (other than an insurance policy issued by an Insurer), as approved in the Supplemental Resolution providing for the issuance of such Bonds. "Debt Service Account" shall mean the account established pursuant to Section 4.04(C) hereof. "Federal Securities" obligations described in paragraphs (1) and (2) of the definition of "Authorized Investments." "Federal Securities" shall also include dirgct obligations of the United States Treasury, Treasury Receipts, CATS, STRPS, Refcorp interest strips and TIGRS; provided such obligations do not permit redemption prior to maturity at the option of the obligor. 7 "Fiscal Year,, shall mean the period commencing on October 1 of each year and continuing through the next succeeding September 30, or such other period as may be prescribed by law. "GDU System" shall mean the utility system being purchased pursuant to the Purchase Agreement. "Governing Body" shall mean the City Council of the City of Sebastian. "Government Grant", when used with respect to the System, shall mean any sum of money (including any loan) heretofore or hereafter received by the Issuer from the United States of America or any agency thereof or from the State or any agency or political subdivision thereof as or on account of a grant or contribution, not repayable by the Issuer, for or with respect to (1) the construction, acquisition or other development of an addition, extension or improvement to any part of the System or any costs of any such construction, acquisition or development, or (2) the financing of any such construction, acquisition, development or costs. "Gross Revenues" shall mean all income and moneys received by the Issuer from the rates, fees, rentals, charges and other income to be made and collected by the Issuer for the use of the products, services and facilities to be provided by the System, or otherwise received by the Issuer or accruing to the Issuer in the management and operation of the_ System, calculated in accordance with generally accepted accounting principles employed in the operation of water and sewer systems similar to the System, including, without limiting the generality of the foregoing, (1) moneys deposited from the Rate Stabilization Account into the Revenue Account, (2) all earnings and income derived from the investment of moneys under the provisions of this Resolution which are deposited or credited to the funds and accounts established hereunder, other than the Project Account and Rebate Account, and (3) payments made by developers to the Issuer for reservation of capacity and similar such charges. "Gross Revenues" shall not include (1) Government Grants and investment earnings thereon, (2) Water Impact Fees and earnings thereon, (3) Sewer Impact Fees and earnings thereon, (4) Special Assessments and earnings thereon, (5) non-cash items contributed to the Issuer with respect to the System, (6) Stormwater Fees and earnings thereon (except to the extent described under the definition of the term the "System" herein), and (7) amounts received which must be remitted as contract payments to the developer of the Park Place system acquired by the Issuer. Gross Revenues may include Special Assessment Proceeds and/or other revenues related to. the System which are not enumerated in the definition of "Gross Revenues" if and to the extent the same shall be approved for inclusion by each Insurer of Bonds then Outstanding. in "Half -Cent Sales Tax Revenues" shall mean the amount of the local government half -cent sales tax distributed by the State from the Government Half -Cent Sales Tax Clearing Trust Fund to the Issuer pursuant to the provisions of Chapter 218, Part VI, Florida Statutes. "Impact Fees" shall mean the Sewer Impact Fees and Water Impact Fees. "Initial Project" shall mean the acquisition of, and the construction, renovation or reconstruction of certain improvements and additions to the System more particularly described in Exhibit A attached hereto and made a part hereof, including, without limitation, all property rights, easements, appurtenances, rights-of-way, franchises and equipment relating thereto and deemed necessary or convenient for the acquisition, construction, renovation, reconstruction or operation thereof, with such changes, deletions, additions or modifications to the enumerated improvements, equipment and facilities, or such other improvements, equipment or facilities as may hereafter be approved by the Governing Body in accordance with the Act. "Insurance Trustee" shall mean the Insurance Trustee designated by the Insurer with respect to any Series of Bonds. "Insurer" shall mean, with respect to the Series 1993 Bonds, such Insurer as set forth in a Supplemental Resolution of the Issuer. With respect to any other Series of Bonds,. "Insurer" shall mean such Person as shall be in the business of insuring or guaranteeing the payment of principal of and interest on municipal securities and whose credit is such that, at the time of any action or consent required or permitted by the Insurer pursuant to the terms of this Resolution, all municipal securities insured or guaranteed by it are then rated, because of such insurance or guarantee, in one of the two most secure grades by one of the two most widely nationally recognized rating agencies which regularly rate the credit of municipal securities. "Interest Date" or "interest payment date" shall be such date or dates as shall be provided by Supplemental Resolution of the Issuer. "Issuer" shall mean the City of Sebastian, a municipal corporation duly organized under the laws of the State. "Maximum Annual Debt Service" shall mean the largest aggregate amount in any Fiscal Year, excluding all Fiscal Years which shall have ended prior to the Fiscal Year in which the Maximum Annual Debt Service shall at any time be computed, of the Annual Debt Service. "Maximum Interest Rate" shall mean, with respect to any particular Variable Rate Bonds, a numerical rate of interest, which N shall be set forth in the Supplemental Resolution of the Issuer delineating the details of such Bonds, that shall be the maximum rate of interest such Bonds may at any particular time bear. "Mayor" shall mean the Mayor or Vice Mayor of the Governing Body and such other person as may be duly authorized to act on his or her behalf. "Moody's" shall mean Moody's Investors Service, Inc. and any assigns and successors thereto. "Net Revenues" shall mean Gross Revenues less Operating Expenses. "Operation and Maintenance Account" shall mean the account created pursuant to Section 4.04(B) hereof. "Operating Expenses" shall mean the Issuer's expenses for operation, maintenance, repairs and replacements with respect to the System and shall include, without limiting the generality of the foregoing, administration expenses, payments for the purchase of materials essential to or used in the operation of the System, including bulk purchases of water or sewage services, fees for the management of the System or any portion thereof, insurance and surety bond premiums, the fees to the provider of a Reserve Subaccount Credit Instrument (but excluding any expenses or reimbursement obligations for draws made thereunder), accounting, legal and engineering expenses, ordinary and current rentals of equipment or other property, refunds of moneys lawfully due to others, payments to others for disposal of sewage or other wastes, payments to pension, retirement, health and hospitalization funds, and any other expenses required to be paid for or with respect to proper operation or maintenance of the System, all to the extent properly characterized as an expense and attributable to the System in accordance with generally accepted accounting principles employed in the operation of public utility systems similar to the System, and disbursements for the expenses, liabilities and compensation of any Paying Agent or Registrar under this Resolution, but does not include (i) Administrative Expenses, or (ii) any costs or expenses in respect of original construction or improvement other than expenditures necessary to prevent an interruption or continuance of an interruption of Gross Revenues or minor capital expenditures necessary for the proper and economical operation or maintenance of the System in accordance with generally accepted accounting principles, or (iii) any provision for interest, depreciation, depletion, amortization or similar charges, or (iv) any fee in lieu of taxes or other transfers to the general fund of the Issuer, or (v) any non-cash items paid by the Issuer with respect to the System, or (vi) extraordinary, non-recurring expenses, or (vii) expenditures for studies for renewal or replacement or capital items which are not funded in the current Fiscal Year. 10 "Outstanding", when used with reference to Bonds and as of any particular date, shall describe all Bonds theretofore and thereupon being authenticated and delivered except, (1) any Bond in lieu of which other Bond or Bonds have been issued under agreement to replace lost, mutilated or destroyed Bonds, (2) any Bond surrendered by the Holder thereof in exchange for other Bond or Bonds under Sections 2.06 and 2.08 hereof, (3) Bonds deemed to have been paid pursuant to Section 9.01 hereof and (4) Bonds cancelled after purchase in the open market or because of payment at or redemption prior to maturity. "Paying Agent" shall mean any paying agent for Bonds appointed by or pursuant to Supplemental Resolution, and its successor or assigns, and any other Person which may at any time be substituted in its place pursuant to this Resolution. "Payment Subaccount" shall mean the separate subaccount in the Debt Service Account established pursuant to Section 4.04(C) hereof. "Person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization or governmental entity or other legal entity. "Pledged Funds" shall mean (1) the Net Revenues, (2) the Impact Fees, (3) until released as provided herein, the Half-Cent Sales Tax Revenues, and (4)_ until applied in accordance with the provisions of this Resolution, all moneys, including investments thereof, in the accounts and subaccounts established hereunder, except (A) to the extent moneys therein shall be required to pay the Operating Expenses of the System in accordance with the terms hereof, (B) to the extent moneys in each subaccount of the Reserve Subaccount shall be pledged solely for the payment of the Series of Bonds for which it was established in accordance with the provisions hereof, and (C) amounts in the Rebate Account. "Prerefunded Obligations" shall mean any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (1) which are (A) not callable prior to maturity or (B) as to which irrevocable instructions have been given to the fiduciary for such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions (2) which are fully secured as to principal, redemption premium, if any, and interest by a fund held by a fiduciary consisting only of cash or Federal Securities, secured in the manner set forth in Section 9.01 hereof, which fund may be applied only to the payment of such principal of, redemption premium, if any, and interest on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as the case may be, (3) as to which the principal of and interest on the Federal 11 Securities, which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay principal of, redemption premium, if any, and interest on the bonds or other obligations on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in clause (1) above and are not available to satisfy any other claims, including those against the fiduciary holding the same, and (4) which are rated in the highest rating category of one of the Rating Agencies. "Project Account" shall mean the account established pursuant to Section 4.03 hereof. "Purchase Agreement" shall mean the Agreement of City of Sebastian, Florida/General Development Utilities, Inc. Water and Sewer System Purchase and Sale Agreement dated as of October 12, 1993, by and between the Issuer and General Development Utilities, Inc. "Rate Consultant" shall mean any accountant, engineer or consultant or firm of accountants, engineers or consultants chosen by the Issuer with reputation for skill and experience in reviewing and recommending rates for utility systems similar to the System. "Rate Stabilization Account" shall mean the Rate Stabilization Account established pursuant to Section 4.04(J) hereof. "Rating Agencies" shall mean Moody's and Standard & Poor's. "Rebate Account" shall mean the Rebate Account established pursuant to Section 4.04(E) hereof. "Redemption Price" shall mean, with respect to any Bond or portion thereof, the principal amount or portion thereof, plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or this Resolution. "Refunding Securities" shall mean Federal Securities and Prerefunded Obligations. "Registrar" shall mean any registrar for the Bonds appointed by or pursuant to Supplemental Resolution and its successors and assigns, and any other Person which may at any time be substituted in its place pursuant to this Resolution or any Supplemental Resolution. "Renewal and Replacement Account" shall mean the account created pursuant to Section 4.04(D) hereof. "Renewal and Replacement Account Requirement" shall mean, on the date of calculation, an -amount of money equal to five percent (5%) of the Gross Revenues received by the Issuer in the immediately preceding Fiscal Year, or such other amount as may be 12 certified to the Issuer by the Consulting Engineers as an amount appropriate for the purposes of this Resolution. "Reserve Subaccount" shall mean the separate subaccount in the Debt Service Account established pursuant to Section 4.04(C) hereof. "Reserve Subaccount Credit Instrument" shall mean a Reserve Subaccount Insurance Policy or a Reserve Subaccount Letter of Credit. "Reserve Subaccount Insurance Policy" shall mean the insurance policy placed in the Reserve Subaccount in lieu of or in partial substitution for cash therein pursuant to Section 4.05(B)(3) hereof. "Reserve Subaccount Letter of Credit" shall mean an unconditional irrevocable commercial letter of credit issued by any bank or national banking association, insurance company or other financial institution to the Paying Agent and then placed in the appropriate subaccount of the Reserve Subaccount in lieu of or in partial substitution for cash therein pursuant to Section 4.05(B)(3) hereof. "Reserve Subaccount Requirement" shall mean, as of any date of calculation for a particular Series of Bonds for which a subaccount of the Reserve Subaccount has been established, an amount equal to the lesser of (1) Maximum Annual Debt Service for all Outstanding Bonds which are secured by such subaccount, (2) one hundred twenty- five percent (125%) of the average annual debt service for all Outstanding Bonds which are secured by such subaccount, or (3) ten percent (1016) of the original proceeds of Outstanding Bonds which are secured by such subaccount. Subject to the foregoing, in computing the Reserve Subaccount Requirement in respect of any subaccount of the Reserve Subaccount which secures Bonds that constitute Variable Rate Bonds, such Variable Rate Bonds shall be assumed to bear interest at the highest of (A) the actual rate on the date of calculation or if the indebtedness is not yet outstanding, the initial rate (if established and binding), (B) if the indebtedness has been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation and (C)(i) if interest on the indebtedness is excludable from gross income under the applicable provisions of the Internal Revenue Code, the most recently published Bond Buyer 25 Bond Revenue Index (or comparable index if no longer published) plus fifty (50) basis points, or (ii) if interest is not so excludable, the interest rate on direct U.S. Treasury obligations with comparable maturities plus fifty (50) basis points. The dates of calculation of the Reserve Subaccount Requirement for purposes of computing such Requirement in regard to Variable Rate Bonds shall be (i) July 1 of each year and (ii) the sale date relating to the initial issuance of Variable Rate Bonds. In computing the Reserve Subaccount Requirement in accordance with clause (3) of 13 this definition in respect of any Capital Appreciation Bonds, the principal amount of such Bonds shall be the Accreted Value thereof, not the original principal amount. "Resolution" shall mean this Resolution, as the same may from time to time be amended, modified or supplemented by Supplemental Resolution. "Revenue Account" shall mean the account created pursuant to Section 4.04(A) hereof. "Serial Bonds" shall mean all of the Bonds other than the Term Bonds. "Series" shall mean all the Bonds delivered on original issuance in a simultaneous transaction and identified pursuant to Sections 2.01 and 2.02 hereof or a Supplemental Resolution authorizing the issuance by the Issuer of such Bonds as a separate Series, regardless of variations in maturity, interest rate, Amortization Installments or other provisions. "Series 1993 Bonds" shall mean the Issuer's Utilities System Revenue Bonds, Series 1993 authorized pursuant to Section 2.02 hereof. "Sewer Impact Fees" shall mean the fees and charges, if any, which relate to acquiring, constructing, equipping or expanding the capacity of the sewer facilities of the System, limited to excess capacity not related to that portion of existing facilities used by current customers at the time of acquisition of the Initial Project by the Issuer, for the purpose of paying or reimbursing the equitable share of the capital cost relating to such acquisition, construction, expansion or equipping of excess and unused capacity of the System or expansion thereof in order to serve new users of the sewer facilities of the System, to the extent the same are lawfully levied, collected and pledged. "Sewer Impact Fees Account" shall mean the account created pursuant to Section 4.04(G) hereof. "Special Assessments" shall mean any and all assessments against property benefited by the System or any part thereof, but which Special Assessments shall be subject to the lien and pledge of this Resolution only if and to the extent provision for inclusion as part of the Pledged Funds has been made by Supplemental Resolution to be adopted by the Issuer. "Special Assessment Proceeds". shall mean the proceeds of Special Assessments pledged hereunder (principal and interest) whether paid at one time or from time to time. "State" shall mean the State of Florida. 14 "Standard and Poor's" shall mean Standard and Poor's Corporation, and any assigns and successors thereto. "Stormwater Fees" shall mean any fees or charges levied by the Issuer on mixed-use, industrial, commercial or residential property for the purposes of making stormwater- related improvements or paying costs related to stormwater-related improvements. "Subordinated Indebtedness" shall mean that indebtedness of the Issuer, subordinate and junior to the Bonds, and any indebtedness issued in accordance with the provisions of Section 6.01 hereof. "Supplemental Resolution" shall mean any resolution of the Issuer amending or supplementing this Resolution enacted and becoming effective in accordance with the terms of Sections 8.01, 8.02 and 8.03 hereof. "Surplus Reserve Account" shall mean the Surplus Reserve Account established pursuant to Section 4.04(F) hereof. "System" shall mean any and all water production, storage treatment, transmission and distribution system and wastewater treatment, transmission, collection and effluent disposal system now owned and operated or hereafter owned and operated by the Issuer and designated by Supplemental Resolution of the Issuer as being part of the System, including the Project, which System shall also include any and all improvements, extensions. and additions thereto hereafter constructed or acquired either from the proceeds of Bonds or from any other sources, together with all property, real or personal, tangible or intangible, now or hereafter owned or used in connection therewith. "System" shall also include any stormwater utility, effluent reuse facilities or any other utility facilities if and to the extent (i) the Issuer determines by Supplemental Resolution to include such utility or facilities within the System as described herein, and (ii) such action will not cause the Issuer to fail to meet the rate covenant set forth in Section 5.04 hereof in the Fiscal Year in which such action takes place. "Taxable Bonds" means any Bond which states, in the body thereof, that the interest income thereon is includable in the gross income of the Holder thereof for Federal income taxation purposes or that such interest is subject to Federal income taxation. "Term Bonds" shall mean those Bonds which shall be designated as Term Bonds hereby or by Supplemental Resolution of the Issuer. "Term Bonds Redemption Subaccount" shall mean the separate subaccount in the Debt Service Account established pursuant to Section 4.04(C) hereof. 15 "Variable Rate Bonds" shall mean Bonds issued with a variable, adjustable, convertible or other similar rate which is not fixed in percentage for the entire term thereof at the date of issue. "Water Impact Fees" shall mean the fees and charges, if any, which relate to acquiring, constructing, equipping or expanding the capacity of the water facilities of the System, limited to excess capacity not related to that portion of existing facilities used by current customers at the time of acquisition of the Initial Project by the Issuer, for the purpose of paying or reimbursing the equitable share of the capital cost relating to such acquisition, construction, expansion or equipping of excess and unused capacity of the System or expansion thereof in order to serve new users of the water facilities of the System, to the extent the same are lawfully levied, collected and pledged. "Water Impact Fees Account" shall mean the account created pursuant to Section 4.04(H) hereof. The terms "herein," "hereunder," "hereby," "hereto," "hereof," and any similar terms, shall refer to this Resolution; the term "heretofore" shall mean before the date of adoption of this Resolution; and the term "hereafter" shall mean after the date of adoption of this Resolution. Words importing the masculine gender include every other gender. Words importing the singular number include the plural number, and vice versa. SECTION 1.02. AUTHORITY FOR RESOLUTION. This Resolution is adopted pursuant to the provisions of the Act. The Issuer has ascertained and hereby determined that adoption of this Resolution is necessary to carry out the powers, purposes and duties expressly provided in the Act, that each and every matter and thing as to which provision is made herein is necessary in order to carry out and effectuate the purposes of the Issuer in accordance with the Act and to carry out and effectuate the plan and purpose of the Act, and that the powers of the Issuer herein exercised are in each case exercised in accordance with the provisions of the Act and in furtherance of the purposes of the Issuer. SECTION 1.03. RESOLUTION TO CONSTITUTE CONTRACT. consideration of the purchase and acceptance of any or all of Bonds by those who shall hold the same from time to time, provisions of this Resolution shall be a part of the the Issuer with the Holders of the Bonds, and shall be and shall constitute a contract between the Issuer ane from time to time of the Bonds. The pledge made in th and the provisions, covenants and agreements herein sel performed by or on behalf of the Issuer shall be f( In the the contract of deemed to be the Holders e Resolution :forth to be )r the equal benefit, protection and security of the Holders of any and all of 1V said Bonds in accordance with the terms hereof. All of the Bonds, regardless of the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof except as expressly provided in or pursuant to this Resolution. SECTION 1.04. FINDINGS. It is hereby ascertained, determined and declared: (A) That it is deemed in the best interests of the citizens of the Issuer that the Initial Project shall be acquired and financed by the proceeds of the Bonds issued pursuant to this Resolution. (B) That the estimated Gross Revenues to be derived in each year hereafter from the operation of the System will be sufficient to pay all Operating Expenses, Administrative Expenses and the principal of and interest on the Bonds to be issued pursuant to this Resolution, as the same become due, and all other payments provided for in this Resolution. (C) That the principal of and interest on the Bonds to be issued pursuant to this Resolution, and all other payments provided for in this Resolution, will be paid solely from the Pledged Funds in accordance with the terms hereof; and the ad valorem taxing power of the Issuer will never be necessary or authorized to pay the principal of and interest on the Bonds to be issued pursuant to this Resolution, or to make any other payments provided for in this Resolution, and the Bonds shall not constitute a lien upon the System or upon any other property whatsoever of or in the Issuer. SECTION 1.05. AUTHORIZATION OF INITIAL PROJECT. The Issuer does hereby authorize the acquisition and construction of the Initial Project. 17 ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND REGISTRATION OF BONDS SECTION 2.01. AUTHORIZATION OF BONDS. This Resolution creates an issue of Bonds of the Issuer to be designated as "City of Sebastian, Florida Utilities System Revenue Bonds" which may be issued in one or more Series as hereinafter provided. The aggregate principal amount of the Bonds which may be executed and delivered under this Resolution is not limited except as is or may hereafter be provided in this Resolution or as limited by the Act or by law. The Bonds may, if and when authorized by the Issuer pursuant to this Resolution, be issued in one or more Series, with such further appropriate particular designations added to or incorporated in such title for the Bonds of any particular Series as the Issuer may determine and as may be necessary to distinguish such Bonds from the Bonds of any other Series. Each Bond shall bear upon its face the designation so determined for the Series to which it belongs. The Bonds shall be issued for such purpose or purposes; shall bear interest at such rate or rates not exceeding the maximum rate permitted by law; and shall be payable .in lawful money of the United States of America on such dates; all as determined by Supplemental Resolution of the Issuer. The Bonds shall be issued in such denominations and such form, whether coupon or registered; shall be dated such date; shall bear such numbers; shall be payable at such place or places; shall contain such redemption provisions; shall have such Paying Agents and Registrars; shall mature in such years and amounts; and the proceeds shall be used in such manner; all as determined by Supplemental Resolution of the Issuer. The Issuer may issue Bonds which may be secured by a Credit Facility or by an insurance policy of an Insurer, all as shall be determined by Supplemental Resolution of the Issuer. The Governing Body may delegate approval of the terms and details of a Series of Bonds to an Authorized Issuer Officer pursuant to Supplemental Resolution. SECTION 2.02. AUTHORIZATION AND DESCRIPTION OF SERIES 1993 BONDS. (A) (i) A Series of Bonds. entitled to the benefit, protection and security of this Resolution is hereby authorized in the aggregate principal amount of not exceeding $5,000,000 for the principal purposes of acquiring and constructing the Initial Project, funding the Reserve Subaccount and paying certain costs of issuance incurred with respect to the Series 1993 Bonds. Such or Series of Bonds shall be designated as, and shall be distinguished from the Bonds of all other Series by the title, "City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993"; provided the Issuer may change such designation in the event that the total amount of Series 1993 Bonds authorized herein are not issued in a simultaneous transaction or the Series 1993 Bonds are not issued in a simultaneous transaction. (ii) The Series 1993 Bonds shall be dated as of the first day of the month in which occurs the delivery of the Series 1993 Bonds to the purchaser or purchasers thereof or such other date as may be set forth by Supplemental Resolution of the Issuer; shall be issued as fully registered Bonds; shall be numbered consecutively from one upward in order of maturity preceded by the letter "R"; shall be in such denominations and shall bear interest at a rate or rates not exceeding the maximum rate permitted by law, payable in such manner and on such dates; shall consist of such amounts of Serial Bonds, Term Bonds, Variable Rate Bonds and Capital Appreciation Bonds maturing in such years and amounts not exceeding forty (40) years from their date; shall be payable in such place or places; shall have such Paying Agents and Registrars; and shall contain such redemption provisions; all as the Issuer shall provide hereafter by Supplemental Resolution. (iii) The principal of or Redemption Price, if applicable, on the Series 1993 Bonds are payable upon presentation of the Series 1993 Bonds at the office of the Paying Agent. Interest payable on any.Series 1993 Bond on any Interest Date will be paid by check or draft of the Paying Agent to the Holder in whose name such Bond shall be registered at the close of business on the date which shall be the fifteenth day (whether or not a business day) of the calendar month next preceding such Interest Date, or, at the option of the Paying Agent, and at the request and expense of the Holder of $500,000 or more in principal amount of Series 1993 Bonds, by bank wire transfer for the account of such Holder. All payments of principal of or Redemption Price, if applicable, and interest on the Series 1993 Bonds shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 2.03. APPLICATION OF SERIES 1993 BOND PROCEEDS. (A) Except as otherwise provided by Supplemental Resolution of the Issuer, the proceeds derived from the sale of the Series 1993 Bonds, including accrued interest and premium, if any, shall, simultaneously with the delivery of the Series 1993 Bonds to the purchaser or purchasers thereof, be applied by the Issuer as follows: 1. (i) Accrued interest and proceeds of the Series 1993 Bonds representing capitalized interest, if any, shall be deposited or credited to the Payment Subaccount and shall be used only for the purpose of paying the interest which shall thereafter become due on the Series 1993 Bonds. (ii) A sufficient amount of Series 1993 Bond proceeds shall be deposited or credited to the appropriate subaccount of the Reserve Subaccount which, together with any moneys and securities therein and Reserve Subaccount Insurance Policy and/or Reserve_ Subaccount Letter of Credit obtained in accordance with Section 4.05(B)(3) hereof, shall equal the Reserve Subaccount Requirement for such subaccount. (iii) A sufficient amount of the Series 1993 Bond proceeds shall be applied to the payment of the premiums of any municipal bond insurance policies applicable to the Series 1993 Bonds or reserves established therefor and to the payment of costs and expenses relating to the issuance of the Series 1993 Bonds. Such amount may, at the option of the Issuer, be deposited or credited to and disbursed from the Project Account. (iv) The balance of the Series 1993 Bond proceeds shall be deposited or credited to the Project Account. SECTION 2.04. EXECUTION OF BONDS. The Bonds shall be executed in the name of the Issuer with the manual or facsimile signature of the Mayor and the official seal of the Issuer shall be imprinted thereon, attested and countersigned with the manual or facsimile signature of the Clerk. In case any one or more of the officers who shall have signed or sealed any of the Bonds or whose facsimile signature shall appear thereon shall cease to be such officer of the Issuer before the Bonds so signed and sealed have been actually sold and delivered, such Bonds may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed or sealed such Bonds had not ceased to hold such office. Any Bond may be signed and sealed on behalf of the Issuer by such person who at the actual time of the execution of such Bond shall hold the proper office of the Issuer, although at the date of such Bond such person may not have held such office or may not have been so authorized. The Issuer may adopt and use for such purposes the facsimile signatures of any such persons who shall have held such offices at any time after the date of the adoption of this Resolution, notwithstanding that either or both shall have ceased to hold such office at the time the Bonds shall be actually sold and delivered. SECTION 2.05. AUTHENTICATION. No Bond of any Series shall be secured hereunder or entitled to the benefit hereof or shall be valid or obligatory for any purpose unless there shall be manually endorsed on such Bond a certificate of authentication by the Registrar or such other entity as may be approved by the Issuer for such purpose. Such certificate on any Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered 20 under this Resolution. The form of such certificate shall be substantially in the form provided in Section 2.09 hereof. SECTION 2.06. TEMPORARY BONDS. Until the definitive Bonds of any Series are prepared, the Issuer may execute, in the same manner as is provided in Section 2.04, and deliver, upon authentication by the Registrar pursuant to Section 2.05 hereof, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds, except as to the denominations thereof, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in denominations authorized by the Issuer by subsequent resolution and with such omissions, insertions and variations as may be appropriate to temporary Bonds. The Issuer, at his own expense, shall prepare and execute definitive Bonds, which shall be authenticated by the Registrar. Upon the surrender of such temporary Bonds for exchange, the Registrar, without charge to the Holder thereof, shall deliver in exchange therefor definitive Bonds, of the same aggregate principal amount and Series and maturity as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this Resolution. All temporary Bonds surrendered in exchange for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be forthwith cancelled by the Registrar. SECTION 2.07. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Bond shall become mutilated, or be destroyed, stolen or lost, the Issuer may, in its discretion, issue and deliver, and the Registrar shall authenticate, a new Bond of like tenor as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond upon surrender and cancellation of such mutilated Bond or in lieu of and substitution for the Bond destroyed, stolen or lost, and upon the Holder furnishing the Issuer and the Registrar proof of his ownership thereof and satisfactory indemnity and complying with such other reasonable regulations and conditions as the Issuer or the Registrar may prescribe and paying such expenses as the Issuer and the Registrar may incur. All Bonds so surrendered or replaced shall be cancelled by the Registrar. If any of the Bonds shall have matured or be about to mature, instead of issuing a substitute Bond, the Issuer may pay the same or cause the Bond to be paid, upon being indemnified as aforesaid, and if such Bonds be lost, stolen or destroyed, without surrender thereof. Any such duplicate Bonds issued pursuant to this Section 2.07 shall constitute original contractual obligations on the part of the Issuer whether or not the lost, Atolen or destroyed Bond be at any time found by anyone, and such duplicate Bond shall be entitled to equal and proportionate benefits and rights as to lien on the Pledged Funds to the same extent as all other Bonds issued hereunder. 21 SECTION 2.08. EXCHANGE AND TRANSFER. Bonds, upon surrender thereof at the office of the Registrar with a written instrument of transfer satisfactory to the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing, may, at the option of the Holder thereof, be exchanged for an equal aggregate principal amount of registered Bonds of the same Series and maturity of any other authorized denominations. The Bonds issued under this Resolution shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of the State, subject to the provisions for registration of transfer contained in this Resolution and in the Bonds. So long as any of the Bonds shall remain Outstanding, the Issuer shall maintain and keep, at the office of the Registrar, books for the registration and transfer of the Bonds. The transfer of any Bond shall be registered only upon the books of the Issuer, at the office of the Registrar, under such reasonable regulations as the Issuer may prescribe, by the Holder thereof in person or by his attorney duly authorized in writing upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed and guaranteed by the Holder or his duly authorized attorney. Upon the registration of transfer of any such Bond, the Issuer shall issue, and cause to be authenticated, in the name of the transferee a new Bond or Bonds of the same aggregate principal amount and Series and maturity as the surrendered Bond. The Issuer, the Registrar and any Paying Agent or fiduciary of the Issuer may deem and treat the Person in whose name any Outstanding Bond shall be registered upon the books of the Issuer 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 or Redemption Price, if applicable, and interest on such Bond and for all other purposes, and 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 Bond to the extent of the sum or sums so paid and neither the Issuer nor the Registrar nor any Paying Agent or other fiduciary of the Issuer shall be affected by any notice to the contrary. The Registrar, in any case where it is not also the Paying Agent in respect to any Series of Bonds, forthwith (A) following the fifteenth (15th) day prior to an interest payment date for such Series; (B) following the fifteenth day next preceding the date of first mailing of notice of redemption of any Bonds of such Series; and (C) at any other time as reasonably requested by the Paying Agent of such Series, certify and furnish to such Paying Agent the names, addresses and holdings of Bondholders and any other relevant information reflected in the registration books. Any Paying Agent of any fully registered Bond shall effect payment of interest on such Bonds by mailing a check to the Holder entitled thereto or may, in lieu thereof, upon the request and at the expense of the 22 Holder of $500,000 or more in principal amount of Series 1993 Bonds, by bank wire transfer for the account of such Holder. In all cases in which Bonds shall be exchanged or the transfer of Bonds shall be registered, the Issuer shall execute and deliver Bonds and the Registrar shall authenticate such Bonds in accordance with the provisions of this Resolution. Execution of Bonds by the Mayor and Clerk for purposes of exchanging, replacing or registering the transfer of Bonds may occur at the time of the original delivery of the Series of which such Bonds are a part. All Bonds surrendered in any such exchanges or registration of transfer shall be held by the Registrar in safekeeping until directed by the Issuer to be cancelled by the Registrar. For every such exchange or registration of transfer, the Issuer or the Registrar may make a charge sufficient to reimburse it for any tax, fee, expense or other governmental charge required to be paid with respect to such exchange or registration of transfer. The Issuer and the Registrar shall not be obligated to make any such exchange or registration of transfer of Bonds of any Series during the fifteen (15) days next preceding an Interest Date on the Bonds of such Series (other than Capital Appreciation Bonds and Variable Rate Bonds), or, in the case of any proposed redemption of Bonds of such Series, then during the fifteen (15) days next preceding the date of the first mailing of notice of such redemption and, in the case of Bonds called for redemption, continuing until such redemption date. The Issuer may elect to issue any Bonds as uncertificated registered public obligations (not represented by instruments), commonly known as book -entry obligations, provided it shall establish a system of registration therefor by Supplemental Resolution. SECTION 2.09. FORM OF BONDS. The text of the Bonds, except as otherwise provided pursuant to Section 2.09 hereof and except for Capital Appreciation Bonds and Variable Rate Bonds, the form of which shall be provided by Supplemental Resolution of the Issuer, shall be in substantially the following form with such omissions, insertions and variations as may be necessary and/or desirable and approved by the Mayor or the Clerk prior to the issuance thereof, (which necessity and/or desirability and approval shall be presumed by such officer's execution of the Bonds and the Issuers delivery of the Bonds to the purchaser or purchasers thereof): 23 I'mIa UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF SEBASTIAN UTILITIES SYSTEM REVENUE BOND, SERIES Interest Maturity Date of Rate Date Original Issue CUSIP 0 Registered Holder: Principal Amount: KNOW ALL MEN BY THESE PRESENTS, that -City of Sebastian, Florida, a political subdivision of the State of Florida, (the "Issuer"), for value received, hereby promises to pay, solely from the Pledged Funds hereinafter described, to the Registered Holder identified above, or registered assigns as hereinafter provided, on the Maturity Date identified above, the Principal Amount identified above and to pay interest on such Principal Amount from the Date of Original Issue identified above or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum identified above on and of each year commencing until such Principal Amount shall have been paid, except as the provisions hereinafter set forth with respect to redemption prior to maturity may be or become applicable hereto. Such Principal Amount and interest and the premium, if any, on this Bond are payable in any coin or currency of the United States of America which, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. Such Principal Amount and the premium, if any, on this Bond, are payable at the principal corporate trust office of , , , as Paying Agent. Payment of each installment of interest shall be made to the person in whose name this Bond shall be registered on the registration books of the Issuer maintained by, as Registrar, at the close of business on the date which 24 shall be the fifteenth (15th) day of the calendar month (whether or not a business day) next preceding each interest payment date and shall be paid by check or draft of the Paying Agent to such Registered Holder at the address appearing on such registration books or, at the option of such Paying Agent, and at the request and expense of the Holder of $500,000 or more in principal amount, by bank wire transfer for the account of such Holder. This Bond is one of an authorized issue of Bonds in the aggregate principal amount of $ (the "Bonds") of like date, tenor and effect, except as to maturity date, interest rate, denomination and number, issued to finance , in and for the Issuer, under the authority of and in full compliance with the Constitution and laws of the State, particularly Chapter 166, Florida Statutes, and other applicable provisions of law (the "Act"), and a resolution duly adopted by the City Council of the Issuer, on , as amended and supplemented (the "Resolution"), and is subject to all the terms and conditions of the Resolution. This Bond and the interest hereon are payable solely from and secured by a lien upon and a pledge of the Pledged Revenues (as defined in the Resolution) to be derived from the operation of the Issuer's water and sewer system (the "System"), the Impact Fees (as defined in the Resolution), until released as provided in the Resolution, the Half -Cent Sales Tax Revenues, and until applied in accordance with the provisions of the Resolution, all moneys, including investments thereof, in the accounts and subaccounts established by the Resolution, except (A) to the extent moneys therein shall be required to pay the Operating Expenses (as defined in the Resolution) of the System in accordance with the terms of the Resolution, (B) to the extent moneys in each subaccount of the Reserve Subaccount shall be pledged solely for the payment of the Series of Bonds for which it was established in accordance with the provisions of the Resolution and (C) amounts in the Rebate Account (collectively, the "Pledged Funds"). It is expressly agreed by the Registered Holder of this Bond that the full faith and credit of the Issuer are not pledged to the payment of the principal of, premium, if any, and interest on this Bond and that such Holder shall never have the right to require or compel the exercise of any taxing power of the Issuer to the payment of such principal, premium, if any, and interest. This Bond and the obligation evidenced hereby shall not constitute a lien upon the System or any other property of the Issuer, but shall constitute a lien only on, and shall be payable solely from, the Pledged Funds in accordance with the terms of the Resolution. Neither the members of the City,. Council of the Issuer nor any person executing this Bond shall be liable personally hereon or be subject to any personal liability or accountability by reason of the issuance hereof. 25 REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE SIDE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH ON THE FRONT SIDE HEREOF. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Registrar. IN WITNESS WHEREOF, the City Council of the City of Sebastian, Florida has issued this Bond and has caused the same to be executed by the manual or facsimile signature of its Mayor, and by the manual or facsimile signature of its Clerk and its corporate seal or a facsimile thereof to be affixed or reproduced hereon, all of the day of (SEAL) CITY OF SEBASTIAN, FLORIDA Mayor Clerk 26 (Provisions on Reverse Side of Bond) The transfer of this Bond is registrable in accordance with the terms of the Resolution only upon the books of the Issuer kept for that purpose at the principal corporate trust office of the Registrar by the Registered Holder hereof in person or by his attorney duly authorized in writing, upon the surrender of this Bond together with a written instrument of transfer satisfactory to the Registrar duly executed by the Registered Holder or his attorney duly authorized in writing, and thereupon a new Bond or Bonds in the same aggregate principal amount shall be issued to the transferee in exchange therefor, and upon the payment of the charges, if any, therein prescribed. The Bonds are issuable in the form of fully registered Bonds in the denomination of $ and any integral multiple thereof, not exceeding the aggregate principal amount of the Bonds. The Issuer, the Registrar and any Paying Agent may treat the Registered Holder of this Bond as the absolute owner hereof for all purposes, whether or not this Bond shall be overdue, and shall not be affected by any notice to the contrary. The Issuer and the Registrar shall not be obligated to make any exchange or transfer of the Bonds during the fifteen (15) days next preceding an interest payment date or, in the case of any proposed redemption of the Bonds, then, during the fifteen (15) days next preceding the date of the first mailing of notice of such redemption and, in the case of the Bonds called for redemption, continuing until such redemption date. (INSERT REDEMPTION PROVISIONS) Redemption of this Bond under the preceding paragraphs shall be made as provided in the Resolution upon notice given by first class mail sent at least thirty (30) days prior to the redemption date to the Registered Holder hereof at the address shown on the registration books maintained by the Registrar; provided, however, that failure to mail notice to the Registered Holder hereof, or any defect therein, shall not affect the validity of the proceedings for redemption of other Bonds as to which no such failure or defect has .occurred. In the event that less than the full principal amount hereof shall have been called for redemption, the Registered Holder hereof shall surrender this Bond in exchange for one or more Bonds in an aggregate principal amount equal to the unredeemed portion of principal, as provided in the Resolution. Reference to the Resolution and any and all resolutions supplemental thereto and modifications and amendments thereof and to the Act is made for a description of the pledge and covenants securing this Bond, the nature, manner and extent of enforcement of 27 such pledge and covenants, and the rights, duties, immunities and obligations of the Issuer. 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 laws and Constitution of the State of Florida applicable thereto, and that the issuance of the Bonds does not violate any constitutional or statutory limitations or provisions. 28 FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto Insert Social Security or Other Identifying Number of Assignee (Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint as attorney to register the transfer of the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature to this assignment must correspond with the name of the Registered Holder as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever and the Social Security or other identifying number of such assignee must be supplied. 29 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 right of survivorship and not as tenants in common UNIF TRANS MIN ACT -- (Cust.) Custodian for under Uniform Transfers to Minors Act of (State) Additional abbreviations may also be used though not in list above. CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the Issuer described in the within -mentioned Resolution. DATE OF AUTHENTICATION: Registrar By: Authorized Officer 30 ARTICLE III REDEMPTION OF BONDS SECTION 3.01. PRIVILEGE OF REDEMPTION. The terms of this Article III shall apply to redemption of Bonds other than Capital Appreciation Bonds or Variable Rate Bonds. The terms and provisions relating to redemption of Capital Appreciation Bonds and Variable Rate Bonds shall be provided by Supplemental Resolution. SECTION 3.02. SELECTION OF BONDS TO BE REDEEMED. The Bonds shall be redeemed only in the principal amount of $5,000 each and integral multiples thereof. The Issuer shall, at least sixty (60) days prior to the redemption date (unless a shorter time period shall be satisfactory to the Registrar) notify the Registrar of such redemption date and of the principal amount of Bonds to be redeemed. For purposes of any redemption of less than all of the Outstanding Bonds of a single maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected not more than forty-five (45) days prior to the redemption date by the Registrar from the Outstanding Bonds of the maturity or maturities designated by the Issuer by such method as the Registrar shall deem fair and appropriate and which may provide for the selection for redemption of Bonds or portions of Bonds in principal amounts of $5,000 and integral multiples thereof. If less than all of the Outstanding Bonds of a single maturity are to be redeemed, the Registrar shall promptly notify the Issuer and Paying Agent (if the Registrar is not the Paying Agent for such Bonds) in writing of the Bonds or portions of Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. Notice of such redemption, which shall specify the Bond or Bonds (or portions thereof) to be redeemed and the date and place for redemption, shall be given by the Registrar on behalf of the Issuer, and (A) shall be filed with the Paying Agents of such Bonds, (B) shall be mailed first class, postage prepaid, at least thirty (30) days prior to the redemption date, to all Holders of Bonds to be redeemed at their addresses as they appear on the registration books kept by the Registrar, and (C) shall be mailed certified, postage prepaid, at least thirty-five (35) days prior to the redemption date to the registered securities depositaries, to two or more nationally recognized municipal bond information services and to each Insurer of any Bonds Outstanding affected by such redemption. Failure to mail notice to the Holders of the Bonds to be redeemed, or any defect therein, shall not affect the proceedings for redemption of Bonds as to which no such failure or defect has occurred. Notice of any redemption of Bonds at the option of the Issuer (except pursuant to a refunding) shall be 31 given only upon the prior deposit into the Debt Service Account of sufficient amounts to effect such redemption. Each notice of redemption shall state: (1) the CUSIP numbers of all Bonds being redeemed; (2) the original issue date of such Bonds; (3) the maturity date and rate of interest borne by each Bond being redeemed; (4) the redemption date; (5) the Redemption Price; (6) the date on which such notice is mailed; (7) if less than all Outstanding Bonds are to be redeemed, the certificate number (and, in the case of a partial redemption of any Bond, the principal amount) of each Bond to be redeemed; (8) that on such redemption date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portions of the principal thereof in the case of Bonds to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such date interest thereon shall cease to accrue and be payable; (9) that the Bonds to be redeemed, whether as a whole or in part, are to be surrendered for payment of the redemption price at the principal office of the Registrar at an address specified; and (10) the name and telephone number of a person designated by the Registrar to be responsible for such redemption. In addition to the mailing of the notice described above, each notice of redemption and payment of the Redemption Price shall meet the following requirements; provided, however, the failure to provide such further notice of redemption or to comply with the terms of this paragraph shall not in any manner defeat the effectiveness of a call for redemption if notice thereof is given as prescribed above: (i) Each further notice of redemption shall be sent at least thirty (30) days before the redemption date by certified mail or overnight delivery service or telecopy to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds (such depositories now being The Depository Trust Company, New York, New York, Midwest Securities Trust Company, Chicago, Illinois, Pacific Securities Depository Trust Company, San Francisco, California, and Philadelphia Depository Trust Company, Philadelphia, Pennsylvania) and to one or more national information services which disseminate notices of prepayment or redemption of obligations such as the Bonds. (ii) Each further notice of prepayment shall be published one time in The Bond Buyer or, if such publication is impractical or, in the opinion,.of the Paying Agent, unlikely to reach a substantial number of the Bondholders, in some other financial newspaper or journal which regularly carries notices of redemption -of other obligations similar to the Bonds, such publication to be made at least thirty (30) days prior to the redemption date. 32 The notice of redemption described in this paragraph need not be given as described above if the Bonds called for redemption are registered pursuant to a book -entry only system. SECTION 3.04. REDEMPTION OF PORTIONS OF BONDS. Any Bond which is to be redeemed only in part shall be surrendered at any place of payment specified in the notice of redemption (with due endorsement by, or written instrument of transfer in form satisfactory to the Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Issuer shall execute and the Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds, of any authorized denomination, as requested by such Holder in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bonds so surrendered. SECTION 3.05. PAYMENT OF REDEEMED BONDS. Notice of redemption having been given substantially as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Issuer shall default in the payment of the Redemption Price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Registrar and/or Paying Agent at the appropriate Redemption Price, plus accrued interest. All Bonds which have been redeemed shall be cancelled and destroyed by the Registrar and shall not be reissued. 33 ARTICLE IV SECURITY, SPECIAL FUNDS AND APPLICATION THEREOF SECTION 4.01. BONDS NOT TO BE INDEBTEDNESS OF ISSUER. The Bonds shall not be or constitute general obligations or indebtedness of the Issuer as "bonds" within the meaning of any constitutional or statutory provision, but shall be special obligations of the Issuer, payable solely from and secured by a lien upon and pledge of the Pledged Funds, in the manner and to the extent provided in this Resolution. No Holder of any Bond shall ever have the right to compel the exercise of any ad valorem taxing power to pay such Bond, or be entitled to payment of such Bond from any moneys of the Issuer, except from the Pledged Funds in the manner and to the extent provided herein. SECTION 4.02. SECURITY FOR BONDS. The payment of the principal of, or Redemption Price, if applicable, and interest on the Bonds shall be secured forthwith equally and ratably by a pledge of and lien upon the Pledged Funds; provided, however, a Series of Bonds may be further secured by a Credit Facility or insurance policy of an Insurer in addition to the security provided herein; and provided, further, that each Series of Bonds shall be secured independently of any other Series of Bonds by the corresponding subaccount in the Reserve Subaccount, except as otherwise provided herein. The Issuer does hereby irrevocably pledge the Pledged Funds to the payment of the principal of, or Redemption Price, if applicable, and interest on the Bonds in accordance with the provisions hereof. Any obligations owed to the issuer of a Reserve Subaccount Credit Instrument shall be deemed to be subordinate to the lien on and pledge of the Pledged Funds to the Holders of the Bonds, solely in respect of the principal of and interest due thereon. The Pledged Funds shall immediately be subject to the lien of this pledge without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Issuer. SECTION 4.03. PROJECT ACCOUNT. The Issuer covenants and agrees to establish a special account in a bank, trust company or other entity in the State which is eligible under the laws of the State to be a depository for public funds, to be known as the "Utilities System Project Account," which shall be used only for payment of the Cost of the Project. Moneys in the Project Account, until applied in payment of any item of the Cost of a Project in the manner hereinafter provided, shall be subject to a lien and charge in favor of the Holders of the Bonds and for the further security of such Holders. 34 There shall be paid into the Project Account the amounts required to be so paid by the provisions of this Resolution, and there may be paid into the Project Account, at the option of the Issuer, any moneys received for or in connection with a Project by the Issuer from any other source. The Issuer shall, establish within the Project Account a separate subaccount for each Project, the Cost of which is to be paid in whole or in part out of the Project Account. Subject to the provisions of Section 5.08 hereof, the proceeds of insurance maintained pursuant to this Resolution against physical loss of or damage to a Project, or of contractors' performance bonds with respect thereto pertaining to the period of construction thereof, shall be deposited or credited to the appropriate subaccount of the Project Account. Any moneys received by the Issuer from the State or from the United States of America or any agencies thereof for the purpose of financing part of the Cost of a Project shall be deposited or credited to the appropriate subaccount of the Project Account and used in the same manner as other Bond proceeds are used therein; provided that separate subaccounts may be established in the Project Account for moneys received pursuant to the provisions of this paragraph whenever required by Federal or State law. The Issuer covenants that the acquisition, construction and installation of each Project will be completed without delay and in accordance with sound engineering practices. The Issuer shall make disbursements or payments from the Project Account to pay the Cost of a Project upon the filing with the Clerk of certificates and/or documents signed by an Authorized Issuer Officer or by the Consulting Engineers, as appropriate, stating with respect to each disbursement or payment to be made: (A) the item number of the payment, (B) the name and address of the Person to whom payment is due, (C) the amount to be paid, (D) the Project Account subaccount from which payment is to be made, (E) the purpose, by general classification, for which payment is to be made, and (F) that (i) each obligation, item of cost or expense mentioned therein has been properly incurred, is in payment of a part of the Cost of a Project and is a proper charge against the subaccount of the Project Account from which payment is to be made and has not been the basis of any previous disbursement or payment, or (ii) each obligation, item of cost or expense mentioned therein has been paid by the Issuer, is a reimbursement of a part of the Cost of a Project, is a proper charge against the subaccount of the Project Account from which payment is to be made, has not been theretofore reimbursed to the Issuer or otherwise been the basis of any previous disbursement or payment and the Issuer is entitled to reimbursement thereof. The Clerk shall retain all such certificates and/or documents of an Authorized Issuer Officer and the Consulting Engineers for three (3) years from the dates of such certificates and/or documents. The Clerk shall make available the certificates and/or documents at 35 all reasonable times for inspection by any Holder of any of the Bonds or the agent or representative of any Holder of any of the Bonds. Notwithstanding the foregoing, a certification of the Consulting Engineers shall not be required to make disbursements or payments from the Project Account to pay (1) costs related to issuance of the Bonds to the extent funds are deposited in the Project Account for such purpose, (2) costs not directly associated with the physical acquisition of the System and (3) any portions of the Cost of a Project which do not, in the aggregate, exceed 1 percent of the amount initially deposited or credited to the Project Account in respect of such Project after deducting any amounts described in clause (1) above. Notwithstanding any of the other provisions of this Section 4.03, to the extent that other moneys are not available therefor, amounts in the Project Account shall be applied to the payment of principal and interest on Bonds when due. The date of completion of the Project or any Additional Project shall be determined by the Consulting Engineers which shall certify such fact in writing to the Governing Body. Promptly after the date of the completion of a Project, and after paying or making provision for the payment of all unpaid items of the Cost of such Project, the Issuer shall deposit or credit in the following order of priority any balance of moneys remaining in the Project Account in (1) another subaccount of the Project Account for which the Consulting Engineers have stated that there are insufficient moneys present to pay the Cost of the related Project, (2) the applicable Reserve Subaccount, to the extent of a deficiency therein, and (3) such other account or subaccount established hereunder as shall be determined by the Governing Body, provided the Issuer has received an opinion of Bond Counsel to the effect that such transfer shall not adversely affect the exclusion, if any, of interest on the Bonds from gross income of the Holder for federal income tax purposes. SECTION 4.04. CREATION OF ACCOUNTS. The Issuer covenants and agrees to establish the "Utilities System Enterprise Fund" with a bank, trust company or such other entity in the State, which is eligible under the laws of the State to be a depository for public funds which shall include the following accounts and subaccounts: (A) The "Utilities System Revenue Account." (B) The "Utilities System Operation and Maintenance Account." (C) The "Utilities System Debt Service Account." The Issuer shall maintain three (3) separate subaccounts in the Utilities System Debt Service Account: the "payment Subaccount," the "Term Bonds Redemption Subaccount" and the "Reserve Subaccount." (D) The "Utilities System Renewal and Replacement Account." W (E) The "Utilities System Rebate Account." (F) The "Utilities System Surplus Reserve Account." (G) The "Sewer Impact Fees Account." (H) The "Water Impact Fees Account." (I) The "Utilities System Special Assessments Account." (J) The "Utilities System Rate Stabilization Account." (K) The "Half -Cent Sales Tax Revenue Account." Moneys in the aforementioned accounts and subaccounts (except for moneys in the Rebate Account), until applied in accordance with the provisions hereof, shall be subject to a lien and charge in favor of the Holders of the Bonds and for the further security of such Holders. The Issuer may, at any time and from time to time, appoint one or more depositaries to hold, for the benefit of the Bondholders, any one or more of the accounts and subaccounts established hereby. Such depositary or depositaries shall perform, at the direction of the Issuer, the duties of the Issuer in depositing, transferring and disbursing moneys to and from each of such accounts or subaccounts as herein set forth, and all records of such depositary in performing such duties shall be open at all reasonable times to inspection by the Issuer and its agents and employees. Any such depositary shall be a bank or trust company duly authorized to exercise corporate trust powers and subject to examination by federal or state authority, of good standing, and be qualified under applicable State law. SECTION 4.05. DISPOSITION OF REVENUES. (A) The Issuer shall deposit or credit all Gross Revenues (other than Special Assessment Proceeds), as received, into the Revenue Account. In the event the Issuer receives a Government Grant, the use and withdrawal of moneys from such Government Grant shall be governed by the terms of the Government Grant and applicable law. The Issuer shall deposit into the Special Assessments Account, as received, all Special Assessment Proceeds. Operation and Maintenance Account. Moneys in the Revenue Account shall first be used each month to deposit or credit to the Operation and Maintenance Account such sums as are necessary to pay Operating Expenses for the month, tAking into account other moneys on deposit in such Account or other moneys reasonably expected to be available for such purpose; provided that the Issuer may transfer moneys from the Revenue Account to the Operation and Maintenance Account at any time to pay Operating Expenses to the extent there is a deficiency in the Operation and Maintenance 37 Account for such purpose. Amounts in the Operation and Maintenance Account shall be paid out from time to time by the Issuer for reasonable and necessary Operating Expenses; provided, however, that no such payment shall be made unless the provisions of Section 5.03 hereof, in regard to the current Annual Budget, are complied with. Redemptions from Special Assessments. In the event the Issuer by Supplemental Resolution provides for all or a portion of any Special Assessments to be applied to the payment of all or a portion of a particular Series of Bonds, the Issuer may establish separate accounts or subaccounts in the Special Assessments Account for the deposit of such Special Assessments if necessary to provide for the earlier redemption of such Bonds from such Special Assessments. (B) Amounts remaining in the Revenue Account after the aforementioned deposits or credits to the Operation and Maintenance Account and all amounts on deposit in the Special Assessments Account shall be applied by the Issuer on or before the twenty- fifth (25th) day of each month, commencing in the month immediately following the delivery of any of the Bonds to the purchasers thereof, or such later date as hereinafter provided, first from the Special Assessments Account and then from the Revenue Account in the following manner and in the following order of priority: (1) Payment Subaccount. The Issuer shall deposit or credit to the Payment Subaccount the sum which, together with the balance in said Subaccount, shall equal the interest on all Bonds Outstanding (except as to Capital Appreciation Bonds) accrued and unpaid and to accrue to the end of the then current calendar month. The Issuer shall also deposit or credit to the Payment Subaccount the sum which, together with the balance in said Subaccount, shall equal the principal amounts on all Bonds Outstanding due and unpaid and that portion of the principal next due which would have accrued on such Bonds during the then current calendar month if such principal amounts were deemed to accrue monthly (assuming that a year consists of twelve (12) equivalent calendar months having thirty (30) days each) in equal amounts from the next preceding principal payment due date, or, if there be no such preceding principal payment due date from a date one year preceding the due date of such principal amount. Moneys in the Payment Subaccount shall be applied by the Issuer for deposit with the Paying Agent to pay the principal of and interest on the Bonds on or prior to the date the same shall become due. Serial Capital Appreciation Bonds shall be payable from the Payment Subaccount in the Bond Years in which such Serial Capital Appreciation Bonds mature, and monthly payments into the Payment Subaccount on account of such Serial Capital Appreciation Bonds shall commence in the first month of the respective Bond Years in which such Serial Capital Appreciation Bonds mature. The Issuer shall, on a pro -rata basis for each Series, adjust the amount of the deposit or credit to the Payment Subaccount not later than the month immediately preceding any 38 Interest Date and/or principal payment date so as to provide sufficient moneys in the Payment Subaccount to pay the principal of and interest on the Bonds coming due on such Interest Date and/or principal payment date. No further deposit need be made to the Payment Subaccount when the moneys therein are equal to the principal of and interest coming due on the Bonds on the next succeeding Payment Date. (2) Term Bonds Redemption Subaccount. Commencing in the month which is one year prior to the first Amortization Installment, there shall be deposited or credited to the Term Bonds Redemption Subaccount the sum which, together with the balance in such Subaccount, shall equal the Amortization Installments on all Term Bonds Outstanding due and unpaid, and that portion of the Amortization Installments of all Term Bonds Outstanding next due which would have accrued on such Term Bonds during the then current calendar month if such Amortization Installments were deemed to accrue monthly (assuming that a year consists of twelve (12) equivalent calendar months having thirty (30) days each) in equal amounts from the next preceding Amortization Installment due date, or, if there is no such preceding Amortization Installment due date, from a date one year preceding the due date of such Amortization Installment. Moneys in the Term Bonds Redemption Subaccount shall be used to purchase or redeem Term Bonds in the manner herein provided, and for no other purpose. The Issuer shall adjust the amount of the deposit or credit to the Term Bonds Redemption Subaccount in the month immediately preceding any Amortization Installment Date so as to provide sufficient moneys in the Term Bonds Redemption Subaccount to pay the Amortization Installments becoming due on such date. Payments to the Term Bonds Redemption Subaccount shall be on a parity with payments to the Payment Subaccount. Amounts accumulated in the Term Bonds Redemption Subaccount with respect to any Amortization Installment (together with amounts accumulated in the Payment Subaccount with respect to interest, if any, on the Term Bonds for which such Amortization Installment was established) may be applied by the Issuer, on or prior to the sixtieth (60th) day preceding the due date of such Amortization Installment, (a) to the purchase of Term Bonds of the Series and maturity for which such Amortization Installment was established, or (b) to the redemption at the applicable Redemption Prices of such Term Bonds, if then redeemable by their terms. The applicable Redemption Price (or principal amount of maturing Term Bonds) of any Term Bonds so purchased or redeemed shall be deemed to constitute part of the Term Bonds Redemption Subaccount until such Amortization Installment date, for the purposes of calculating the amount of such Subaccount. As spon as practicable after the sixtieth (60th) day preceding the due date of any such Amortization Installment, the Issuer shall proceed to call. for redemption on such due date, by causing notice to be given as provided in Section 3.03 hereof, Term Bonds of the Series and maturity for which such Amortization Installment was established (except in the case of 39 Term Bonds maturing on a Amortization Installment date) in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Amortization Installment. The Issuer shall pay out of the Term Bonds Redemption Subaccount and the Payment Subaccount to the appropriate Paying Agents, on or before the day preceding such redemption date (or maturity date), the amount required for the redemption (or for the payment of such Term Bonds then maturing)., and such amount shall be applied by such Paying Agents to such redemption (or payment). All expenses in connection with the purchase or redemption of Term Bonds may be paid by the Issuer from the Operation and Maintenance Account. (3) Reserve Subaccount. Except as otherwise provided by Section 8.01(H) hereof, the Issuer shall establish within the Reserve Subaccount a separate subaccount for each Series of Bonds issued hereunder. The moneys in each such subaccount shall be applied in the manner provided herein solely for the payment of the principal of, or Redemption Price, if applicable, and interest on the Series of Bonds for which it is designated and shall not be available to pay debt service on any other Series. There shall be deposited to each subaccount of the Reserve Subaccount an amount which would enable the Issuer to restore the funds on deposit in each such subaccount to an amount equal to the Reserve Subaccount Requirement applicable thereto, whether such shortfall was caused by decreased market value or withdrawal. All deficiencies in the Reserve Subaccount must be made up no later than twelve (12) months from the date such deficiency first occurred; provided, deficiencies resulting from a decrease in market value of investments in any subaccount of the Reserve Subaccount must be remedied only if the market value of such investments is less than ninety-five percent (95°s) of the Reserve Subaccount Requirement on the immediately preceding date of valuation provided in Section 4.10 hereof. Payments of such deficiencies shall be made in twelve (12) substantially equal monthly payments, unless paid on an accelerated basis. On or prior to each principal and interest payment date for the Bonds (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date), moneys in each subaccount of the Reserve Subaccount shall be applied by the Issuer to the payment of the principal of, or Redemption Price, if applicable, and interest on related Series of Bonds to the extent moneys in the Payment Subaccount and the Term Bonds Redemption Subaccount shall be insufficient for such purpose, but only to the extent the moneys transferred from the Surplus Reserve Account for such purposes pursuant to Section 4.05(B)(8) hereof, moneys transferred from the Rate Stabilization Account for such purpose pursuant to Section 4.09 hereof, moneys transferred frotm.the Water Impact Fees Account and the Sewer Impact Fees Account pursuant to Sections 4.07 and 4.08 hereof and moneys transferred from the Half -Cent Sales Tax Revenue Account pursuant to Section 4.10 hereof shall be inadequate to fully provide for such insufficiency. Whenever there shall be surplus moneys in any subaccount of the Reserve Subaccount by 40 reason of a decrease in the Reserve Subaccount Requirement, increase in the market value of the instruments in any subaccount of the Reserve Subaccount or as a result of a deposit in such subaccount of a Reserve Subaccount Credit Instrument, such surplus moneys shall be deposited or credited by the Issuer first, on a pro rata basis into other subaccounts, if any, containing less than the Reserve Subaccount Requirement applicable thereto, and second, into the Revenue Account._ The Issuer shall inform each Insurer of any draw upon the Reserve Subaccount for purposes of paying the principal of and interest on the Bonds. Upon the issuance of any Series of Bonds under the terms, limitations and conditions as herein provided, the Issuer shall, on the date of delivery of such Series of Bonds, fund the corresponding subaccount of the Reserve Subaccount established for such Series in an amount at least equal to the Reserve Subaccount Requirement applicable to such Series of Bonds. Such required amount may be paid in full or in part from the proceeds of such Series of Bonds. The requirement that the Reserve Subaccount be fully funded upon the issuance of Additional Bonds may be waived at the discretion of each Insurer. Notwithstanding the foregoing provisions, in lieu of the required deposits into the Reserve Subaccount or moneys on deposit in the Reserve Subaccount, the Issuer may cause to be deposited into the Reserve Subaccount a Reserve Subaccount Credit Instrument for the benefit of the Bondholders in an amount equal to the difference between the Reserve Subaccount Requirement applicable thereto and the sums then on deposit in the Reserve Subaccount, if any. Such Reserve Subaccount Credit Instrument shall be payable to the Paying Agent (upon the giving of notice as required thereunder) on any principal payment date or Interest Date on which a deficiency exists which cannot be cured by moneys in any other fund or account held pursuant to this Resolution and available for such purpose. A Reserve Subaccount Insurance Policy issued to the Paying Agent, as agent of the Bondholders, by a company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Bonds (a "municipal bond insurer") may be deposited in the Reserve Subaccount to meet the Reserve Subaccount Requirement if the claims -paying ability of the issuer thereof shall be rated at least "AAA" by Standard & Poor' s or at least "Aaa° by Moody' s. A Reserve Subaccount Insurance Policy issued to the Paying Agent, as agent of the Bondholders, by an entity other than a municipal bond insurer, may be deposited in the Reserve Subaccount to meet the Reserve Subaccount Requirement if the form and substance of such Reserve Subaccount Insurance Policy and the issuer thereof shall be approved by each Insurer. Whenever moneys in a subaccount of the Reserve Subaccount, together with the other available amounts in the Debt Service Account, are sufficient to fully pay the corresponding Series of Bonds in accordance with their terms (including principal and 41 interest thereon), the funds in such subaccount of the Reserve Subaccount may be applied to the payment of such Series of Bonds. A Reserve Subaccount Letter of Credit issued to the Paying Agent, as agent of the Bondholders, by a bank may be deposited in the Reserve Subaccount to meet the Reserve Subaccount Requirement if the issuer thereof is rated at least "AA" by Standard & Poor's. The Reserve Subaccount Letter of Credit shall be payable in one or more draws upon presentation by the beneficiary of a sight draft accompanied by its certificate that it then holds insufficient funds to make a required payment of principal or interest on the Bonds. The draws shall be payable within two (2) days of presentation of the sight draft. The Reserve Subaccount Letter of Credit shall be for a term of not less than three (3) years and shall be subject to an "evergreening" feature so as to provide the Issuer with at least thirty (30) months notice of termination. The issuer of the Reserve Subaccount Letter of Credit shall be required to notify the Issuer and the Paying Agent, not later than thirty (30) months prior to the stated expiration date of the Reserve Subaccount Letter of Credit, as to whether such expiration date shall be extended, and if so, shall indicate the new expiration date. If such notice indicates that the expiration date shall not be extended, the Issuer shall deposit in the Reserve Subaccount an amount sufficient to cause the cash or Authorized Investments on deposit in the Reserve Subaccount, together with any other Reserve Subaccount Credit Instruments, to equal the Reserve Subaccount Requirement on all Outstanding Bonds, such deposit to be paid in equal installments on at least a semiannual basis over the remaining term of the Reserve Subaccount Letter of Credit, unless the Reserve Subaccount Letter of Credit is replaced by a Reserve Subaccount Credit Instrument meeting the requirements of this Section 4.05(B)(3). The Reserve Subaccount Letter of Credit shall permit a draw in full not less than two (2) weeks prior to the expiration or termination of such Reserve Subaccount Letter of Credit if the Reserve Subaccount Letter of Credit has not been replaced or renewed. The Paying Agent shall draw upon the Reserve Subaccount Letter of Credit prior to its expiration or termination unless an acceptable replacement is in place or the Reserve Subaccount is fully funded in its required amount. The use of any Reserve Subaccount Credit Instrument pursuant to this Section 4.05(B)(3) shall be subject to receipt of an opinion of counsel acceptable to each Insurer in form and substance satisfactory to each Insurer as to the due authorization, execution, delivery and enforceability of such instrument in accordance with its terms, subject to applicable laws affecting creditors' rights generally, and, in the event the issuer of such Reserve Subaccount Credit Instrument is not a domestic entity, an opinion of foreign counsel in form and substance satisfactory to each Insurer. In addition, the use of a Reserve Subaccount Letter of Credit shall be subject -to receipt of an opinion of counsel acceptable to each Insurer in form and substance satisfactory to each Insurer to the effect that payments under such Reserve 42 Subaccount Letter of Credit would not constitute avoidable preferences under Section 547 of the United States Bankruptcy Code or similar state laws with avoidable preference provisions in the event of the filing of a petition for relief under the United States Bankruptcy Code or similar state laws by or against the issuer of the Bonds (or any other account party under the Reserve Subaccount Letter of Credit). The obligation to reimburse the issuer of a Reserve Subaccount Credit Instrument for any fees or expenses or claims or draws upon such Reserve Subaccount Credit Instrument shall be subordinate to the payment of debt service on the Bonds. The right of the issuer of a Reserve Subaccount Credit Instrument to payment or reimbursement of its fees and expenses shall be subordinated to cash replenishment of the Reserve Subaccount, and, subject to the further provisions of this paragraph, its right to reimbursement for claims or draws shall be on a parity with the cash replenishment of the Reserve Subaccount. Each Reserve Subaccount Credit Instrument shall provide for a revolving feature under which the amount available thereunder will be reinstated to the extent of any reimbursement of draws or claims paid. If the revolving feature is suspended or terminated for any reason, the right of the issuer of the Reserve Subaccount Credit Instrument to reimbursement will be further subordinated to cash replenishment of the Reserve Subaccount to an amount equal to the difference between the full original amount available under the Reserve Subaccount Credit Instrument and the amount then available for further draws or claims. In the event (a) the issuer of a Reserve Subaccount Credit Instrument becomes insolvent, or (b) the issuer of a Reserve Subaccount Credit Instrument defaults in its payment obligations thereunder, or (c) the claims -paying ability of the issuer of the Reserve Subaccount Insurance Policy falls below "AAA" by Standard & Poor's or "Aaa" by Moody's, or (d) the rating of the issuer of the Reserve Subaccount Letter of Credit falls below "AA" by Standard & Poor's, the obligation to reimburse the issuer of such Reserve Subaccount Credit Instrument shall be subordinate to the cash replenishment of the Reserve Subaccount. In the event (a) the revolving reinstatement feature described in the preceding paragraph is suspended or terminated, or (b) the rating of the claims -paying ability of the issuer of the Reserve Subaccount Insurance Policy falls below "AAA" by Standard & Poor's or "Aaa" by Moody's, or (c) the rating of the issuer of the Reserve Subaccount Letter of Credit falls below "AA" by Standard & Poor's, the Issuer shall either (i) deposit into the Reserve Subaccount an amount sufficient to cause the cash or Authorized Investments on deposit in the Reserve Subaccount to equal the Reserve Subaccount Requirement on all Outstanding Bondq, such amount to be paid over the ensuing five (5) years in equal installments deposited at least semiannually or (ii) replace such Reserve Subaccount Credit Instrument with a Reserve Subaccount Credit Instrument meeting the requirements provided herein within six (6) months of such occurrence. In the event (a) the rating of the claims -paying 43 ability of the issuer of the Reserve Subaccount Insurance Policy falls below "A", or (b) the rating of the issuer of the Reserve Subaccount Letter of Credit falls below "A", or (c) the issuer of the Reserve Subaccount Credit Instrument defaults in its payment obligations hereunder, or (d) the issuer of the Reserve Subaccount Credit Instrument becomes insolvent, the Issuer shall either (i) deposit into the Reserve Subaccount an amount sufficient to cause the cash or Authorized Investments on deposit in the Reserve Subaccount to equal the Reserve Subaccount Requirement on all Outstanding Bonds, such amount to be paid over the ensuing year in equal installments on at least a monthly basis, or (ii) replace such instrument with a Reserve Subaccount Credit Instrument meeting the requirements provided herein within six (6) months of such occurrence. The amount available for draws or claims under the Reserve Subaccount Credit Instrument may be reduced by the amount of cash or Authorized Investments deposited in the Reserve Subaccount. Cash on deposit in a subaccount of the Reserve Subaccount shall be used (or investments purchased with such cash shall be liquidated and the proceeds applied as required) prior to any drawing on any Reserve Subaccount Credit Instrument. If and to the extent that more than one Reserve Subaccount Credit Instrument is deposited in a subaccount of the Reserve Subaccount, drawings thereunder and repayments of costs associated therewith shall be made on a pro rata basis, calculated by reference to the maximum amounts available thereunder. If a disbursement is made from a Reserve Subaccount Credit Instrument provided pursuant to this Section 4.05(B)(3), the Issuer shall reinstate the maximum limits of such Reserve Subaccount Credit Instrument immediately following such disbursement from Net Revenues received in accordance with the provisions of this Section 4.05 (B) (3) . If three (3) days prior to an interest payment or redemption date, the Issuer shall determine that a deficiency exists in the amount of moneys available to pay in accordance with the terms hereof interest and/or principal due on the Bonds on such date, the Issuer shall immediately notify (a) the issuer of the applicable Reserve Subaccount Credit Instrument and (b) the Insurer, if any, of the amount of such deficiency and the date on which such payment is due, and shall take all action to cause such issuer or Insurer to provide moneys sufficient to pay all amounts due on such interest payment date. The Issuer may evidence its obligation to reimburse the issuer of any Reserve Subaccount Credit ,.Instrument by executing and delivering to such issuer a promissory note therefor, provided, however, any such note (a) shall not be a general obligation of the Issuer the payment of which is secured by the full faith and credit or taxing power of the Issuer, and (b) shall be payable solely from the Pledged Funds in the manner provided herein. 44 Any consent or approval of any Insurer described in this Section 4.05(B) (3) shall be required only so long as there are Outstanding Bonds secured by a Bond Insurance Policy issued by such Insurer which is in full force and effect and the commitments of which have been honored by such Insurer. The term "Paying Agent" as used in this Section 4.05(B)(3) may include one or more Paying Agents for the Outstanding Bonds. (4) Payments to Issuer of Reserve Subaccount Credit Instrument. The Issuer shall next make any payments required to be made to the issuer of any Reserve Subaccount Credit Instrument. Payments pursuant to this subsection (4), other than payments which are not incurred as a result of a draw against the Reserve Subaccount Credit Instrument, shall be on a parity with all payments made to the Reserve Subaccount pursuant to subsection (3) above. (5) Renewal and Replacement Account. There shall be deposited or credited to the Renewal and Replacement Account an amount equal to one -twelfth (1/12th) of the Renewal and Replacement Requirement until the amount accumulated in such Account is equal to the Renewal and Replacement Account Requirement, taking into account the market value of investments in such account; provided, however, that (a) such Renewal and Replacement Account Requirement may be increased or decreased as the Consulting Engineers shall certify to the Issuer is necessary for the purposes of the Renewal and Replacement Account, and (b) in the event that the Consulting Engineers shall certify that the Renewal and Replacement Account Requirement is excessive for the purposes of the Renewal and Replacement Account such excess amount as may be on deposit therein may be transferred by the Issuer from the Renewal and Replacement Account for deposit into the Revenue Account. The moneys in the Renewal and Replacement Account shall be applied by the Issuer for the purpose of paying the cost of major extensions, improvements or additions to, or the replacement or renewal of capital assets of, the System, or extraordinary repairs of the System; provided, however, that on or prior to each principal and interest payment date for the Bonds (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date), moneys in the Renewal and Replacement Account shall be applied for the payment into the Payment Subaccount and the Term Bonds Redemption Subaccount when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account pursuant to Section 4.05(B)(8) hereof, moneys transferred from the Half -Cent Sales Tax Revenue Account pursuant to Section 4.10 hereof, moneys available in the Reserve Subaccount for such purpose pursuant to Section 4.05(B)(3) hereof, moneys, transferred from the Rate Stabilization Account pursuant to Section 4.09 hereof and moneys transferred from the Water impact Fees Account and Sewer Impact Fees Account pursuant to Sections 4.07 and 4.08 hereof shall be inadequate to fully provide for such insufficiency. Moneys in the Renewal and Replacement Account may also be transferred to the 45 Operation and Maintenance Account to fund Operating Expenses to the extent Gross Revenues shall be insufficient for such purpose; provided, however, such transfer shall be treated as an interfund loan and shall be repaid from Gross Revenues as described in this Section 4.05(B)(5) within one year from the date of such transfer. (6) Subordinated Indebtedness. Gross Revenues shall next be applied by the Issuer for the payment of any accrued debt service on Subordinated Indebtedness incurred by the Issuer in connection with the System and in accordance with the proceedings authorizing such Subordinated Indebtedness. (7) Administrative Expenses. Gross Revenues shall next be applied by the Issuer for the payment of Administrative Expenses. (8) Surplus Reserve Account. The balance of any Gross Revenues remaining in said Revenue Account after the foregoing shall be deposited or credited to the Surplus Reserve Account. Moneys in the Surplus Reserve Account shall be applied monthly by the Issuer, to the extent necessary, in the following order of priority, (i) to pay Operating Expenses whenever the moneys in the Operation and Maintenance Account shall be insufficient for such purpose, (ii) to pay debt service on the Bonds in the event amounts in the Debt Service Account are insufficient for such purpose, and (iii) to cure any deficiency in the Reserve Subaccount. Moneys not required to meet such deficiencies shall be deposited to the Water Impact Fees Account, Sewer Impact Fees Account or Half -Cent Sales Tax Revenue Account to make up any withdrawal therefrom pursuant to Sections 4.07(A) and 4.08(A) or 4.10 hereof, respectively. Thereafter, whenever no Event of Default shall have occurred and be continuing under this Resolution, and after setting aside in the Surplus Reserve Account a sum which, together with the moneys in the Operation and Maintenance Account, shall be sufficient to pay Operating Expenses for the succeeding twelve (12) months according to the Annual Budget, the balance of any moneys remaining in the Surplus Reserve Account may be applied by the Issuer to reimburse the Issuer for any ad valorem taxes previously paid to the Issuer from portions of the System prior to public ownership and for any lawful purpose. Notwithstanding the foregoing requirement for the segregation of amounts to pay Operating Expenses, the Issuer shall have the right, at any time, to apply any money in the Surplus Reserve Account for deposit or credit to the Renewal and Replacement Account and the Rebate Account. Additionally, the Issuer shall have the right, but may never be compelled by any Holder, to apply any moneys in the Surplus Reserve Account, at any time, to the payment of all or any part of principal of, Redemption Price or interest, on the Bonds or any Subordinated Indebtedness. (C) Whenever moneys in the Reserve Subaccount, together with the other amounts in the Debt Service Account, are sufficient to fully pay all Outstanding Bonds in accordance with their terms (including principal or applicable Redemption Price and interest thereon), no further deposits or credits to the Debt Service 46 Account need be made. If, on any payment date, the Gross Revenues are insufficient to deposit the required amount in any of the funds or accounts or for any of the purposes provided above, the deficiency shall be made upon on the subsequent payment date. The Issuer, in its discretion, may use moneys in the Payment Subaccount to purchase or redeem Bonds coming due on the next principal payment date; provided such purchase or redemption does not adversely affect the Issuer's ability to pay the principal or interest coming due on such principal payment date on the Bonds not so purchased or redeemed. Prior to the close of business on the sixteenth Business Day (or, if no Reserve Subaccount Credit Instrument is then in place, prior to the close of business on the fifth Business Day) prior to any date established for the payment of principal of or Redemption Price, if applicable, or interest on any Series of Bonds, the Issuer shall certify to the Paying Agent that sufficient moneys are in the Payment Subaccount and Term Bonds Redemption Subaccount to make all payments due on such forthcoming date. The Paying Agent shall be entitled to verify such certification by examination of any books, records or other proceedings deemed necessary by the Paying Agent to effectuate such verification and shall be entitled, at its request, to receive the certificate described in the preceding sentence in writing. At least one (1) business day prior to the date established for payment of any principal of or Redemption Price, if applicable, or interest on the Bonds, the Issuer _shall withdraw from the appropriate account of the Debt Service Account sufficient moneys to pay such principal or Redemption Price, if applicable, or interest and deposit such moneys with the Paying Agent for the Bonds to be paid. (D) In the event the Issuer shall issue a Series of Bonds secured by a Credit Facility, the Issuer may establish separate subaccounts in the Payment Subaccount and the Term Bonds Redemption Subaccount to provide for payment of the principal of and interest on such Series; provided payment from the Pledged Funds of one Series of Bonds shall not have preference over payment of any other Series of Bonds. The Issuer may also deposit or credit moneys to such subaccounts at such other times and in such other amounts from those provided in Section 4.05(B) as shall be necessary to pay the principal of and interest on such Bonds as the same shall become due, all as provided by the Supplemental Resolution authorizing such Bonds. In the case of Bonds secured by a Credit Facility, amounts in the Debt Service Account may be applied as provided in the applicable Supplemental Resolution to reimburse the Credit Bank for amounts drawn under such Credit Facility to pay the principal of, premium, if any, and interest on such Bonds; provided such Credit Facility shall have no priority over Bondholders or the Insurer with respect to amounts in the Debt Service Account. 47 SECTION 4.06. REBATE ACCOUNT. Amounts in the Rebate Account shall be held in trust by the Issuer and used solely to make required rebates to the United States (except to the extent the same may be transferred to the Revenue Account), and the Bondholders shall have no right to have the same applied for debt service on the Bonds. The Issuer agrees to undertake all actions required of it in its arbitrage certificate, dated the date of issuance of the Series 1993 Bonds, as well as any successor certificate relating to other Series of Bonds relating to such Series 1993 Bonds, including, but not limited to: (A) making a determination in accordance with the Code of the amount required to be deposited or credited to the Rebate Account; (B) depositing or crediting the amount determined in clause (A) above into the Rebate Account; (C) paying on the dates and in the manner required by the Code to the United States Treasury from the Rebate Account and any other legally available moneys of the Issuer, such amounts as shall be required by the Code to be rebated to the United States Treasury; and (D) keeping such records of the determinations made pursuant to this Section 4.06 as shall be required by the Code, as well as evidence of the fair market value of any investments purchased with proceeds of the Bonds. The provisions of the above-described arbitrage certificate may be amended from time to time as shall be necessary, in the opinion of Bond Counsel, to comply with the provisions of the Code. SECTION 4.07. WATER IMPACT FEES ACCOUNT. The Issuer shall deposit into the Water Impact Fees Account all Water Impact Fees as received, together with moneys transferred to such account pursuant to Section 4.05(B)(8), and such Water Impact Fees shall be accumulated in the Water Impact Fees Account and applied by the Issuer in the following manner and order of priority: (A) For the payment on or prior to each Interest Payment Date (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date) into the Payment Subaccount and the Term Bonds Redemption Subaccount, when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account, for such purpose pursuant to Section 4.05(B)(8) hereof shall be inadequate to fully provide for such insufficiency; provided moneys shall be transferred to the aforementioned accounts from the Water Impact Fees Account and the Sewer Impact Fees Account on a pro -rata basis in relation to the amount of moneys in each account at the time of transfer. Any moneys transferred to the aforementioned accounts shall be treated as an interfund loan and shall be repaid, together with reasonable 48 interest thereon, from Gross Revenues as described in Section 4.05(B)(8) hereof on or prior to the date such amounts are needed for the purposes described in Sections 4.07(B) and (C) hereof, but in no event later than one year from the date of such transfer, unless the Issuer shall determine that such transfer constitutes an appropriate use of such Water Impact Fees. (B) To pay the cost of acquiring and/or constructing new user water improvements or additions to the System in accordance with the plans and specifications provided by the Consulting Engineers and the requisitions for disbursement of moneys provided by the Issuer. (C) To be used for any other lawful purpose relating to the System. SECTION 4.08. SEWER IMPACT FEES ACCOUNT. The Issuer shall deposit into the Sewer Impact Fees Account all Sewer Impact Fees as received, together with moneys transferred to such account pursuant to Section 4.05(B)(8) hereof, and such Sewer Impact Fees shall be accumulated in the Sewer Impact Fees Account and applied by the Issuer in the following manner and order of priority: (A) For the payments on or prior to each Interest Payment Date (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date) into the Payment Subaccount and the Term Bonds Redemption Subaccount, when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account for such purpose pursuant to Section 4.05(B)(8) hereof shall be inadequate to fully provide for such insufficiency; provided moneys shall be transferred to the aforementioned accounts from the Sewer Impact Fees Account and the Water Impact Fees Account on a pro -rata basis in relation to the amount of moneys in each account at the time of transfer. Any moneys transferred to the aforementioned accounts described above shall be treated as an interfund loan and shall be repaid, together with reasonable interest thereon, from Gross Revenues as described in Section 4.05(B)(8) hereof on or prior to the date such amounts are needed for the purposes described in Sections 4.08(B) and (C) hereof, but in no event later than the date of such transfer, unless the Issuer shall determine that such transfer constitutes an appropriate use of such Sewer Impact Fees. (B) To pay the cost of acquiring and/or constructing new user related sewer improvements or additions to the System in accordance with the plans and specifications provided by the Consulting Engineers and the requisitions for d�isbursement of moneys provided by the Issuer. (C) To be used for any other lawful purpose relating to the System. L] SECTION 4.09. RATE STABILIZATION ACCOUNT. The Issuer may transfer into the Rate Stabilization Account such moneys which are on deposit in the Surplus Reserve Account as it deems appropriate. The Issuer may transfer such amounts of moneys from the Rate Stabilization Account to the Revenue Account as it deems appropriate; provided, however, that on or prior to each principal and interest payment date for the Bonds (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date), moneys in the Rate Stabilization Account shall be applied for the payment into the Payment Subaccount and the Term Bonds Redemption Subaccount when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account for such purposes pursuant to Section 4.05(B)(8) hereof and moneys transferred from the Water Impact Fees Account and Sewer Impact Fees Account pursuant to Sections 4.07 and 4.08 hereof shall be inadequate to fully provide for such insufficiency. SECTION 4.10. HALF -CENT SALES TAX REVENUE ACCOUNT. (A) At all times prior to the release and discharge of the pledge of and lien upon the Half -Cent Sales Tax Revenues in accordance with Section 4.11 hereof, the Issuer shall maintain a special account, to be known as the "Half -Cent Sales Tax Revenue Account." The Issuer shall deposit all Half -Cent Sales Tax Revenues, as received, into the Half -Cent Sales Tax Revenue Account until the amount on deposit therein is equal to the aggregate required deposits to the Payment Subaccount and Term Bonds Redemption Subaccount on the next ensuing twenty-fifth (25th) day of the month. (B) On the twenty -fifty (25th) day of each month, amounts on deposit in the Half -Cent Sales Tax Revenue Account shall be deposited or credited to the Payment Subaccount and Term Bonds Redemption Subaccount, when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account, the Rate Stabilization Account, the Water Impact Fees Account and the Sewer Impact Fees Account for such purpose pursuant to Sections 4.05(B)(8), 4.09, 4.07 and 4.08 hereof shall be inadequate to fully provide for such insufficiency. Any moneys transferred to the aforementioned Accounts described above shall be repaid from Gross Revenues as described in Section 4.05(B)(8) hereof. Any funds on deposit in the Half -Cent Sales Tax Revenue Account not required for deposit or credit to the aforementioned Accounts shall be transferred out of the Half -Cent Sales Tax Revenue Account and may be used for any other lawful purpose of the Issuer. (C) The Issuer hereby represents that there are currently no obligations secured by a lien on the Half -Cent Sales Tax Revenues on a parity with or prior to the lien of the Bonds. The Issuer hereby covenants and agrees that, unless and until the lien on the Half -Cent Sales Tax Revenues is released as provided in Section 4.11 hereof, the Issuer will not cause to be issued any obligations secured by a lien on the Half -Cent Sales Tax Revenues prior to or on a parity with the lien of the Bonds on such Half -Cent Sales Tax Revenues other than Additional Bonds issued in accordance with Article VI hereof or obligations described in Section 6.05 hereof. SECTION 4.11. RELEASE OF HALF -CENT SALES TAX REVENUES. (A) The pledge of and lien upon the Half -Cent Sales Tax Revenues shall be discharged and satisfied upon compliance with the following requirements: (1) An independent certified public account shall certify to the Issuer and each Insurer and Credit Bank that (a) the amount of the Net Revenues, adjusted as provided in Section 6.02(E) hereof, received during each of the three most recently completed Fiscal Years is equal to at least 1.15 times the Maximum Annual Debt Service on the Outstanding Bonds. For the purpose of determining the Net Revenues with respect to such certificate, any adjustment to the Net Revenues pursuant to Section 6.02(E)(2) thru (6) hereof, shall be deemed to be seventy- five percent (750) of the adjustments that would otherwise be allowed under said Section 6.02(E)(2) thru (6). For the purpose of determining the Maximum Annual Debt Service with respect to such certificate, the interest rate on Outstanding Variable Rate Bonds shall be deemed to be the Maximum Rate. (2) Each Insurer should give written approval of such release, which approval shall not be unnecessarily withheld. (3) Such release shall be conditioned upon the Reserve Subaccount being fully funded at the Reserve Subaccount Requirement at the time of release. The Issuer shall adopt a resolution acknowledging receipt of the independent certified public accountant's certificate and discharging the Half -Cent Sales Tax Revenues from the lien of this Resolution. A certified copy of the resolution described in the foregoing Section 4.11(A)(3) shall be provided to any Insurer, Credit Bank or other financial institution that has insured or provided for Bonds of any one or more Series credit or liquidity support to enhance the security or the value of such Bonds. (4) Upon discharge and satisfaction of the lien on and the pledge of the Half -Cent Sales Tax Revenues in accordance with Section 4.11(A), the Bondholders shall have no further rights to such Half -Cent Sales Tax Revenues, which may, thereupon, be used for any lawful purpose by the Issuer. 51 SECTION 4.12. INVESTMENTS. The Project Account, the Revenue Account, the Debt Service Account, the Operation and Maintenance Account, the Water Impact Fees Account, the Sewer Impact Fees Account, the Surplus Reserve Account, the Rate Stabilization Account and the Renewal and Replacement Account shall be continuously secured in the manner by which the deposit of public funds are authorized to be secured by the laws of the State. The moneys in the Project Account, the Half -Cent Sales Tax Revenue Account, the Revenue Account, Operation and Maintenance Account, the Payment Subaccount, the Term Bonds Redemption Subaccount, the Water Impact Fees Account, the Sewer Impact Fees Account, the Renewal and Replacement Account, the Rate Stabilization Account and the Surplus Reserve Account shall be invested and reinvested by the Issuer in Authorized Investments, maturing not later than the dates on which such moneys will be needed for the purposes of such account or subaccount. Moneys in the Reserve Subaccount shall be invested in Authorized Investments, maturing no later than five (5) years from the date of investment. All investments shall be valued at cost except the Reserve Subaccount, which shall be valued by the Issuer at least annually at the market value thereof, exclusive of accrued interest. Any and all income received from the investment of moneys in each separate subaccount of the Project Account, the Half -Cent Sales Tax Revenue Account, the Payment Subaccount, the Term Bonds Redemption Subaccount, the Renewal and Replacement Account (to the extent such income and the other amounts in such account do not exceed the Renewal and Replacement Account Requirement)., the Rate Stabilization Account, the Water Impact Fees Account, the Sewer Impact Fees Account and each subaccount of the Reserve Subaccount (to the extent such income and the other amounts in such subaccount does not exceed the Reserve Subaccount Requirement applicable thereto) shall be retained in such respective account or subaccount. Any and all income received from the investment of moneys in the Special Assessments Account shall be deposited upon receipt thereof in the Payment Subaccount. Any and all income received from the investment of moneys in the Operation and Maintenance Account, the Surplus Reserve Account, the Renewal and Replacement Account (only to the extent such income and the other amounts in such account exceed the Renewal and Replacement Account Requirement) and each subaccount of the Reserve Subaccount (only to the extent such income and the other amounts in such subaccount exceed the Reserve Subaccount Requirement), shall be deposited or credited upon receipt thereof in the Revenue Account. Nothing in this Resolution shall prevent any Authorized Investments acquired as investments of or security for funds held under this Resolution from being issued or held in book -entry form on the books of the Department of the Treasury of the United States. 52 SECTION 4.13. SEPARATE ACCOUNTS. The moneys required to be accounted for in each of the foregoing funds, accounts and subaccounts established herein may be deposited in a single bank account, and funds allocated to the various funds, accounts and subaccounts established herein may be invested in a common investment pool; provided that adequate accounting records are maintained to reflect and control the restricted allocation of the moneys on deposit therein and such investments for the various purposes of such funds, accounts and subaccounts as herein provided. The designation and establishment of the various funds, accounts and subaccounts in and by this Resolution shall not be construed to require the establishment of any completely independent, self -balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues for certain purposes and to establish certain priorities for application of such revenues as herein provided. 53 ARTICLE V COVENANTS SECTION 5.01. GENERAL. The Issuer hereby makes the following covenants, in addition to all other covenants in this Resolution, with each and every successive Holder of any of the Bonds so long as any of said Bonds remain Outstanding. SECTION 5.02. OPERATION AND MAINTENANCE. The Issuer will maintain or cause to be maintained the System and all portions thereof in good condition and will operate or cause to be operated the same in an efficient and economical manner, making or causing to be made such expenditures for equipment and for renewals, repairs and replacements as may be proper for the economical operation and maintenance thereof. The Issuer covenants to comply with all State and Federal laws and regulations applicable to its ownership and operation of the System. SECTION 5.03. ANNUAL BUDGET. The Issuer shall annually prepare and adopt, prior to the beginning of each Fiscal Year, an Annual Budget in accordance with applicable law. No expenditure for the operation and maintenance of the System shall be made in any Fiscal Year in excess of the amount provided therefor in the Annual Budget, (A) without a written finding and recommendation by an Authorized Issuer Officer, which finding and recommendation shall state in detail the purpose of and necessity for such increased expenditures, and (B) until the Governing Body shall have approved such finding and recommendation. If, for any reason, the Issuer shall not have adopted the Annual Budget before the first day of any Fiscal Year, other than the first Fiscal Year, the Annual Budget for the preceding Fiscal Year, shall be deemed to be in effect for such Fiscal Year until the Annual Budget for such Fiscal Year is adopted. The Issuer shall mail copies of such Annual Budgets and amended Annual Budgets to any Credit Bank or Insurer of Bonds who shall file his address with the Clerk and request, in writing, that copies of all such Annual Budgets and resolutions be furnished to him and shall make available all such Annual Budgets and resolutions authorizing increased expenditures for operation and maintenance of the System at all reasonable times to any Holder or Holders of Bonds or to anyone acting for and on behalf of such Holder or Holders. SECTION 5.04 RATES. The Issuer shall fix, establish and maintain such rates and collect such fees, rates, or other charges for the product, services and facilities of its System, and revise the same from time to time, whenever necessary, as will always provide in each Fiscal Year either: 54 (A) Net Revenues which at least equal (1) one hundred fifteen percent (115%) of the Annual Debt Service on all Outstanding Bonds becoming due in such Fiscal Year plus (2) one hundred percent (100%) of (a) any amounts required by the terms hereof to be deposited or credited to the Reserve Subaccount or with any issuer of a Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy as a result of a withdrawal from the Reserve Subaccount; (b) any amount required to be deposited in the Renewal and Replacement Account pursuant to Section 4.05(B)(5) hereof, and (c) any amounts required by the terms of Sections 4.07(A) and 4.08(A) to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account in such Fiscal Year, respectively, or (B) (1) Net Revenues, Water Impact Fees and Sewer Impact Fees in each Fiscal Year adequate to pay at least one hundred twenty-five percent (125%) of the Annual Debt Service becoming due in such Fiscal Year on all Outstanding Bonds plus (2) one hundred percent (100%) of any amounts (a) required by the terms hereof, to be deposited or credited to the Reserve Subaccount or with any issuer of a Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy as a result of a withdrawal from the Reserve Subaccount, (b) any amount required to be deposited in the Renewal and Replacement Account pursuant to Section 4.05(B)(5) hereof, and (c) any amount required by the terms of Sections 4.07(A) and 4.08(A) hereof to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account, respectively, in such Fiscal Year; provided, however, Net Revenues shall, at all times, equal at least one hundred ten percent .(110%) of the Annual Debt Service on all Outstanding Bonds becoming due in such Fiscal Year. Such rates, fees or other charges shall not be so reduced so as to be insufficient to provide adequate Net Revenues, Water Impact Fees and Sewer Impact Fees for the purposes provided therefor by this Resolution. To the extent at the end of any Fiscal Year it is determined that Impact Fees must be included in the calculation to comply with the above -referenced rate covenant, the Issuer will supply each Insurer with an opinion of counsel to the Issuer to the effect that such Impact Fees are lawfully levied, collected and available to pay debt service on the Bonds. The Issuer hereby represents that it has the power to raise such rates and charges without the approval of any regulatory body. For purposes of this Section 5.04, Variable Rate Bonds shall be assumed to bear interest at the higher of the actual rate on the date of calculation and the average rate borne over the twelve (12) months preceding the date of calculation. If, in any Fiscal Year, the Issuer shall fail to comply with the requirements contained in this Section 5.04, it shall immediately cause the Rate Consultant to review its rates, fees, charges, income, Gross Revenues, Operating Expenses and methods of operation, and to, within sixty (60) days of such request by the Issuer, make written recommendations as to the methods by which the Issuer may promptly seek to comply with the requirements set forth 55 in the preceding paragraph. The Issuer shall, within thirty (30) days after receipt of such recommendations, commence to implement such recommendations to the extent required so as to cause it to thereafter comply with said requirements. SECTION 5.05. BOOKS AND RECORDS. The Issuer shall keep books, records and accounts of the revenues and operations of the System, which shall. be kept separate and apart from all other books, records and accounts of the Issuer, and the Holders of any Bonds Outstanding or the duly authorized representatives thereof shall have the right, at all reasonable times, to inspect all books, records and accounts of the Issuer relating thereto. SECTION 5.06. ANNUAL AUDIT. The Issuer shall, immediately after the close of each Fiscal Year, cause the books, records and accounts relating to the System to be properly audited by an independent certified public accountant or firm of independent certified public accountants, and shall require such accountants to complete their report of such Annual Audit in accordance with applicable law. Each Annual Audit shall be in conformity with generally accepted accounting principles. A copy of each Annual Audit shall regularly be furnished to any Insurer and to any Holder of a Bond who shall have furnished his address to the Clerk and requested, in writing, that the same be furnished to him. SECTION 5.07. NO MORTGAGE OR SALE OF THE SYSTEM. Except as permitted by this Section 5.07 hereof, the Issuer irrevocably covenants, binds and obligates itself not to sell, lease, encumber or in any manner dispose of the System as a whole or any substantial part thereof until all of the Bonds and all interest thereon shall have been paid in full or provision for payment has been made in accordance with Section 9.01 hereof. The foregoing provision notwithstanding, the Issuer shall have and hereby reserves the right to sell, lease or otherwise dispose of any of the property comprising a part of the System in the following manner, if any one of the following conditions exist: (A) such property is not necessary for the operation of the System, (B) such property is not useful in the operation of the System, (C) such property is not profitable in the operation of the System, or (D) in the case of a lease of such property, such lease will be advantageous to the System and will not adversely affect the security for the Bondholders. Prior to any such sale, lease or other disposition of said property: (1) if the amount to be received therefor is not in excess of one-half of one percent of the value of the fixed assets of the System at original cost, an Authorized Issuer Officer shall make a finding, in writing, determining that one or more of the conditions for sale, lease or disposition of property provided for in the second paragraph of this Section 5.07 have been met; or (2) if the amount to be received from such sale, lease or other disposition of said property shall be in excess of one-half of one 56 percent of the value of the gross plant of the System at original cost, (a) an Authorized Issuer Officer, shall first make a finding, in writing, determining that one or more of the conditions for sale, lease or other disposition of property provided for in the second paragraph of this Section 5.07 have been met, (b) the Issuer shall, by resolution, duly adopt, approve and concur in the finding of an Authorized Issuer Officer, and (c) the Issuer shall obtain an opinion of Bond Counsel to the effect that such sale, lease or other disposition is not in violation of the Act and will not adversely affect the Federal tax exempt status of interest on the Bonds (other than Taxable Bonds). The proceeds from such sale or other disposition shall be deposited or credited, first, to the Renewal and Replacement Account to the extent necessary to make the amount therein equal to the Renewal and Replacement Account Requirement, and, second, to the Surplus Reserve Account. Proceeds of any such lease shall constitute Gross Revenues and shall be deposited in the Revenue Account. Notwithstanding the foregoing provisions of this Section 5.07, the Issuer shall have the authority to sell for fair and reasonable consideration or to transfer without charge from the System to another department of the Issuer, any land comprising a part of the System which, based upon the certification of an Authorized Issuer Officer, is no longer necessary or useful in the operation of the System and the proceeds derived from the sale of such land shall be disposed of in accordance with the provisions of the fourth paragraph of this Section 5.07. The Issuer may make contracts or grant licenses for the operation of, or grant easements or other rights with respect to, any part of the System, if such contract, license, easement or right does not, in the opinion of the Consulting Engineers, as evidenced by a certificate to that effect filed with the Issuer, impede or restrict the operation by the Issuer of the System, but any payments to the Issuer under or in connection with any such contract, license, easement or right in respect of the System or any part thereof shall constitute Gross Revenues. SECTION 5.08. INSURANCE. The Issuer will carry such insurance as is ordinarily carried by private or public corporations owning and operating water and sewer utilities systems similar to the System with a reputable insurance carrier or carriers, including public liability insurance in such amounts as the Issuer shall determine to be sufficient and such other insurance against loss or damage by fire, explosion (including underground explosion), hurricane, ,.tornado or other hazards and risks, and said property loss or damage insurance shall at all times be in an amount or amounts equal to the fair appraisal value of the buildings, properties, furniture, fixtures and equipment of the System, or such other amount or amounts as the Consulting Engineers shall approve as sufficient. 57 The Issuer may establish certain minimum levels of insurance for which the Issuer may self -insure. Such minimum levels of insurance shall be in amounts as recommended, in writing, by an insurance consultant who has a favorable reputation and experience and is qualified to survey risks and to recommend insurance coverage for Persons engaged in operations similar to the System. The Issuer shall, immediately upon receipt, deposit the proceeds from property loss and casualty insurance to the credit of the Revenue Account. The proceeds from property loss and casualty insurance shall be applied as follows: (A) If such proceeds, together with other available funds of the Issuer, are sufficient to repair or replace the damaged portion of the System, such proceeds and other available funds shall be deposited to the credit of the Renewal and Replacement Account and, together with any other available funds of the Issuer, applied to such repair or replacement; or (B) if such proceeds, together with other available funds of the Issuer, are not sufficient to repair or replace the damaged portion of the System or if the Issuer makes a determination in accordance with Section 5.07 hereof that such portion of the System is no longer necessary or useful in the operation of the System, such proceeds shall (1) if such proceeds equal or exceed $50,000, (a) be applied to the redemption or purchase of Bonds or (b) be deposited in irrevocable trust for the payment of Bonds in the manner set forth in Section 9.01, provided the Issuer has received an opinion of Bond Counsel to the effect that such deposit shall not adversely affect the exclusion, if any, from gross income of interest on the Bonds for purposes of Federal income taxation, or (2) if such proceeds are less than $50,000, be deposited in the Revenue Account. SECTION 5.09. NO FREE SERVICE. The Issuer will not render, or cause to be rendered, any free services of any nature by its System or any part thereof, nor will any preferential rates be established for users of the same class. SECTION 5.10. NO IMPAIRMENT OF RIGHTS. The Issuer will not enter into any contract or contracts, nor take any action, the results of which might impair the rights of the Holders of the Bonds, and will not permit the operation of any competing water and sewer facilities in the Issuer; provided, however, that the Issuer reserves the right to permit the ownership and operation of water or sewer service facilities or both by itself or by others in any territory which is not in any service area now or hereafter served by the System. SECTION 5.11. COMPULSORY SEWER CONNECTIONS. To the extent practicable, the Issuer shall comply with all requirements of Florida law with respect to compulsory sewer connections. SECTION 5.12. ENFORCEMENT OF CHARGES. The Issuer shall compel the prompt payment of rates, fees and charges imposed for service rendered on every lot or parcel connected with the System, and, to that end, will vigorously enforce all of the provisions of any ordinance or resolution of the Issuer having to do with sewer and water connections and charges, and all of the rights and remedies permitted the Issuer under law, including any requirement for the making of a reasonable deposit by each user, the requirement for disconnection of all premises delinquent in payment for services, and the securing of an injunction against the disposition of sewage or industrial waste into the sewer facilities of the System by any premises delinquent in the payment of such charges. SECTION 5.13. COVENANTS WITH CREDIT BANKS AND INSURERS. The Issuer may make such covenants as it may, in its sole discretion, determine to be appropriate with any Insurer, Credit Bank or other financial institution that shall agree to insure or to provide, for Bonds of any one or more Series, credit or liquidity support that shall enhance the security or the value of such Bonds; provided, that any such covenants shall not adversely affect the Holders of any Outstanding Bonds. Such covenants may be set forth in the applicable Supplemental Resolution and shall be binding on the Issuer, the Registrar, the Paying Agent and all the Holders of Bonds, the same as if such covenants were set forth in full in this Resolution. SECTION 5.14. CONSULTING ENGINEERS. The Issuer shall, from time to time, employ Consulting Engineers or other professionals with expertise in utility systems, whose duties shall be to make any certificates and perform any other acts required or permitted of the Consulting Engineers or other professionals, under this Resolution, and also to review the construction and operation of the System, to make an inspection of the System at least once every two years, and to submit to the Issuer a report with recommendations as to the proper maintenance, repair and operation of the System during the ensuing Fiscal Year, including recommendations for expansion and additions to the System to meet anticipated service demands, and an estimate of the amount of money necessary for such purposes. Copies of such reports, recommendations and estimates made as hereinabove provided shall be filed with the Issuer and made available for inspection by Bondholders, if such inspection is requested. SECTION 5.15. UNIT WATER AND SEWER BILLS. In every instance in which a building or structure on a lot is connected to the sewer facilities of the System, which building or structure is also connected to the water facilities of the System and receives water therefrom, the Issuer shall submit to the owner or occupant of such lot a single bill for both water and sewer service and shall refuse to accept payment for either the water charge alone or sewer charge alone without payment of the other. SECTION 5.16. COLLECTION OF IMPACT FEES. The Issuer shall proceed diligently to perform legally and effectively all steps required in the imposition and collection of the Impact Fees. Upon 59 the due date of any such Impact Fees, the Issuer shall diligently proceed to collect the same and shall exercise all legally available remedies to enforce such collections now or hereafter available under State law. SECTION 5.17. COLLECTION OF HALF -CENT SALES TAX REVENUES. The Issuer shall take all action necessary to continue to receive the Half -Cent Sales Tax Revenues for so long as any Bonds remain outstanding and the Half -Cent Sales Tax Revenues have not been released pursuant to the provisions hereof. SECTION 5.18. FEDERAL INCOME TAXATION COVENANTS; TAXABLE BONDS. (A) The Issuer covenants with the Holders of each Series of Bonds (other than Taxable Bonds) that it shall not use the proceeds of such Series of Bonds in any manner which would cause the interest on such Series of Bonds to be or become includable in gross income for purposes of Federal income taxation. (B) The Issuer covenants with the Holders of each Series of Bonds (other than Taxable Bonds) that neither the Issuer nor any Person under its control or direction will make any use of the proceeds of such Series of Bonds (or amounts deemed to be proceeds under the Code) in any manner which would cause such Series of Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and neither the Issuer nor any other Person shall do any act or fail -to do any act which would cause the interest on such Series of Bonds to become includable in gross income for purposes of Federal income taxation. (C) The Issuer hereby covenants with the Holders of each Series of Bonds (other than Taxable Bonds) that it will comply with all provisions of the Code necessary to maintain the exclusion from gross income of interest on the Bonds for purposes of Federal income taxation, including, in particular, the payment of any amount required to be rebated to the U.S. Treasury pursuant to the Code. (D) The Issuer may, if it so elects, issue one or more Series of Taxable Bonds, the interest on which is (or may be) includable in the gross income of the Holder thereof for Federal income taxation purposes, so long as each Bond of such Series states in the body thereof that interest payable thereon is (or may be) subject to Federal income taxation and provided that the issuance thereof will not cause interest on any other Bonds theretofore issued hereunder other than Taxable Bonds to be or become subject to federal income taxation. The covenants set forth in paragraphs (A), (B) and (C) above shall not apply to any Taxable Bonds. M ARTICLE VI SUBORDINATED INDEBTEDNESS AND ADDITIONAL BONDS SECTION 6.01. SUBORDINATED INDEBTEDNESS. The Issuer will not issue any other obligations, except under the conditions and in the manner provided herein, payable from the Pledged Funds or the Gross Revenues or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge having priority to or being on a parity with the lien thereon in favor of the Bonds and the interest thereon. The Issuer may, at any time or from time to time, issue evidences of indebtedness payable in whole or in part out of Pledged Funds and which may be secured by a pledge of Pledged Funds; provided, however, that such pledge shall be, and shall be expressed to be, subordinated in all respects to the pledge of the Pledged Funds created by this Resolution; and provided, further, that the issuance of such Subordinated Indebtedness shall be subject to any provisions contained in financing documents securing Outstanding Subordinated Indebtedness to the extent such provisions impact on the ability of the Issuer to issue Subordinated Indebtedness. The Issuer shall have the right to covenant with the holders, from time to time, of any Subordinated Indebtedness to add to the conditions, limitations and restrictions under which any Additional Bonds may be issued under the provisions of Section 6.02 hereof. The Issuer agrees to pay promptly any Subordinated Indebtedness as the same shall become due. Notwithstanding anything contained herein to the contrary, no Subordinated Indebtedness shall be subject to acceleration upon an event of default. SECTION 6.02. ISSUANCE OF ADDITIONAL BONDS. No Additional Bonds, payable on a parity with the Bonds then Outstanding pursuant to this Resolution, shall be issued except upon the conditions and in the manner herein provided. The Issuer may issue one or more Series of Additional Bonds for any one or more of the following purposes: (i) financing the Cost of a Project, or the completion thereof, or (ii) refunding any or all portion of any Outstanding Bonds or of any Subordinated Indebtedness of the Issuer. No such Additional Bonds shall be issued unless the following conditions are complied with: (A) The Issuer shall certify that it is current in all deposits or credits to the various accounts and subaccounts established hereby and all payments theretofore required to have been deposited or credited by it under the provisions of this Resolution and that no Event'of Default shall have occurred and be continuing. 61 (B) An independent certified public accountant or the Rate Consultant shall certify to the Issuer that the amount of the Net Revenues received during the immediately preceding Fiscal Year or any twelve (12) consecutive months selected by the Issuer of the eighteen (18) months immediately preceding the issuance of said Additional Bonds, adjusted as hereinafter provided, were equal to at least (a) one hundred fifteen percent (1150) of the Maximum Annual Debt Service .of the Outstanding Bonds and the Additional Bonds then proposed to be issued plus (b) one hundred percent (100%) of (i) the maximum annual debt service for all Subordinated Indebtedness then outstanding; (ii) any amounts owed to the issuer of a Reserve Subaccount Letter of Credit as a result of a draw against such Reserve Subaccount Letter of Credit; (iii) any amounts required by the terms hereof to be deposited in the Renewal and Replacement Account or the Reserve Subaccount; and (iv) any amounts required by the terms of Sections 4.07(A) and 4.08(A) hereof to be repaid to the Water Impact Fees Account and Sewer Impact Fees Account during such twelve (12) month period. (C) For the purpose of determining the Maximum Annual Debt Service under this Section 6.02, the additional parity Variable Rate Bonds then proposed to be issued and on Variable Rate Bonds then Outstanding shall be deemed to be the rate described for Variable Rate Bonds under the definition of "Reserve Account Requirement." (D) For the purpose of this Section 6.02, the phrase "immediately preceding Fiscal Year or the twelve (12) consecutive months of the eighteen (18) months immediately preceding the issuance of said Additional Bonds" shall be sometimes referred to as "twelve (12) consecutive months." Such twelve (12) consecutive months may occur during a period of time during which the System was not owned by the Issuer. (E) The Net Revenues and Impact Fees calculated pursuant to Section 6.02(B) may be adjusted by an independent certified public accountant upon the written advice of the Consulting Engineers, at the option of the Issuer, as follows: (1) If the Issuer, prior to the issuance of the proposed Additional Bonds, shall have put into effect or budgeted an increase in the rates, fees or other charges for the product, services or facilities of the System, the Net Revenues and Impact Fees for the twelve (12) consecutive months shall be adjusted to show the Net Revenues and Impact Fees which would have been derived from the System in such twelve (12) consecutive months as if such increased rates, fees or other charges for the product, services or facilities of the System had been in effect during all of such twelve (12) consecutive months. (2) If the Issuer shall have acquired or has contracted to acquire any privately or publicly owned existing utilities 62 system, the cost of which shall be paid from all or part of the proceeds of the issuance of the proposed Additional Bonds, then the Net Revenues derived from the System during the twelve (12) consecutive months immediately preceding the issuance of said Additional Bonds shall be increased by adding to the Net Revenues for said twelve (12) consecutive months the Net Revenues which would have been derived from said existing utilities system as if such existing utilities system had been a part of the System during such twelve (12) consecutive months. Such Net Revenues shall, to the extent the Issuer has increased its rates as described in paragraph (1) above, be calculated as if such increased rates were in effect as described in paragraph (1). For the purposes of this paragraph, the Net Revenues derived from said existing utilities system during such twelve (12) consecutive months shall be adjusted to determine such Net Revenues by deducting what would have been the Issuer's costs of operation and maintenance of said existing utilities system (the basis of which shall be certified by the Consulting Engineers) as part of the System from the gross revenues of said system. (3) If the Issuer, in connection with the issuance of Additional Bonds, shall enter into a contract (with a duration not less than the final maturity of such Additional Bonds) with any public or private entity whereby the Issuer agrees to furnish services in connection with any utilities system, then the Net Revenues of the System during the twelve (12) consecutive months immediately preceding the issuance of said Additional Bonds shall be increased by the least amount which said public or private entity shall guarantee to pay in any one year for the furnishing of said services by the Issuer, after deducting therefrom the proportion of operating expenses and repair, renewal and replacement cost attributable in such year to such services. (4) If the Issuer covenants to levy Special Assessments against property to be benefited by the improvements, the cost of which shall be paid from the proceeds of the proposed Additional Bonds, then the Special Assessment Proceeds derived from the System during the twelve (12) consecutive months shall be increased by an amount equal to the average amount which the Rate Consultant estimates will be received in any one year subsequent to completion of such improvements from the levy of said Special Assessments, said amount to be the total received, assuming no prepayments, from the installment payments on the Special Assessments plus the interest paid on the unpaid portion of the Special Assessments. The estimate of the Rate Consultant shall be based upon the preliminary assessment roll filed with the Issuer prior to the construction of such improvements. (5) In the event the Issuer shall be constructing or acquiring additions, extensions or improvements to the System 63 from the proceeds of such Additional Bonds and shall have established fees, rates or charges to be charged and collected from users of such facilities when service is rendered, such Net Revenues and Impact Fees may be adjusted by adding thereto the Net Revenues estimated by the Consulting Engineers to be derived during the first twelve (12) months of operation after completion of the construction or acquisition of said additions, extensions and improvements from the proposed users of the facilities to be financed by Additional Bonds, together with other funds on hand or lawfully obtained for such purpose. (6) The Net Revenues and Impact Fees shall be adjusted for any period the System or any portion thereof was not owned by the Issuer to reflect government ownership of the System or such portion. (7) If any customer of the Issuer shall have commenced service by the System during the twelve (12) consecutive months, the Net Revenues shall be adjusted to take into account the Net Revenues which would have been derived during such twelve (12) consecutive months if such customer had been serviced by the System for such entire twelve (12) consecutive month period. (F) Additional Bonds shall be deemed to have been issued pursuant to this Resolution the same as the Outstanding Bonds, and all of the other covenants and other provisions of -this Resolution (except as to details of such Additional Bonds inconsistent therewith) shall be for the equal benefit, protection and security of the Holders of all Bonds issued pursuant to this Resolution. Except as provided in Sections 4.02 and 4.05 hereof, all Bonds, regardless of the time or times of their issuance, shall rank equally with respect to their lien on the Pledged Funds and their sources and security for payment therefrom without preference of any Bonds over any other. (G) In the event any Additional Bonds are issued for the purpose of refunding any Bonds then Outstanding, the conditions of Section 6.02(B) shall not apply; provided that the issuance of such Additional Bonds shall not result in an increase in the aggregate amount of principal of and interest on the Outstanding Bonds becoming due in the current Fiscal Year and each subsequent Fiscal Year thereafter. The conditions of Section 6.02(B) shall apply to Additional Bonds issued to refund Subordinated Indebtedness and to Additional Bonds issued for refunding purposes which cannot meet the conditions of this paragraph. (H) If, at any time, the Issuer shall enter into an agreement or contract for an ownership interest in any public or privately owned water and/or sewer system or for the reservation of capacity therein whereby the Issuer has agreed, as part of the cost thereof, to pay part of the debt service on the obligations of such public 64 or privately owned water and/or sewer system issued in connection therewith, such payments to be made by the Issuer shall be junior, inferior and subordinate in all respects to the Bonds issued hereunder, unless such obligations (when treated as Additional Bonds) shall meet the conditions of Section 6.02(B), in which case such obligations shall rank on parity as to lien on the Pledged Funds with the Bonds and will thereafter be treated as Additional Bonds for purposes of making any additional determinations of when the conditions of said Section 6.02(B) have been met. (I) For purposes of making a draw against any Reserve Subaccount Letter of Credit, the Issuer's obligation to reinstate the Reserve Subaccount Letter of Credit shall not be subject to the Additional Bonds test set forth in the Resolution. SECTION 6.03. BOND ANTICIPATION NOTES. The Issuer may issue notes in anticipation of the issuance of Bonds which shall have such terms and details and be secured in such manner not inconsistent with this Resolution, as shall be provided by Supplemental Resolution of the Issuer. SECTION 6.04. ACCESSION OF SUBORDINATED INDEBTEDNESS TO PARITY STATUS WITH BONDS. The Issuer may provide for the accession of Subordinated Indebtedness to the status of complete parity with the Bonds if (A) the Issuer shall meet all the requirements imposed upon the issuance of Additional Bonds by Sections 6.02(A) and (B) hereof, assuming for purposes of said requirements, that such Subordinated Indebtedness shall be Additional Bonds, (B) the facilities financed by such Subordinated Indebtedness shall be, or become part of, the System, and (C) if such Bonds are to be secured by the Reserve Subaccount, a subaccount in the Reserve Subaccount is established, upon such accession, which shall contain an amount equal to the Reserve Subaccount Requirement in accordance with Section 4.05(B)(4) hereof. If the aforementioned conditions are satisfied, the Subordinated Indebtedness shall be deemed to have been issued pursuant to this Resolution the same as the Outstanding Bonds, and such Subordinated Indebtedness shall be considered Bonds for all purposes provided in this Resolution. SECTION 6.05. ISSUANCE OF OBLIGATIONS SECURED BY HALF -CENT SALES TAX REVENUES. The Issuer may issue obligations secured by the Half -Cent Sales Tax Revenues on a parity with the pledge hereunder of the Half -Cent Sales Tax Revenues, provided that the Issuer has received a certificate from an independent certified public accountant that for any twelve (12) consecutive months out of the preceding eighteen (18) months the Half -Cent Sales Tax Revenues equal at least one hundred twenty-five percent (125%) of the Maximum Annual Debt Service on,.the Outstanding Bonds and the additional parity debt to be secured by the Half -Cent Sales Tax Revenues and one hundred percent (100%) of all required deposits to the Renewal and Replacement Account and Reserve Subaccount, all amounts required by the terms of Sections 4.07(A) and 4.08(A) hereof to be repaid to the Water Impact Fees Account and Sewer 65 Impact Fees Account during such twelve (12) month period and the maximum annual debt service for all Subordinated Indebtedness then outstanding. 11 ARTICLE VII DEFAULTS AND REMEDIES SECTION 7.01. EVENTS OF DEFAULT. The following events shall each constitute an "Event of Default": (A) Default shall be made in the payment of the principal, of Amortization Installment, redemption premium or interest on any Bond when due; provided, however, that no effect shall be given to payments made under a Bond Insurance Policy. (B) There shall occur the dissolution or liquidation of the Issuer, or the filing by the Issuer of a voluntary petition in bankruptcy, or the commission by the Issuer of any act of bankruptcy, or adjudication of the Issuer as a bankrupt, or assignment by the Issuer for the benefit of its creditors, or appointment of a receiver for the Issuer, or the entry by the Issuer into an agreement of composition with its creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Issuer in any proceeding for its reorganization instituted under the provisions of federal bankruptcy law, or under any similar act in any jurisdiction which may now be in effect or hereafter enacted. (C) The Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Resolution on the part of the Issuer to be performed, and such default shall continue for a period of thirty (30) days after written notice of such default shall have been received from the Holders of not less than twenty-five percent (25°s) of the aggregate principal amount of Bonds Outstanding or the Insurer of such amount of Bonds. Notwithstanding the foregoing, the Issuer shall not be deemed to be in default hereunder if such default can be cured within a reasonable period of time and if the Issuer, in good faith, institutes appropriate curative action and diligently pursues such action until default has been corrected; provided however, that if such default is not cured within sixty (60) days, it shall become an Event of Default. SECTION 7.02. REMEDIES. Any Holder of Bonds issued under the provisions of this Resolution or any trustee or receiver acting for such Bondholders may, either at law or in equity, by suit, action, mandamus or other proceedings in any court of competent jurisdiction, protect and enforce any and all rights under the Laws of the State, or granted and contained in this Resolution, and may enforce and compel the performance of all duties required by this Resolution or by any applicable statutes to be performed by the Issuer or by any officer thereof; provided, however, that no Holder, trustee or receiver shall have the right to declare the Bonds immediately due and payable. The Holder or Holders of Bonds in an aggregate principal amount of not less than twenty-five percent (250) of the Bonds then Outstanding may, by a duly executed certificate in writing, appoint a trustee for Holders of Bonds issued pursuant to this Resolution with authority to .represent such Bondholders, in any legal proceedings for the enforcement and protection of the rights of such Bondholders, and such certificate shall be executed by such Bondholders or their duly authorized attorneys or representatives, and shall be filed in the office of the Clerk. Notice of such appointment, together with evidence of the requisite signatures of the Holders of not less than twenty-five percent (2516) in aggregate principal amount of Bonds Outstanding and the trust instrument under which the trustee shall have agreed to serve, shall be filed with the Issuer and the trustee, and notice of such appointment shall be given to all Holders of Bonds in the same manner as notices of redemption are given hereunder. After the appointment of the first trustee hereunder, no further trustees may be appointed; however, the Holders of a majority in aggregate principal amount of all the Bonds then Outstanding may remove the trustee initially appointed and appoint a successor and subsequent successors at any time. If any remedial action is discontinued or abandoned, the Bondholders and Insurers shall be restored to their respective positions held prior to commencement of such remedial action. SECTION 7.03. DIRECTIONS TO TRUSTEE AS TO REMEDIAL PROCEEDINGS. The Holders of a majority in principal amount of the Bonds then Outstanding (or any Insurer insuring any then Outstanding Bonds) have the right, by an instrument or concurrent instruments in writing executed and delivered to the trustee, to direct the method and place of conducting all remedial proceedings to be taken by the trustee hereunder with respect to the Series of Bonds owned by such Holders or insured by such Insurer; provided that such direction shall not be otherwise than in accordance with law or the provisions hereof, and that the trustee shall have the right to decline to follow any direction which in the opinion of the trustee would be unjustly prejudicial to Holders of Bonds not parties to such direction. SECTION 7.04. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. SECTION 7.05. WAIVER OF DEFAULT. No delay or omission of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a M waiver of any such default, or an acquiescence therein; and every power and remedy given by Section 7.02 to the Bondholders may be exercised from time to time, and as often as may be deemed expedient. SECTION 7.06. APPLICATION OF MONEYS AFTER DEFAULT. If an Event of Default shall happen and shall not have been remedied within the specified cure period, the Issuer or a trustee or receiver appointed for the purpose shall apply all Pledged Funds (except for amounts in the subaccounts of the Reserve Subaccount which shall be applied to the payment of the Series of Bonds for which they were established) as follows and in the following order: (A) To the payment of the reasonable and proper charges, expenses and liabilities of the trustee or receiver and Registrar hereunder; (B) To the payment of the amounts required for operating Expenses, and for the reasonable renewals, repairs and replacements of the System necessary to prevent loss of Gross Revenues, as certified by the Consulting Engineers; (C) To the payment of the interest and principal or Redemption Price, if applicable, then due on the Bonds, as follows: (1) Unless the principal of all the Bonds shall have become due and payable, all such moneys shall be applied: FIRST: to the payment to the Persons entitled thereto of all installments of interest then due, in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or preference; SECOND: to the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due at maturity or upon mandatory redemption prior to maturity (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of Section 9.01 of this Resolution), in the order of their due dates, with interest upon such Bonds from the respective dates upon which they became due, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment first of such interest, ratably according to the amount of such interest due on such date, and then to the payment of such principal, ratably according to the amount of such principal due on such date, to the Persons M entitled thereto without any discrimination or preference; and THIRD: to the payment of the Redemption Price of any Bonds called for optional redemption pursuant to the provisions of this Resolution. (2) If the principal of all the Bonds shall have become due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, with interest thereon as aforesaid, without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or preference. In the event a Reserve Subaccount Insurance Policy or Reserve Subaccount Letter of Credit provider shall fail to honor its commitment in respect of a Series of Bonds, the Pledged Funds shall be allocated on a pro rata basis by and among each Series of Bonds outstanding without regard to the availability of (i) monies in the remaining reserve subaccounts or (ii) Reserve Subaccount Insurance Policies or Reserve Subaccount Letters of Credit issued in respect of the remaining reserve subaccounts. SECTION 7.07. CONTROL BY INSURER. Upon the occurrence and continuance of an Event of Default or any event which with notice or the lapse of time or both would become an Event of Default, an Insurer, if such Insurer shall have honored all of its payment obligations under its Bond Insurance Policy, shall be entitled to direct and control the enforcement of all right and remedies with respect to the Bonds it shall insure, including any waiver of an Event of Default and it shall be considered the sole Holder of such Bonds for purposes of exercising remedies. The Issuer shall provide each Insurer immediate notice of any Event of Default described in Section 7.01(A) hereof and notice of any other Event of Default occurring hereunder within thirty (30) days of the occurrence thereof 70 ARTICLE VIII SUPPLEMENTAL RESOLUTIONS SECTION 8.01. SUPPLEMENTAL RESOLUTION WITHOUT BONDHOLDERS' CONSENT. The Issuer,. from time to time and at any time, may adopt such Supplemental Resolutions without the consent of the Bondholders (which Supplemental Resolution shall thereafter form a part hereof) for any of the following purposes: (A) To cure any ambiguity or formal defect or omission or to correct any inconsistent provisions in this Resolution or to clarify any matters or questions arising hereunder. (B) to grant to or confer upon the Bondholders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Bondholders. (C) To add to the conditions, limitations and restrictions on the issuance of Bonds under the provisions of this Resolution other conditions, limitations and restrictions thereafter to be observed. (D) To add to the covenants and agreements of the Issuer in this Resolution other covenants and agreements thereafter to be observed by the Issuer or to surrender any right or power herein reserved to or conferred upon the Issuer. (E) To specify and determine the matters and things referred to in Sections 2.01, 2.02 or 2.09 hereof, and also any other matters and things relative to such Bonds which are not contrary to or inconsistent with this Resolution as theretofore in effect, or to amend, modify or rescind any such authorization, specification or determination at any time prior to the first delivery of such Bonds. (F) To authorize Additional Projects or to change or modify the description of any Project. (G) To specify and determine matters necessary or desirable for the issuance of Variable Rate Bonds or Capital Appreciation Bonds. (H) To provide for the establishment of a subaccount in the Reserve Subaccount which shall equally and ratably secure more than one Series of Bonds issued hereunder; provided the establishment of such subaccount shall not materially, -adversely affect the security of any Outstanding Bonds. (I) To revise the procedures provided in Section 4.05(B)(3) hereof pursuant to which moneys are drawn on a Reserve Account 71 Credit Instrument and moneys are reimbursed to the provider of such Reserve Account Credit Instrument. (J) With the written prior approval of each Insurer, to make any other change that, in the opinion of the Issuer, would not materially adversely affect the security for the Bonds. In making such determination, the Issuer shall not take into consideration any Bond Insurance Policy. SECTION 8.02. SUPPLEMENTAL RESOLUTION WITH BONDHOLDERS' AND INSURER'S CONSENT. Subject to the terms and provisions contained in this Section 8.02 and Section 8.01 hereof, the Holder or Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in this Resolution to the contrary notwithstanding, to consent to and approve the adoption of such Supplemental Resolution or Resolutions hereto as shall be deemed necessary or desirable by the Issuer for the purpose of supplementing, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Resolution; provided, however, that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any specified Series or maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section 8.02. Any Supplemental Resolution which is adopted in accordance with the provisions of this. Section 8.02 shall also require the prior written consent of each Insurer of Bonds which are Outstanding at the time such Supplemental Resolution shall take effect. No Supplemental Resolution may be approved or adopted which shall permit or require (A) an extension of the maturity of the principal of or the payment of the interest on any Bond issued hereunder, (B) reduction in the principal amount of any Bond or the Redemption Price or the rate of interest thereon, (C) the creation of a lien upon or a pledge of the Pledged Funds, other than the lien and pledge created by this Resolution, which adversely affects any Bondholders, (D) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (E) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Resolution. Nothing contained in this Section 8.02, however, shall be construed as making necessary the approval by Bondholders of the adoption of any Supplemental Resolution as authorized in Section 8.01 hereof. If, at any time, the Issuer shall determine that it is necessary or desirable to adopt any Supplemental Resolution pursuant to this Section 8.02, the Clerk shall cause the Registrar to give notice of the proposed adoption of such Supplemental Resolution and the form of consent to such adoption to be mailed, postage prepaid, to all Bondholders at their addresses as they appear on the registration books. Such notice shall briefly set forth the nature of the proposed Supplemental Resolution and shall 72 state that copies thereof are on file at the offices of the Clerk and the Registrar for inspection by all Bondholders. The Issuer shall not, however, be subject to any liability to any Bondholder by reason of its failure to cause the notice required by this Section 8.02 to be mailed and any such failure shall not affect the validity of such Supplemental Resolution when consented to and approved as provided in this Section 8.02. Whenever the Issuer shall deliver to the Clerk an instrument or instruments in writing purporting to be executed by the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed Supplemental Resolution described in such notice and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the Issuer may adopt such Supplemental Resolution in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto. If the Holders of not less than a majority in aggregate principal amount of the Bonds Outstanding at the time of the adoption of such Supplemental Resolution shall have consented to and approved the adoption thereof as herein provided, no Holder of any Bond shall have any right to object to the adoption of such Supplemental Resolution, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to. enjoin or restrain the Issuer from adopting the same or from taking any action pursuant to the provisions thereof. Upon the adoption of any Supplemental Resolution pursuant to the provisions of this Section 8.02, this Resolution shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the Issuer and all Holders of Bonds then Outstanding shall thereafter be determined, exercised and enforced in all respects under the provisions of this Resolution as so modified and amended. SECTION 8.03. AMENDMENT WITH CONSENT OF INSURER ONLY. If all of the Bonds Outstanding hereunder are insured as to payment of principal and interest by an Insurer or Insurers, the Issuer may enact one or more Supplemental Resolutions amending all or any part of Articles I, IV, V, VI and VII hereof with the written consent of said Insurer or Insurers and the acknowledgment by said Insurer or Insurers that its insurance or guaranty policy will remain in full force and effect; provided, however, that such amendment shall not have any adverse affect on the Holders of any Bonds Outstanding. The consent of the Holders of any Bonds shall not be necessary. The foregoing right of amendment, however, does not apply to any amendment with respect to the exclusion, if applicable, of interest on said Bonds from gross income of the holder for Federal income tax purposes nor may any such amendment deprive the Holders of any 73 Bond of right to payment of the Bonds from, and their lien on, the Pledged Funds. Upon filing with the Clerk of evidence of such consent of the Insurer or Insurers as aforesaid, the Issuer may adopt such Supplemental Resolution. Copies of any Supplemental Resolution proposed to be adopted pursuant to this Section 8.03 shall be provided to Moody's and Standard and Poor's at least fifteen (15) days prior to its adoption. After the adoption by the Issuer of such Supplemental Resolution, notice thereof shall be mailed in the same manner as notice of an amendment under Section 8.02 hereof. SECTION 8.04. TRANSCRIPT OF DOCUMENTS TO INSURERS. The Issuer shall provide each Insurer of Bonds which are Outstanding at the time any Supplemental Resolution is adopted with a complete transcript of all proceedings relating to the execution of any Supplemental Resolution. 74 ARTICLE IX MISCELLANEOUS SECTION 9.01. DEFEASANCE. If (i) the Issuer shall pay or cause to be paid or there shall otherwise be paid to the Holders of all Bonds the principal or Redemption Price, if applicable, and interest due or to become due thereon, at the times and in the manner stipulated therein and in this Resolution, (ii) the Issuer shall pay all amounts owing to any issuer of any Reserve Subaccount Letter of Credit or Reserve Subaccount Insurance Policy and all amounts owing to any Insurer, and (iii) all provisions regarding any amounts to be rebated to the United States government have been complied with, then the pledge of the Pledged Funds, and all covenants, agreements and other obligations of the Issuer to the Bondholders, shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Paying Agents shall pay over or deliver to the Issuer all money or securities held by them pursuant to the Resolution which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption. Any Bonds or interest installments appertaining thereto, whether at or prior to the maturity or redemption date of such Bonds, shall be deemed to have been paid within the meaning of this Section 9.01 if (A) in case any such Bonds are to be redeemed prior to the maturity thereof, there shall have been taken all action necessary to call such Bonds for redemption and notice of such redemption shall have been duly given or provision shall have been made for the giving of such notice, and (B) there shall have been deposited in irrevocable trust with a banking institution or trust company by or on behalf of the Issuer either moneys in an amount which shall be sufficient, or Refunding Securities certified by an independent nationally recognized certified public accountant to be in such amount that the principal of and the interest on which when due will provide moneys which, together with the moneys, if any, deposited with such bank or trust company at the same time, shall be sufficient to pay the principal of or Redemption Price, if applicable, and interest due and to become due on said Bonds on and prior to the redemption date or maturity date thereof, as the case may be. Except as hereafter provided, neither the Refunding Securities nor any moneys so deposited with such bank or trust company nor any moneys received by such bank or trust company on account of principal of or Redemption Price, if applicable, or interest on said Refunding Securities, shall be withdrawn or used for any purpose other than, and all,.such moneys shall be held in trust for and be applied to, the payment, when due, of the principal of or Redemption Price, if applicable, of the Bonds for the payment or redemption of which they were deposited and the interest accruing thereon to the date of maturity or redemption; provided, however, the Issuer may substitute new Refunding 75 Securities and moneys for the deposited Refunding Securities and moneys if the new Refunding Securities and moneys are sufficient, based upon the certification of an independent certified public accountant, to pay the principal of or Redemption Price, if applicable, and interest on the refunded Bonds. For purposes of determining whether Variable Rate Bonds shall be deemed to have been paid prior to the maturity or the redemption date thereof, as the case may be, by the deposit of moneys, or specified Refunding Securities and moneys, if any, in accordance with this Section 9.01, the interest to come due on such Variable Rate Bonds on or prior to the maturity or redemption date thereof, as the case may be, shall be calculated at the Maximum Interest Rate; provided, however, that if on any date, as a result of such Variable Rate Bonds having borne interest at less than the Maximum Interest Rate for any period, the total amount of moneys and specified Refunding Securities on deposit for the payment of interest on such Variable Rate Bonds is in excess of the total amount which would have been required to be deposited on such date in respect of such Variable Rate Bonds is in order to satisfy this Section 9.01, such excess shall be paid to the Issuer free and clear of any trust, lien, pledge or assignment securing the Bonds or otherwise existing under this Resolution. In the event the Bonds for which moneys are to be deposited for the payment thereof in accordance with this Section 9.01 are not by their terms subject to redemption within the next succeeding _sixty (60) days, the Issuer shall cause the Registrar to mail a notice to the Holders of such Bonds that the deposit required by this Section 9.01 of moneys or Refunding Securities has been made and said Bonds are deemed to be paid in accordance with the provisions of this Section 9.01 and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of or Redemption Price, if applicable, and interest on said Bonds. Nothing herein shall be deemed to require the Issuer to call any of the Outstanding Bonds for redemption prior to maturity pursuant to any applicable optional redemption provisions, or to impair the discretion of the Issuer in determining whether to exercise any such option for early redemption. In the event that the principal of or Redemption Price, if applicable, and interest due on the Bonds shall be paid by an Insurer or Insurers, such Bonds shall remain Outstanding, shall not be defeased and shall not be considered paid by the Issuer, and the pledge of the Pledged Funds and all covenants, agreements and other obligations of the Issuer to the Bondholders shall continue to exist and such Insurer or Insurers shall be subrogated to the rights of such Bondholders. SECTION 9.02. CAPITAL APPRECIATION BONDS. For the purposes of (A) receiving payment of the Redemption Price if a Capital 76 Appreciation Bond is redeemed prior to maturity, or (B) receiving payment of a Capital Appreciation Bond if the principal of all Bonds becomes due and payable under the provisions of this Resolution, or (C) computing the amount of Bonds held by the Holder of a Capital Appreciation Bond in giving to the Issuer or any trustee or receiver appointed to represent the Bondholders any notice, consent, request or demand pursuant to this Resolution for any purpose whatsoever, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. SECTION 9.03. SALE OF BONDS. The Bonds shall be issued and sold at public or private sale at one time or in installments, from time to time, and at such price or prices as shall be consistent with the provisions of the Act, the requirements of this Resolution and other applicable provisions of law. The Finance Director of the Issuer is hereby authorized to deem the preliminary official statement of the Issuer in connection with the Series 1993 Bonds "final" within the meaning of Securities and Exchange Commission Rule 15c2-12, except for permitted omissions, as defined therein. SECTION 9.04. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions of this Resolution shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements and provisions of this Resolution and shall in no way affect the validity of any of the other covenants, agreements or provisions hereof or of the Bonds issued hereunder. SECTION 9.05. VALIDATION AUTHORIZED. To the extent deemed necessary by Bond Counsel or desirable by Counsel for the Issuer, the Counsel for the Issuer is authorized to institute appropriate proceedings for validation of the Bonds herein authorized pursuant to Chapter 75, Florida Statutes. SECTION 9.06. EFFECTIVE DATE. This Resolution shall take effect immediately upon its adoption." SECTION 2. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions of this Resolution shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed ,separable from the remaining covenants, agreements and provisions of this Resolution and shall in no way affect the validity of any of the other covenants, agreements or provisions hereof or of the Bonds issued hereunder. 77 SECTION 3. EFFECTIVE DATE. This Restated Resolution shall take effect immediately upon its adoption. The forego ing� Resolution was moved for adoption by Council Member (5/�-r,,4eCe – The motion was seconded by Council Member hnepA.;�j and, upon being put to a vote, the vote was as follows: Mayor Lonnie R. Powell (, c. Vice -Mayor Frank Oberbeck Council Member Carolyn Corum Council Member Norma J. Damp —� Council Member Robert Freeland The Mayor thereupon declared this Resolution duly passed and adopted on this 8th day of December, 1993. ATTEST: Kathryrf M. O'Halloran, CMC/AAE City Clerk (Seal) CITY OF SEBASTIAN, FLORIDA B �= Lonnie R`:`Powe , Mayor Approved as to Form and Content: 78 EXHIBIT A DESCRIPTION OF THE INITIAL PROJECT The acquisition of the water and wastewater utility system owned by General Development Utilities, Inc., as described in the Purchase Agreement, together with the construction and acquisition of certain improvements thereto, consisting of a ground storage tank, water treatment plant improvements, high service pumping improvement, hydraulic improvements, wastewater treatment improvements, sludge stabilization improvements, the initial phase of a regional wastewater treatment plant, wastewater disinfection facilities, wastewater effluent treatment improvements and reclaimed water reuse system improvements, together with other necessary and appurtenant improvements. 2.2 CLERK'S CERTIFICATE REGARDING RESOLUTION I, Kathryn M. O'Halloran, the undersigned City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that attached hereto is a copy of the City of Sebastian Resolution No. R-93-68 entitled "A RESOLUTION RESTATING, AMENDING AND SUPPLEMENTING RESOLUTION NO. R-93-58 OF THE CITY OF SEBASTIAN, FLORIDA; AND PROVIDING AN EFFECTIVE DATE"; PROVIDING CERTAIN TERMS AND DETAILS OF SAID BONDS, INCLUDING AUTHORIZING A NEGOTIATED SALE OF SAID BONDS AND THE EXECUTION AND DELIVERY OF A PURCHASE CONTRACT WITH RESPECT TO THE SERIES 1993 BONDS; APPOINTING THE PAYING AGENT AND REGISTRAR FOR SAID BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT WITH RESPECT TO THE SERIES 1993 BONDS AND RATIFYING THE USE OF A PRELIMINARY OFFICIAL STATEMENT; AUTHORIZING THE EXECUTION AND DELIVERY OF A LETTER OF REPRESENTATIONS WITH RESPECT TO THE SERIES 1993 BONDS; ACCEPTING THE COMMITMENT FOR THE ISSUANCE OF A MUNICIPAL BOND INSURANCE POLICY AND SETTING FORTH CERTAIN PROVISIONS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE," adopted at a meeting of the City Council of the City of Sebastian, Florida, duly called and held on December 8, 1993, at which meeting a quorum was present and acting throughout, which resolution has been compared by me with the original thereof to be recorded in the Minute Book of said City and that said resolution is a true, complete and correct copy thereof, and said resolution has been duly adopted and has not been further modified, amended or repealed and is in full force and effect on and as of the date hereof in the form attached. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 16th day of December, 1993. (SEAL) Kathry M. O'Halloran City Clerk, City of Sebastian, Florida RESOLUTION NO. R-93-68 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA, SUPPLEMENTING A RESOLUTION ENTITLED: "A RESOLUTION RESTATING, AMENDING AND SUPPLEMENTING RESOLUTION NO. R-93-58 OF THE CITY OF SEBASTIAN, FLORIDA; AND PROVIDING AN EFFECTIVE DATE"; PROVIDING CERTAIN TERMS AND DETAILS OF SAID BONDS, INCLUDING AUTHORIZING A NEGOTIATED SALE OF SAID BONDS AND THE EXECUTION AND DELIVERY OF A BOND PURCHASE CONTRACT WITH RESPECT TO THE SERIES 1993 BONDS; APPOINTING THE PAYING AGENT AND REGISTRAR FOR SAID BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT WITH RESPECT TO THE SERIES 1993 BONDS AND RATIFYING THE USE OF A PRELIMINARY OFFICIAL STATEMENT; AUTHORIZING THE EXECUTION AND DELIVERY OF A LETTER OF REPRESENTATIONS WITH RESPECT TO THE SERIES 1993 BONDS; ACCEPTING THE COMMITMENT FOR THE ISSUANCE OF A MUNICIPAL BOND INSURANCE POLICY AND SETTING FORTH CERTAIN PROVISIONS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA: SECTION 1. FINDINGS. It is hereby found and determined that: (A) Immediately prior to consideration of this Supplemental Resolution, the Issuer duly adopted a resolution (the "Authorizing Resolution"), the title of which Authorizing Resolution is quoted in the title of this Supplemental Resolution, for the purposes described therein, authorizing, among other things, the issuance of not exceeding $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"). (B) The principal of and interest on the Series 1993 Bonds and all required sinking fund, reserve and other payments shall be payable solely from the Pledged Funds as provided in the Authorizing Resolution. The Issuer shall never be required to levy ad valorem taxes on any property within its corporate territory to pay the principal of and interest on the Series 1993 Bonds or to make the required sinking fund, reserve or other payments, and such Series 1993 Bonds shall not constitute a lien upon any property owned by or situated within the territorial limits of the Issuer. (C) Due to the present volatility of the market for tax- exempt obligations such as the Series 1993 Bonds and the complexity of the transactions relating to such Series 1993 Bonds, it is in the best interest of the Issuer to sell the Series 1993 Bonds by a negotiated sale, allowing the Issuer to enter the market at the most advantageous time, rather than at a specified advertised date, thereby permitting the Issuer to obtain the best possible price and interest rate for the Series 1993 Bonds. The Issuer acknowledges receipt of the information required by Section 218.385, Florida Statutes, including a "truth -in -bonding statement", in connection with the negotiated sale of the Series 1993 Bonds. A copy of the letter of the underwriter for the Series 1993 Bonds containing the aforementioned information is attached to the hereinafter described Purchase Contract. (D) Raymond James & Associates, Inc. (the "Underwriter") has offered to purchase the Series 1993 Bonds from the Issuer and has submitted a Bond Purchase Contract attached hereto as Exhibit A (the "Purchase Contract") expressing the terms of such offer, and the Issuer does hereby find and determine that it is in the best financial interest of the Issuer that the terms expressed in the Purchase Contract be accepted by the Issuer. (E) The Authorizing Resolution provides that the Bonds, such as the Series 1993 Bonds, shall mature on such dates and in such amounts, shall bear such rates of interest, shall be payable in such places and shall be subject to such redemption provisions as shall_ be determined by Supplemental Resolution adopted by the Issuer; and it is now appropriate that the Issuer determine such terms and details. SECTION 2. DEFINITIONS. When used in this Supplemental Resolution, the terms defined in the Authorizing Resolution shall have the meanings therein stated, except as such definitions shall be hereinafter amended and defined. SECTION 3. AUTHORITY FOR THIS SUPPLEMENTAL RESOLUTION. This Supplemental Resolution is enacted pursuant to the provisions of the Act and other applicable provisions of law. SECTION 4. AUTHORIZATION AND DESCRIPTION OF THE SERIES 1993 BONDS. The Issuer hereby determines to issue a Series of Bonds in the aggregate principal amount of $5,000,000 to be known as "Utilities System Revenue Bonds, Series 1993," for the principal purpose of providing moneys for the acquisition of the Initial Project. Said Series 1993 Bonds shall be dated December 1, 1993, shall be issued in the form of fully registered Bonds in the denomination of $5,000 or any integral multiple thereof, shall be numbered consecutively from one upward in order of maturity preceded by the letter "R", shall bear interest from December 1, 1993, payable semi-annually, -on April 1 and October 1 of each year, commencing on April 1, 1994, at such rates and maturing in such amounts on October 1 of such years as follows: SECTION 5. REDEMPTION PROVISIONS. The Series 1993 Bonds shall be subject to redemption prior to maturity as follows: (A) The Series 1993 Bonds maturing October 1 of the years 1996 through 2003, inclusive, are not subject to redemption prior to maturity. The Series 1993 Bonds maturing October 1, 2004, and thereafter may, at the option of the Issuer, be called for redemption prior to maturity in whole on any date on or after October 1, 2003, or in part, on October 1, 2003, or on the first business day of any month thereafter, in such maturity or maturities as shall be designated by the Issuer and by such method within a maturity as the Registrar shall deem fair and appropriate if less than a full maturity, from any legally available moneys at the following redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued interest to the redemption date: Redemption Date (Both Dates Inclusive) Redemption Price October 1, 2003 through September 30, 2004 1021- October 020October 1, 2004 through September 30, 2005 101 October 1, 2005 and thereafter 100 (B) The Series 1993 Bonds maturing on October 1, 2013, are subject to mandatory redemption by Amortization Installments prior to maturity in part by lot at a redemption price equal to the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium, as follows: Principal Interest Year Amount Rate 1996 $ 50,000.00 3.40%- .40%1997 1997 75,000.00 3.60 1998 100,000.00 3.70 1999 100,000.00 3.90 2000 105,000.00 4.00 2001 110,000.00 4.20 2002 115,000.00 4.30 2003 120,000.00 4.45 2004 125,000.00 4.60 2005 130,000.00 4.75 2006 135,000.00 4.90 2007 145,000.00 5.00 2013 1,035,000.00 5.40 2023 2,655,000.00 5.45 SECTION 5. REDEMPTION PROVISIONS. The Series 1993 Bonds shall be subject to redemption prior to maturity as follows: (A) The Series 1993 Bonds maturing October 1 of the years 1996 through 2003, inclusive, are not subject to redemption prior to maturity. The Series 1993 Bonds maturing October 1, 2004, and thereafter may, at the option of the Issuer, be called for redemption prior to maturity in whole on any date on or after October 1, 2003, or in part, on October 1, 2003, or on the first business day of any month thereafter, in such maturity or maturities as shall be designated by the Issuer and by such method within a maturity as the Registrar shall deem fair and appropriate if less than a full maturity, from any legally available moneys at the following redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued interest to the redemption date: Redemption Date (Both Dates Inclusive) Redemption Price October 1, 2003 through September 30, 2004 1021- October 020October 1, 2004 through September 30, 2005 101 October 1, 2005 and thereafter 100 (B) The Series 1993 Bonds maturing on October 1, 2013, are subject to mandatory redemption by Amortization Installments prior to maturity in part by lot at a redemption price equal to the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium, as follows: October 1 Principal Amount 2008 $150,000 2009 160,000 2010 170,000 2011 175,000 2012 185,000 2013* 195,000 *Maturity (C) The Series 1993 Bonds maturing on October 1, 2023 are subject to mandatory redemption by Amortization Installments prior to maturity in part by lot at a redemption price equal to the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium, as follows: October 1 Principal Amount 2014 $205,000 2015 220,000 2016 230,000 2017 240,000 2018 255,000 2019 270,000 2020 285,000 2021 300,000 2022 315,000 2023* 335,000 *Maturity SECTION 6. SALE OF THE SERIES 1993 BONDS. The Series 1993 Bonds shall be sold to the Underwriter pursuant to the Purchase Contract at the purchase price set forth therein; all the terms and conditions set forth in said Purchase Contract being hereby approved. The Mayor is hereby authorized and directed to execute said Purchase Contract and to deliver the same to the Underwriter. SECTION 7. OFFICIAL STATEMENT. The form, terms and provisions of the Official Statement, dated the date hereof, in the form of the Preliminary Official Statement submitted at this meeting and attached hereto as Exhibit B, relating to the Series 1993 Bonds, be and the same are hereby approved with respect to the information therein contained. The Mayor and City Clerk are hereby authorized and directed to execute and deliver said Official Statement in the name and on behalf of the Issuer, and thereupon to cause such Official Statement to be delivered to the Underwriter with such changes, amendments, modifications, omissions and additions as may be approved by the Mayor. Said Official Statement, including any such changes, amendments, modifications, omissions and additions as approved by the Mayor, and the information contained therein are hereby authorized to be used in connection with the sale of the Series 1993 Bonds to the public. Execution by the Mayor of the Official Statement shall be deemed to be conclusive evidence of approval of such changes. SECTION 8. PRELIMINARY OFFICIAL STATEMENT. The Preliminary Official Statement attached hereto as Exhibit B, is hereby approved as to form, terms and substance, and the use thereof in the offering of the Series 1993 Bonds is hereby ratified. The Preliminary Official Statement is "deemed final," as of its date, within the meaning of paragraph (b)(1) of SEC Rule 15c2-12 and the applicable rules developed by the Municipal Securities Rulemaking Board. The Mayor is hereby authorized to execute a certificate so deeming the Preliminary Official Statement "final." SECTION 9. APPOINTMENT OF PAYING AGENT AND REGISTRAR. Barnett Banks Trust Company, N.A., Jacksonville, Florida, is hereby designated Registrar and Paying Agent for the Series 1993 Bonds. The Mayor and the City Clerk are hereby authorized to approve and execute any agreement which may be necessary to effect the transactions contemplated by this Section 9 and by the Authorizing Resolution. SECTION 10. MUNICIPAL BOND INSURANCE. The Issuer hereby authorizes the payment of the principal of and interest on the Series 1993 Bonds to be insured pursuant to a municipal bond insurance policy (the "Policy") issued by Municipal Bond Investors Assurance Corporation (the "Insurer"). The Mayor and the Clerk are hereby authorized to execute such documents and instruments necessary to cause the Insurer to insure the Series 1993 Bonds. SECTION 11. PROVISIONS REGARDING MUNICIPAL BOND INSURANCE. The following provisions relating to the municipal bond insurance shall apply to the Series 1993 Bonds so long as the Policy is in full force and effect: (A) If on the second business day prior to a payment date the Issuer does not have sufficient moneys to pay the principal of and interest on the Series 1993 Bonds on such date, it shall so inform the Insurer on such day. In the event that on the business day immediately prior to the payment date on the Series 1993 Bonds, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Series 1993 Bonds due on the following business day, the Paying Agent shall immediately notify the Insurer or its designee on the same business day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. 5 (B) If the deficiency is made up in whole or in part prior to or on the payment date, the Paying Agent shall so notify the Insurer or its designee. (C) In addition, if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal or interest on the Series 1993 Bonds to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. (D) The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Bondholders of the Series 1993 Bonds as follows: (1) If and to the extent there is a deficiency in amounts required to pay interest on the Series 1993 Bonds, the Paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the Policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Bondholders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Bondholders (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Bondholders; and (2) If and to the extent of a deficiency in amounts required to pay principal of the Series 1993 Bonds, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Bondholder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Series 1993 Bonds surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Bondholders (and not as Paying Agent) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Bondholders. (E) Payments with respect to claims for interest on and principal of Series 1993 Bonds disbursed by the Paying Agent from 6 proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Series 1993 Bonds, and the Insurer shall become the owner of such unpaid Series 1993 Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (F) Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent agree for the benefit of the Insurer that: (1) They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Series 1993 Bonds, the Insurer will be subrogated to the rights of such Bondholders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in the Authorizing Resolution and the Series 1993 Bonds; and (2) They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in the Authorizing Resolution and the Series 1993 Bonds, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Series 1993 Bonds to Bondholders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. (G) In connection with the issuance of Additional Bonds, the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such Additional Bonds. (H) The Issuer shall provide copies of any amendments made to the Authorizing Resolution which are consented to by the Insurer to Standard & Poor's Corporation. (I) The Issuer shall provide the Insurer with notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. (J) The Issuer shall provide the Insurer with copies of all notices required to be delivered to Bondholders under the Authorizing Resolution and, on an annual basis, copies of the Issuer's audited financial statements and Annual Budget. (K) Any notice required to be given to a Bondholder or to the Paying Agent pursuant to the Authorizing Resolution shall also be provided to the Insurer. All notices required to be given to the 7 Insurer shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Surveillance. SECTION 12. COVENANT REGARDING VARIABLE RATE BONDS. The Issuer does hereby covenant, that until such time as the Half -Cent Sales Tax Revenues have been released pursuant to the provisions of the Authorizing Resolution, it will not, without the prior written consent of the Insurer, issue any Variable Rate Bonds. SECTION 13. DESIGNATION FOR BANK QUALIFICATION. The Issuer does hereby designate the Series 1993 Bonds as a "qualified tax- exempt obligation" within the meaning of Section 265(b) (3) of the Internal Revenue Code of 1986, as amended, and in connection therewith does hereby certify that it, together with all subordinate entities thereof, does not expect to issue in excess of $10,000,000 of tax-exempt obligations in calendar year 1993. SECTION 14. BOOK -ENTRY SYSTEM OF REGISTRATION. The Series 1993 Bonds shall be initially issued in the form of a separate single certificated fully registered Series 1993 Bond for each of the maturities of the Series 1993 Bonds. The Issuer hereby authorizes and directs the Mayor to execute and deliver a letter of representations (the "Letter of Representations") to The Depository Trust Company ("DTC"), in substantially the form attached hereto as Exhibit C, in order to induce DTC to act as securities depository for the Series 1993 Bonds. Upon initial issuance, the ownership of each such Series 1993 Bond shall be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. Except as provided in this Section, all of the Outstanding Series 1993 Bonds shall be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. As long as the Series 1993 Bonds shall be registered in the name of Cede & Co., all payments of interest on the Series 1993 Bonds shall be made by the Paying Agent by check or draft or by wire transfer to Cede & Co., as Holder of the Series 1993 Bonds. With respect to Series 1993 Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the Issuer, the Registrar and the Paying Agent shall have no responsibility or obligation to any participant in the DTC book -entry program (a "Participant") or to any indirect participant. Without limiting the immediately preceding sentence, the Issuer, the Registrar and the Paying Agent shall have no responsibility or obligation with respect to (A) the accuracy of the records of DTC, Cede & Co., or any Participant with respect to any ownership interest in the Series 1993 Bonds, (B) the delivery to any Participant or any other Person other than a Series 1993 Bondholder, as shown in the registration books kept by the W Registrar, of any notice with respect to t including any notice of redemption, or (( Participant or any other Person, other Bondholder, as shown in the registratio Registrar, of any amount with respect to pr premium, if any, or interest on the Series 1. the Registrar and the Paying Agent may t Person in whose name each Bond is register, books kept by the Registrar as the Holder such Series 1993 Bond for the purpose of redemption premium, if any, and interest Series 1993 Bond, for the purpose of giving and other matters with respect to such Ser: purpose of registering transfers with respe Bond, and for all other purposes whatsoev shall pay all principal of, redemption interest on the Series 1993 Bonds only to o3 respective Holders, as shown in the registrz Registrar, or their respective attorney: writing, as provided herein and all such p+ and effective to fully satisfy and di he Series 1993 Bonds, the payment to any than a Series 1993 1 books kept by the incipal of, redemption )93 Bonds. The Issuer, =eat and consider the ;d in the registration and absolute owner of payment of principal, with respect to such notices of redemption .es 1993 Bond, for the ::t to such Series 1993 �r. The Paying Agent Dremium, if any, and upon the order of the tion books kept by the duly authorized in iyments shall be valid scharge the Issuer's obligations with respect to payment of principal, redemption premium, if any, and interest on the Series 1993 Bonds to the extent of the sum or sums so paid. No Person other than a Holder, as shown in the registration books kept by the Registrar, shall receive a certificated Series 1993 Bond evidencing the obligation of the Issuer to make payments of principal, redemption premium, if any, and interest pursuant to the provisions hereof. Upon delivery by DTC to the Issuer of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to transfers during the fifteen (15) days next preceding an Interest Date or mailing of notice of redemption, the words "Cede & Co." in this Resolution shall refer to such new nominee of DTC; and upon receipt of such notice, the Issuer shall promptly deliver a copy of the same to the Registrar and the Paying Agent. Upon (A) receipt by the Issuer of written notice from DTC (i) to the effect that a continuation of the requirement that all of the outstanding Series 1993 Bonds be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, is not in the best interest of the beneficial owners of the Series 1993 Bonds or (ii) to the effect that DTC is unable or unwilling to discharge its responsibilities and no substitute depository willing to undertake the functions of DTC hereunder can be found which is willing and able to undertake such functions upon reasonable and customary terms, or (B) determination by the Issuer that such book -entry only system is burdensome to the Issuer, the Series 1993 Bonds shall no longer be "restricted to being registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or names Holders shall designate, in accordance with the provisions hereof. In such event, the Issuer shall issue and the Registrar shall authenticate, transfer and exchange Series 1993 Bonds of like principal amount and maturity, in denominations of $5,000 or any integral multiple thereof to the Holders thereof. The foregoing notwithstanding, until such time as participation in the book- entry only system is discontinued, the provisions set forth in the Letter of Representations shall apply to the payment of principal of and interest on the Series 1993 Bonds. SECTION 15. GENERAL AUTHORITY. The members of the City Council of the Issuer and the officers, attorneys and other agents or employees of the Issuer are hereby authorized to do all acts and things required of them by this Supplemental Resolution, the Authorizing Resolution, the Official Statement or the Purchase Contract, or desirable or consistent with the requirements hereof or the Authorizing Resolution, the Official Statement or the Purchase Contract for the full punctual and complete performance of all the terms, covenants and agreements contained herein or in the Series 1993 Bonds, the Authorizing Resolution, the Official Statement and the Purchase Contract, including the execution of any documents or instruments relating to insuring payment of the Series 1993 Bonds, and each member, employee, attorney and officer of the Issuer and the City Clerk is hereby authorized and directed to execute and deliver any and all papers and instruments and to be and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated hereunder. SECTION 16. SEVERABILITY AND INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions herein contained shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements or provisions and shall in no way affect the validity of any of the other provisions hereof or of the Series 1993 Bonds. SECTION 17. RESOLUTION TO CONTINUE IN FORCE. Except as herein expressly provided, the Authorizing Resolution and all the terms and provisions thereof are and shall remain in full force and effect. 10 SECTION 18. EFFECTIVE DATE. This Supplemental Resolution shall become effective immediately upon its adoption. The foregoingesolution was moved for adoption by Council Member l/wj 4:,) k,v The motion was seconded by Council Member Euand, upon being put to a vote, the vote was as follows: Mayor Lonnie R. Powell Q� Vice -Mayor Frank Oberbeck Council Member Carolyn Corum Council Member Norma J. Damp Council Member Robert Freeland C: The Mayor thereupon declared this Resolution duly passed and adopted on this 8th day of December, 1993. ATTEST: Kathr M. O'Halloran, CMC/AAE City Clerk (SEAL) CITY OF Approved to Form and Content: Charles Ian Nash, City Attorney 11 0 , FLORIDA EXHIBIT A BOND PURCHASE CONTRACT See Tab 1.3 of this Transcript EXHIBIT B PRELIMINARY OFFICIAL STATEMENT See Tab 1.1 of this Transcript EXHIBIT C LETTER OF REPRESENTATIONS See Tab 2.20 of this Transcript 2.3 CLERK'S CERTIFICATE REGARDING SUPPLEMENTAL RESOLUTION I, Kathryn M. O'Halloran, the undersigned City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that attached hereto is a copy of the City of Sebastian Resolution No. R-93-76 entitled "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEBASTIAN, FLORIDA, SUPPLEMENTING ITS RESOLUTION NO. R-93-67; PROVIDING AN EFFECTIVE DATE," adopted at a meeting of the City Council of the City Sebastian (the "Sebastian City Council") duly called and held on December 8, 1993, at which meeting a quorum was present and acting throughout, which resolution has been compared by me with the original thereof recorded in the Minute Book of said City and that said resolution is a true, complete and correct copy thereof, and said resolution has been duly adopted and has not been further modified, amended or repealed, and is in full force and effect on and as of the date hereof in the form attached. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 16th day of December, 1993. (SEAL) City Clerk, City of Sebastian, Florida RESOLUTION NO. R-93-76 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, SUPPLEMENTING ITS RESOLUTION NO. R-93-67 PERTAINING TO THE DEFINITION OF AUTHORIZED INVESTMENTS; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Sebastian, Indian River County, Florida (the "City") has previously adopted its Resolution No. R-93-67 (the "Authorizing Resolution"), authorizing the issuance of the City's Utilities System Revenue Bonds, Series 1993 and providing for the security thereof; and WHEREAS, the City desires to supplement the Authorizing Resolution to provide some additional restrictions on repurchase agreements as investments under the Authorizing Resolution; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, as follows: SECTION 1. SUPPLEMENT TO "AUTHORIZED INVESTMENTS" DEFINITION. Paragraph (11) of the definition of "Authorized Investments" set forth in the Authorizing Resolution is hereby supplemented to include as additional subparagraphs (B) and (C) thereunder to provide as follows: "(B) The written repo contract must include the following: (i) Securities which are acceptable for transfer are: (a) Direct U.S. Governments, or (b) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC); (ii) The term of the repo may be up to 30 days; (iii) The collateral must be delivered to the Issuer, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/ simultaneous with payment (perfection by possession of certificated securities); (iv) Valuation of Collateral (a) The securities must be valued weekly, market -to -market at current market price Plus accrued interest. (1) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. (C) Legal opinion must be delivered to the Issuer: (i) Repo meets guidelines under state law for legal investment of public funds." SECTION 2. EFFECTIVE DATE. This Restated Resolution shall take effect immediately upon its adoption. The foregoing Resolution was moved for adoption by Council Member ��/;_1,6� The motion was seconded by Council Member and, upon being put to a vote, the vote was as follows: Mayor Lonnie R. Powell �Ly� Vice -Mayor Frank Oberbeck Council Member Carolyn Corum 17 Council Member Norma J. Damp Council Member Robert Freeland The Mayor thereupon declared this Resolution duly passed and adopted on this f 155_,L'= day of December, 1993. ATTEST: Kathrym M. O'Halloran, CMC/AAE City 'Clerk (S E A L) Approved s to Form and Content: Charles Ian Nash, City Attorney 3 2 2.4 CLERK'S CERTIFICATE REGARDING RATE RESOLUTION I, Kathryn M. O'Halloran, the undersigned City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that attached hereto is a copy of the City of Sebastian Resolution No. R-93-59 of the City Council of the City of Sebastian, Florida (the "Sebastian City Council") entitled "A RESOLUTION OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, ESTABLISHING A WATER SYSTEM RATE SCHEDULE AND A WASTEWATER SYSTEM RATE SCHEDULE AS PROVIDED IN ORDINANCE NO. 0-93-19 AND THE CODE OF ORDINANCES OF THE CITY OF SEBASTIAN; PROVIDING FOR REPEAL OF RESOLUTIONS OR PARTS OF RESOLUTIONS IN CONFLICT HEREWITH; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE," adopted at a meeting of the Sebastian City Council duly called and held on December 1, 1993, at which meeting a quorum was present and acting throughout, which resolution has been compared by me with the original thereof to be recorded in the Minute Book of said City and that said resolution is a true, complete and correct copy thereof, and said resolution has been duly adopted and has not been further modified, amended or repealed except as stated above and is in full force and effect on and as of the date hereof in the form attached. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 16th day of December, 1993. (SEAL) KathrynOM. O'Halloran City Clerk, City of Sebastian, Florida RESOLUTION NO. R-93-59 A RESOLUTION OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, ESTABLISHING A WATER SYSTEM RATE SCHEDULE AND A WASTEWATER SYSTEM RATE_ SCHEDULE AS PROVIDED IN ORDINANCE NO. 0-93-19 AND THE CODE OF ORDINANCES OF THE CITY OF SEBASTIAN; PROVIDING FOR REPEAL OF RESOLUTIONS OR PARTS OF RESOLUTIONS IN CONFLICT HEREWITH; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, pursuant to Section 14 of the City Ordinance No. 0-93-19 and the Code of Ordinances of the City of Sebastian, the City Council shall have the duty, right, power and authority to establish and adopt by Resolution a water system rate schedule which shall apply to each customer of the City's water system; and WHEREAS, pursuant to Section 15 of the City Ordinance No. 0-93-19 and the Code of Ordinances of the City of Sebastian, the City Council shall have the duty, right, power and authority to establish and adopt by Resolution a wastewater system rate schedule which shall apply to each customer of the City's wastewater system; and WHEREAS, pursuant to Chapter 180.301 Florida Statutes, the City Council may establish just and equitable rates or charges to be paid to the municipality for the use of the utility by each person, firm, or corporation whose premises are served; and WHEREAS, the rates established herein provide funding for water and sewer utility services which promote the health, safety, and general welfare of its customers and is therefore beneficial to the ratepayers of the system. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, as follows: SECTION 1. WATER SYSTEM RATE SCHEDULE. Pursuant to Ordinance No. 0-93-19 and the Code of Ordinances of the City of Sebastian, the City Council hereby establishes and adopts the water system rate schedule as attached to this Resolution as Exhibit "A". SECTION 2. WASTEWATER SYSTEM RATE SCHEDULE. Pursuant to Ordinance.No. 0-93-19 and the Code of Ordinances of the City of Sebastian, the City Council hereby establishes and adopts the wastewater system rate schedule as attached to this Resolution as Exhibit "B". SECTION 3. CONFLICT. All resolutions or parts of resolutions in conflict herewith are hereby repealed. SECTION 4. SEVERABILITY. In the event a court of competent jurisdiction shall hold or determine that any part of this Resolution is invalid or unconstitutional, the remainder of the Resolution shall not be affected and it shall be presumed that the City Council of the City of Sebastian did not intend to enact such invalid or unconstitutional provision. It shall further be assumed that the City Council would have enacted the remainder of this Resolution without such invalid and unconstitutional provision, thereby causing said remainder to remain in full force and effect. SECTION 5. EFFECTIVE DATE. This Resolution shall take effect immediately upon its adoption. 2 The foregoing Resolution was moved for adoption by Councilmember y ie� c` The motion was seconded by Councilmember '4�.a,,._,/ and, upon being put into a vote, the vote was as follows: Mayor Lonnie R. Powell Vice -Mayor Frank Oberbeck Councilmember Carolyn Corum Councilmember Norma J. Damp Councilmember Robert Freeland /i.. The Mayor thereupon declar/eed-)this Resolution duly passed and adopted this %at day of (iC �c �rc� , 1993. fBy.Z R ATTEST: Kathryn�/M. O'Halloran, CMC/AAE City Clerk (SEAL) Approved s rm. and Content: Charles Ian Nash, City Attorney EXHIBIT "A' WATER SYSTEM MONTHLY RATE SCHEDULE (1) Definition. As used herein, the following terms shall have the following meaning: (a) "Residential" means an individual dwelling unit designed for more or less permanent household occupancy which would include individual cooldng and bathing facilities. Examples are a single family home, efficiency apartment unit, cooperative apartment unit, duplex unit, and multi -family residential building unit. (b) "General Service" means a use of land or a building for non-residential purposes, but shall include a residential use which has identificable "general service" characteristics, as the term is used herein, both of which use the same water meter. Examples are hotels, motels, commercial business, rooming houses, buildings into which the public is invited and not designed for household occupancy and not including cooldng and bathing facilities. (2) Schedule. The City Council hereby adopts the water system monthly rate schedule set forth herein. The rates, fees and charges in the following schedule shall apply to each customer of the water system beginning with the charges payable by the customer in connection with the first reading of the customer's water meter by the City or the first monthly billing by the City after the City adopts the rates presented herein. The water system monthly rate schedule is as follows: Residential and Multi -Family Service: Billing Charge Base Facility Charge Volumetric Charge 0 - 3.000 gallons 3,001 - 7,000 gallons 7,001 - 13,000 gallons Above 13,000 gallons General Service: Billing Charge Base Facility Charge 5/8 inch 1 inch 1'h inch 2 inch 3 inch 4 inch 6 inch Monthlv Rates 52.75 per Bill 11.25 per ERU $1.51 per 1,000 gallons $1.85 per 1,000 gallons 52.20 per 1,000 gallons $4.20 per 1,000 gallons 1. 52.25 per Bill 11.25 per Meter 28.15 per Meter 56.75 per Meter 90.00 per Meter 180.00 per Meter 281.25 per Meter 562.50 per Meter EXHIBIT "A" (Continued) Volumetric Charge: Block 1 il) $1.51 per 1,000 gallons Block 2 tll 1.85 per 1,000 gallons Block 3 (1) 2.20 per 1,000 gallons Block 4 (1) 4.20 per 1,000 gallons 1. The following tabulation summarizes the usage block levels by meter size for the commercial class based on equivalent residential factors by meter size. (3) Annual Rate Indexing Adjustment. Pursuant to Sections 8 of this Resolution, the City hereby adopts an annual automatic rate increase to all rates, fees and charges set forth herein and which shall be applied to such rates and charges which are in effect immediately prior to the effective date of each such annual increase. The purpose of such annual rate indexing is to provide annual rate adjustments commensurate with the escalation of utility operating expenditures and inflation. The annual rate index shall be the greater of either the Consumer Price Index (CPI) factor or a minimum of 3.0% per year for the fiscal yearsbegl.nning 0_tob r 1 9 eft"October 1 1997 31515 through and including Septeatber 3�, -4#* and equivalent to the CPI index thereafter. Each annual increase shall take effect and be imposed on bills rendered on and after October 1st of each fiscal year. RCC/11/Misc-6/reso.a General Service General Service General Service General Service First Block Second Block Third Block Fourth Block Meter Size Usage Threshold Usage Threshold Usage Threshold Usage Threshold 3/4 inch 3,000 7,000 13,000 Above 13,000 1 inch 7,500 17,500 32,500 Above 32,500 11h inch 15,000 35,000 65,000 Above 65,000 2 inch 24,000 56,000 104,000 Above 105,400 3 inch 48,000 112,000 208,000 Above 208,000 4 inch 75,000 175,000 375,000 Above 325,000 6inch 150,000 350,000 650,000 Above 650,000 (3) Annual Rate Indexing Adjustment. Pursuant to Sections 8 of this Resolution, the City hereby adopts an annual automatic rate increase to all rates, fees and charges set forth herein and which shall be applied to such rates and charges which are in effect immediately prior to the effective date of each such annual increase. The purpose of such annual rate indexing is to provide annual rate adjustments commensurate with the escalation of utility operating expenditures and inflation. The annual rate index shall be the greater of either the Consumer Price Index (CPI) factor or a minimum of 3.0% per year for the fiscal yearsbegl.nning 0_tob r 1 9 eft"October 1 1997 31515 through and including Septeatber 3�, -4#* and equivalent to the CPI index thereafter. Each annual increase shall take effect and be imposed on bills rendered on and after October 1st of each fiscal year. RCC/11/Misc-6/reso.a EXHIBIT "B" WASTEWATER SYSTEM MONTHLY RATE SCHEDULE (1) Definition. As used herein, the following terms shall have the following meaning: (a) "Residential" means an individual dwelling unit designed for more or less permanent household occupancy which would include individual cooling and bathing facilities. Examples are a single family home, efficiency apartment unit, cooperative apartment unit, duplex unit, and multi -family residential building unit. (b) "General Service' means a use of land or a building for non-residential purposes, but shall include a residential use which has identificable "general service" characteristics, as the term is used herein, both of which use the same water meter. Examples are hotels, motels, commercial business, rooming houses, buildings into which the public is invited and not designed for household occupancy and not including cooldng and bathing facilities. (2) Schedule. The City Council hereby adopts the wastewater system rate schedule set forth herein. The rates, fees and charges in the following schedule shall apply to each customer of the wastewater system beginning with the charges payable by the customer in connection with the first reading of the customer's water meter by the City or the first monthly billing by the City after the City adopts the rates presented herein. The wastewater system monthly rate schedule is as follows: Residential and Multi -family service: Billing Charge Base Facility Charge(*) Volumetric Charge 0 - 10,000 gallons Monthly Rate: $3.75 per Bill 13.Oo per ERU 52.75 per 1.000 gallons of all metered water use (maximum of 10,000 gallons of service per ERU) EXHIBIT "B" (Continued) Commercial Service: Billing Charge $3.75 per Bill Base Facility Charge(*) 5/8 inch 13.00 per Meter I inch 32.50 per Meter 1'h inch 65.00 per Meter 2 inch 104.00 per Meter 3 inch 208.00 per Meter 4 inch 325.25 per Meter 6 inch 650.50 per Meter Volumetric Charge: 2.75 per 1,000 gallons Abnormal Strength Waste Surcharge Factor - see below (') • Amounts shown are the base facilities charged when lines are available. When lines are not available, the base facility charge will be equal to one half (1/2) the amount shown. (3) Annual Rate Indexing Adjustment- Pursuant to Section 8 of this Resolution, the City hereby adopts an annual automatic rate increase to all rates, fees and charges set forth herein and which shall be applied to such rates and charges which are in effect immediately prior to the effective date of each such annual increase. The purpose of such annual rate indexing is to provide annual rate adjustments commensurate with the escalation of utility operating expenditures and inflation. The annual rate index shall be the greater of either the Consumer Price Index (CPI) factor or a minimum of 3.0% per year for the fiscal yearsbning cto er lgn 4 October 1 1997 , PW through and including September 30 }998 and equivalent to the CPI index thereafter. Each annual increase shall take effect and be imposed on bills rendered on and after October 1st of each fiscal year. Abnormal Strength Waste Surcharge Factor (SF) - The SF is determined by the ratio of Bio -Chemical Oxygen Demand (BOD) or Chemical Oxygen Demand (COD) and Total Suspended Solids in excess of 300 parts per million (ppm) by the following formula: SF =(BOD (ppm) or COD (ppm) - 300 ppm)+ (TSS(ppm-300 ppm)) whichever is greater 300 ppm Monthly Sewage Charge = (1 + SF)•x Normal Sewage Use RCC/II/Misch/reso.b 2.5 INCUMBENCY CERTIFICATE I, Kathryn M. O'Halloran, City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY as follows: 1. The following are now, and have continuously been since the dates of beginning of their respective current terms shown below, the duly elected, qualified and acting members of the City Council of the City of Sebastian, Florida, and the dates of the beginning and ending of their respective current terms are hereunder correctly designated opposite their names: Member Beginning Date Ending Date of Current Term of Current Term Carolyn Corum March 1992 March 1994 Norma J. Damp March 1993 March 1995 Robert Freeland March 1993 March 1995 Frank J. Oberbeck March 1993 March 1995 2. The following are now, and have continuously been since the dates of beginning of their respective current terms of office shown below, the duly elected, qualified and acting officers of the City and the dates of the beginning and ending of their respective current terms of office are hereunder correctly designated opposite their names: Office Name Mayor Lonnie R. Powell Beginning Date Current Term March 1992 Ending Date of Office March 1994 IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 16th day of December, 1993. (SEAL) Kathryn . O'Halloran City Clerk, City of Sebastian, Florida I, Charles Ian Florida, do hereby qualified Clerk of Nash, City Attorney for the City of Sebastian, certify that Kathryn M. O'Halloran is the duly the City. Attorney SCHEDULE A $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 The Series 1993 Bonds are dated as of December 1, 1993, are payable as to interest on April 1 and October 1 of each year, commencing on April 1, 1994, and bear interest at the rates and mature in the amounts on October 1 of the years set forth below: Principal Interest Year Amount Rate 1996 $ 50,000.00 3.401 1997 75,000.00 3.60 1998 100,000.00 3.70 1999 100,000.00 3.90 2000 105,000.00 4.00 2001 110,000.00 4.20 2002 115,000.00 4.30 2003 120,000.00 4.45 2004 125,000.00 4.60 2005 130,000.00 4.75 2006 135,000.00 4.90 2007 145,000.00 5.00 2013 1,035,000.00 5.40 2023 2,655,000.00 5.45 2.6 SIGNATURE CERTIFICATE We, the undersigned, DO HEREBY CERTIFY that: 1. We did heretofore officially execute the obligations described in Schedule A attached hereto (the "Bonds") of City Council of the City of Sebastian, Florida (the "City"). 2. Lonnie R. Powell, Mayor of the City of Sebastian, Florida, has executed each of the Bonds by his manual signature, and that said Mayor was on the date he executed the Bonds and is now the duly chosen, qualified and acting Mayor of the City. 3. We have caused the official seal of the City to be impressed on each of the Bonds, said seal impressed hereon being the official seal of the City, and that Kathryn M. O'Halloran, City Clerk of the City, has caused such seal to be attested by her manual signature, and that said Kathryn M. O'Halloran was on the date she executed the Bonds and is now the duly qualified and acting Clerk of the City. 4. The seal which has been impressed on the Bonds and impressed upon this certificate is the legally adopted, proper and only seal of the City. IN WITNESS WHEREOF, we have hereunto set our hands and affixed the official seal of the City this 16th day of December, 1993. ( SEAL?, signature 9 � Title of Office Mayor Clerk Term of Office Expires March 1994 At discretion of the Board I, Charles Ian Nash, City Attorney for the City of Sebastian, Florida, do hereby certify that the signatures of the officers which appear above are true and genuine and that I know said officers and know them to hold the offices set opposite their names. City Attorney SCHEDULE A $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 The Series 1993 Bonds are dated as of December 1, 1993, are payable as to interest on April 1 and October 1 of each year, commencing on April 1, 1994, and bear interest at the rates and mature in the amounts on October 1 of the years set forth below: Principal Interest Year Amount Rate 1996 $ 50,000.00 3.400-. 1997 75,000.00 3.60 1998 100,000.00 3.70 1999 100,000.00 3.90 2000 105,000.00 4.00 2001 110,000.00 4.20 2002 115,000.00 4.30 2003 120,000.00 4.45 2004 125,000.00 4.60 2005 130,000.00 4.75 2006 135,000.00 4.90 2007 145,000.00 5.00 2013 1,035,000.00 5.40 2023 2,655,000.00 5.45 2.7 NO -LITIGATION CERTIFICATE We, Lonnie R. Powell, Mayor of the City of Sebastian, Florida (the "City") and Charles Ian Nash, Attorney for the City of Sebastian, Florida, DO HEREBY CERTIFY that no legal proceedings are pending or, to the best of our knowledge, threatened which materially affect the City's ability to perform its obligations to the holders of the obligations of the City described in Schedule A attached hereto (the "Bonds"). There is no litigation or controversy of any nature now pending or, to the best of our knowledge, threatened, to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contesting the validity of the Bonds, the Bond Resolution, the Bond Purchase Contract or the Rate Resolution (as such terms are defined in the Purchase Contract, dated December 8, 1993 between the City and the underwriter referred to therein) or any proceedings of the City taken with respect to the authorization, sale or issuance of the Bonds or the pledge or application of any moneys provided for the payment of the Bonds. IN WITNESS WHEREOF, we have hereunto set our hands this 16th day of December, 1993. Mayor SEBASTIAN, FLORIDA City Attorney SCHEDULE A $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 The Series 1993 Bonds are dated as of December 1, 1993, are payable as to interest on April 1 and October 1 of each year, commencing on April 1, 1994, and bear interest at the rates and mature in the amounts on October 1 of the years set forth below: Principal Interest Year Amount Rate 1996 $ 50,000.00 3.40; 1997 75,000.00 3.60 1998 100,000.00 3.70 1999 100,000.00 3.90 2000 105,000.00 4.00 2001 110,000.00 4.20 2002 115,000.00 4.30 2003 120,000.00 4.45 2004 125,000.00 4.60 2005 130,000.00 4.75 2006 135,000.00 4.90 2007 145,000.00 5.00 2013 1,035,000.00 5.40 2023 2,655,000.00 5.45 2.8 CERTIFICATE AS TO ARBITRAGE AND CERTAIN OTHER TAR MATTERS I, Marilyn Swichkow, Finance Director of the City of Sebastian, Florida (the "City"), being a person duly charged, together with others, with the responsibility for issuing the City's $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds") dated as of December 1, 1993 being issued this day, DO HEREBY CERTIFY that: 1. AUTHORIZATION AND DEFINITIONS. The Series 1993 Bonds are being issued pursuant to the authority contained in Chapter 166, Florida Statutes, the City Charter and pursuant to Resolution 8-93- 67 of the City, adopted December 8, 1993, as supplemented (collectively, the "Resolution"). The terms defined in the Resolution shall retain the meanings set forth therein when used in this Certificate unless the context clearly indicates another meaning is intended. Other terms used in this Certificate shall have the meanings set forth for same in other provisions hereof or in the Code, or in the Regulations, or in the Arbitrage Rebate Statement attached hereto as Exhibit A, in each case unless the context clearly indicates another meaning is intended. 2. PURPOSE. The Series 1993 Bonds are being issued for the purposes of providing sufficient moneys to: (a) acquire certain water production, treatment, storage and distribution facilities, wastewater collection, treatment and effluent disposal facilities located in the City and the establishment of a City -owned water and wastewater utility system (the "System"), (b) make certain capital improvements to the System, (c) fund the Reserve Subaccount in an amount equal to the Reserve Subaccount Requirement, (d) pay acquisition and transition costs as well as any allowed reimbursement expenses associated with the acquisition by the City of the System, (e) provide for capitalized interest, and (f) pay certain costs of issuance incurred with respect to the Series 1993 Bonds. 3. FACTS, ESTIMATES AND CIRCUMSTANCES. On the basis of the facts, estimates and circumstances in existence on the date hereof, I reasonably expect the following with respect to the Series 1993 Bonds and with respect to the proceeds of the Series 1993 Bonds: (a) NET PROCEEDS. (i) Total. The amount of proceeds received by the City from the sale of the Series 1993 Bonds (the "Net Proceeds"), which consists of the principal amount of $5,000,000, plus 1 accrued interest of $10,728.44, less underwriter's discount of $62,500.00, less original issue discount of $8,451.00, will be $4,939,777.44. (ii) Accrued Interest. An amount of the Net Proceeds of the Series 1993 Bonds equal to $10,728.44, which represents accrued interest, will be deposited in the Payment Subaccount and will'be used to pay a portion of the interest due on the Series 1993 Bonds on April 1, 1994. (iii) Capitalized Interest. An amount of the Net Proceeds of the Series 1993 Bonds equal to $21,419.27 will be deposited in the Payment Subaccount and used to pay a portion of the interest due on the Series 1993 Bonds through October 1, 1995. (iv) Project Account. An amount of the Net Proceeds of the Series 1993 Bonds equal to $4,340,000 will be deposited in the Project Account and will be used to pay a portion of the costs of the acquisition of the System and to pay the Costs of the Initial Project. (v) Reserve Subaccount Deposit. An amount of the Net Proceeds of the Series 1993 Bonds equal to $353,847.50 will be deposited in the subaccount of the Reserve Subaccount established with respect to the Series 1993 Bonds. (vi) Costs of Issuance and Insurance. On the date hereof, an amount of Net Proceeds of the Series 1993 Bonds equal to $108,000.00 will be expended to provide for payment of an insurance premium to Municipal Bond Investors Assurance Corporation ("MBIA") for issuance of a bond insurance policy relating to the Series 1993 Bonds. In addition, an amount of the Net Proceeds of the Series 1993 Bonds equal to $105,782.23 will be held by the City and will be used within six months of the date hereof to provide for the payment of the expenses of issuance of the Series 1993 Bonds. (b) NO OVERISSUANCE. The Net Proceeds of the Series 1993 Bonds ($4,939,777.44), less payment of the costs of issuance including the bond insurance policy premium to MBIA from the Net Proceeds of $108,000 will be $4,725,995.21 (the' "Original Proceeds"). The Original Proceeds and the investment earnings thereon from amounts deposited in the Project Account will be used to finance the acquisition of the System and the acquisition and construction of the Initial Project and funding the Reserve Subaccount and interest on the Series 1993 Bonds through November 1, 1995. Taking into account other available funds, the Original Proceeds plus the investment earnings on the Original Proceeds do not exceed the amount necessary to finance the acquisition of the System and the acquisition and construction of the Initial Project. E (c) PROJECT ACCOUNT: (i) Project Account. An amount of the Original Proceeds of the Series 1993 Bonds equal to $4,340,000 will be deposited in the Project Account. Such amounts and investment earnings thereon will be used to pay a portion of the costs of the acquisition of the System and for a portion of the Costs of the Initial Project. (ii) Use of Project Account Moneys. The City expects to spend all of the Original Proceeds of the Series 1993 Bonds and any investment proceeds related thereto on or before December 16, 1996. The City hereby represents that any amounts reimbursed to the City for expenditures made with respect to the Initial Project prior to the date hereof constituted "preliminary expenditures" within the meaning of Treasury Regulation Section 1.150-2(f)(2). Such amounts do not, in the aggregate exceed twenty percent (20%) of the aggregate issue price of the Series 1993 Bonds. (iii) Binding Obligations. The City has spent or expects, within six months of the date hereof, to spend (or to enter into binding obligations with third parties obligating the City to spend) from the Original Proceeds and any investment proceeds thereon, an amount at least equal to the lesser of $100,000 or 2h percent of the cost of that portion of the Initial Project to be financed from the Original Proceeds in order to commence or acquire such portion of the Initial Project. (iv) Due Diligence. Work on the acquisition and construction of the Initial Project to be funded from the Original Proceeds will proceed with due diligence to the completion thereof. (v) Disposal of Initial Project. The Initial Project is not expected to be sold or disposed of prior to the last maturity date of the Series 1993 Bonds, except such portions as may be disposed of in the normal course of business. (d) FLOW OF FUNDS. The City shall deposit or 'credit all Gross Revenues, as received, into the Revenue Account. Moneys in the Revenue Account shall be applied as follows: Operation and Maintenance Account. Moneys in the Revenue Account shall first be used each month to deposit or credit to the Operation and Maintenance Account such sums as are necessary to pay Operating Expenses for the ensuing month, taking into account other moneys reasonably expected to be available for such purpose; provided the City may transfer moneys from the Revenue Account to the Operation and Maintenance Account at any time to pay Operating Expenses to the extent there is a deficiency in the Operation and 3 Maintenance Account for such purpose. Amounts in the Operation and Maintenance Account shall be paid out from time to time by the City for reasonable and necessary Operating Expenses. Amounts remaining in the Revenue Account after the aforementioned deposits or credits to the Operation and Maintenance Account shall be applied by the City on or before the twenty-fifth (25th) day of each month, commencing in the month immediately following the delivery of any of the Bonds to the purchasers thereof, or such later date as hereinafter provided, in the following manner and in the following order of priority: (i) Payment Subaccount. The City shall deposit or credit to the Payment Subaccount the sum which, together with the balance in said Subaccount, shall equal the interest on all Bonds Outstanding (except as to Capital Appreciation Bonds) accrued and unpaid to accrue to the end of the then current calendar month. The City shall also deposit or credit to the Payment Subaccount the sum which, together with the balance in said Subaccount, shall equal the principal amounts on all Bonds Outstanding due and unpaid and that portion of the principal next due which would have accrued on such Bonds during the then current calendar month if such principal amounts were deemed to accrue monthly (assuming that a year consists of twelve (12) equivalent calendar months having 30 days each) in equal amounts from the next preceding principal payment due date, or, if there be no such preceding payment due date from a date one year preceding the due date of such principal amount. Moneys in the Payment Subaccount shall be applied by the City for deposit with the Paying Agents to pay the principal of and interest on the Bonds on or prior to the date the same shall become due. (ii) Term Bonds Redemption Subaccount. Commencing in the month which is one year prior to the first Amortization Installment, there shall be deposited or credited to the Term Bonds Redemption Subaccount the sum which, together with the balance in such Subaccount, shall equal the Amortization Installments on all Term Bonds Outstanding due and unpaid and that portion of the Amortization Installments of all Term Bonds Outstanding next due which would have accrued on such Term Bonds during the then current calendar month if such Amortization Installments were deemed to accrue monthly (assuming that a year consists of twelve (12) equivalent calendar months having 30 days each) in equal amounts from the next preceding Amortization Installment due date, or, if there is no such preceding Amortization Installment due date, from a date one year preceding the due date of such Amortization Installment. Moneys in the Term Bonds Redemption Subaccount shall be used to purchase or redeem Term Bonds in the manner provided in the Resolution, and for no other purpose. 4 (iii) Reserve Subaccount. Except as otherwise provided by the Resolution, the City is required to establish within the Reserve Subaccount a separate subaccount for each Series of Bonds issued under the Resolution. The moneys in each such subaccount shall be applied in the manner provided in the Resolution solely for the payment of the principal of, or Redemption Price, if applicable, and interest on the Series of Bonds for which it is designated in the event amounts on deposit in the Payment Subaccount and certain other accounts are insufficient therefor, and shall not be available to pay debt service on any other Series. There shall be deposited or credited to each subaccount of the Reserve Subaccount such sum, if any, as will be necessary to immediately restore the funds in each such subaccount to an amount equal to the Reserve Subaccount Requirement applicable thereto including the reinstatement of any Reserve Subaccount Credit Instrument therein; provided, in no event shall the amount deposited or credited to the subaccounts of the applicable Reserve Subaccount be less than one twelfth (112) of the amount which would enable the City to restore the funds in each such subaccount to an amount equal to the Reserve Subaccount Requirement in one (1) year from the date of such shortfall. (iv) Payments to Issuer of Reserve Subaccount. The City shall next make any payments required to be made to the issuer of any Reserve Subaccount Credit Instrument. (v) Renewal and Replacement Account. There shall be deposited or credited to the Renewal and Replacement Account an amount equal to one -twelfth of the Renewal and Replacement Requirement until the amount accumulated in such Account is equal to the Renewal and Replacement Account Requirement. In the event that the Renewal and Replacement Account Requirement is reduced, any excess amount in the Renewal and Replacement Account shall be deposited or credited to the Surplus Reserve Account. The moneys in the Renewal and Replacement Account shall be applied by the City for the purpose of paying the cost of major extensions, improvements or additions to, or the replacement or renewal of capital assets of, the'System, or extraordinary repairs of the System; provided, however, that on or prior to each principal and interest payment date for the Bonds (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date), moneys in the Renewal and Replacement Account shall be applied for the payment into the Payment Subaccount, and the Term Bonds Redemption subaccount when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys available in certain funds and accounts established under the Resolution for such purpose shall be inadequate to fully provide for such insufficiency. (vi) Subordinated Indebtedness. Gross Revenues shall next be applied by the City for the payment of any accrued debt service on Subordinated Indebtedness incurred by the City in connection with the System and in accordance with the proceedings authorizing such Subordinated Indebtedness. (vii) Administrative Expenses. Gross Revenues shall next be applied by the City to pay Administrative Expenses. (viii) Surplus Reserve Account. The balance of any Gross Revenues remaining in said Revenue Account after the foregoing shall be deposited or credited to the Surplus Reserve Account. Moneys in the Surplus Reserve Account shall be applied monthly by the City, to the extent necessary, to pay Operating Expenses whenever the moneys in the Operation and Maintenance Account shall be insufficient for such purpose. Whenever no Event of Default shall have occurred and be continuing under the Resolution, and after setting aside in the Surplus Reserve Account a sum which, together with the moneys in the Operation and Maintenance Account, shall be sufficient to pay Operating Expenses for the succeeding twelve (12) months according to the Annual Budget, the balance of any moneys remaining in the Surplus Reserve Account may be applied by the City to any lawful purpose. Notwithstanding the foregoing requirement for the segregation of moneys for Operating Expenses, the City shall have the right, at any time, to apply any money in the Surplus Reserve Account to the payment of all or any part of principal of, Redemption Price or interest on the Bonds or any Subordinated Indebtedness. (ix) Water Impact Fees Account. The City shall deposit into the Water Impact Fees Account all Water Impact Fees as received, together with moneys transferred to such Account from the Surplus Reserve Account and such Water Impact Fees shall be accumulated in the Water Impact Fees Account and applied by the City in the following manner and order of priority: (A) for the payments on or prior to each Interest Payment Date (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date) into the Payment Subaccount and the Term Bonds Redemption Subaccount, when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account for such purpose pursuant to the Resolution shall be inadequate to fully provide for such insufficiency; (B) to pay the cost of acquiring and/or constructing new user water improvements or additions to the System in accordance with the plans and specifications provided by the Consulting Engineers and the requisitions for disbursement of moneys provided by the City; and (C) to be used for any other lawful purpose relating to the System. (x) Sewer Impact Fees Account. The City shall deposit into the Sewer Impact Fees Account all Sewer Impact Fees as received, together with moneys transferred to such Account from the Surplus Reserve Account and such Sewer Impact Fees shall be accumulated in the Sewer Impact Fees Account and applied by the Issuer in the following manner and order of priority; (A) for the payments on or prior to each Interest Payment Date (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date) into the Payment Subaccount and the Term Bonds Redemption Subaccount, when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account for such purpose pursuant to the Resolution shall be inadequate to fully provide for such insufficiency; (B) to pay the cost of acquiring and/or constructing new user related sewer improvements or additions to the System in accordance with the plans and specifications provided by the Consulting Engineers and the requisitions for disbursement of moneys provided by the City; and (C) to be used for any other lawful purpose relating to the System. (xi) Rate Stabilization Account. The City may transfer into the Rate Stabilization Account such moneys which are on deposit in the Surplus Reserve Account as it deems appropriate. The City may transfer such amounts of moneys from the Rate Stabilization Account to the Revenue Account as it deems appropriate; provided, however, that on or prior to each principal and interest payment date for the Bonds (in no event earlier than the twenty-fifth (25th) day of the month next preceding such payment date), moneys in the Rate Stabilization Account shall be applied for the payment into the Payment Subaccount and the Term Bonds Redemption Subaccount when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account for such purposes and moneys transferred from the Water Impact Fees Account and Sewer Impact Fees Account shall be inadequate to fully provide for such insufficiency. (xii) Half -Cent Sales Tax Revenue Account: The City shall deposit all Half -Cent Sales Tax Revenues, as received, into the Half -Cent Sales Tax Revenue Account until the amount on deposit therein is equal to the aggregate required deposits to the Payment Subaccount and Term Bonds Redemption Subaccount on the next ensuing twenty-fifth (25th) day of the month. On the twenty -fifty (25th) day of each month, amounts on deposit in the Half -Cent Sales Tax Revenue Account shall be deposited or credited to the Payment Subaccount and Term Bonds Redemption Subaccount, when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Surplus Reserve Account, the Rate Stabilization Account, the Water Impact Fees Account and the Sewer Impact Fees Account for such purpose shall be inadequate to fully provide for such insufficiency. Any funds on deposit in the Half -Cent Sales Tax Revenue Account not required for deposit or credit to the aforementioned Accounts shall be transferred out of the Half - Cent Sales Tax Revenue Account and may be used for any other lawful purpose of the City. (xiii) Project Account. Amounts in the Project Account shall be used for the purpose of paying the Costs of the Initial Project. Amounts deposited in the Project Account may be used for the payment of debt service on the Series 1993 Bonds; however, the City does not expect that amounts in such Account will be used to pay debt service on the Series 1993 Bonds and there is no assurance that any portion of the amounts deposited in such Account will be available to pay such debt service. (xiv) Investment Earnings. Any and all income received from the investment of moneys in the Payment Subaccount or Term Bonds Redemption Subaccount shall be retained in such fund and shall be expended within one year of receipt thereof. (XV) No Other Funds. Other than the Revenue Account, Project Account, Payment Subaccount, Term Bonds Redemption Subaccount and Reserve Subaccount of the Debt Service Account, Renewal and Replacement Account, Surplus Reserve Account, Rate Stabilization Account and Half -Cent Sales Tax Revenue Account described in this Certificate, no fund or account has been established pursuant to any instrument which secures or otherwise relates to the Series 1993 Bonds. 4. YIELD. (a) GENERAL. For purposes of this Certificate, bond yield is, and shall be, calculated in the manner provided in Treasury Regulations Section 1.148-3T, and the provisions therein will be complied with in all respects. The term "bond yield" means, with respect to a bond, the discount rate that when used in computing the present value of all the unconditionally payable payments of principal and interest and all the payments for a qualified guarantee paid and to be paid with respect to the bond produces an amount equal to the present value of the issue price of the bond. In computing the purchase price of the Series 1993 Bonds, which is equal to the issue price, the City did not take into consideration the costs of issuance or the underwriters, discount. The purchase price of the Series 1993 Bonds, therefore, is $4,894,277.44 (principal amount of $5,000,000, plus accrued interest of $10,728.441 less original issue discount of $8,451.00, less municipal bond insurance policy premium of $108,000). For purposes hereof, yield is, and shall be, calculated on a 360 -day year basis 9 with interest compounded semiannually. The yield on the Series 1993 Bonds calculated in the above-described manner is 6.492478 percent (the "Bond Yield"). Such calculation has been computed by Raymond James & Associates, Inc., the underwriter for the Series 1993 Bonds. It should be noted, however, that such yield may, under certain circumstances set forth in the Treasury Regulations, be subject to recalculation. See Exhibit A hereto. The purchase price of all obligations other than tax-exempt investments ("Taxable Obligations") to which restrictions as to yield under this Certificate applies shall be calculated using (i) the price, taking into account discount, premium, and accrued interest, as applicable, actually paid or (ii) the fair market value if less than the price actually paid and if such Taxable Obligations were not purchased directly from the United States Treasury. The City will acquire all such Taxable Obligations directly from the United States Treasury or in arms length transactions without regard to any amounts paid to reduce the yield on such Taxable Obligations. The City will not pay or permit the payment of any amounts to reduce the yield on any Taxable Obligations. (b) INSURANCE. On the date hereof, $108,000 will be paid to MBIA as a bond insurance policy premium for the Series 1993 Bonds. According to information supplied by Raymond James & Associates, Inc., the underwriter for the Series 1993 Bonds, the present value of the debt service savings reasonably expected to result from the purchase of such insurance, discounted at the yield of the Series 1993 Bonds, computed without taking into account the bond insurance policy premium, exceeds the amount of the bond insurance policy premium. Thus, for purposes of calculating the Bond Yield, the 108,000 bond insurance policy premium is treated as an interest payment on the date of issuance. For all other purposes such amounts are treated as an expense of issuance. (c) PAYMENT SUBACCOUNT -- ACCRUED AND CAPITALIZED INTEREST. Amounts held in the Payment Subaccount representing accrued and capitalized interest on the Series 1993 Bonds will be invested without regard to yield restriction for a period not to exceed 12 months from the date of deposit of such amounts in such Subaccount. Any amounts not expended within the period set forth above shall be invested at a yield not in excess of the Bond Yield. (d) DEBT SERVICE ACCOUNT -- DEBT SERVICE. Amounts held in the Debt Service Account which are set aside for the payment of the principal of and interest on the Series 1993 Bonds will be invested without regard to yield restriction for a period not to exceed 13 months from the date of deposit of such amounts in such Account. Any amounts not expended within the period set forth above shall be invested at a yield not in excess of the Bond Yield. 2 (e) PROJECT ACCOUNT. Amounts deposited in the Project Account from Original Proceeds will be invested without regard to yield restrictions for a period not exceeding three years from the date hereof. Any such amounts not expended within the period set forth above shall, to the extent not invested in tax-exempt investments, be invested at a yield not in excess of the Bond Yield. (f) INVESTMENT EARNINGS. All investment earnings on amounts in the Project Account derived from Original Proceeds may be invested without regard to yield restrictions for a period not to exceed three years from the date hereof. Any investment earnings on amounts in the Project Account derived from Original Proceeds not expended within three years from the date hereof shall be invested at a Yield not in excess of the Bond Yield. All investment earnings on amounts in the Debt Service Account may be invested without regard to yield restriction for a period not to exceed one year from the date of receipt of the amount earned. All investment earnings on amounts in the Debt Service Account not expended within one year from the date of receipt shall be invested at a yield not in excess of the Bond Yield. 5. FURTHER CERTIFICATIONS. The City will take no action which would cause the Series 1993 Bonds to become Private Activity Bonds or Industrial Development Bonds (as such terms are defined in the Code), including, without limitation, any sale, lease, management or similar use of the Initial Project or the System to or by any person other than a governmental unit. None of the Gross Proceeds of the Series 1993 Bonds will be used directly or indirectly in any trade or business carried on by any person other than a governmental unit. No bonds or other obligations of the City (a) were sold in the 15 days preceding the date of sale of the Series 1993 Bonds, (b) were sold or will be sold within the 15 days after the date of sale of the Series 1993 Bonds, (c) have been delivered in the past 15 days, or (d) will be delivered in the next 15 days, pursuant to a common plan of financing with the plan for the issuance of the Series 1993 Bonds and payable out of substantially the same source of revenues. The City does not expect that the proceeds of the Series 1993 Bonds will be used in a manner that would cause them to be arbitrage bonds under Section 148 of the Code. The City does not expect that the proceeds of the Series 1993 Bonds will be used in a manner that would cause the interest on the Series 1993 Bonds to be includable in the gross income of the holder of the Series 1993 Bonds under Section 103 of the Code. 6. REBATE. Moneys in the Rebate Account shall be held in trust by the City and, subject to the provisions hereof, shall be held for the benefit of the United States Government as 10 contemplated under the provisions hereof and shall not constitute part of the Pledged Funds held for the benefit of the Holders of the Series 1993 Bonds or the City. The City represents that it is not issuing in excess of $5,000,000 in tax-exempt bonds in calendar year 1993 and, accordingly, the Series 1993 Bonds qualify for the small governmental units exception to the arbitrage rebate requirements imposed by the Code. Accordingly, unless advised otherwise by Bond Counsel, requirements imposed by the City need not comply with the provisions of Exhibit A hereof, other than the market price rules contained therein. 7. AMENDMENTS. The provisions hereof need not be observed and this Certificate may be amended or supplemented at any time by the City if, in each case, the City receives an opinion or opinions of Bond Counsel that the failure to comply with such provisions will not cause, and that the terms of such amendment or supplement will not cause, any of the Series 1993 Bonds to become arbitrage bonds under Section 148 of the Code, or other applicable section of the Code, or otherwise cause interest on any of the Series 1993 Bonds to become includable in gross income for federal income tax purposes under the Code. 8. SERIES 1993 BONDS NOT FEDERALLY GUARANTEED. Payment of debt service on the Series 1993 Bonds is not directly or indirectly guaranteed in whole or in part by the United States, within the meaning of Section 149(b) of the Code. None of the Original Proceeds of the Series 1993 Bonds will be invested directly or indirectly in federally insured deposits or accounts except for: (i) Original Proceeds invested during the applicable temporary periods described in paragraph 3(c)(ii) hereof until such Original Proceeds are needed for the purpose for which the Series 1993 Bonds are being issued and (ii) investments of the Debt Service Account described in paragraphs 3(d)(i) and (ii) hereof. 9. SERIES 1993 BONDS NOT HEDGE BONDS. It is reasonably expected that not less than 858 of the Original Proceeds will be used to carry out the governmental purposes of the Series 1993 Bonds within three years from the date hereof. None of the Original Proceeds will be invested in nonpurpose investments having a substantially guaranteed yield for four years or more (including but not limited to any investment contract or fixed yield investment having a maturity of 4 years or more). The reasonable expectations stated above are not based on and do not take into account any expectations or assumptions as to the occurrence of changes in market interest rates or of federal tax law or regulations or rulings thereunder. Those reasonable expectations are not based on any prepayments of items other than items which are customarily prepaid. 10. ADDITIONAL COVENANTS. The City further agrees to (a) impose such limitations on the investment or use of moneys or investments related to the Series 1993 Bonds, (b) make such rebate 11 payments to the United States Treasury, (c) maintain such records, (d) perform such calculations, (e) enter into such agreements, and (f) perform such other acts as may be necessary under the Code to preserve the exclusion from gross income for purposes of federal income taxation of interest on the Series 1993 Bonds, which it may lawfully do. 11. INFORMATION. The City agrees to file all information statements as may be required by the Code. 12. VALUATION AND MARKET PRICE RULES. In determining the amounts on deposit in any fund or account for purposes of this Certificate, the purchase price of the obligations, including accrued interest, shall be added together, and adding or subtracting to such purchase prices any discount, computed ratably on an annual basis. With respect to any amounts required to be restricted as to yield, the "market price rules" set forth in Exhibit A attached hereto shall apply. 13. NO REPLACEMENT. No portion of the amounts received from issuance, conversion, sale or remarketing of the Series 1993 Bonds will be used as a substitute for other funds which were otherwise to be used for the payment of debt service of the Series 1993 Bonds, and which have been or will be used to acquire, directly or indirectly, obligations producing a yield in excess of the Bond Yield. 14. RELIANCE. The City has relied on certain representations made by MBIA in its certificate attached as Exhibit B hereto and by Raymond James & Associates, Inc., in its certificate attached as Exhibit C hereto. The City is not aware of any facts or circumstances that would cause it to question the accuracy of such representations. 15. NO ADVERSE ACTION. The City has neither received notice that its Certificate may not be relied upon with respect to its issues, nor has it been advised that any adverse action by the Commissioner of Internal Revenue is contemplated. To the best of my knowledge and belief there are no facts, estimates or circumstances other than those expressed herein that materially affect the expectations herein expressed, and, to the best of my knowledge and belief, the City's expectations are reasonable. I further represent that the City expects and intends 12 to be able to comply with the provisions and procedures set forth herein, including Section 148 of the Code. IN WITNESS WHEREOF, I have hereunto set my hand as of this 16th day of December, 1993. CITY OF SEBASTIAN, FLORIDA 17 By: Finance Di.ector 13 [This Exhibit A is inapplicable to the Series 1993 Bonds unless otherwise advised by Bond Counsel.] EXHIBIT A ARBITRAGE REBATE This Arbitrage Rebate Statement is intended to set forth certain duties and requirements necessary for compliance with Section 148(f) of the Code to the extent necessary to preserve the tax exempt treatment of interest on the Series 1993 Bonds. This Statement is based upon Section 148(f) and, by analogy, to Treasury Regulations Sections 1.148-0 through 1.148-11, 1.149(b)-1 and (d)-1 and 1.150-0 through 1.150-2. However, it is not intended to be exhaustive. Since the requirements of such Section 148(f) are subject to amplification and clarification, it maybe necessary to supplement or modify this Statement from time to time to reflect any additional or different requirements of such Section or to specify that action required hereunder is no longer required or that some further or different action is required to maintain or assure the exemption from federal income tax of interest with respect to the Series 1993 Bonds. For purposes hereof, any covenant relating to a fund, account or subaccount established under the Resolution shall be deemed to apply only to that portion of such fund, account or subaccount allocable to the Series 1993 Bonds. SECTION 1. TAX COVENANTS. Pursuant to the Resolution, the City and has made certain covenants designed to assure that the interest with respect to the Series 1993 Bonds is and shall remain excludable from gross income for purposes of federal income taxation. The City shall not, directly or indirectly, use or permit the use of any proceeds of the Series 1993 Bonds or any other funds or take or omit to take any action that would cause the Series 1993 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code or that would cause interest on the Series 1993 Bonds to be subject to federal income tax under the provisions of the Code. The City shall comply with all other requirements as shall be determined by Bond Counsel to be necessary or appropriate to assure that interest on the Series 1993 Bonds will be excludable from gross income for purposes of federal income taxation. To that end, the City shall comply with all requirements of Section 148 of the Code to the extent applicable to the Series 1993 Bonds. SECTION 2. DEFINITIONS. Capitalized terms used herein, not otherwise defined herein, shall have the same meanings set forth in the Resolution and in the City's Certificate as to Arbitrage and Certain Other Tax Matters relating to the Series 1993 Bonds. "Bond Counsel" means Nabors, Giblin & Nickerson, P.A., or such other firm of nationally recognized bond counsel as may be selected by the City. "Bond Year" means any one-year period (or shorter period from the Issue Date) ending on the close of business on the day preceding the anniversary of the Issue Date; provided, however, that the City may select any other day as the end of a Bond Year if such selection is made prior to the earlier of the final maturity date of the Series 1993 Bonds or the fifth anniversary of the Issue Date. "Computation Date" means any date selected by the City which is not more than 5 years later than the later of (x) the date of issue or (y) the most recent Computation Date; provided, however, that for purposes of paying any penalty due as a result of an election of the City pursuant to Section 3(f) hereof, the Computation Date shall be the last day of each six-month period described in said Section 3(f). "Code" means the Internal Revenue Code of 1986, as amended, and the applicable Treasury Regulations proposed or promulgated thereunder. "Fair Market Value" means, when applied to a Nonpurpose Investment, the fair market value of such Investment as determined in accordance with Section 4 hereof. "Gross Proceeds" means, with respect to the Series 1993 Bonds: (1) Amounts constituting sale proceeds of the Series 1993 Bonds, within the meaning of Treasury Regulations Section 1.148- 1(b) (i.e., amounts actually or constructively received from the sale of the Series 1993 Bonds, not including accrued interest). (2) Amounts constituting investment proceeds of the Series 1993 Bonds, within the meaning of Treasury Regulations Section 1.148-1(b) (i.e., amounts actually or constructively received from investing sale proceeds and investment proceeds of the Series 1993 Bonds). (3) Amounts constituting transferred proceeds of the Series 1993 Bonds, within the meaning of Treasury Regulations Section 1.148-1(b). (4) other amounts constituting replacement proceeds of the Series 1993 Bonds, within the meaning of Treasury Regulations Section 1.148-1(c). (5) Amounts that constitute Pledged Moneys (as defined below) and that are derived directly or indirectly from the City (or a governmental unit of which the City is a part) or any other person who substantially benefits from the issuance of the Series 1993 Bonds. "Investment -type Property" means any security or obligation held principally as a passive vehicle for the production of income, within the meaning of Treasury Regulations 1.148-1(b). "Issue Date" means December 16, 1993. "Nonpurpose Investment" shall have the meaning ascribed to such term in Section 148(b)(2) of the Code and shall include any Investment Property in which Gross Proceeds are invested which is not acquired to carry out the governmental purpose of the Series 1993 Bonds, e.g., obligations acquired with Gross Proceeds that are invested temporarily until needed for the governmental purpose of the Series 1993 Bonds, that are used to discharge a prior issue, or that are invested in a reasonably required reserve or replacement fund. "Nonpurpose Payments" shall include the payments specified in Treasury Regulations Section 1.148-3(d)(1)(i)-(v). "Nonpurpose Receipts" shall include the receipts specified in Treasury Regulations Section 1.148-3(d)(2)(i)-(iii). "Pledged Moneys" means moneys that are reasonably expected to be used directly or indirectly to pay debt service on the Series 1993 Bonds (or to reimburse the Insurer) or as to which there is a reasonable assurance that such moneys or the earnings thereon will be available directly or indirectly to pay debt service on the Series 1993 Bonds (or to reimburse the Insurer) if the City encounters financial difficulties. "Rebatable Arbitrage" means, as of any Computation Date, the excess of the future value of all Nonpurpose Receipts over the future value of all Nonpurpose Payments. "Rebate Account" means the Rebate Account established pursuant to the Resolution and described in Section 3 hereof. "Tax -Exempt Investment" means (i) an obligation the interest on which is excluded from gross income pursuant to Section 103 of the Code, (ii) United States Treasury -State and Local Government Series, Demand Deposit Securities, and (iii) stock in a tax-exempt mutual fund. Tax -Exempt Investment shall not include a specified private activity bond as defined in Section 57(a)(5)(C) of the Code. For purposes of this Rebate Statement, a tax-exempt mutual fund includes any regulated investment company within the meaning of Code Section 851(a) meeting the requirements of Code Section 852(a) for the applicable taxable year; having only one class of stock authorized and outstanding; investing all of its assets in tax-exempt bonds to the extent practicable; and having at least 98% of (1) its gross income derived from interest on, or gain from the sale of or other disposition of, tax-exempt bonds or (2) the weighted average value of its assets represented by investments in tax-exempt bonds. "Yield on the Bonds" means, for all Computation Dates, the Yield expected as of the date hereof on the Series 1993 Bonds over the term of such Bonds computed by: (i) using as the purchase price of the Series 1993 Bonds, the amount at which such Bonds were sold to the public within the meaning of Sections 1273 and 1274 of the Code; and (ii) assuming that all of the Series 1993 Bonds will be paid at their scheduled maturity dates or in accordance with any mandatory redemption requirements. "Yield" means, generally, the discount rate which, when used in computing the present value of all the unconditionally payable payments of principal and interest on an obligation and all the payments for a qualified guarantee paid and to be paid with respect to such obligation, produces an amount equal to the present value of the issue price of such obligation. Present value is computed as of the date of issue of the obligation. There are, however, many additional specific rules contained in the Treasury Regulations which apply to the calculation and recalculation of yield for particular obligations and such rules should be consulted prior to calculating the yield for the Series 1993 Bonds on any Computation Date. Yield shall be calculated on a 360 -day year basis with interest compounded semi-annually. For this purpose the purchase price of a Nonpurpose Investment or a Tax -Exempt Investment is its Fair Market Value, as determined pursuant to Section 4 of this Rebate Statement, as of the date that it becomes allocated to Gross Proceeds of the Series 1993 Bonds. SECTION 3. REBATE REQUIREMENTS. (a) The City shall pay to the United States Government at the times and in the amounts determined hereunder the Rebatable Arbitrage. For purposes of determining the Rebatable Arbitrage, the City hereby covenants to cause the calculations described below to be made by competent tax counsel or other financial or accounting advisors to ensure correct application of the rules contained in the Code and the Treasury Regulations relating to arbitrage rebate. (b) Pursuant to the Resolution, there has been established a fund separate from any other fund or account established and maintained under the Resolution designated the Rebate Account. The City or its designated agent shall administer the Rebate Account and continuously invest all amounts held in the Rebate Account in Authorized Investment (as defined in the Resolution) as described in clause (1) and (2) of such definition. (c) Within 30 days after any Computation Date, the City shall calculate or cause to be calculated the Rebatable Arbitrage or any penalty due pursuant to Section 3(f) hereof. Immediately following such calculations, but in no event later than 60 days following the Computation Date, the City shall remit an amount which shall not be less than 90 percent (100 percent with respect to the Computation Date on the final repayment or retirement of the Series 1993 Bonds) of the Rebatable Arbitrage or 100; of any penalty due pursuant to Section 3(f) hereof as of the applicable Computation Date. Each payment shall be accompanied by Form 8038-T and, until such Forms are modified to reflect the payment of penalty payments, such Form shall conform to the requirements set forth in IRS Revenue Procedure 92-22 if the subject payment constitutes a penalty payment described in Section 3(f) hereof. (d) The obligation to pay Rebatable Arbitrage to the United States, as described herein, shall be treated as satisfied with respect to the Series 1993 Bonds if (i) Gross Proceeds are expended for the governmental purpose of the Series 1993 Bonds by no later than the date which is six months after the Issue Date and if it is not anticipated that any other Proceeds will arise during the remainder of the term of the Series 1993 Bonds and (ii) the requirement to pay Rebatable Arbitrage, if any, to the United States with respect to the portion of the Reserve Subaccount allocable to the Series 1993 Bonds is met. For this purpose only, Gross Proceeds do not include (i) amounts deposited in a bona fide debt service fund, so long as the funds therein constitute bona fide debt service funds, or a reserve or replacement fund (as defined in Treasury Regulations Section 1.148-1 and meeting the requirements of Treasury Regulations 1.148-2(f), respectively), (ii) amounts that, as of the Issue Date, are not reasonably expected to be Gross Proceeds but that become Gross Proceeds after the date which is six months after the Issue Date, (iii) amounts representing sale or investment proceeds derived from any Purpose Investment (as defined in Treasury Regulations Section 1.148-1) and earnings on those payments and (iv) amounts representing any repayments of grants (as defined in Treasury Regulations 1.148- 6(d)(4)). If Gross Proceeds are in fact expended by such date, then Rebatable Arbitrage need not be calculated and no payment thereof to the United States Department of Treasury need be made. Use of Gross Proceeds to redeem the Series 1993 Bonds shall not be treated as an expenditure of such Gross Proceeds. Notwithstanding the foregoing, if Gross Proceeds which were reasonably expected to be Gross Proceeds on the Issue Date actually become available after the date which is six months after the Issue Date, as determined by the City, then the requirements described herein relating to the calculation of Rebatable Arbitrage and the payment thereof to the United States must be satisfied, except that no such calculation or payment need be made with respect to the initial six month period. (e) As an alternative to paragraph (d) above, the obligation to pay Rebatable Arbitrage to the United States, as described herein, shall be treated as satisfied with respect to the Series 1993 Bonds if the Gross Proceeds are expended for the governmental purposes of the issue within the periods set forth below: (i) at least 15 percent of such Gross Proceeds are spent within the six-month period beginning on the Issue Date; (ii) at least 60 percent of such Gross Proceeds are spent within the 1 -year period beginning on the Issue Date; and (iii) at least 100 percent of such Gross Proceeds are spent within the 18 -month period beginning on the Issue Date. As set forth in Treasury Regulations Section 1.148-7(d)(2), for purposes of the expenditure requirements set forth in this paragraph (e), 100 percent of the Gross Proceeds of the Series 1993 Bonds shall be treated as expended for the governmental purposes of the issue within the 18 -month period beginning on the Issue Date if such requirement is met within the 30 -month period beginning on the Issue Date and such requirement would have been met within such 18 - month period but for a reasonable retainage (not exceeding 5 percent of the Net Proceeds of the Series 1993 Bonds). If Gross Proceeds are in fact expended by such dates, then Rebatable Arbitrage need not be calculated and no payment thereof to the United States Department of Treasury need be made. Any failure to satisfy the final spending requirement shall be disregarded if the City exercises due diligence to complete the project financed and the amount of the failure does not exceed the lesser of 3 percent of the issue price of the Series 1993 Bonds or $250,000. Use of Gross Proceeds to redeem the Series 1993 Bonds shall not be treated as an expenditure of such Gross Proceeds. For purposes of this paragraph (e), "Gross Proceeds" shall be modified as described in paragraph (d) above. (f) As an alternative to paragraphs (d) and (e) above, the obligation to pay Rebatable Arbitrage to the United States, as described herein, shall be treated as satisfied with respect to the Series 1993 Bonds if the Available Construction Proceeds (as defined in Section 148(f) (4) (c) (vi) of the Code and described below) are expended for the governmental purposes of the issue within the periods set forth below: (i) at least 10 percent of such Available Construction Proceeds are spent within the six-month period beginning on the Issue Date; (ii) at least 45 percent of such Available Construction Proceeds are spent within the 1 -year period beginning on the Issue Date; (iii) at least 75 percent of such Available Construction Proceeds are spent within the eighteen -month period beginning on the Issue Date; and (iv) at least 100 percent of such Available Construction Proceeds are spent within the'2-year period beginning on the Issue Date. For purposes of this paragraph (f), the term Available Construction Proceeds means the Net Proceeds of the construction issue, increased by earnings on the Net Proceeds, and earnings on amounts in the Reserve Subaccount to the extent that such amounts were not funded from proceeds of the Series 1993 Bonds, and earnings on all of the foregoing earnings, and reduced by the amount of the Net Proceeds deposited to the Reserve Subaccount and amounts used to pay issuance costs (including bond insurance premium). As set forth in Section 148(f)(4)(B)(iv)(III) of the Code, for purposes of the expenditure requirements set forth in this paragraph (f), 100 percent of the Available Construction Proceeds of the Series 1993 Bonds shall be treated as expended for the governmental purposes of the issue within the 2 -year period beginning on the Issue Date if such requirement is met within the 3 -year period beginning on the Issue Date and such requirement would have been met within such 2 -year period but for a reasonable retainage (not exceeding 5 percent of the Net Proceeds of the Series 1993 Bonds). Any failure to satisfy the final spending requirement shall be disregarded if the City exercises due diligence to complete the project financed and the amount of the failure does not exceed the lesser of 3 percent of the issue price of the issuer or $250,000. For purposes of Section 148 (f) (4) (C) (vii) of the Code, in the event the City fails to meet the expenditure requirements referred to above, the City may elect to pay, in lieu of the Rebatable Arbitrage otherwise required to be paid with respect to such Gross Proceeds, a penalty with respect to the close of each 6 -month period after the Issue Date equal to 1.5 percent of the amount of the Available Construction Proceeds of the Series 1993 Bonds which shall be used to construct improvements to the land acquired as part of the project which, as of the close of such period, are not spent as required by the expenditure provisions set forth above. The penalty referred to above shall cease to apply only after the Series 1993 Bonds (including any refunding bonds issued with respect thereto) are no longer outstanding. The City makes no election in regard to the above-described penalty. In order to qualify for the exemption from the obligation to pay Rebatable Arbitrage to the United States pursuant to this paragraph (f), at least 75 percent of the Available Construction Proceeds of the Series 1993 Bonds must be used for construction expenditures (as defined in Treasury Regulations Section 1.148- 7(8)) with respect to property which is owned by a governmental unit or an organization described in Section 501(c)(3) of the Code. If only a portion of an issue is to be used for construction expenditures, such portion and the other portion of such issue may, at the election of the issuer, be treated as separate issues for purposes of this Section 3(f) (although the remaining portion may not be entitled to the benefits of paragraph (d) hereof). The City does not elect to treat any portion of the Series 1993 Bonds as a separate issue. (g) The City shall keep proper books of records and accounts containing complete and correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the moneys related to the Series 1993 Bonds, including moneys derived from, pledged to, or to be used to make payments on the Series 1993 Bonds. Such records shall, at a minimum, be adequate to enable the City or its consultants to make the calculations for payment of Rebatable Arbitrage as required by this Arbitrage Rebate Statement. The records required to be maintained under this Section 3(g) shall be retained by the City until six years after the retirement of the last obligation of the Series 1993 Bonds or for such other period as the United States Treasury may by regulations otherwise provide. Such records shall at least specify the account or fund to which each investment (or portion thereof) is to be allocated and shall set forth, in the case of each investment security, (i) its purchase price (including the amount of accrued interest to be stated separately), (ii) identifying information, including par amount, coupon rate, and payment dates, (iii) the amount received at maturity or its sale price, as the case may be, including accrued interest, (iv) the amounts and dates of any payments made with respect thereto, (v) the dates of acquisition and disposition or maturity, (vi) the amount of original issue discount or premium (if any), (vii) the frequency of periodic payments (and actual dates and amounts of receipts), (viii) the period of compounding, (ix) the transaction costs (e.g., commissions) incurred in acquiring, carrying or disposing of the Nonpurpose Investments, and (x) market price data sufficient to establish that the purchase price (disposition price) was not greater than (less than) the arm's-length price (see Section 4 below) on the date of acquisition (disposition) or, if earlier, on the date of a binding contract to acquire (dispose of) such Nonpurpose Investment. SECTION 4. MARKET PRICE RULES. Except as provided below, the City agrees to comply with the requirements relating to the "fair market value" of acquired Nonpurpose Investments ("Fair Market Value"). All investments required to be made pursuant to this Rebate Statement shall be made to the extent permitted by law. In this regard, the City agrees, among other things, that it will not acquire or cause to be acquired a Nonpurpose Investment (or any other investment acquired with Gross Proceeds or on deposit in the Rebate Account ), in excess of its Fair Market Value or sell any such investment at a price (determined without any reduction for transaction costs) less than its Fair Market Value, except as provided below. For this purpose, the following rules shall apply: (a) Established securities markets. Except as otherwise provided below, any market especially established to provide a security or obligation to an issuer of municipal obligations shall not be treated as an established market. (b) Arm's-length price. Any transaction in which a Nonpurpose Investment is directly purchased with Gross Proceeds, or in which a Nonpurpose Investment allocable to Gross Proceeds is disposed of, shall be undertaken in an arm's-length manner, and no amount shall be paid to reduce the yield on the Nonpurpose Investment. Provided that the requirements of the preceding sentence are satisfied, the price at which an acquisition or disposition of any such Nonpurpose Investment occurs need not be Fair Market Value. (c) Fair Market Value of traded obligations. The Fair Market Value of any Nonpurpose Investment (other than an obligation described in (c) above) that is traded on an established securities market (within the meaning of Treasury Regulations Section 15A. 453 -1 (e) (4) (iv) ) shall be determined as provided in Treasury Regulations Section 20.2031-2. (d) Fair Market Value of other obligations. The Fair Market Value of a Nonpurpose Investment (other than one described in Section (c) above) shall be the price at which a willing buyer would purchase the Nonpurpose Investment from a willing seller. If the Nonpurpose Investment is not readily salable, the Fair Market Value shall be determined by taking into account the price at which a willing buyer would purchase the same (or a substantially similar) investment from the issuer of the investment. The price shall not be increased by brokerage commissions, administrative expenses or similar expenses. Any such other obligation is rebuttably presumed to be acquired or disposed of for a price that is not equal to its Fair Market Value. (e) Arm's-length price for investment contracts. In the case of an investment contract, the purchase price of the investment contract shall not be considered to be an arm's-length price unless all the following conditions are met: (i) At least three bids on the investment contract are received from reasonably competitive providers (of investment contracts) that have no material financial interest in the Series 1993 Bonds. (ii) The City purchases the highest -yielding guaranteed investment contract for which a qualifying bid is made (determined net of broker's fees); (iii) The yield on the guaranteed investment contract (determined net of broker's fees) is not less than the yield then available from the provider on reasonably comparable guaranteed investment contracts, if any, offered to other persons from a source of funds other than gross proceeds of tax-exempt bonds; (iv) The determination of the terms of the guaranteed investment contract takes into account as a significant factor the City's reasonably expected drawdown schedule for the amounts to be invested, exclusive of amounts deposited in debt service funds and reasonably required reserve or replacement funds; (v) The terms of the guaranteed investment contract, including collateral security requirements, are reasonable; and (vi) the obligor on the guaranteed investment contract certifies the administrative costs that it is paying (or expects to pay) to third parties in connection with the guaranteed investment contract. Certificates in substantially the form of subparagraph (vi) above must be obtained to evidence the foregoing. SECTION 5. ACCOUNTS AND FUNDS SUBJECT TO REBATE. Generally, the basic principle of the rebate requirement is that the City must determine the extent to which earnings on the investment of Gross Proceeds of the Series 1993 Bonds exceeds the Yield on the Series 1993 Bonds. Such arbitrage profits, if any, must be set aside in the Rebate Account, invested and paid to the United States Government as set forth herein. Subject to the provisions hereof, calculation of the Rebatable Arbitrage shall take into account, but shall not be limited to, investments in the Series 1993 Subaccount of the Reserve Subaccount. SECTION 6. MODIFICATION UPON RECEIPT OF BOND COUNSEL OPINION. Notwithstanding any provision of this Rebate Statement, if the City shall receive an opinion of Bond Counsel that any specified action required under this Rebate Statement is no longer required or that some further or different action is required to maintain or assure the exclusion from federal gross income of interest with respect to the Series 1993 Bonds, the City may conclusively rely on such opinion in complying with the requirements of this Rebate Statement and the covenants herein shall be deemed to be modified to that extent. This Rebate Statement shall be amended or modified by the parties hereto in any manner which is necessary to comply with such regulations as may be promulgated by the United States Treasury Department from time to time. Municipal Bond Investors Assurance Corporation 113 King Street Armonk, NY 10504 914 273 4545 M C31A City of Sebastian 1225 Main Street Sebastian, Florida 32958 RE: $5,000,000 City of Series 1993 (the "Obligations") Ladies and Gentlemen: EXHIBIT B - 2.8 TAX CERTIFICATE Sebastian, Florida, Utilities System Revenue Bonds, In connection with the issuance of the above -referenced obligations (the "Obligations"), we are issuing a financial guaranty insurance policy (the "Policy") securing the payment of principal and interest on the Obligations. This is to advise you that: 1. The Policy is an unconditional obligation of the Insurer to pay scheduled payments of principal and interest on the Obligations in the event of a failure to do so by the City of Sebastian (the "Issuer"); 2. The insurance premium in the amount of $108,000 represents the charge for a transfer of credit risk and was determined in arm's length negotiations and is required to be paid as a condition to the issuance of the Policy; 3. No portion of such premium represents an indirect payment of costs related to the issuance of the Obligations other than the transfer of credit risk; 4. The Insurer does not reasonably expect that it will be called upon to make any payment under the Policy; and 5. To the extent the Insurer is called upon to make any payment under the Policy, the Insurer reasonably expects to pursue all available legal remedies to secure reimbursement for such payment. Dated: December 16, 1993 MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION Assistant Secretary EXHIBIT C UNDERWRITER'S CERTIFICATE The undersigned, acting on behalf of Raymond James & Associates, Inc. (the "Underwriter") for the $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Bonds"), hereby certifies to City of Sebastian, Florida (the "City") that: 1. All of the Bonds have been the subject of a bona fide initial offering to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers), at prices no higher than, or yields no lower than, those shown on the cover of the Official Statement relating to the Bonds. 2. Based on our records and other information available to us, which we believe to be correct, at least ten percent (10%) of the principal amount of the Bonds was sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at initial offering prices not greater than the respective prices shown on the cover of the Official Statement, plus accrued interest, or in the case of discount obligations sold on a yield basis, at yields no lower than the respective yields shown on the cover, plus accrued interest. At the time the Underwriter agreed to purchase the Bonds, based upon then prevailing market conditions, we had no reason to believe any of the Bonds would be initially sold to the public (excluding such bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at prices greater than the prices, or yields less than the yields, shown on the cover of the Official Statement, plus accrued interest. 3. The funding of the Reserve Subaccount (as described in the Official Statement) in the required amount is in accordance with customary practice in the municipal bond market, facilitates the marketing of such Bonds, permits the marketing of such Bonds at an interest rate comparable to that of other bond issues of a similar size and type, and is not in excess of that amount considered necessary for such purpose. 4. The sum of the present value of the premium paid to Municipal Bond Investors Assurance Corporation ("MBIA") to obtain credit support for the Bonds through the issuance of a bond insurance policy (the "Policy") is less than the present value of the interest reasonably expected to be saved as a result of such Policy. The discount rate chosen for computing such present value is the yield on the Bonds (determined without regard to costs of issuing the Bonds or such premiums). We understand that the representations set forth herein are being relied on by the City in the City's Certificate as to Arbitrage and Certain Other Tax Matters. Dated: December 16, 1993 RAYMOND JAMES & ASSOCIATES, INC. By: l tA Its: lily! SaAk 2.9 GENERAL CERTIFICATE The undersigned, Lonnie R. Powell, Mayor of the City of Sebastian, Florida (the "City"), DOES HEREBY CERTIFY as follows: 1. Resolution No. R-93-67 of the City (as amended and supplemented, the "Resolution") has been entered into and is in full force and effect. 2. To the best of my knowledge and belief, the representations, warranties, covenants and agreements of the City contained in the Bond Purchase Contract dated December 8, 1993, between the City and the underwriter named therein (the "Purchase Contract"), with respect to the sale by the City of its $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"), are true and correct in all material respects on and as of the date of the Closing (as such term is defined in the Purchase Contract) as if made on the date of the Closing. 3. Except as disclosed in the Official Statement, dated December 8, 1993, relating to the Series 1993 Bonds (the "Official Statement"), no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency or public board or body, is pending against or, to the best of my knowledge, threatened against or affecting the City or involving any of the businesses, properties or affairs of the City which involves the possibility of any judgment or liability which may result in any material adverse change in the properties, businesses or assets of the City or the condition, financial or otherwise, of the City. 4. The Bond Resolution, the Purchase Agreement Resolution and the Rate Resolution (as such terms are defined in the Bond Purchase Contract) have been duly adopted and are presently in effect. 5. The Official Statement, as of its date and as of the date hereof, (apart from the information contained under the captions "MUNICIPAL BOND INSURANCE" and "TAX EXEMPTION" as to which no representation is made) does not contain any untrue statement of a material fact or omit to state a material fact which should be included therein for the purposes for which the Official Statement is to be used, or which is necessary in order to make the statements contained therein, in light of the circumstances in which they were made, not misleading. 6. To the best of my knowledge, no event affecting the City has occurred since the date of the Official Statement which has not been disclosed therein or by supplement or amendment and which should be disclosed in the Official Statement for the purpose for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect. 7. The City has never been in default at any time after December 31, 1975, as to principal or interest with respect to an obligation issued by the City. 8. The City has complied with all the agreements and satisfied all the conditions on its part to be complied with or satisfied at or prior to this date pursuant to the Bond Purchase Contract, the Purchase Agreement, the Rate Resolution and the Bond Resolution. 9. Since the date of the Official Statement there has been no material adverse change in the condition of the City, financial or otherwise. IN WITNESS WHEREOF, the official seal of the I have hereunto set my hand and affixed City this 16th day of December, 1993. /Z. , //v ayor, City oirSebastian, Florida 2.10 CERTIFICATE AS TO SPECIMEN BONDS I, Kathryn M. O'Halloran, the undersigned City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that attached hereto as Exhibit A are specimens of the City's Utilities System Revenue Bonds, Series 1993 (the "Bonds"), which specimens are identical in all respects, except as to registered holder, date of authentication, principal amount and number, with the Bonds this day delivered to the original purchasers thereof. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of December, 1993. (SEAL) Kathry M. O'Halloran City Clerk, City of Sebastian, Florida No. $ UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF SEBASTIAN UTILITIES SYSTEM REVENUE BOND SERIES 1993 r" 6 Interest Maturity te' f Rate Date Origibel I sue CUSIP 1993 Registered Holder: Principal Amount: % , KNOW ALL MEN Y THESE P�IsSA`NTS, that the City of Sebastian, Florida, a munic ber ration of the State of Florida (the "Issuer°) r v ed, hereby promises to pay, solely from the Pled d da described, to the Registered Holder identifi d ove,red assigns as hereinafter provided, on kayment Matu 'ty Date i above, the Principal Amount identified e an t pay insuch Principal Amount from the Date of inal ue identified above or from the most recent interest da to which interest has been paid at the Interest Rate per annum i tified above on April 1 and October 1 of each year commencing Ap '1 1, 1994 until such Principal Amount shall have been paid, exc t as the provisions hereinafter set forth with �pect to redem ion prior to maturity may be or become applicable Such Pri ipal Amount and interest and the premium, if any, on this Bond ar payable in any coin or currency of the United States of America ich, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. Such Principal Amount and the premium, if any, on this Bond, are payable at the principal corporate trust office of Barnett Banks Trust Company, N.A., Jacksonville, Florida, as Paying Agent. Payment of each installment of interest shall be made to the person in whose name this Bond shall be registered on the registration books of the Issuer maintained by Barnett Banks Trust Company, N.A., Jacksonville, Florida, as Registrar, at the close of business on the date which shall be the fifteenth (15th) day of the calendar month (whether or not a business day) next preceding each interest payment date and shall be paid by check or draft of the Paying Agent to such Registered Holder at the address appearing on such registration books or, at the option of such Paying Agent, and at the request and expense of the Holder of $500,000 or more in principal amount, by bank wire transfer for the account of such Holder. This Bond is one of an authorized issue of Bond in the aggregate principal amount of $5,000,000 (the "Bonds") o like date, tenor and effect, except as to maturity date, interest ate, denomination and number, issued to finance of the acquisition of and the construction and acqu 'tion of certain additions, extensions and improvements to the GZn 1 Development Utilities Water and Sewer System, in and r the Issu under the authority of and in full compliance wit heC stitution and laws of the State, particularly -Chapter 166 loci Sta tes, and other applicable provisions of law (the "Ac Reso tion No. R-93- 58 of the Issuer duly adopted by the Cjt9k<ounciVof the Issuer on November 3, 1993, as restated, ended supplemented (the "Resolution"), and is subject to a he terms and conditions of the Resolution. This Bond and the interes he re payable solely from and secured by a lien upon and a ple a of a Net Revenues (as defined in the Resolution) to be d ived om the operation of the System (as defined in the Resoluta ), I act Fees (as defined in the Resolution), until eased a provided in the Resolution, the Half -Cent Sales Tax _venues, an until applied in accordance with the provisions of t Resolution, all moneys, including investments thereof, in the counts and subaccounts established by the Resolution, exc t (A) to t extent moneys therein shall be required to y t Oper ing Expenses (as defined in the Resolution) Q1 the S in accordance with the terms of the Resolution, (B) to the extent moneys in each subaccount of the Resery ccou t shall be pledged solely for the payment of the Serie o onds or which it was established in accordance with the provi i s f e Resolution and (C) amounts in the Rebate Account (Coll c ive the " ledged Funds"). It is expressly agreed by the Regis ed H er o this Bond that the full faith and credit of the I uer are pledged to the payment of the principal of, 'premi if any, and interest on this Bond and that such Holder shall n er have the right to require or compel the exercise of any taxing p er of the Issuer to the payment of such principal, premium, i any, and interest. This Bond and the obligation evidenced he y shall not constitute a lien upon the System or any other property of the Issuer, but shall constitute a lien only on, P ayable solely from, the Pledged Funds in accordance with the to s of the Resolution. 01 The ransfer of this Bond is registrable in accordance with the t s of the Resolution only upon the books of the Issuer kept for that purpose at the principal corporate trust office of the Registrar by the Registered Holder hereof in person or by his attorney duly authorized in writing; upon the surrender of this Bond together with a written instrument of transfer satisfactory to the Registrar duly executed by the Registered Holder or his attorney duly authorized in writing, and thereupon a new Bond or Bonds in the same aggregate principal amount shall be issued to the transferee in exchange therefor, and upon the payment of the charges, if any, therein prescribed. The Bonds are issuable in the form of fully registered Bonds in the denomination of $5,000.00 and any integral multiple thereof, not exceeding the aggregate principal amount of the Bonds. The Issuer, the Registrar and any Paying Agent may treat the Registered Holder of this Bond as the absolute owner hereof for all purposes, whether or not this Bond shall be overdue, and shall not be affected by any notice to the contrary. The Issuer and the Registrar shall not be obligated to make any exchange or transfer of the Bonds during the fifteen (15) days next preceding an interest payment date or, in the case of any proposed redemption of the Bonds, then, during the fifteen (15) days next preceding the date of the first mailing of notice of such redemption and, in the case of the Bonds called for redemption, continuing until such redemption date. The Issuer has established a book - entryt system of registration for the Bonds. Except as specifically pro ed otherwise in the Resolution, an agent will hold this bond-%Q,behalf of the beneficial owner hereof. By acceptance confirmation of purchase, delivery or transfer, the bene cial owner of this bond shall be deemed to have agreed to sucl}/ar ment. The Series 1993 Bonds maturing cbe 1 of the years 1996 through 2003, inclusive, are not sub ct p redemption prior to maturity. The Series 1993 Bond to ' c/be 1, 2004, and thereafter may, at the option of Xe Issuer, be called for redemption prior to maturity whole on any date on or after October 1, 2003, or in part, n ober 1, 2003, or on the first business day of any month her fter, in such maturity or maturities as shall be designat by the Issuer and by such method within a maturity as the Registr shall deem fair and appropriate if less than a full matur y, from any legally available moneys at the following redemption p 'ces (expressed as percentages of the principal amount) se forth glow, plus accrued interest to the redemption date: Redempti Dat B th D e Sl 've Redemption Price October 1 200 th oug� September 30, 2004 102% October200 t ougl September 30, 2005 101 October ,l, 005 d th&reafter 100 T S ies 1993'Sonds maturing on October 1, 2013, are subject o man redemption by Amortization Installments prior to maturity part by lot at a redemption price equal to the principal a nt thereof and accrued interest thereon to the date fixed for red ption, without premium, as follows: Principal Amount 2008 $150,000 2009 160,000 2010 170,000 2011 175,000 2012 185,000 2013* 195,000 *Maturity The Series 1993 Bonds maturing on October 1, 2023 are subject to mandatory redemption by Amortization Installments prior to maturity in part by lot at a redemption price equal to the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium, as follows: October 1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023* * Principal Amount $205,000 220,000 230,000 240,000 255,000 270,00 285, 30 00 .9���111, 000 �0 Maturity Redemption of this Bond under the ding paragraphs shall be made as provided in the Resolution pon otice given by first class mail sent at least thirty (30) da s prior to the redemption date to the Registered Holder her f at he address shown on the registration books maintainecy by the egistrar; provided, however, that failure to mail notice the Reg ered Holder hereof, or any defect therein, shall not a fect the validity of the proceedings for redemption of other Bond4 as to,/which no such failure or defect has occurred. In the evenk thjot less than the full principal amount hereof shall hav,K bben ed for redemption, the Registered portion hereof sha�s der,this Bond in exchange for one d more Bonds in an agg rinyyc�/((//....pal amount equal to the unredeemed of rin r ided in the Resolution. Referent t the Resolution and any and all resolutions suppletal t to and modifications and amendments thereof and to the ct is m for a description of the pledge and covenants aecuri g this Bon a nature, manner and extent of enforcement of such edge and covenants, and the rights, duties, immunities and oblitions a Issuer. s hereb certified and recited that all acts, conditions and things re ired to exist, to happen and to be performed precedent to ape in the issuance of this Bond, exist, have happened and have bead performed, in regular and due form and time as required by the laws and Constitution of the State of Florida applicable thereto, slid that the issuance of the Bonds does not violate any constitutional or statutory limitations or provisions. Neither the members of the City Council of the Issuer nor any person executing this Bond shall be liable personally hereon or be subject to any personal liability or accountability by reason of the issuance hereof. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Registrar. IN WITNESS WHEREOF, the City Council of the City of Sebastian, Florida has issued this Bond and has caused the same to be executed by the manual signature of its Mayor, and by the manual signature of its Clerk and its corporate seal or a facsimile thereof to be affixed or reproduced hereon, all as of the 1st day of December, 1993. (SEAL) CITY OF SEBASTIAN, FLORIDA Mayor STATEMENT OF INSURANCE The Municipal Bond Investors Assurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at Barnett Banks Trust Company, N.A., Jacksonville, Florida. The Insurer, in consideration of the eby payme of the premium and subject to the terms of•this policy, herunc ditionally and irrevocably guarantees to any owner, as hereinafter fined, of the following described obligations, the full and co ete payment required to be made by or on behalf the i s arnett Banks Trust Company, N.A. or its successor (the 'Paying Agent") of an amount equal to (i) the principal of /(eiter the stated maturity or by any advancement of maturity put to mandatory sinking fund payment) and interest on, the ations (as that term is defined below) as such payments shalom due but shall not be so paid (except that in the event of y celeration of the due date of such principal by reason andatory or optional redemption or acceleration resul in from default or otherwise, other than any advancement of ma urit pursuant to a mandatory sinking fund payment, the payme uaranteed hereby shall be made in such amounts and at such ti es s such payments of principal would have been due had there no been any such acceleration); and (ii) the reimbursement of any s h payment which is subsequently recovered from any owner rsuant o a final judgment by a court of competent Jur isdictio tha such payment constitutes an avoidable preference to such er w the meaning of any applicable bankruptcy law. The mounts referred to in clauses (i) and (ii) of the preceding sent c shall be referred to herein collectively as the "Insured Amou s. "Obligations" shall mean: $5,000,000 of Sebastian, Florida :em Revenue Bonds, Series 1993 Upon ec ipt of—Eelephonic or telegraphic notice, such notice S equent onfirmed in writing by registered or certified mail, or upon rece of written notice by registered or certified mail, b the Insurer m the Paying Agent or any owner of an Obligation t e paymen an Insured Amount for which is then due, that such r quir ayme t has not been made, the Insurer on the due date of s ayment o within one business day after receipt, of notice of such nonpaymen , whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York, New York, or its successor, fficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium. which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504. This policy is non-cancelleable for an reason. The premium on this policy is not refundable for anyeason including the payment prior to maturity of the Obligations. The insurance provided by this Polite is Florida Insurance Guaranty Association c eY Florida Statutes. MUNICIPAL BOND covered by the x chapter 631, CORPORATION CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the Issuer described in the within -mentioned Resolution. DATE OF AUTHENTICATION: BARNETT BANKS TRUST COMPANY, N.A. Registrar By: 8 Unless this certificate is presented by an authorized representative of The Depository Trust Company to the.Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as required by the authorized representative of The Depository Trust Company and any payment is made t9 Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE O OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered o er hereof, Cede & Co., has an interest herein. ASSIGNMENT FOR VALUE RECEIVED, the undersigned wells, assigns and transfers unto Insert Social Security or Other Identifying Number of Assignee (Name and the within Bond and doWLVrr-by ixod-vocably constitute and appoint as attorney to register the transfer ofka� sakd Vond on the books kept for registration thereof with full poweXof substitution in the premises. Dated: Signature NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature to this assignment must correspond with the name of the Registered Holder as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever and the Social Security or other identifying number of such assignee must be supplied. 9 2.11 CITY'S CERTIFICATE AS TO DELIVERY AND PAYMENT WITH RESPECT TO THE SERIES 1993 BONDS I, Kathryn M. O'Halloran, City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that on the date hereof I caused to be delivered to The Depository Trust Company, New York, New York, on behalf of Raymond James & Associates, Inc. the Underwriter, the obligations of the City described in Schedule A attached hereto, and received on this date from the Underwriter in full payment therefor, the following sum: Original Principal Amount Plus: Accrued Interest Less: Original Issue Discount Underwriters' Discount MBIA Premium paid on behalf of the City Total $5,000,000.00 10,728.44 (8,451.00) (62,500.00) (108,000.00) $4,831,777.44 Pursuant to the instruction of the City, Raymond James & Associates, Inc. has wired $3,470,221.15 of the sum set forth above to General Development Utilities, Inc. and has wired $15,538 to Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 16th day of December, 1993. U l • / / /GLZZ" ce— Kathryn . O'Halloran, Acting City Manager of the City of Sebastian, Florida SCHEDULE A $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 The Series 1993 Bonds are dated as of December 1, 1993, are payable as to interest on April 1 and October 1 of each year, commencing on April 1, 1994, and bear interest at the rates and mature in the amounts on October 1 of the years set forth below: Principal Interest Year Amount Rate 1996 $ 50,000.00 3.40; 1997 75,000.00 3.60 1998 100,000.00 3.70 1999 100,000.00 3.90 2000 105,000.00 4.00 2001 110,000.00 4.20 2002 115,000.00 4.30 2003 120,000.00 4.45 2004 125,000.00 4.60 2005 130,000.00 4.75 2006 135,000.00 4.90 2007 145,000.00 5.00 2013 1,035,000.00 5.40 2023 2,655,000.00 5.45 2.12 CERTIFICATE AS TO NO PRIOR PLEDGE I, Kathryn M. O'Halloran, the undersigned City Clerk of the City of Sebastian, Florida (the "City"), DO HEREBY CERTIFY that the Pledged Funds (as defined in Resolution No. R-93-67 of the City) pledged by the City to the payment of the principal of and interest on the obligations of the City described in Schedule A attached hereto are not pledged, in whole or in part, directly or indirectly, for the benefit of any other obligations of the City which are currently outstanding. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of December, 1993. (SEAL) Rathry#jM. O'Halloran City Clerk, City of Sebastian, Florida SCHEDULE A $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 The Series 1993 Bonds are dated as of December 1, 1993, are payable as to interest on April 1 and October 1 of each year, commencing on April 1, 1994, and bear interest at the rates and mature in the amounts on October 1 of the years set forth below: Principal Interest Year Amount Rate 1996 $ 50,000.00 3.40% 1997 75,000.00 3.60 1998 100,000.00 3.70 1999 100,000.00 3.90 2000 105,000.00 4.00 2001 110,000.00 4.20 2002 115,000.00 4.30 2003 120,000.00 4.45 2004 125,000.00 4.60 2005 130,000.00 4.75 2006 135,000.00 4.90 2007 145,000.00 5.00 2013 1,035,000.00 5.40 2023 2,655,000.00 5.45 2.13 A4BIA FINANCIAL GUARANTY INSURANCE POLICY Municipal Bond Investors Assurance Corporation Armonk, New York 10504 Policy No. 15019 Municipal Bond Investors Assurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally ll band e mark by ren guarantee the Iany owner, to as hereinafter defined of the following described obligations, the full and completepay req y Barnett Banks Trust Company, N.A., Jacksonville, Florida or is successor (the "Paying Agent") of an amount equal to (i) the princiQal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest en, die Obbligabons (u that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due dace of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than my advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as mch payments of principal would have been due had them, not been my such secekration); and (ii) the reimbursement of my such payment which is subsequently recovered from any owner Pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy low. Tie amounts refereed to in clauses (i) and (B) of the preceding sentence shall be referred to herein collectively as the "Iround Amounts." "Obligations" shall mean: $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds Series 1993 Upon receipt of telephonic or mlegra hic notice, much notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by die Insurer from die Paying Agent or my owner of an Obligation Ute payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York, New York, or is successor, sufficient for the payment of my such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with my appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations u are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank. N.A., Citibank, N.A. shall disburse to such owners, or the Paying Agent payment of the Insured Amounts due on such Obligations, km any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. 'Ibis policy does not insure against loss of any prepayment premium which may at my time be payable with respect to my Obligation. As used herein, the term "owner" shall mean the registered owner of my Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or my party whom agreement with the Issuer comdums the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its office located at 113 Ring Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non -cancellable for my mum. The premium on this policy is not refundable for my mum including the payment prior to maturity of the Obligations. Tim insurance provided by this Policy is not covered by the Florida Insurance Guaranty Association created under chapter 631, Florida Statutes. IN WRNESS WIR REOF, the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers, this 16th day of December, 1993. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION Resident Licensed Agent Tampa Florida City, State December 13, 1993 Date STD-RCS/F1.4 ill President Am�t: �4� � , I,— Assistant Secretary Municipal Bond Investors Assurance Corporation 113 King Street Armonk, NY 10504 914 273 4545 December 16, 1993 MBIA Barnett Banks Trust Company, N.A., Jacksonville, Florida $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds Series 1993 Gentlemen: In connection with the above-described obligations (the "Obligations") of which you are acting as paying agent (the "Paying Agent"), please be advised that the payment to you of principal of and interest on the Obligations has been guaranteed by a policy of financial guaranty insurance (the "Policy") issued by the Municipal Bond Investors Assurance Corporation (the "Insurer"). Citibank, N.A., New York, New York, (the "Fiscal Agent") is acting as the fiscal agent for the Insurer. The Policy unconditionally and irrevocably guarantees to any owner or holder of the Obligations or, if applicable, of the coupons appertaining thereto (the "Owner"), the full and complete payment required to be made by or on behalf of the issuer of the Obligations (the "Issuer") to the Paying Agent or its successor of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the Policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any Owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference (a "Preference") to the Owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence are referred to collectively in this letter as the "Insured Amounts." Mava -2- The Policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligations. The Policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Obligations upon tender by an Owner thereof; or (iv) any Preference relating to (i) through (iii) above. In the event that the Issuer does not make full and complete payment when due of the principal of and interest on the Obligations, please immediately notify, by telephone or telegraph, the Insurer, 113 King Street, Armonk, New York, 10504, (914) 273-4545. On the due date or within one business day after receipt of such notice, whichever is later, the Insurer will deposit funds with the Fiscal Agent sufficient to pay the Obligations (or, if applicable, coupons appertaining thereto) then due. Upon presentment and surrender of such Obligations (or, if applicable, coupons) or presentment of such other proof of ownership of Obligations together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for the Owners in any legal proceeding related to payment of Insured Amounts on the Obligations (or, if applicable, coupons), such instruments being in a form satisfactory to the Fiscal Agent, shall disburse to you payment of the Insured Amounts due on such Obligations (and, if applicable, coupons), less any amount held by you for the payment of such Insured Amounts and legally available therefor. Forms of such instruments of assignment and instruments to effect the appointment of the Insurer as such agent for the Owners (collectively, the "Claim Documents"), which are currently acceptable to the Fiscal Agent and the Insurer, are on file with the Fiscal Agent. The Insurer may, from time to time, file revised forms of Claim Documents with the Fiscal Agent in substitution for the forms previously filed with the Fiscal Agent, and upon such filing, the revised forms shall supersede all forms of Claim Documents previously filed with the Fiscal Agent, except as otherwise directed by the Insurer in writing. In the event that you shall have prior knowledge of an impending failure by the Issuer to make payment on the Obligations (or, if applicable, coupons) when due, please immediately notify the Insurer so that it will be possible to have funds available for you on the due date to make payments against surrendered Obligations (and, if applicable, coupons). Your cooperation in this matter will possible for the Owners of Obligations of all payments when due. Very truly yours, David H. Elliott, President Municipal Bond Investors Assurance Corporation be most appreciated and will make it guaranteed by the Insurer to be assured @ moody§ investors service AA Church Street New York. NY IOW7 Deoember 15, 1993 Municipal Bond Investor Assurance Corporation 113 King Street Armonk, Now York 10504 Dear META: MoodIsInvestors Service has assigned the rating of A= (MBIA insured - Policy No. 150191 to the $5,000,000.00 City of Sebastian, Florida, Utilities System Revnue Bonds, Series 1993, dated December 1, 1993, which sold through negotiation on December 8, 1993. The rating is based upon an insurance policy provided by Municipal Bond Investor Assurance Corporation. should you have any questions regarding the above, please do not hesitate to contact the assigned analyst, Margaret Kessler at (212) 553-7884. DH:gm SSiinccarely yours, Daniel N. Heimowitz Executive Vice President Director Public Finance Dept. *.�ENDn.. 2.14 Standard & Poor's Corporation Bond Insurance Administration 25 Broadway Now York, Now York 10004.1064 Telaphone 212/208-1740 FAX 212/2088282 Deoomber 15, 1993 Municipal Bond Investors Assurance Corporation 113 King Street Armonk, New York 10504 Ile: $5,000,000 City of Sebastian, Florida, Utilities System Revenue Bonds, Series 1993, dated, December I, 1993, due. October 1, 1996-2023 (POLICY #15019) Ladies and Gentlemen: Pursuant to your request for a Standard & Poor's rating on the subject obligations, we have reviewed the information submitted and have assigned a rating of 'AAA'. This reflects our assessment of the likelihood of repayment of principal and interest based on the bond insurance policy your company is providing. Rating adjustments may result from changes in the financial position of your company or from alterations in documents governing the issue. With respect to the latter, please notify us of any changes or amendments over the term of the issue. When using this Standard & Poor's rating, include S&P's definition of the rating together with a statement that this may be changed, suspended or withdrawn as a result of changes in, or unavailability of, information. This rating is not a `market rating", because it is not a recommendation to buy, hold or sell the obligations. Please remember that complete documentation relating to this issue must be submitted no Iater than 90 days after the date of this letter. If you have any questions, please contact us. Very ly yours, icf �`�iC� 2.15 Fon, 8038-G Information Return for Tax -Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) OMB No. 1545-0720 (Rev. May 1993) ► See separate Instructions. Dewrm+em of ma a eaA„ny se Form -e issue rice is under $100,000. kuareinever,ir Sru (UF8038-GC if thiP ) Reporting Authority If Amended Return, check here ► ❑ 1 Issuer's name 2 Issuer's employer identification number CITY OF SEBASTIAN, FLORIDA 59:6000427 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 1225 MAIN STREET G1993 - 1 5 City, town, state, and ZIP code 6 Date of issue SEBASTIAN, FLORIDA 32958 December 16, 199 7 Name of, Issue 8 CUSIP Number UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 217RArR171 9 10 11 12 13 14 15 16 17 18 111Education (attach schedule -see instructions) . . . . . . . . . . . . . . . . . ❑ Health and hospital (attach schedule -see instructions). . . . . . . . . . . ❑ Transportation . . . . . . . . . . . . . . . . . _ . . . . . . . . . ❑ Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❑ Environment (including sewage bonds) . . . . . . . . . . . . . . . . . . . ❑ Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❑ Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❑ Other. Describe (see Instructions) ► If obligations are tax or other revenue anticipation bonds, check box ► ❑ If obligations are in the form of a lease or installment sale, check box ► ❑ Issue price $ 4;991,549.00 Descri tion of Obligations Maturity date IntX rate Issue (C)(d) Mated r(eddemption at maturity Weighted average maturity YM � in)er� cost 19 Final maturity. 10701/23 5:45 % 1 2, 655, 000 2,655,000 20 Entire issue 4,991 549 5, 000, 000 19.684 ears -5:492 % 5.399% Uses of Original Proceeds of Bond Issue(including underwriters' discount - 21 22 23 24 25 26 27 28 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . Issue price of entire issue (enter amount from line 20, column (c)) .22 Proceeds used for band issuance costs (including underwriters' discount) 23 167,500. 00 Proceeds used for credit enhancement . . . . . . . . . . 24 108, 000.00 Proceeds allocated to reasonably required reserve or replacement fund 25 385, 995.21 Proceeds used to refund prior issues . . . . . . . . . . . . 26 -0- Total (add lines 23 through 26) . . . . Nonrefunding proceeds of the Issue subtract line 27 from line 22 and enter amount here . . . 12814,340,782.23 21 .10,728 * 44 4,991,549.00 661, 495.21 27 Descri tion of Refunded Bonds (complete this part only for refunding bonds 29 30 31 Enter the remaining weighted average maturity of the bonds to be refunded . . . . . . ► Enter the last date on which the refunded bonds will be called . . . . . . , ► Enter the date(s) the refunded bonds were issued ► Years 32 Enter the amount of the state volume cap allocated to the issue . . . . . . . . . , ► $5,000,000 33 Enter the amount of the bonds designated by the issuer under section 265(b)(3XB"i ll) (small issuer exception) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► 34 Pooled financings: a Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units ► b If this Issue is a ban made from the proceeds of another tax-exempt Issue, check box ► ❑ and enter the name of the issuer ► and the date of the Issue ► 35 If the issuer has elected to pay a penalty in lieu of rebate, check box , ► ❑ Under penalties of perjury, I declare that I have examined this return and accompanying schedules ant statements, "to the best of my kno'j dge and belief, 0% are true, correct, and oomplete. Please I Sign Here ecember II�Sgno2 foce Dad For Paperwork Reduction Act Notice, see page i of the Instructions / Type -print nameerwtmeLonnie R. Powel Cat. No. 637735 Form 8038-G (Rev. 5-93) Mayor, City of Sebastian 'US. GrnarrcnON P"kV O f : IM -313-034=150 STATE OF FLORIDA 2.16 DIVISION OF BOND FINANCE LOCAL, BOND MONITORING SECTION BOND INFORMATION FORM Part I. Issuer Information 1. Name of Governmental Unit City of Sebastian, Florida 2. Mailing Address 1225 Main Street 3. City Sebastian 4. County Indian River 5. Zip Code 32958 6. Type of Issuer County Dependent Special District City Independent Special District = Authority Other Part II. Bond Issue Information 1. Name of Issue City of Sebastian, Florida Utilities System Revenue Bonds Series 1993 2. Amount Issued $5.000,000 3. Amount Authorized $5,000.000 4. Dated Date December 1. 1993 5. Sale Date December 8, 1993 6. Delivery Date December 16, 1993 7. Legal Authority for Issuance Florida Statutes Chanter 166 Special Act Other 8. Type of Issue General Obligation Revenue Special Assessment Special Obligation 9. Specific Revenue(s) Pledged (1) Primary Water and Sewer Revenues (2) Secondary Impact Fees; Half Cent Sales Tax (3) Tertiary (4) Other 10. Purpose(s) of the Issue (1) Acquire water and sewer system and construct improvements with respect thereto. (2) _Pay certain costs of issuance BF 2003 (Revised 3/83) 10a. If purpose is refunding, complete the following: (1) For each issue refunded, list name of issue, dated date, original par value of issue, and amount of par value refunded. (a) M 2 (c) (2) Refunded debt has been: retired, or defeased 11. Type of Sale Competitive Bid Private Placement © Negotiated 12. Basis of Interest Rate Calculation Rate Net Interest Cost Rate (NIC) O True Interest Cost Rate (TIC) Canadian Interest Cost Rate (CIC) Other Bond Yield 5.492478 13. Insurance AMBAC (MGIC) © MBIA None FGIC 14. Rating(s) Moody's Aaa Standard & Poor's AAA Other None 15. Financial Advisor or Consultant 16. Bond Counsel Nabors, Giblin & Nickerson, P.A. 17. Lead Managing Underwriter Raymond James & Associates. Inc. 18. Paying Agent Barnett Banks Trust Company, N.A. 19. Registrar Barnett Banks Trust Company, N.A. 2 20. Maturity Schedule (Fill in following schedule showing annual amounts for bond years or attach completed maturity schedule.) Maturity Date Coupon Annual Principal Mandatory (mo/day/yr) % Interest (Par Value) Term Amortization (1993 Bonds) 10/01/94 $214.568.75 10/01/95 257,482.50 10/01/96 3.400 257,482.50 50.000.00 10/01/97 3.600 255,782.50 75.000.00 10/01/98 3.700 253,082.50 100,000.00 10/01/99 3.900 249,382.50 100.000.00 10/01/00 4.000 245,482.50 105.000.00 10/01/01 4.200 241.282.50 110,000.00 10/01/02 4.300 236,662.50 115,000.00 10/01/03 4.450 231.717.50 120,000.00 10/01/04 4.600 226,377.50 125.000.00 10/01/05 4.750 220,627.50 130,000.00 10/01/06 4.900 214.452.50 135,000.00 10/01/07 5.000 207,837.50 145,000.00 10/01/08 5.400 200,587.50 150,000.00 10/01/09 5.400 192,487.50 160.000.00 10/01/10 5.400 183.847.50 170.000.00 10/01/11 5.400 174,667.50 175,000.00 10/01/12 5.400 165,217.50 185,000.00 10/01/13 5.400 155,227.50 195,000.00 10/01/14 5.450 144,697.50 205,000.00 10/01/15 5.450 133,525.00 220,000.00 10/01/16 5.450 121,535.00 230,000.00 10/01/17 5.450 109,000.00 240.000.00 10/01/18 5.450 95,920.00 255.000.00 10/01/19 5.450 82,022.50 270,000.00 10/01/20 5.450 67,307.50 285.000.00 10/01/21 5.450 51,775.00 300,000.00 10/01/22 5.450 35,425.00 315,000.00 10/01/23 5.450 18,257.50 $ 335,000.00 3 21. Optional Redemption Provisions The Bonds are subject to optional redemption prior to maturity. The Series 1993 Bonds maturing October 1, 2004, and thereafter may, at the option of the Issuer. be called for redemption prior to maturity in whole on any date on or after October 1, 2003, or in part, on October 1, 2003, or on any interest payment date thereafter, in such maturity or maturities as shall be designated by the Issuer and by such method within a maturity as the Registrar shall deem fair and appropriate if less than a full maturity, from any legally available moneys at the following redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued interest to the redemption date: Redemption Date Redemption Both Dates Inclusive Price October 1, 2003 through September 30, 2004 102 October 1, 2004 through September 30, 2005 101 October 1, 2005 and thereafter 100 22. Comments Part III. Respondent Information 1. Name Nabors, Giblin & Nickerson. P.A. Title Bond Counsel Phone 407/426-7595 Date Report Submitted December 16, 1993 Part IV. Please return completed form along with Final Official Statement, if any, to: Division of Bond Finance Department of General Services 2737 Centerview Drive Tallahassee, Florida 32399-0950 904/488-4782 4 STATE OF FLORIDA DIVISION OF BOND FINANCE LOCAL BOND MONITORING SECTION BOND DISCLOSURE FORM - NEGOTIATED SALE Disclosure form for units of local government for bonds sold by negotiated sale, as required by Section 218.38 (1) (c) 1, Florida Statutes, as amended in 1982. This form must be completed and returned to the Division within 120 days after the delivery of the bonds. 1. Title of unit of local government: City of Sebastian, Florida 2. Mailing Address: 1225 Main Street Sebastian, Florida 32958, 3. Name of bond issue: City of Sebastian. Florida Utilities System Revenue Bonds, Series 1993 4. Amount issued: $5,000,000 5. Dated date: December 1, 1993 6. Delivery date: December 16, 1993 7. Name and address of the managing underwriter connected with bond issue: Raymond James & Associates, Inc. 2255 Glades Road, Suite 120A Boca Raton, Florida 33431 8. Name and address of any attorney or financial consultant who advised the unit of local government with respect to the bond issue: (1) Nabors. Giblin & Nickerson, P.A. 201 South Orange Avenue, Suite 1060 Orlando, Florida 32801 (2) (3) (If additional space is needed, continue on separate sheet.) BF 2004-B (3/83) 9. Management fee charged by underwriter: $12,500 10. Underwriter's expected gross spread: $12.50 per thousand par value. 11. Any fee, bonus, or gratuity paid in connection with the bond issue, by any underwriter or financial consultant to any person not regularly employed or engaged by such underwriter or consultant: (1) Name Squire, Sanders & Dempsey Amount $ 15,000 (2) Name Amount $ (3) Name Amount $ (If additional space is needed, continue on separate sheet.) 12. Any other fee paid by the unit of local government with respect to the bond issue, including any fee paid to attorneys or financial consultants: (1) Name Nabors, Giblin & Nickerson, P.A. Amount $ 25,000 (2) Name Amount $ (3) Name Amount $ (4) Name Amount $ (If additional space is needed, continue on separate sheet.) 13. The signature of either the chief executive officer of the governing body of the Unit of Local Government or the governmental officer primarily responsiblzrCitv rdinating th issuance of the bonds must be affixed hereto. Signatur Title of Sebastian Florida Date December 16, 1993 14. For further information regarding this form, the Division -should contact: Name Nabors, Giblin & Nickerson. P.A. Phone No. 407/426-7595 15. Completed form should be returned to: Division of Bond Finance Department of General Services 2737 Centerview Drive Tallahassee, Florida 32399-0950 904/488-4782 2.17 MBIA NO DEFAULT CERTIFICATE OF MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION Re: $5,000,000 City of Sebastian, Florida, Utilities System Revenue Bonds, Series 1993 The undersigned, an authorized officer of Municipal Bond Investors Assurance Corporation ("Insurer"), in connection with the above -captioned financing, hereby certifies that the Insurer is not now in default nor has it been in default as to payment of principal or interest with respect to an obligation insured by the Insurer. IN WITNESS WHEREOF, I hereunto set my hand and deliver this Certificate on this 15th day of December, 1993. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION By Assistant Secretary 2.18 HAA 11i A \ & ASSOCIATES.) INC. PRINCIPALS: engineers, hydrogeologists, surveyors & management consultants Jomce E. Cln9tophen PE. Charles W Drake, P.G. Gerald C. Han.... RE, Mark 1. Luke. P.L.S. December 16, 1993 HAI #92-023.06 HamdaERE kSchm'ids+JB, RE ASSOCIATES Robes J. On, &I. B, A. William D. Musscr P.E. Scan C. Quinlan, RE, Timothy A. Hachuli, PE. Raymond James & Associates, Inc. 2255 Glades Road, Suite 120A Boca Raton, Florida 33431 Squire, Sanders & Dempsey One Enterprise Center, Suite 2100 225 Water Street Jacksonville, Florida 32202 Subject: Consulting Engineer's Comfort Letter for $5,000,000 City of Sebastian, Florida, Utilities System Revenue Bonds, Series 1993 This letter constitutes the Consulting Engineer's Comfort Letter for the Utilities System Revenue Bonds, Series 1993 (the "Series 1993 Bonds"). Hartman & Associates, Inc. (HAI) of Orlando, Florida, performed the duties of the "Consulting Engineers" for this transaction. HAI is a professional engineering firm registered in the State of Florida, and consents to the use of our name and reference to our firm as the Consulting Engineer in the Official Statement for the Series 1993 Bonds and the inclusion therein as Appendix A of our report (the "Engineer's Report") as the Consulting Engineers to the City of Sebastian, Florida, dated November 30, 1993. The Consulting Engineer's Report was prepared in accordance with generally accepted engineering practices. Nothing has come to our attention which would cause our firm to believe that the Consulting Engineer's Report was, as of its date or as the date of closing, inaccurate in any material respect. We have been retained by the City to act as the Consulting Engineers and to provide the financial feasibility evaluations with regard to the acquisition of the System to be financed with the proceeds of the Series 1993 Bonds. With respect to the statements contained in the Official Statement for the Series 1993 Bond under the headings: i) "THE SYSTEM"; ii) "RESULTS OF OPERATIONS: HISTORICAL AND PROJECTED"; iii) "RATES, FEES AND CHARGES"; iv) "ADVISORS AND CONSULTANTS" as it relates only to the Consulting Engineers; and v) "APPENDIX A - CONSULTING ENGINEER'S REPORT" as of its date or as of the date of such certificate, do not contain any untrue statement of a material fact or failure to include any statement necessary to make the other statements made therein, in light of the circumstances in which they were made, not misleading in our opinion. In the course of our engagement as the Consulting Engineers, nothing has come to our attention which would lead us to believe that the information reflected in the Official Statement under the above referenced headings, when taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary to 201 EAST PINE STREET • SUITE 1000 • ORLANDO, FL 32801 TELEPHONE (407) 839-3955 • FAX (407) 839-3790 ORLANDO FORT MYERS JACKSONVILLE TALLAHASSEE Raymond James & Associates, Inc. Squire, Sanders & Dempsey December 16, 1993 Page 2 make the statements contained therein, in light of the circumstances under which they were made, not misleading in our opinion. We have continued in our engagement with the City of Sebastian from November 30, 1993, through and including December 16, 1993. We have had additional discussions with the City, state and federal regulatory officials, and others. As a result of these discussions and investigations, our firm reaffirms the statements and contents of the Consulting Engineer's Report as shown as Appendix A in the Official Statement. Very truly yours, Hartman & Associates, Inc. Harold E. Schmidt, Jr., P.E. Vice President HES/cl/R-S-1/Sebas2. do 2.19 HOYMAN, DOBSON & COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS 6767 North Wickham Rd., Suite 500, Melbourne, Florida 32940 (407) 255-0088 Fax (407) 259-8648 Charles W. Hoyman, Jr. Roger W. Dobson Barbara J. Oswalt Eugene K. Bjeming Thomas LKirk December 16, 1993 Karen E. Kirkland City of Sebastian 1225 Main Street Sebastian, FL 32958 Nabors, Giblin & Nickerson, P.A. 213 South Calhoun Street, Suite 800 Tallahassee, FL 32301 Raymond James & Associates, Inc. 2255 Giades Road, Suite 120A Boca Raton, FL 33431 Squire, Sanders & Dempsey One Enterprise Center 225 Water Street, 21 st Floor Jacksonville, FL 32202 We have audited the general purpose financial statements of the City of Sebastian, Florida (the "City") as of and for the year ended September 30, 1992 included in the Official Statement (herein defined) for the $5,000,000 City of Sebastian, Florida's Utilities System Revenue Bonds, Series 1993 ("the Bonds"); our report with respect thereto also is included in the Preliminary Official Statement dated December 6, 1993 and the Official Statement dated December 8, 1993 (collectively the "Official Statement") in connection with the Official Statement: We are independent auditors with respect to the City within the meaning of the code and rules of professional conduct of the American institute of Calurlcu Public Accountants. We have not audited any financial statements of the City as of any date or for any period subsequent to September 30, 1992. The purpose (and therefore the scope) of our audit for the year ended September 30, 1992 was to enable us to express our opinion on the general purpose financial statements at September 30, 1992 and for the year then ended, but not on the financial statements for any interim period subsequent to such year. Therefore, we are unable to express and do not express an opinion on the financial position, results of operations, or cash flows as of.any date or for any period subsequent to September 30, 1992. American Institute of Certified Public Accountants ♦ Florida Institute of Certified Public Accountants Private Companies Practice Section of the A.I.C.P.A. ♦ Accounting Firms Associated, Inc Page Two 3. For purposes of this letter, we have read the minutes of meetings of the City Council of the City as set forth in the minute books through November 17, 1993 (the date of the latest regular meeting for which minutes are available), officials of the City having advised us that the minutes of all such meetings through that date were set forth therein, and have carried out other procedures to December 9, 1993 (a date not more than five business days prior to the date of closing) as follows (our work did not extend to the period from December 10, 1993 to December 16, 1993 inclusive): With respect to the period from October 1, 1992 to December 9, 1993, we have been advised by the City that no financial statements exist as of any date or for any period subsequent to September 30, 1992. We have also made the inquiries referred to in the second sentence of paragraph 4. The foregoing procedures do not constitute an audit conducted in accordance with generally accepted auditing standards. Also, they would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representations as to the sufficiency of the foregoing procedures for your purposes. 4. As mentioned under 3. above, City officials have advised us that no financial statements as of any date or for any period subsequent to September 30, 1992 are available. We have.made inquiries of certain officials of the City who have responsibility for financial and accounting matters as to whether at December 9, 1993, there was any decrease in net current assets or fund equity as compared to September 30, 1992; or for the period from October 1, 1992 to December 9, 1993, there was any increase in long term debt or any decrease, as compared with the corresponding period in the preceding year in the excess of operating revenues over expenses. On the basis of these inquiries and our reading of the minutes as described in 3. above nothing came to our attention that caused us to believe that there was any such increase or decrease, except in all instances for increases/decreases which the Official Statement discloses have occurred or may occur. 5. This letter is solely for the information of the addresses and to assist the underwriter of the Bonds and its counsel in conducting and documenting their investigation of the affairs of the City in connection with the offering of the Bonds, and is not to be used, circulated, quoted or otherwise referred to within or without the underwriting group for any other purpose, including, but not limited to, the registration, purchase, or sale of securities, nor is it be filed with or referred to in whole or in part in the Official Statement or any other document, except that reference may be made to it in the underwriting agreement or in any list of closing documents pertaining to the offering of the securities covered by the Official Statement. Very truly yours, n Hoy n, Dobson & Company, P.A."�7V1 HOYMAN, DOBSON & COMPANY, P.A. CERTIFIED PUBLIC AC COUNTANTS 6767 North Wickham Rd., Suite 500, Melbourne, Florida 32940 (407) 255-0088 Fax (407) 259.8648 Charles W. Hoyman, Jr. Roger W. Dobson Barbara J. Oswalt Eugene K. Bjerning Thomas L. Kirk December 16, 1993 Karen E. Kirkland City of Sebastian 1225 Main Street Sebastian, FL 32958 Nabors, Giblin & Nickerson, P.A. 213 South Calhoun Street, Suite 800 Tallahassee, FL 32301 City of Utilities System Raymond James & Associates, Inc. 2255 Glades Road, Suite 120A Boca Raton, FL 33431 Squire, Sanders & Dempsey One Enterprise Center 225 Water Street, 21st Floor Jacksonville, FL 32202 $5,000,000 Sebastian, Florida Revenue Bonds, Series 1993 This letter is to confirm to you that we are independent certified public accountants with respect to the City of Sebastian, Florida (the "City"). We consent to the inclusion of the general purpose financial statements of the City for the year ended September 30, 1992 and our report on the general purpose financial statements dated January 29, 1993 in the Preliminary Offici'a: Statement dated December 6. 1993 and the Official Statement datad December 8, 1993. Very truly yours, Hdyman, Dobson & Company, P.A. American Institute of Certified Public Accountants ♦ Florida Institute of Certified Public Accountants Private Companies Practice Section of the A.I.C.P.A. ♦ Accounting Firms Associated, Inc. 2.20 Letter of Representations CITY OF SEBASTIAN, FLORIDA Nwuv W' Issirtl BARNETT BANKS TRUST COMPANY, N.A. I Numv ut dgvull December 8. 1993 D., '' Attention: General Counsel's Office The Depository Trust Company 55 Water Street; 49th Floor New York, NY 10041-0099 R,., $5,000,000 City of Sebastian Florida--- .-- Utilities System Revenue Bonds, Series 1 Ladies and Geuticureu: 'mis letter sets Iurth our uuderst:uulin' tcilh n•shCct to cort:tiil urutrrs rCLttiu to ll„ above -referenced issue (the "Bunds). AgCnI will uM its trusmt-, puNiog :r_Cut. li;rtl a• Cut, �w uth'.1, agent of Issuer with respect to the Bunds. "rbC Bonds \kill be issued pursuautt to :t taut intlCuturC. bond resolution, or other such docuotout turthorizint{ the issu:u,ce of the Bonds Bods datt-d December 8 1993 (tire I)oc,m,00C'I• Raymond James & Associa es, Inc. is tlistributing the Bonds through The DepositoryTrust Cornpam ("DTC -1. To induce DTC to accept the Bowls as CligiblC lin• ticpusit :d DTC, :utel w act ill acc„r(LIR , with its Rules with respect to the Bunds, Issuer aml Agent, if arty. ottkc the 1()11(M'1 H"' representations to DTC: 1. Prior to closing on the Bonds oil December 16 • 1993, there Shall he dcpusitcd with DTC one Bond certificate registered in the name of DTCs nowiuee, Cede & Co., fin' eaeli stated maturity ol' the 13011(ls ill the Dolce a111Utllltl set forth oil Schedule A I, rein, the total of which represents 100%, of the principal aiuuunt of' such Bonds. If, however: the w"Itegatt p] ilicipul amount of any maturity exceeds $150 million, one certiliute will be issued \%lilt respect to each $150 million of principal amouut and an additional certilicate will be issued Stith rzspect to ally remaining principal amount. Each $150 million Bond certificate shall bear the hollowing legend: Unless this certificate is presented by an authorized representative of The Depository'rrust Company, a New York corporation ("61'C"'), to Issuer or its aigeut for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Ce& & Co. or in such other nanie as is requested by an authorirxul representative of DTC (and any patywent is made to Cede & Co. or to such other entity its is requested by all authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR vALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL ivacsumch its the registered owner hereof, Cede & Co., has an interest herein. 2. In the event of any solicitation of consents licit or voting by holders of the Bonds, Issuer or Agent shall establish it record date for such purposes (with no provision fior rc•t (xaiou of,ctmsents or votes by subsequent holders) and shall, to the extent possible, send nonce of such record date to DTC not less than 15 cidendau' days ill advance of such record (Lite. 3. Ill the evutt ol'a full or partial rc(h•mptiou or an adv:iu<Y+ roliuuliut of pall of* dir• outslaunlim", Bonds, Issuer' or' Agent shall seed it uolico to DTC SIX-61)'iu;�: (a) ill(' au uuuut of ih(• roclenttttiou ur reliu«liug; (b) in tliv erose of a relimding, the otauu'ity dale(r.) e.:atblislrerl tarter the rcfundiug; and (c) the date such notice is to be mauled to bt•urfici:l owners or published (ibo'Publicatiou Date`s. Such notice shall be sent to ll"rC by at secure nu•;ms ((.., legible tt•Iccopv, regisered or ecitifi, d Mail, overnight delivery) ill it timely maomcr designed to assure that Stoehr n_olice is ill DTC1 possession too liter than the close of husiuoss oto the business day h,•litre ill, -Publication: Datc. Issuer or Agent shall fi)rWa d such notice tither ill it separate sk-curc trautsmissiou lar rads CUSIP mmliber or ill it secure transmission fin- umltiple CUSIP numbers (il applica blc) which includes it mmrifest or list of tach CUSIP submiltcd ill that tr;ui,niissiuu. 01w panty scudiu" such uotit o Stell hack- it method to Will <'subscttucully lht• list' rd Sochi oir:uis and th(• liur"liuc+s'd sur li uulicr .) TIlt. Publication Dade shall be out less luau :311 dans our iuom Ilam 60 das prior to rhe rcdt iupliou unto or, ill ill(-- case of au advance ref iutcliug, thc• date that th(• pa,cccds :u -c depusiWd iu r•scnrw. -1. les the event of,an invitation to leudor ill(. Bunds, notice liv Issuer or Ageul les lioadboldt-rs specifying the terms of the tender and ill(- Puhlicatiou Daae of such notice stall by sent to DTC by it secure weans in the manner set firth in the preceding Par; m-aph. 5. All notices and payment advices sent to DTC shall contatiu the CUSIP uuumber ol•the Bonds. 6. Notices to DTC pursuant to Para)"ntplt 2 by telecupv shall ht scut to DTC's Reor,{aa'iZation Department at (212) 709-6896 or (2 12) 709-6597, and receipt ol*such notices shall h(: coufimred by telephoning (212) 709-GS70. Notices to DTC pursuant to Paragraph 2 by mail or iv any other meatus shall be sunt to: Supervisor; Proxy Reorgauizatiou Department The Depositor) Trust Company 7 Hanover Square; 23rd Floor New York, NY 10004-2695 7. Notices to DTC pursuant to Paragraph 3 by telecopy shall be sent to DTC's Call Nutilicatioo Department at (516) 227-4164 or (516) ?27-4190. 11'the party sending rho notice docs nut mccivc a telecopy receipt from DTC a>nfirmiog that tht. uoticc has been reccivt.d, Mach party shall t(.1cpholn. (516) 2274070. Notices to DTC pursuant to Paragraph 3 by mail or by auic other ra+ars shadl he sent to: Call Notification Department The Depository'rrust Company 711 Stewart Avenue Carden City, NY 11530-4719 S. Notices to DTC pursuant to Paragraph 4 and notices of other actions (including mandatory tenders, exchanges, and capital changes) by telecopy shall be sent to DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt of'such notices shall be conlirined by telephoning (212) 709-6884. Notices to DTC pursuant to lac above by ruail Or by any Other mtrmrs shall be sent to: Manager; Reorganization Department Reorgani-ration Window The Depository Trust Company 7 Hanover Square; 23rd Floor New York, NY 10004-2695 9. Transactions in the Bonds shall be eligible for next -day funds settlement in DTC's Next -Day Funds Settlement ("NDFS") system. A. Interest payments shall be received by Cede & Co., as nominee of DTC, or its ra ,tiisterod assigns in next -day funds on each payment date (or the equivalent in accurdawcc with existing arrangements between Issuer or Agent and DTC). Such payments shall he made payable to the order of Cede & Co. Absent any other existing arrangenreuls such payments shall be addressed as follows: Manager; Cash Receipts Dividend Department The Deposito9, Trust Company 7 Hanover Square; 24th Flax New York, NY 10004-2695 B. Principal payments shall he received by Cede & Co., as nominee of DTC, or its n ;"isteled assigns in next -day funds oil each payment elate (or the equivalent in ac:cvrd;mcc with existing arnmgemeuts between Issuer or Agent and DTC). Such payments shall ht. made payable to die order of Cede & Co., and sl all he addressed as lillosys: NDFS Redemption Department The Depository Trust Company 55 Water Street; 50th Floor New York, NY 10041-0099 10. DTC may direct Issuer or Agent to use am other telephone rnllihel- or address as the number or address to which notices or payments of interest or principal Ina , y be sent. 11. In the event of a redemption, acceleration, ur au it other similar traursactiun (C., (t.ndrr naak• and accepted in response to Issuer's ur A,lorts invitation) ueccssittinti a n•doctiou in the {tiregatc principal amount of Bonds outstandill" or all advance refunding ul' part of the Bouch uulstautdiu{. DTC, in its discretion: (a) may requosl Issuer Or Agent to issue wel anthentic•att. a now Bund certificate, or (b) may MAC an appropii;at. nutation un the Bond certificatc- indicating the elate and autowrt of such reduction in principal rho cast. of final Onturity, in which cane rho certificate will be presented to Issuer or Agcut prior to payment il'requirml. 12. In the event that Issuer determines that beneficial miiers of Bonds shall be able to obtain certificated Bonds, Issuer or Agent shall notify DTC of the availability of Bund ds•rtif lcates. fit such event, Issuer or Agent shall issue, trmsfer, and exchange Bond certificates in appropriate amounts, as required by DTC and others. 13. DTC maty discontinue providing its services as securities depositor% with respect to the Bonds at any time by giving reasonable notice to Issuer or Agent (at which time DTC will confirm with Issuer or Agent the aggregate principal amount of Bonds outstanding). Under such circumstances, at DTC's request Issuer and Agent shall cooperate fully %kith DTC by taking appropriate action to make available one or more separate certificates midenciug Bunds to any DTC Participant having Bonds credited to its DTC accounts. 14. Notltfug herein shall be deemed to require Agent to advance funds oil behalf of fssuer Notes A. If there is an Agent (eu defined ice this Letter of ltetxese:ntatiwu). Agent its well :u lssucr must sip this letter. If duwm is no A���ent, in silntiig this Letter lssucr itself widerw"— to liedono fill of the obligations s:t forth hcmeui. 11. Under Mules of the Municilxd Securities litduu.Jdi g Buard m -Ung to "gotxl delneiy", a mwtdixd securities de.dur amt be able to deteni iue die tae dut a notice of a lxuti:ddullorofwiadvu vmfwidin4ofalxutofmixsuets pubti ml (die '•publ cation date'). lie esublishment of stu:lt a publication (ate is arlca�td'ui Pa%myth 3 of die Letter. C. Schedule B coutWits statunents that DTC lxhems itectuatefy dcycribe DTC, die mediod of efraling Lmk- eatry trwufers of xxurities distributed dtruubda DTC, wid ecrtatn refuted nutters. Received and Accepted: THE DEP SITORYTRUSTCOMPANY at��, e oto By: (Aadtori-md Officer) ec: Umdemiter Uudemiter1 Cuumsel Very truly yours, CIT -X OF SEBASTIAN, FLORIDA U3s ' (AulLmirr,l OI'lia•ri Sigmsnt�') Mayor BARNETT BANKS lie .- ) �-• � (Aurhurived N.A., (Describe Issue) $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 CUSIP Principal Amount Maturity Date 812845 AC9 $ 50,000.00 10/01/96 812845 AN 75,000.00 10/01/97 812845 AES 100,000.00 10/01/98 812845 AF2 100,000.00 10/01/99 812845 AGO 105,000.00 10/01/00 812845 AH8 110,000.00 10/01/01 812845 AJ4 115,000.00 10/01/02 812845 AK1 120,000.00 10,/01/03 812845 AL9 125,000.00 10/01/04 812845 AM7 130,000.00 10/01/05 812845 AN5 135,000.00 10/01/06 812845 APO 145,000.00 10/01/07 812845 AV7 1,035,000.00 10/01/13 812845 BFI 2,655,000.00 10/01/23 SCHEDULE A inr<ra<, aat,. 3.40% 3.60 3.70 3.90 4.00 4.20 4.30 4.45 4.60 4.75 4.90 5.00 5.40 5.45 3.1 BOND REGISTRAR AND PAYING AGENT AGREEMENT THIS AGREEMENT, made and entered into as of this 8th day of December, 1993, by and between the City of Sebastian, Florida, a municipal corporation, hereinafter referred to as the "City", and Barnett Banks Trust Company, N.A., having its primary corporate trust office in Jacksonville, Florida, hereinafter referred to as the "Bank"; WHEREAS, the City, by Resolution No. R-93-68 duly adopted December 8, 1993, designated the Bank as Bond Registrar and Paying Agent for its $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Bonds"), issued by the City pursuant to Resolution No. R-93-67, as supplemented (collectively, the "Resolution"). All capitalized terms used herein have the meaning set forth in the Resolution. WHEREAS, the City and the Bank desire to define the terms of the Bank's responsibilities and liabilities; NOW, THEREFORE, IT IS MUTUALLY UNDERSTOOD, STIPULATED, COVENANTED AND AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS: 1. The City will cause to be deposited with the Bank, as Paying Agent, on or before any payment date with respect to the Bonds, sufficient cleared funds to pay the principal and interest payments upon the Bonds, in accordance with the Resolution and in accordance with the laws of the State of Florida and the United States. 2. The Bank shall act as Paying Agent for the City and shall pay principal and interest on the Bonds and perform all other duties of Paying Agent in accordance with the Resolution and in accordance with the laws of the State of Florida and the United States. The Paying Agent shall require the owners of Bonds which are due and payable to surrender the same to the Paying Agent before the same are paid in accordance with their terms; shall keep an account of all Bonds paid; and shall, upon request of the City, destroy and issue a destruction certificate to the City upon having accounted for all Bonds related to a payment date. 3. The Bonds shall all be issued in fully registered form, without coupons; shall be payable with respect to principal and premium, if any, upon presentation and surrender thereof on the date fixed for maturity or redemption thereof at the office of the Paying Agent. 4. The Bank shall act as Registrar for the Bonds and shall perform all duties of Bond Registrar under the Resolution, the laws of the United States and the State of Florida (including, without limitation, the Florida Registered Public Obligations Act). The City agrees to deliver all records pertaining to the Bonds to the Bank as Registrar and agrees to deliver any and all Bonds received by it for the purpose of exchange or transfer directly to the Paying Agent for processing in accordance with the Resolution. The City hereby instructs the Bank pursuant to Section 2.08 of the Resolution to immediately cancel any Bonds surrendered in any exchange or transfer. 5. The City shall provide to the Bank an adequate inventory of unregistered Bonds to facilitate transfers. The Bank covenants that it will maintain the unregistered Bonds in safekeeping, which shall be not less than the care it maintains for debt securities of other governments or corporations for which it serves as registrar, or which it maintains for its own securities. 6. Subject to the provisions of this Section 6, the City hereby instructs the Bank to deliver fully registered Bonds in exchange for or in lieu of mutilated, destroyed, lost or stolen Bonds as long as the same does not result in an overissuance, all in conformance with the requirements of the Resolution. If (i) any mutilated Bond is surrendered to the Bank, or the City and the Bank receive evidence to their satisfaction of the destruction, loss or theft of any Bond and (ii) there is delivered to the City and the Bank such security or indemnity as may be required by the Bank and the City to save and hold each of them harmless, then, in the absence of notice to the City or the Bank that such Bond has been acquired by a bona fide purchaser, the City shall execute and upon its request the Bank shall register and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new Bond of the same stated maturity and of like tenor and principal amount bearing a number not contemporaneously outstanding. Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not the mutilated, destroyed, lost or stolen Bond shall be at any time enforceable by anyone, and shall be entitled to all the benefits of the Resolution equally and ratably with all other outstanding Bonds. Upon the satisfaction of the Bank and the City that a Bond has been mutilated, destroyed, lost or stolen and upon receipt by the Bank and the City of such indemnity or security as they may require, the Bank shall cancel the Bond number on the Bond registered with a notation in the Register that said Bond has been mutilated, destroyed, lost or stolen, and a new Bond shall be issued of the same series and of like tenor and principal amount bearing a number, according to the Register not contemporaneously outstanding. E The Bank may charge the Owner the Bank's fees and expenses in connection with issuing a new Bond in lieu of or exchange for a mutilated, destroyed, lost or stolen Bond. The City accepts the Bank's current blanket bond for lost, stolen or destroyed Bonds and any future substitute blanket bond for lost, stolen or destroyed Bonds that the Bank may arrange and that the coverage under any such blanket bond is acceptable to it and meets the City's requirements as to security or indemnity. The Bank need not notify the City of any changes in the security or other company giving such bond or the terms of any such bond, provided that the amount of such bond is not reduced below the amount of the bond on the date of execution of this Agreement. The blanket bond then utilized by the Bank for lost, stolen or destroyed Bonds by the Bank is available for inspection by the City on request. 7. The Bank will have no investment responsibilities regarding funds held under the Resolution. The responsibility of the Paying Agent shall be limited to the functions of Paying Agent. OTHER GENERAL PROVISIONS 8. The Bank shall, at all times when reasonably requested to do so in writing by an authorized representative of the City, furnish full and complete information pertaining to its functions with regard to said Bonds as Registrar and as Paying Agent and shall, without further authorization, execute checks, certificates and other documents with reference thereto. The Bank hereby agrees to provide to the City not less than ten days (10 days) prior to each date interest or principal on the Bonds becomes due, a notice specifying the amount due from the City to make such payment. 9. The Paying Agent shall provide to the City an Annual Cash Statement for the Paying Agent account. The Statement will provide (1) a total of funds disbursed during the given year, (2) a description of those items paid and (3) the remaining balance in the account. 10. All parties agree that the fees to be charged by the Bank in connection with its services as Registrar and as Paying Agent shall be solely as set forth on Exhibit A attached. The City agrees to reimburse the Bank for any reasonable expenses, disbursements or advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agent and counsel). Such fees and expenses shall be paid to the Bank as billed. 11. Either party hereto, at its option, may cancel this Agreement after giving ninety (90) days' written notice to the other party of its intention to cancel said Agreement, or said Agreement may be cancelled at any time by mutual consent of the 3 parties hereto. In the event this Agreement is cancelled (other than as a result of redemption of Bonds) pursuant to the provisions hereof, the total fee paid to the Bank shall be pro -rated on a straight-line basis from the date hereof until the final payment is scheduled to be made for the Bonds, and the unearned portion of such fee shall be rebated and returned to the City. 12. On the cancellation of this Agreement, the City shall deliver any proper and necessary releases to the Bank upon demand, and the Bank shall upon demand pay over the funds on deposit in connection with the Bonds and surrender all related records after payment of all outstanding fees and expenses, including legal fees and expenses, and the City shall appoint and name a successor paying agent for the Bonds. It shall also, in such event, be the duty of the City to notify all known bondholders as to the appoint- ment and name of the successor Bank. 13. This Agreement shall not be assignable by either party without the consent of the other party, and shall be construed liberally in order to effectuate its purpose. 14. The City agrees that it will indemnify and hold the Bank harmless from any and all liability, cost or expense (other than the expenses referred to in paragraph 10 above) incurred as Paying Agent or Registrar without gross negligence or willful misconduct in the course of its duties, including any act, omission, delay or refusal of the Paying Agent in reliance upon any signature, certificate, order, demand, instruction, request, notice or other instrument or document believed by it to be valid, genuine and sufficient. 15. The City agrees that it will perform, execute, acknowledge and deliver all such further and other acts, instruments and assurances as may reasonably be required by the Bank for the carrying out or performing of the provisions of this Agreement. 16. At any time, the Bank, in connection with the performance of its duties, may apply for instructions to the Mayor or Vice Mayor of the City and shall be fully protected in acting in accordance with written instructions sent by either of such officers. 17. Whenever in the performance of its duties under this Agreement the Bank shall deem it necessary or desirable that any fact or matter be proved or established by the City prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) shall be deemed to be conclusively proved and established by a statement signed by either the Mayor or Vice Mayor of the City and delivered to the Bank. Such statement shall be full warrant to the Bank for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon 4 such statement; but in its discretion the Bank may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as it may deem reasonable. 18. The Bank shall be liable hereunder only for its own gross negligence or willful misconduct. 19. The Bank shall not (a) be liable for or by reason of any of the statements of fact or recitals contained in this Agreement, or (b) be required to verify the same, or (c) be liable for any expenses of litigation, taxes, failure to obtain any required government approval or violations by the City of any federal or state securities laws or other laws in connection with this transaction; and the City shall indemnify and hold the Bank harmless for any loss or damage it suffers or which results from such litigation, taxes, failure or violation. The Bank shall in no event be liable to the Insurer, any Owner or Owners or any other Person for any amount due on any Bond, except as otherwise provided herein. 20. The Bank shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof, nor shall it be responsible for any breach by the City of any covenant or condition contained in this Agreement. The City agrees that in case of any suit or proceeding regarding the instruments, papers and/or money connected herewith, to which the Bank is or may at any time be a party, the Bank shall have the right to defend, and if it deems the same necessary, to prosecute the same, and to incur all necessary and reasonable costs, attorney's fees and solicitor's fees and other expenses which the Bank may incur or become liable for on account thereof; provided, however, that the Bank shall have no lien or right of set-off for any or all of such costs, attorney's and solicitor's fees and other expenses against any funds deposited for the payment of the Bonds. The City agrees to pay the Paying Agent, upon demand, all such costs, fees and expenses so incurred, only to the extent the Bank has not breached its obligations under this Agreement. 21. All the covenants and provisions of this Agreement by or for the benefit of the City or of the Bank shall bind and inure to the benefit of their respective successors and assigns hereunder. 22. In the event of any merger or consolidation of the Bank with or into any other corporation or in the event of the sale of all or substantially all the Bank's corporate trust business, the corporation resulting from such merger or consolidation or the transferee in the case of such sale, shall be and become successor Paying Agent and Registrar. Bonds transferred after any such merger, consolidation or sale may be signed by the successor bank either in its name or in the name of any predecessor which shall have been the Paying Agent or Registrar. 3 23. Only the City and the Bank shall have any express or implied rights under this Agreement. 24. Notwithstanding anything to the contrary herein, the Bank shall have no duty to determine the performance or non-performance of any term or condition of any contract or agreement between the parties hereto, and the duties and responsibilities of the Bank are limited to those specifically stated herein. 25. The Paying Agent shall not be responsible for notifying any Person of any transaction involving any funds or other property herein described or of any profit realized by any person, firm or corporation in connection therewith, notwithstanding that such transactions may be handled by the Bank, provided they do not prevent the Bank's compliance with the terms of this Agreement. 26. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, certificate, note, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Bonds, but is protected in acting upon receipt of Bonds containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Owner or an attorney-in-fact of the Owner. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, direction, consent, order, certificate, note, security paper or document supplied by the City. (e) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys and the Bank. 0 (f) The Bank may consult with counsel and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. 27. The City and the Bank agree that the Bank may seek adjudication of any adverse claim, demand or controversy over its Persons as well as funds on deposit. The City and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. 28. Any correspondence, notices, reports, etc., should be addressed to the addresses set forth below or at such other addresses as the parties shall hereafter• designate to the other parties. City: City of Sebastian, Florida 1225 Main Street Sebastian, Florida 32958 Attention: City Finance Director Bank: Barnett Banks Trust Company, N.A. 9000 Southside Boulevard Building 100, Fifth Floor Jacksonville, Florida 32256 Attention: Corporate Trust Division 29. Notwithstanding anything to the contrary herein, this Agreement shall terminate on the date of final payment by the Bank issuing its checks for the final payment of principal and interest on the Bonds. 30. The Bank, in its individual or any other capacity, may become the owner or pledgee of Bonds and may otherwise deal with the City with the same rights it would have if it were not the Paying Agent or Registrar, or any other agent. 31. (a) Money held by the Bank hereunder need not be segregated from any other funds provided appropriate accounts are maintained. (b) The Bank shall be under no liability for interest on any money received by it hereunder. (c) Any money deposited with the Bank for the payment of the principal, redemption premium, if any, or interest on any Bond and remaining unclaimed for three years after final maturity of the Bond has become due and payable will be paid by the Bank to the City, and the Owner of such Bond shall thereafter look only to the City for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. 7 32. Sections 10, 14 and 26 will survive termination of this Agreement. This Agreement shall be governed by the laws of the State of Florida. IN WITNESS WHEREOF, the parties have hereunto set their hands and seals the day and year first above written. CITY OF SEBASTIAN, FLORIDA • ('SEAL a , . J B ayor t ATTEST: _ sy:. athr n M. O'Halloran, Acting City Manager and City Clerk, City of Sebastian, Florida 3 BARNETT BANKS TRUST COMPANY, N.A. as Paying Agent and Registrar By: aw"�4 r ATTEST: By: Corp rate Trust Officer 0 AutbbrizV Signatory EXHIBIT A REGISTRAR AND PAYING AGENT FEES AND EXPENSES $750 annually, plus expenses to be billed at cost. 3.2 $5,000,000 CITY OF SEBASTIAN, FLORIDA, UTILITIES SYSTEM REVENUE BONDS SERIES 1993 CERTIFICATE OF REGISTRAR AND PAYING AGENT The undersigned duly authorized signatory of Barnett Banks Trust Company, N.A_ (the "Bank"), as Registrar and Paying Agent under that certain Registrar and Paying Agent Agreement, dated as of December 16, 1993, between the City of Sebastian, Florida (the "City") and the Bank, with respect to the City's issuance of the above -captioned obligations (herein called the "Bonds") DOES HEREBY CERTIFY as follows: 1. Jennifer E. Reid did, by manual execution of the Certificate of Authentication thereon, duly authenticate the Bonds on December 16, 1993, and such person was at the time of such authentication and is now the duly qualified and acting incumbent of the office described below, and the signature appearing after his/her name is a true and correct copy of his/her genuine signature. Name Jennifer E. Reid Office Signature / Corporate Trust Specialist Li a�(. 2. The Registrar and Paying Agent Agreement and each Certificate of Authentication appearing on the Bonds was manually signed by an authorized signatory of the Bank who was and is duly authorized by the Bank to execute such Registrar and Paying Agent Agreement and Certificate of Authentication on behalf of the Bank. 3. The Bank is a national banking association with trust power, duly organized, validly existing and in good standing under the laws of the United States of America and is authorized to do business and to exercise trust powers in the State of Florida as contemplated by the Registrar and Paying Agent Agreement and has the corporate power and has validly agreed to take all action required or permitted to it under the Registrar and Paying Agent Agreement. 4. To the knowledge of the undersigned officer, the execution, delivery and performance by the Bank of the Registrar present law do not and will not contravene the charter or the bylaws of the Bank or conflict with or constitute a breach of or default under any law, administrative regulation, consent decree or any agreement or instrument to which the Bank is subject. 5. To the knowledge of the undersigned officer, all approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter which would constitute a condition precedent to the performance by the Bank of its duties and obligations under the Registrar and Paying Agent Agreement have been obtained and are in full force and effect. 6. The Registrar and Paying Agent Agreement has been duly entered into and delivered by the Bank and constitutes a legal, valid and binding obligation of the Bank, enforceable against the Bank in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy or other similar laws affecting the enforcement of creditors' rights generally. 7. No litigation is pending or, to the knowledge of the undersigned officer, threatened in any way contesting or affecting the existence or powers (including trust powers) of the Bank or the Bank's ability to fulfill its duties and obligations under the Bond Registrar and Paying Agent Agreement. 8. The Registrar and Paying Agent Agreement was duly authorized, executed and delivered on behalf of the undersigned Bank, by Jennifer E. Reid and Elizabeth R. Feezor , and they were at the time of execution of the Registrar and Paying Agent Agreement and are now the duly elected, qualified and acting incumbents of their respective offices, and the signature appearing after their name is a true and correct specimen of their genuine signature. Name Office Signature Jennifer E. Reid Corporate Trust Specialist Rl; 7ahpth R F pzc)r Corporate Trust Officer LI- y 9. The attached is a true and correct copy of an excerpt of the by-laws of the Bank evidencing the authority of the officers named in paragraphs 1 and 8 hereof to execute and deliver the Registrar and Paying Agent Agreement and to authenticate and deliver the Bonds. 10. The seal of the Bank impressed upon this certificate is the legally adopted, proper and only official seal of the Bank and the seal has been impressed upon the appropriate page of each counterpart of the Registrar and Paying Agent Agreement. IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the 16th day of December, 1993. BARNETT BANKS TRUST COMPANY, N.A. as Paying Agent and Registrar By: Authorized S l7rmtolyy ATTEST• By:gpo)tate " , Trust Officer 0 R E S O L U T I O N BE IT RESOLVED that Section 8.4 of the Bylaws be amended as follows: Section 8.4 Execution of Instruments. All agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments , or documents may be signed, executed, acknowledged, verified, delivered, or accepted in behalf of the Association by the. Chairman of the Board, or the President, or any. Vice President, or the Secretary, or, if in connection with the exercise of fiduciary powers of the Association, by any of the Officers named above or by any other duly elected officer of the Association. BE IT FURTHER RESOLVED that the President and Chief Executive Officer or any Executive Vice President of the Association, shall be empowered to authorize specific employees to sign on behalf of the Company all agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents which may need to be executed in connection with the exercise of appropriate fiduciary activities of the Association. Any such instruments may also be executed, acknowledged, verified, delivered or accepted on behalf of the Association in such other manner and by such other Officers or employees as the Board may from time to time direct. The provisions of this Section 8.4 are supplementary to any other provision of these Bylaws. ized BARNETT BANKS TRUST. COMPANY, N.A. J Signature Lies I% Authorized Signature Rhonda //Dahl Authorized Sligplature Tama a L. Dixoti Authorized Signature Jennifer E. Reid 0e Up l Authorized Si ire Sherr Farris SIGNATURE LIST CORPORATE TRUST.DIVISICN' Authorized Signature Elizabeth R. Feezor OR ER Feezor Authorized Signature Martin P. Henry Authorized Sigrtiture Mary B. Knauer 1��aulL1 Authorized Signature William A. L l�l I, Nancy M. Geary, Senior Vice President of BARNETT BANKS TRUST COMPANY, N.A.do hereby certify that the persons whose signatures appear above are authorized to sign documents. as provided in Article VIII -Section 8.4 of the By -Laws of BARNETT BANKS TRUST COMPANY, N.A. Llla,1�4_4 9 /( g4:� Nancy My MGdary, Senior Vice President Barnett Banks. Trust Company, N.A. Dated this l day of I U, 19q?. Page 1 of 3 BARNETT BANKS TRUST COMPANY, N.A. AUTHORIZED SIGNATURE. LIST CORPORATE TRUST DIVISION Authorized Signature Nancy Lynch Authorized 49nature Barbara D. Mengel Authorized Signature Lynette A. Murp Authorized Signature B. Ale eil i Au orized Signature G ret�th Authorized Signature Judy H. Staudermann I, Nancy M. Geary, Senior Vice COMPANY, N.A.do hereby certify appear above are authorized to Article VIII -Section 8.4 of the COMPANY, N.A. Authorized Signature Tammy Stegall Authorized Signature Lucretia M. Vizcaiinno Authorized Signature Karen Water Authorized S' e ie ite Au horized Signature Ethel G. White OR E.G. White . President of BARNETT BANKS TRUST that the persons whose signatures sign documents as provided in By -Laws of BARNETT BANKS TRUST Nancy M. /Geary, Sen;Vor Vice President Barnett Banks Trust Company, N.A. Dated this (-2)4-K _ day of �_akt o&y 19 ' _�; . Page 2 of 3 BARNETT BANKS TRUST COMPANY, N.A. AUTHORIZED SIGNATURE LIST CORPORATE TRUST DIVISION Authorized Signature Paula R. Williams Qi! LhR l k)( .Q(.� OR P. Williams (WhAll�k� Authorized Signature J. Arroyo Authorized Signature D.A. Bennett I, Nancy M. Geary, Senior Vice President of BARNETT BANKS TRUST COMPANY, N.A.do hereby certify that the persons whose signatures appear above are authorized to sign documents as provided in Article VIII -Section 8.4 of the By -Laws of BARNETT BANKS TRUST COMPANY, N.A. hXL k Nancy M. Geary, Seni r Vice President Barnett Banks Trust Company, N.A. Dated this day of ,2 ee 6wr 19q?. Page 3 of 3 4.1 UNDERWRITER'S CERTIFICATE AS TO DELIVERY AND PAYMENT December 16, 1993 City Council of the City of Sebastian, Florida Sebastian, Florida Dear Council Members: We have deposited for your account the amount of $4,831,777.44 being payment of the purchase price for $5,000,000 aggregate original principal amount of your Utilities System Revenue Bonds, Series 1993, received today from you by the undersigned, less the amount of $108,000 paid by us on your behalf to Municipal Bond Investors Assurance Corporation. The undersigned hereby acknowledges delivery of said Bonds and return of its good faith check in the amount of $50,000. RAYMOND JAMES & ASSOCIATES, INC. c By: Its: lJw ►�� Please acknowledge receipt of the foregoing deposit by signing and returning the original or a counterpart of this letter. CITY OF SEBASTIAN, FLORIDA Kathryn M. O'Halloran, City Clerk and Acting City Manager of the City of Sebastian, Florida 4.2 December 8, 1993 Mayor and City Council City of Sebastian, Florida RE: City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 Gentlemen: In connection with the proposed issuance by the City of Sebastian, Florida (the "City) of $5,000,000 original aggregate principal amount of its Utilities System Revenue Bonds, Series 1993, referred to above (the "1993 Bonds"), Raymond James & Associates, Inc., Boca Raton, Florida (the "Underwriter") is underwriting a public offering of the 1993 Bonds. Arrangements for underwriting the 1993 Bonds will include a Bond Purchase Contract (the "Purchase Contractl between the City and the Underwriter, which will embody the terms in respect thereof. The purpose of this letter is to furnish, pursuant to the provisions of Section 218.385(6), Florida Statutes, certain information with respect to the arrangements contemplated for the underwriting of the 1993 Bonds as follows: (A) The nature and estimated amounts of expenses to be incurred by the Underwriter in connection with the purchase and reoffering of the 1993 Bonds are as set forth in Schedule 1 attached hereto. (B) No person has entered into an understanding with the Underwriter, or to the knowledge of the Underwriter, with the City, for any paid or promised compensation or valuable consideration, directly or indirectly, expressly or implied, to act solely as an intermediary between the City and the Underwriter or to exercise or attempt to exercise any influence to effect any transaction in the purchase of the 1993 Bonds. (C) The Underwriting Spread (the difference between the price at which the 1993 Bonds will be initially offered to the public by the Underwriter and the price to be paid to the City for the 1993 Bonds, exclusive of accrued interest in both cases) will be $12.50/$1,000 (which includes a management fee of $2.50/$1,000, risk of $0.00, takedown of $6.04/$1,000 and expenses of $3.96/$1,000). B-1 (which includes a management fee of $2.50/$1,000, risk of $0.00, takedown of $6.04/$1,000 and expenses of $3.96/$1,000). (D) No other fee, bonus or other compensation is estimated to be paid by the Underwriter in connection with the issue of the 1993 Bonds, to any, person not regularly employed or retained by the Underwriter (including any "finder" as defined in Section 218.386(1)(a), Florida Statutes), except as specifically enumerated as expenses to be incurred by the Underwriter, as set forth in Paragraph (A) above. (E) The name and address of the Underwriter is: Raymond James & Associates, Inc, 2255 Glades Road Suite 120A Boca Raton, Florida We understand that you do not require any further disclosure from the Underwriter, pursuant to Section 218.385(6), Florida Statutes. Very truly yours, RAYMOND JAMES & ASSOCIATES, INC. BOCA RATON, FLORIDA By: 04 l' Vice Pres' ent !*6 W-84 pKeDONMINHUM LIST OF EXPENSES UNDERV ITER'S EXPENSES Per $1,000 Management Fee $ 2.50 Risk 0.00 Takedown 6.04 Expenses 3.96 TOTAL SPREAD 512.50 EXPENSES: Counsel $3.00 Clearance 0.00 Federal funds .15 Good faith check and day loan 0.00 MSRB, PSA, CUSIP .10 DTC .08 Communication, travel and out-of-pocket .23 Computer _A4 TOTAL EXPENSES 3.96 M 4.3 %L,iO "CiJOI/iA4�,l0J�,at�pZ¢ris .%ya,�„® /O�l�959-1P6.y ��! 0 $5,000,000* 2 ��l✓YY �• ��« CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 PRELIMINARY BLUE SKY SURVEY December 6, 1993 To: Raymond James & Associates, Inc. Boca Raton, Florida In connection with the proposed offering and sale by you of $5,000,000* CITY OF SEBASTIAN, FLORIDA, UTILITIES SYSTEM REVENUE BONDS, SERIFS 1993 (the 'Bonds"), we submit herewith the attached Survey which sets forth information relating to the Blue Sky or securities laws of the various states of Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Massachusetts, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin with respect to such offering. The Survey is based upon an examination of the regularly accepted unofficial compilations of the securities laws and regulations, if any, of the various jurisdictions referred to in the Survey, on interpretative advice obtained from representatives of the securities commissions of certain jurisdictions and on the information contained in the Preliminary Official Statement dated December 6, 1993 relating to the Bonds. We have not obtained either opinions of local counsel or formal rulings by administrative authorities in any jurisdiction with respect to this proposed offering. The Survey is furnished only for your general information and is not to be relied upon as an opinion of counsel. *Preliminary, subject to change. I IA The Survey is subject to the broad discretionary powers of the authorities administering the securities laws to withdraw or deny the exempt states accorded by statute to particular classes of securities, to require additional information or actions, to refuse registration, to issue stop orders and to revoke or suspend permits where such have been granted. In all jurisdictions where persons registered or licensed as dealers or brokers may sell the Bonds, it is assumed that such persons have complied with applicable statutes and regulations concerning dealers or brokers and with respect to the registration or licensing of salesmen. The Survey does not deal with the requirements or restrictions, if any, with respect to the publication and use of advertising material in any jurisdiction. Any statement in the Survey with respect to sales to banks, savings institutions, trust companies, insurance companies or the like refers only to requirements of these securities laws relating to such sales and does not purport to cover the question as to whether the Bonds will be a legal investment for such institutions. Very truly yours, SQUIRE, SANDERS & DEMPSEY amara 13.00smm m-si.str-S.r -2- $5,000,000* CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 PRELIMINARY BLUE SKY SURVEY PART I SALES TO THE PUBLIC The Bonds may be sold to the public in the following jurisdictions without registration or other filings with respect thereto but, except as noted below, only by dealers registered in the respective jurisdictions(1): Arkansas New Jersey California New York Connecticut North Carolina Delaware Pennsylvania (2) Florida South Carolina Georgia Tennessee Illinois Texas Massachusetts Virginia Missouri Wisconsin *Preliminary, subject to change. (1) Under certain limited circumstances persons, whether or not registered or licensed as brokers or dealers in such jurisdictions, may sell the Bonds to certain purchasers as set forth more fully in Part II hereof. (2) A boldface legend denoting the issuer's limited obligation must appear on the cover page of any Official Statement used in Pennsylvania. 3248/j=l3.0051Pmlim-emc-say-&�=y —3— PART II EXEMPT TRANSACTIONS In the following jurisdictions, anyone may sell the Bonds to the specified institutions or persons regardless of whether the seller is registered as a dealer in such jurisdiction or whether the Bonds are covered by an existing registration or other filing in such jurisdiction, except as otherwise indicated: Alabama A bank, savings institution, credit union, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or a dealer, whether the purchaser is acting for itself or in some fiduciary capacity. Alaska A broker-dealer, or a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, whether the purchaser is acting for itself or in some fiduciary capacity; provided the seller, if not registered as a broker-dealer, has no place of business in this state, and effects transactions in this state exclusively with or through the foregoing. Arizona A bank, savings institution, insurance company, dealer, an agency or instrumentality of the United States or of a state, or a person a principal part of whose business consists of buying securities. Arkansas Same as Alaska. The Arkansas State Securities Commissioner may by order, upon petition by any person, determine if the petitioner may be deemed, upon the basis of knowledge, experience, volume and number of transactions and other securities background, an "institutional buyer". California A broker-dealer; a bank, savings and loan association, trust company, insurance company, investment company registered under the Investment Company Act of 1940, pension or profit-sharing trust (other than a pension or profit-sharing trust of the issuer, or a self-employed individual retirement plan, or individual retirement account); any organization described in Section 501(c)(3) of the Internal Revenue Code, as amended December 29, 1981, which has total assets 3246/am13.005/Prefim-BWeSkySurvcy —4— (including endowment, annuity and life income funds) of not less than $5,000,000 according to its most recent audited financial statement; any corporation which has a net worth on a consolidated basis according to its most recent audited financial statement of not less than $14,000,000, provided that, if the securities being acquired by such corporation are common stock of a corporation or securities exchangeable for or convertible into common stock of a corporation, (1) the holders of less than 25 percent of the outstanding shares of such common stock (computed as provided by the Rules of the Commissioner of Corporations) have addresses in California, or (2) such securities (plus any other similar securities held by such corporation) will not represent more than five percent of the total number of outstanding shares of common stock of the issuer assuming the exchange or conversion of all securities exchangeable for or convertible into common stock (unless all such shares of common stock are owned by corporations meeting the above net worth test for corporations) provided, however, that the foregoing limitations with respect to transactions in common shares or securities convertible into common shares shall not apply to a transaction (1) in which such securities are offered pro rata to the holders of the outstanding common shares, (2) which is approved by the holders of 75 percent or more of the outstanding common shares, or (3) there are no common shares or securities convertible into common shares outstanding prior to the transaction; any wholly-owned subsidiary of any of the foregoing institutional investors; or the federal government, any agency or instrumentality of the federal government, any corporation wholly-owned by the federal government, any state, any city, city and county, or county, or any agency or instrumentality of a state, city, city and county, or county, or any state university or state college, and any retirement system for the benefit of employees of any of the foregoing; and also provided that the seller, if not licensed in California, is registered as a broker-dealer under the Securities Exchange Act of 1934, has not previously had any certificate denied or revoked under the California Securities Law or any predecessor statute, has no place of business in California and does not direct offers to sell or buy into California to persons other than the foregoing; and provided further that the seller does not direct offers to sell or buy to broker-dealers not licensed in this state until the securities are qualified for sale in California; and provided further, if the securities are not qualified for sale in California, any purchaser which is an institutional investor represents that it is purchasing for its own account (or for an account for which it is acting as trustee) for 3248/jam 13.005/PmIm-BI=-Sky-Survey —5— investment and not with a view to or for sale in connection with any distribution of the securities. Colorado A bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer or a broker or dealer, whether the purchaser is acting for itself or in some fiduciary capacity, provided that a notice and fee are filed with the Colorado Division of Securities no later than 10 days after the first sale if the securities are to be registered under the Securities Act of 1933 or are to be sold pursuant to an exemption for which the issuer is required to submit a filing or notice to the Securities and Exchange Commission, and provided further the seller, if not registered under the Colorado Securities Act, is registered under the Securities Exchange Act of 1934 and has met certain Colorado filing requirements. Connecticut A state bank and trust company, national banking association, savings bank, savings and loan association, federal savings and loan association, credit union, federal credit union, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, as amended, pension or profit-sharing trust, or other financial institution or institutional buyer, or a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity; provided the seller, if not registered as a broker-dealer, has no place of business in this state, and effects transactions in this state exclusively with or through the foregoing. Delaware Same as Alaska. District of Columbia Same as Alaska, except read "District" for "State"; provided, however, if the seller is a registered broker or dealer, to anyone. Florida A bank or trust company, whether acting in its individual or fiduciary capacity, savings institution, insurance company, dealer, regulated investment company, or a pension or a profit-sharing plan having assets not less than $500,000. Georgia A bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, as now or hereafter amended, real estate investment trust, small 32WJaml3.005ftclim.Blue-Sky.Su ey —6— business investment corporation, pension or profit-sharing plan or trust, other financial institution, or a dealer, whether the purchaser is acting for itself or in some fiduciary capacity. Guam Same as Alaska. Hawaii Same as Alaska. "Institutional buyer" includes any organization coming within the scope of Section 501(c)(3) of the Internal Revenue Code of 1954, as amended. Idaho A bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity. Illinois A corporation, bank, savings institution, trust company, insurance company, building and loan association, dealer, pension fund or pension trust, employees' profit-sharing trust, other financial institution (including but not limited to a manager of investment accounts on behalf of other than natural persons, who, with affiliates, exercises sole investment discretion with respect to such accounts, and provided such accounts exceed 10 in number and have a fair market value of not less than $10,000,000 at the end of the calendar month preceding the month during which the transaction occurred for which the exemption is utilized) or institutional investor (including but not limited to investment companies, universities, and other organizations whose primary purpose is to invest its own assets or those held in trust by it for others; and trust accounts and individual or group retirement accounts in which a bank, trust company, insurance company or savings and loan institution acts in a fiduciary capacity, and foundations and endowment funds exempt from taxation under the Internal Revenue Code, a principal business function of which is to invest funds to produce income in order to carry out the purpose of the foundation or fund), whether the purchaser is acting for itself or in some fiduciary capacity, or any partnership or other association engaged as a substantial part of its business or operations in purchasing or holding securities, or any trust in respect of which a bank or trust company is trustee or co -trustee; or any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of the offer, sale or issuance exceeds $1,000,000, or who had an individual income 3748/j.1 IODYPrelim-Blue-Sky-Su .y —7— in excess of $200,000 in each of the two most recent years and who reasonably expects an income in excess of $200,000 in the current year, or any person who purchases at least $150,000 of the securities being offered where the purchaser's total purchase price does not exceed 20 percent of the purchaser's net worth at the time of the sale, or joint net worth with that person's spouse. Indiana Same as Alaska. Iowa Same as Alaska. Kansas A bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or a broker-dealer or underwriter. Kentucky Same as Idaho. Louisiana Same as Georgia. Maine A broker-dealer; financial and institutional investor including, but not limited to, a depository institution (a person, other than an insurance company or other organization primarily engaged in the insurance business, which is: organized, chartered or holding an authorization certificate under the laws of any state or of the United States which authorizes the person to receive deposits, including a savings, share, certificate or deposit account; and regulated, supervised and examined for the protection of depositors by an official or agency of any state or the United States; "depository institution" also includes any trust company or other institution which is authorized by state law to exercise fiduciary powers similar to those permitted to national banks under the authority of the United States Comptroller of the Currency, but does not include any industrial bank, Morris Plan Bank or industrial loan bank) or a depository institution holding company, an insurance company, a separate account of an insurance company, an investment company as defined by the United States Investment Company Act of 1940, a business development company as defined by the United States Investment Company Act of 1940; an entity, other than a natural person, a substantial part of whose business activities consists of investing, purchasing, selling or trading in securities of more than one issuer and not of its own issue and that has gross assets 3748/im13.005/P.H.-BWe-SkySu q -8- in excess of $1,000,000 at the end of its latest fiscal year; an employee pension and profit sharing or benefit plan, other than an employee pension and profit sharing or benefit plan of the issuer, a self-employed individual retirement plan or individual retirement account, if: (1) the investment decision is made by a plan fiduciary, as defined in the United States Employee Retirement Income Security Act of 1974, Section 3, subsection 21, which is either a depository institution, an insurance company or an investment adviser registered under the Revised Maine Securities Act; or (2) the plan has total assets in excess of $5,000,000; a small business investment company licensed by the United States Small Business Administration under the United States Small Business Investment Act of 1958, Section 301(c) or (d); or an entity organized and operated not for private profit, as described in the United States Internal Revenue Code, Section 501(c)(3) with total assets in excess of $5,000,000; whether acting for itself or others in a fiduciary capacity; provided the seller, if not registered as a broker-dealer, is registered under the Securities Exchange Act of 1934 and effects transactions in this state exclusively with the foregoing except unlicensed, non-exempt broker-dealers or a clearing broker-dealer. Maryland Same as Alaska. Massachusetts Same as Alaska. The term "financial institution or institutional buyer" includes, but is not limited to, any entity, other than an individual, having gross assets of $1,000,000 or more at the end of its latest fiscal year, a substantial part of whose business activities consists of investing, purchasing, selling or trading in securities of others. Michigan A broker-dealer, or a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust the assets of which are managed by a bank or trust company or other institutional manager, or other financial institution or institutional manager, whether the purchaser is acting for itself or in some fiduciary capacity; provided the seller, if not registered as a broker-dealer, has no place of business in this state, and effects transactions in this state exclusively with or through the foregoing. Minnesota Same as Alaska. The terms "financial institution or institutional buyer" include but are not limited to any corporation with a class of equity 32Wj= 13.005/P.H.-Blue-Sky-Survey —9— securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended, and a person who is an "accredited investor" within the meaning of rule 501(a) adopted by the Securities and Exchange Commission in Federal Register, vol. 47, page 11262, to be codified as Code of Federal Regulations, title 17, section 230.501(a). Mississippi Same as Alaska. Missouri Same as Alaska. Montana Same as Idaho. Nebraska Same as Idaho except the exemption is also available to a business development company as defined in section 2(a)(48) of the Investment Company Act of 1940 and a Small Business Investment Company licensed by the U.S. Small Business Act of 1958. A pension or profit sharing trust is an employee benefit plan as defined in Title I of the Employee Retirement Income Security Act of 1974 if the investment decisions are made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank or insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000. Nevada Banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees, or broker-dealers, provided the seller has no place of business in this state and effects transactions in this state exclusively with or through the foregoing; or to anyone, provided the seller is registered as a broker-dealer in this state; and provided an exemption claim is filed with the Nevada Securities Division unless the offering is registered under the Securities Act of 1933. New Hampshire Same as Alaska. New Jersey A broker-dealer, a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, whether the purchaser is acting for itself or in some fiduciary capacity, provided the seller effects 3248/jam 13.005/PmH..BWo8ky51wey -10- transactions in this state exclusively with or through the foregoing. New Mexico Same as Idaho. "Financial and institutional buyer or investor" means, but is not limited to: a depository institution which means a person, other than an insurance company or other organization primarily engaged in the insurance business, which is organized, chartered or holding an authorization certificate under the laws of any state or of the United States which authorizes the person to receive deposits, including a savings, share, certificate or deposit account; and regulated, supervised and examined for the protection of depositors by an official or agency of any state or the United States; depository institution also includes any trust company or other institution which is regulated and authorized by state law to exercise fiduciary powers similar to those permitted to national banks under the authority of the comptroller of the currency, but does not include any industrial bank, Morris plan bank or industrial loan company; a separate account of an insurance company, a business development company as defined by the Investment Company Act of 1940; an entity, other than a natural person, which is directly engaged in the business of, and derives at least eighty percent of its annual gross income from, investing, purchasing, selling or trading in securities of more than one issuer and not selling or trading in securities of more than one issuer and not of its own issue, and that has gross assets in excess of five million dollars ($5,000,000) at the end of its latest fiscal year; an employee pension and profit-sharing or benefit plan, other than an employee pension and profit-sharing or benefit plan of the issuer, a self-employed individual retirement plan or individual retirement account, if: (a) the investment decision is made by a plan fiduciary, as defined in Section 3(21) of the Employee Retirement Income Security Act of 1974, which is an investment adviser registered under the Securities Act of New Mexico, a depository institution or an insurance company, or (b) the plan has total assets in excess of five million dollars ($5,000,000); a small business investment company licensed by the United States small business administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or an entity organized and operated not for private profit as described in Section 501(c)(3) of the Internal Revenue Code with total assets in excess of five million dollars ($5,000,000). New York A state or national bank, trust company or savings institution incorporated under the laws and subject to the examination, supervision 32 Wjjeml3.005/PmHm-Blue-Sky-Survey -11- , and control of any state or of the United States or of any insular possession thereof, a dealer or broker, or a syndicate, corporation or group formed for the specific purpose of acquiring such securities for resale to the public directly or through other syndicates or groups. North Carolina A corporation having a net worth in excess of $1 million as determined by generally accepted accounting principles, bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or a dealer, whether the purchaser is acting for itself or in some fiduciary capacity; provided the seller, if not registered as a dealer in this state, has no place of business in this state and effects transactions in this state exclusively with or through any of the foregoing, with the exception of a corporation. North Dakota A bank, savings bank, savings institution, trust company, insurance company, registered dealer, or a corporation, organization or association a principal part of whose business consists of buying securities. Ohio A licensed dealer; and, provided the seller is a licensed dealer, a corporation, bank, trust company, building and loan association, savings association, insurance company, pension fund or trust, employees' profit-sharing fund or trust, an association engaged, as a substantial part of its business or operations, in purchasing or holding securities, or a trust in respect of which a bank, trust company, building and loan association or savings association is trustee or co -trustee. Oklahoma Same as Alaska. Oregon A bank, savings institution, trust company, insurance company, investment company, pension or profit-sharing trust, or other financial institution or institutional buyer, or any broker-dealer. Pennsylvania A bank, including a banking and trust company, savings bank, trust company, or private bank, as defined in the Banking Code of 1965, Act of November 30, 1965 (P.L. 847) or any successor statutes thereto, or any banking institution or trust company organized under the laws of the United States, or of any state, territory or the District 37A8fj=13.005/Praim-Blue-sky-S1 cy -12- of Columbia, or a receiver, conservator or other liquidating agent of any of the foregoing, insurance company, pension or profit-sharing plan or trust, investment company, as defined in the Investment Company Act of 1940, other financial institution or any person, other than an individual, which controls any of the foregoing; the Federal Government, State or an agency or political subdivision thereof; a corporation or business trust or a wholly-owned subsidiary which has been in existence for 18 months and which has a tangible net worth on a consolidated basis, as reflected in its most recent audited financial statements, of $10 million or more; a college, university, or other public or private institution which has received exempt status under Section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. {501(c)(3)) and which has a total endowment or trust funds, including annuity and life income funds, of $5 million or more according to its most recent audited financial statements, provided that the aggregate dollar amount of securities being sold to such person may not exceed 5.0% of the endowment or trust funds; a wholly-owned subsidiary of a bank; a person, except an individual or an entity whose securityholders consist entirely of one individual or group of individuals who are related, which is organized primarily for the purpose of purchasing, in non-public offerings, securities of corporations or issuers engaged in research and development activities in conjunction with a corporation and which complies with certain additional requirements established by rule; a Small Business Investment Company defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662) which either: (i) has a total capital of $1 million or more, or (ii) is controlled by specified institutional investors; a Seed Capital Fund, as defined in section 2 and authorized in section 6 of the Small Business Incubators Act (73 P.S. {{395.2 and 395.6); a Business Development Credit Corporation, as authorized by the Business Development Credit Corporation Law (15 P.S. {{2701-2716); and a person whose securityholders consist solely of institutional investors or broker-dealers; or a broker-dealer, whether the buyer is acting for itself or in some fiduciary capacity; provided the seller, if not registered as a broker-dealer, has no place of business in this state and effects transactions in this state exclusively with or through the foregoing. Puerto Rico A broker-dealer, or a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Companies Act of Puerto Rico, pension or profit-sharing trust or other 3248/jam 13.005/P.1M-B].-Sky-Survey —13— financial institution or institutional buyer, whether the purchaser is acting for itself or in some fiduciary capacity; provided the seller, if not registered as a broker-dealer, has no place of business in Puerto Rico, and effects transactions in Puerto Rico exclusively with or through the foregoing. Rhode Island A registered broker; or a national bank, or a bank, trust company, insurance company or association under the supervision of the director of business regulation of this state, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or institutional buyer, provided such securities are being purchased by the above institutions for their own account and investment. South Carolina Same as Alaska. South Dakota A bank, savings institution, trust company, insurance company, savings and loan association, investment company as defined in the Investment Company Act of 1940, or pension or profit-sharing trust, or the state or any state agency or political subdivision thereof, or other financial institution or institutional buyer (including an endowment or trust fund of a charitable organization specified in Section 170(b)(1)(A) of the Internal Revenue Code; an issuer which has any class of securities registered under Section 12 of the Securities Exchange Act of 1934 and any wholly-owned subsidiary of such an issuer; and any other corporation, partnership, or association which has been in existence for 10 years or whose net assets exceed $250,000 and whose principal purpose- as stated in its articles, bylaws, or other organizational instrument is investing in securities), or licensed broker, whether such person is acting for itself or as trustee. Tennessee A bank, trust company, insurance company, investment company registered under the Investment Company Act of 1940, as amended, a holding company which controls any of the foregoing, a trust or fund over which any of the foregoing has or shares investment discretion, or any other person engaged as a substantial part of its business in investing in securities, in each case having a net worth in excess of $1,000,000, or a broker-dealer; provided the seller, if not registered in this state as a broker-dealer, has no place of business in this state, effects transactions in this state exclusively with or through the foregoing, and is registered as a broker-dealer with the Securities and Exchange Commission or the National Association of Securities 320j=13.005/Pre1im-s1=-sky-smey —14— Dealers, Inc. Texas A bank, trust company, building and loan association, insurance company, surety or guaranty company, savings institution, including a state or federally chartered credit union or savings and loan association, investment company as defined in the Investment Company Act of 1940, small business investment company as defined in the Small Business Investment Act of 1958, as amended, or a registered dealer actually engaged in buying and selling securities. Utah Same as Alaska. Vermont A bank, savings institution, trust company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or a broker-dealer, whether the purchaser is acting for itself or in a fiduciary capacity. Virginia A corporation, investment company or pension or profit-sharing trust, or a broker-dealer. Washington Same as Idaho. West Virginia Same as Alaska. Wisconsin A broker-dealer, a bank, savings institution, credit union, trust company, insurer, investment advisor or savings and loan association, if the purchaser or prospective purchaser is acting for itself or as trustee with investment control; investment company as defined under 15 USC 80 a-3, or pension or profit-sharing trust, or the state or any of its agencies or political subdivisions, or the federal government or any of its agencies or instrumentalities or any financial institution or institutional investor designated by rule or order of the Commissioner of Securities (including an endowment or trust fund of a charitable organization specified in section 170(b)(1)(A) of the Internal Revenue Code; an issuer which has any class of securities registered under section 12 of the Securities Exchange Act of 1934, and any wholly-owned subsidiary thereof; any other corporation, partnership or association which has been in existence for 10 years or whose net assets exceed $500,000, and whose principal purpose as stated in its articles, by-laws or other organizational instrument is investing in 3248/j=13.003JPrelim.Blue-sy.s�=y -15- securities); provided that the seller, if not a registered broker-dealer, effects transactions in this state exclusively for the accounts of or exclusively in offers to sell or sales to the foregoing. Wyoming Same as Alaska. 32"Ij.13.005/Prtlim-Blue-sky-survey -16- t � e� e4m 6 Ga. B ow"w ,//.: _ 225 %t IV &,z 411. &4 . 2-e $5,000,000 CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 SUPPLEMENTAL BLUE SKY LETTER To: Raymond James & Associates, Inc. Boca Raton, Florida 4.4 y/,4. 111e-0 f,3 -,f MW 6a.yo. flw-0956-P9B6 December 8, 1993 Supplementing our Preliminary Blue Sky Survey, dated December 6, 1993 relating to the proposed offering and sale by you of $5,000,000 CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 (the "Bonds"), we wish to advise that the Bonds may be sold to the public by dealers registered in the states of Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Massachusetts, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin. For information relating to the status of the Bonds under the Blue Sky or securities laws of the other jurisdictions referred to in our Preliminary Blue Sky Survey, and for information relating to certain exempt transactions in such jurisdictions and in the above-named jurisdictions, reference should be made to the aforementioned Preliminary Blue Sky Survey. Very truly yours, SQUIRE, SANDERS & DEMPSEY ,(J��O pp(�Jwii2d p��m�2��tf/ Tiaa�z4euor2 ,o,L` eZ2us o em�, �7rcite 2�DD o� u6eo� ��.x..o.2 922D2 $5,000,000* CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 LEGAL INVESTMENT MEMORANDUM To: Raymond James & Associates, Inc. Boca Raton, Florida 4.5 (62aV, 35.9.mew n /AO�IJ 356-P966 December 6, 1993 In connection with the proposed offering and sale by you of $5,000,000* CITY OF SEBASTIAN, FLORIDA, UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 (the 'Bonds"), we have examined certain loose-leaf services and other unofficial compilations of statutes and other material relating to the requirements of the laws of the various states of Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Massachusetts, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin (i) governing legal investments for savings banks, life insurance companies and certain other insurance companies organized under the laws of such jurisdictions and (ii) applicable to investments by fiduciaries subject to the laws of such jurisdictions. We have not obtained either opinions of local counsel or formal rulings by administrative authorities in any jurisdiction. Our Memorandum is only for the general guidance of the underwriters in appraising and analyzing the potential market for the Bonds and is not to be relied upon as an opinion of counsel. Each ultimate investor should independently satisfy itself that investment in the Bonds is legal as to such investor. *Preliminary, subject to change. Information in this Memorandum is subject in many instances to the existence of discretionary authority granted to officials in the application of statutory standards, and is also subject to any limitations and restrictions (i) imposed by statute or regulation as to the amount and character of funds which may be invested in certain types of securities or in the securities of any one issuer, and as to the procedures to be followed with respect to investment of particular funds and (ii) resulting from relationships between issuer and investor or from provisions of the charter, by-laws or other instrument under which any investor may act. The conclusions expressed in the attached Memorandum relate to the statutory requirements in the particular jurisdictions as to which we have made the examinations referred to above and are based upon information contained in the Preliminary Official Statement dated December 6, 1993, relating to the Bonds. The omission of a particular class of investors does not necessarily indicate that the Bonds will not be legal for such class of investors. Very truly yours, SQUIRE, SANDERS & DEMPSEY 3748/jem13.0051legxl-invest-memo —2— / $5,0009000* CITY OF SEBASTIAN, FLORIDA UTILITIES SYSTEM REVENUE BONDS, SERIES 1993 MEMORANDUM CONCERNING ELIGIBILITY FOR INVESTMENT BY SAVINGS BANKS, FIDUCIARIES, LIFE INSURANCE COMPANIES AND CERTAIN OTHER INSURANCE COMPANIES *Preliminary, subject to change. ** The conclusions expressed herein are applicable only to the following specified classes of fiduciaries: 3W/j.13.005nc A4.vmt-memo -3- Certain Life Other Savings Insurance Insurance Jurisdictions Banks Fiduciaries** Companies Companies Arkansas (1) (1) Legal (1) California Legal Legal(2) (3) (3) Connecticut Legal(4) Legal(2) Legal (1) Delaware (1) Legal(2) Legal Legal Florida Legal Legal(2) Legal Legal Georgia (5) Legal(2) Legal Legal Illinois (6) Legal(2) Legal Legal Massachusetts Legal (1) Legal Legal Missouri Legal Legal(2) Legal Legal New Jersey Legal(7) Legal(2) Legal Legal New York Legal(8) Legal(2) Legal(9) Legal(9) North Carolina (1) Legal(2) Legal Legal Pennsylvania (10) Legal(2) Legal Legal South Carolina (1) Legal(2) Legal(11) Legal(11) Tennessee (1) Legal(2) Legal Legal Texas (1) Legal(2) Legal Legal Virginia (1) Legal(2) Legal Legal Wisconsin Legal(12) Legal(2) Legal Legal *Preliminary, subject to change. ** The conclusions expressed herein are applicable only to the following specified classes of fiduciaries: 3W/j.13.005nc A4.vmt-memo -3- V, V/ (a) Trustees - California, Illinois, and Texas; (b) Guardians - Missouri; (c) Trustees and executors - Georgia; (d) Trustees, guardians and conservators - Connecticut; (e) Trustees, guardians and personal representatives - Arkansas and Wisconsin; (f) Trustees, guardians, personal representatives, conservators and administrators - New Jersey; (g) Fiduciaries, other than personal representatives - Pennsylvania; (h) Fiduciaries, other than guardians holding funds received from the Veterans' Administration, to the extent of such funds - Florida; and (i) Fiduciaries, other than in any situation governed by the Uniform Veterans Guardianship Act - Tennessee. Investments by fiduciaries of pension plans and many other types of employee benefit plans are subject to certain standards and restrictions under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.A. Section 1001 et seq. ("ERISA"). ERISA purports to supersede any and all state laws (statutory or non -statutory, and including laws of the District of Columbia, Puerto Rico and certain U.S. possessions) insofar as they relate to pension and other employee benefit plans that are subject to ERISA; except ERISA does not exempt or relieve any person from any such law that regulates insurance, banking or securities, or from any generally applicable criminal law. (1) No applicable statutory provisions permitting investment. (2) Provided the "prudent" investor test is met. (3) For "excess funds investment" provided that the Bonds qualify as a "sound investment". (4) Provided the Bonds at the time of investment are within the top three rating categories in any rating service recognized by the Connecticut Banking commissioner, or in the opinion of the savings bank are a prudent investment; otherwise an additional provision permits investment of limited amounts in securities not otherwise expressly permitted or prohibited, provided the "prudent" investor test is met. (5) Investment is permitted if the Bonds are rated in the three highest ratings categories by either Fitch, Moody's or Standard and Poor ratings services. (6) State Banks may invest in the Bonds, provided the Bonds are considered "marketable investment securities. " (7) Provided the Bonds are rated among the three highest ratings by an authorized investment rating service. 3248/j. 13.005neSal-mw-� -4- i (8) Provided the Bonds, at the time of investment, are rated in one of the three highest rating grades by each rating service designated by the New York Banking Board, which has rated the Bonds; otherwise, an additional provision permits investment of limited amounts in securities not otherwise permitted or prohibited. (9) Provided that the bonds are rated within the three highest grades by each rating service designated by the New York Insurance Commissioner. (10) Investments authorized by the savings bank's articles of incorporation are permitted. (11) Provided the Bonds are eligible for amortization in accordance with rules or regulations promulgated by the Chief Insurance Commissioner of South Carolina; otherwise, investment is permitted only if, and to such extent as, the Chief Insurance Commissioner finds the Bonds appropriate for investment. (12) Provided that the Bonds are of "recognized bank investment quality" 3148fjam13.00511cga1-invm-mcmo —5— NABORS, GIBLIN & NICKERSON, P A. ATTORNEYS AT LAW THE POINTE, SUITE 1060 2502 ROCKY POINT DRIVE TAMPA, FLORIDA 33607 BARNETT BANK BUILDING, SUITE 800 TELEPHONE (813) 281-2222 315 SOUTH CALHOUN STREET TELECOPY (613) 281-0129 TALLAHASSEE. FLORIDA 32301 (904)224-4070 TELECOPY(904) 224-4073 December 16, 1993 City Council of the City of Sebastian, Florida Sebastian, Florida Council Members: 61MIN SIGNATURE PLAZA, SUITE 1060 201 SOUTH ORANGE AVENUE ORLANDO, FLORIDA 32801 (4071426-759S TELECOPY (407) 426-8022 We have examined a record of proceedings relating to the issuance of $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Bonds") of the City of Sebastian, Florida (the 11City"). The Bonds are issued under and pursuant to the Constitution and laws of the State of Florida, including particularly Chapter 166, Florida Statutes, and other applicable provisions of law, and under and pursuant to a resolution of the City adopted on December 8, 1993, as supplemented (the "Resolution"). The Bonds are dated as of and bear interest from December 1, 1993, except as otherwise provided in the Resolution. The Bonds will mature on the dates and in the principal amounts, and will bear interest at the respective rates per annum, as provided in the Resolution. Interest on the Bonds shall be payable on each April 1 and October 1, commencing April 1, 1994. The Bonds are subject to redemption prior to maturity in accordance with the terms of the Resolution. The Bonds are issued for the principal purpose of providing moneys to acquire a water and wastewater utility system in and for the City and to construct and acquire certain improvements thereto. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Resolution and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. City Council Sebastian, December 16, Page Two of the City of Florida 1993 Based on the foregoing, we are of the opinion that: 1. The City is a duly created and validly existing municipal corporation of the State of Florida. 2. The City has the right and power under the Constitution and Laws of the State of Florida to adopt the Resolution, and the Resolution has been duly and lawfully adopted by the City, is in full force and effect in accordance with its terms and is valid and binding upon the City and enforceable in accordance with its terms, and no other authorization for the Resolution is required. The Resolution creates the valid pledge which it purports to create of the Pledged Funds (as defined in the Resolution), subject to the provisions of the Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the Resolution. 3. The City is duly authorized and entitled to issue the Bonds, and the Bonds have been duly and validly authorized and issued by the City in accordance with the Constitution and Laws of the State of Florida. The Bonds constitute a valid and binding obligation of the City as provided in the Resolution, are enforceable in accordance with their terms and the terms of the Resolution and are entitled to the benefits of the Resolution and the laws pursuant to which they are issued. The Bonds do not constitute a general indebtedness of the City or the State of Florida or any agency, department or political subdivision thereof, or a pledge of the faith and credit of such entities, but are payable solely from the Pledged Funds in the manner provided in the Resolution. No holder of the Bonds shall ever have the right to compel the exercise of any ad valorem taxing power of the City or the State of Florida or any agency, department or political subdivision thereof to pay the Bonds. 4. The Bonds and interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, as defined in said Chapter 220. 5. Under existing statutes, regulations, rulings and court decisions, the interest on the Bonds (a) is excluded from gross income for federal income tax purposes and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be City Council of the City of Sebastian, Florida December 16, 1993 Page Three noted that with respect to certain corporations, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The opinion set forth in clause (a) above is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements could cause the interest on the Bonds to be so included in gross income retroactive to the date of issuance of the Bonds. The City has covenanted to comply with all such requirements. Ownership of the Bonds may result in collateral federal tax consequences to certain taxpayers. We express no opinion regarding such federal tax consequences arising with respect to the Bonds. It should be noted that (1) except as may expressly be set forth in an opinion delivered by us to the underwriters (on which opinion only they may rely) for the Bonds on the date hereof, we have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto, and (2) we have not been engaged or undertaken to review the compliance with any federal or state law with regard to the sale or distribution of the Bonds and we express no opinion relating thereto. The opinions expressed in paragraphs 2 and 3. hereof are qualified to the extent that the enforceability of the Resolution and the Bonds, respectively, may be limited by any applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors, rights generally, or by the exercise of judicial discretion in accordance with general principles of equity. We have examined the form of the Bonds and, in our opinion, the form of the Bonds are regular and proper. Very truly yours, BARNETT BANK BUILDING, SUITE BOO 31S SOUTH CALHOUN STREET TALLAHASSEE. FLORIDA 32301 (904)224-4070 TELECOPY (904) 224-4073 NABORS, GIBLIN & NICKERSON, P. A. ATTORNEYS AT LAW THE POINTE, SUITE 1060 2502 ROCKY POINT DRIVE TAMPA, FLORIDA 33607 TELEPHONE (813) 281-2222 TELECOPY (813) 281-0129 Raymond James & Associates, Inc. St. Petersburg, Florida Municipal Bond Investors Assurance Corporation Armonk, New York Gentlemen: 55.2. SIGNATURE PLAZA. SUITE 1060 201 SOUTH ORANGE AVENUE ORLANDO. FLORIDA 32801 (407) 426-7595 TELECOPY (407) 426-8022 December 16, 1993 We have acted as Bond Counsel for the City of Sebastian, Florida (the "City"), in connection with the issuance of the City's $5,000,000 Utilities System Revenue Refunding Bonds, Series 1993 (the "Series 1993 Bonds"), issued pursuant to a resolution of the City adopted on December 8, 1993, as amended and supplemented (the "Resolution"). In such capacity, we have examined the following: (i) the Official Statement, dated December 8, 1993 (the "Official Statement"), relating to the sale of the Series 1993 Bonds; (ii) the Resolution; (iii) the Bond Purchase Contract, dated December 8, 1993 (the "Purchase Contract"), between the City and the underwriter named therein; and (iv) such other records, documents, certificates, proceedings and questions of law as we have considered necessary to enable us to render this opinion. Capitalized terms used herein have the meanings set forth in the Resolution. Based upon such examination, we are of the opinion that: 1. The Official Statement has been duly authorized, executed and delivered by the City. 2. The information (other than any financial and statistical data contained in the Official Statement, for which no opinion is expressed) set forth in the Official Statement under the Raymond James & Associates, Inc. Municipal Bond Investors Assurance Corporation December 16, 1993 Page Two subheadings "Summary Statement - Sources and Security for Payment of the Bonds and Description of the Bonds" and under the headings "DESCRIPTION OF THE 1993 BONDS" "SECURITY FOR THE 1993 BONDS" "COVENANTS REGARDING RATES AND ADDITIONAL DEBT" "SUMMARY OF CERTAIN BOND RESOLUTION PROVISIONS" "VALIDATION," and "TAX EXEMPTION," "ADVISORS AND CONSULTANTS -BOND COUNSEL," "APPENDIX D -FORM OF RESOLUTION" insofar as such information purports to be descriptions or summaries of the Resolution, the Series 1993 Bonds, the Act and the Constitution and laws of the State of Florida, or federal tax law, is correct as to matters of law and, to the extent indicated therein, accurate and fair statements or ,summaries of the matters set forth or documents referred to therein, and that attached to the Official Statement as Exhibit D is a true and accurate copy of the Resolution except as to the amendment thereto adopted December 15, 1993. 3. The Series 1993 Bonds are exempt securities as described in Section 3(a)(2) of the Securities Act of 1933, as amended and now in effect, and the offer and sale thereof does not require any registration under such Securities Act or the qualification of the Resolution under the Trust Indenture Act of 1939, as amended and now in effect. Very truly yours, BARNETT BANK BUILDING, SUITE 600 315 SOUTH CALHOUN STREET TALLAHASSEE. FLORIDA 32301 (904)224-4070 TELECOPY 1904) 224-4073 NABORS, GIBLIN & NICKERSON, P. A. ATTORNEYS AT LAW THE POINTE, SUITE 1060 2502 ROCKY POINT DRIVE TAMPA, FLORIDA 33607 TELEPHONE (813) 281-2222 TELECOPY (813) 281-0129 Raymond James & Associates, Inc. St. Petersburg, Florida Municipal Bond Investors Assurance Corporation Armonk, New York Gentlemen: 5.3 SIGNATURE PLAZA. SUITE 1060 201 SOUTH ORANGE AVENUE ORLANDO, FLORIDA 32801 (407) 426-7595 TELECOPY (407) 426-6022 December 16, 1993 Of even date herewith, we have given our approving opinion with respect to the City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993. You may rely upon such opinion as if it were addressed to you. Very truly yours, GARY B. F RUSE 1 CHARLES IAN NARH VINCENT G. TORPY. JR i RICHARD E. TONPY GREGORY S. HANSEN = J. PATRIcE ANDERSON LAURA L. ANDERSON CHARLES A SCHHLINGRR STEPHEN P. HEGSTON WILLIAM A Gmm OF COUNSEL CRIS BATES FOBTER OF COUNSEL FREsE. NAsx & TORPy, P.A ATTORNEYS AT LAW December 16, 1993 City Council of City of Sebastian City of Sebastian, Florida Raymond James & Associates, Inc. 2255 Glades Road, Suite 120A Boca Raton, Florida 33431 Municipal Bond Investors Assurance Corporation 113 King Street Armonk, New York 10504 Squire, Sanders & Dempsey One Enterprise Center 225 Water Street, 21st Floor Jacksonville, Florida 32202 5.4 930 S. HARBOR C= BLVD. SEnTE 505 MEL ouRNE, F LoRiDA 32901 (407) 984-3300 FAX (407) 951-3741 (BOARD CERTIFIED IN TAXATION BOARD CERTIFIED IN WILLS. TROETE & EETATEs # BOARD CERTIFIED IN CT T.,,... L!w RE: City of Sebastian, Florida $5,000.00 Utilities System Revenue Bonds, Series 1993 Ladies and Gentlemen: In connection with the issuance and sale of the above described Bonds (the "Series 1993 Bonds"), I have served as counsel to the City of Sebastian, Florida (the "City"). In connection therewith, I have reviewed various documents I have deemed necessary to enable me to render this opinion, including, without limitation to: (A) Resolution No. R-93-58 adopted by the City Council of the City on November 3, 1993, as later amended and supplemented in Resolution No. R-93-68 adopted by the City Council of the City on December 8, 1993, Resolution No. R-93-67 adopted by the City Council of the City on December 8, 1993, and Resolution No. R-93-76 adopted by the City Council of the City on December 15, 1993 (collectively, the "Bond Resolution") authorizing the Bonds; (B) Resolution No. R-93-59 adopted by the City Council of the City on December 1, 1993 (the "Rate Resolution") establishing a water system rate schedule and a wastewater system rate schedule; City Council of City of Sebastian; Raymond James & Associates, Inc.; Municipal Bond Investors Assurance Corporation; and Squire, Sanders & Dempsey December 16, 1993 Page Two (C) Resolution No. R-93-63 adopted by the City Council of the City on November 10, 1993 (the "Purchase Agreement Resolution") authorizing the purchase of the Sebastian Highlands Water and Wastewater System from General Development Utilities, Inc. pursuant to the Purchase Agreement; (D) The Official Statement, dated December 8, 1993 (the "Official Statement") with respect to the Series 1993 Bonds; and (E) The Bond Purchase Agreement, dated December 8, 1993 (the "Purchase Contract") between the City and Raymond James & Associates, Inc. with respect to the Series 1993 Bonds. As to questions of fact material to my opinion, I have relied upon the representations of the City contained in the Bond Resolution, the Rate Resolution, the Purchase Agreement Resolution and in the certified proceedings and other certifications of public officials furnished to me without undertaking to verify the same by independent investigation. All capitalized terms used herein shall have the meanings set forth in the Purchase Contract. Based upon the foregoing, I am of the opinion that: 1. The City is a municipal corporation of the State of Florida, duly created and validly existing under and by virtue of the Constitution and laws of the State of Florida, with legal authority to issue the Series 1993 Bonds, and secure the Series 1993 Bonds as provided by the Bond Resolution. 2. The City has full legal right, power and authority to adopt the Bond Resolution and to enter into and assume the obligations under the Purchase Contract and consummate all the transactions contemplated by the Bond Resolution and the Purchase Contract. 3. The City Council meetings held on November 3, 1993, November 10, 1993, December 1, 1993, December 8, 1993, and December 15, 1993, were duly noticed and validly convened. 4. The Bond Resolution, the Purchase Contract, the Rate Resolution, the Purchase Agreement and the Purchase Agreement Resolution have been duly adopted or authorized, executed and delivered by the City and, assuming due authorization, execution and deliver thereof by the other parties thereto, constitute binding and enforceable obligations of the City in accordance with City Council of City of Sebastian Raymond James & Associates, Inc.; Municipal Bond Investors Assurance Corporation; and Squire, Sanders & Dempsey December 16, 1993 Page Three their terms, except that the binding effect and enforceability are subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, readjustment of debt and other laws in effect from time to time affecting rights of creditors generally and except to the extent that enforceability thereof may be limited by the application of principles of equity. 5. The information in the Official Statement under the captions "PURPOSE OF THE 1993 BONDS", "THE CITY", "LITIGATION", "LEGAL MATTERS", and statements of fact under the caption "DISCLOSURE MATTERS" - Required by Florida Blue Sky Regulations", is correct in all material respects and does not omit any statement which, in my opinion, should be included or referred to therein in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 6. Based upon my review of the Official Statement, and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement as of the date of the Closing, nothing has come to my attention which would lead me to believe that the Official Statement, when taken as a whole, contains an untrue statement of a material fact or omits to state a material fact necessary to make the statement contained therein, in light of the circumstances under which they were made, not misleading (except for the financial information and statistical data contained in the Official Statement or in the Appendices thereto, as to all of which no view is expressed). 7. The adoption of the Bond Resolution, the Rate Resolution, the Purchase Agreement Resolution, and the execution and delivery of the Series 1993 Bonds, the Official Statement, the Purchase Contract and the Purchase Agreement, and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a breach of or default under any constitutional provisions, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party, or to which the City or any of its property or assets is 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 or under the terms of any such law, City Council of City of Sebastian Raymond James & Associates, Inc.; Municipal Bond Investors Assurance Corporation; and Squire, Sanders & Dempsey December 16, 1993 Page Four regulation, or instrument, except as expressly provided in the Series 1993 Bonds, and the Resolution. 8. To the best of my knowledge and except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, pending or, threatened against or affecting the City, nor to the best of my knowledge is there a basis for such action, suit, proceeding, inquiry or investigation wherein an unfavorable decision, ruling or finding would have a materially adverse affect upon the transactions contemplated by the Purchase Contract and the Official Statement or the validity of the Series 1993 Bonds, the Bond Resolution, the Rate Resolution, the Purchase Agreement and the Purchase Agreement Resolution. 9. The City has obtained, as contemplated in the Purchase Agreement, fee simple title or other appropriate possessory interest to the facilities constituting the System, subject only to such liens, encumbrances, administrative orders or proceedings, as are specifically disclosed in such opinion or in any policy of title insurance delivered in connection with the acquisition of the System as may be acceptable to the City. Very triyiy yours, FRES , NASH & TORPY, P.A. harles Ian Nash City Attorney City of Sebastian CIN/bl , -W., M, � ./V. &a .ti1. &14 December 16, 1993 Raymond James & Associates, Inc. St. Petersburg, Florida Re: $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds, Series 1993 5.5 /Ods/ ,�5.9-1P6f1 This opinion is rendered pursuant to the Bond Purchase Contract, dated December 8, 1993 (the "Purchase Contract"), between you and the City of Sebastian, Florida (the "City"), relating to your purchase from the City of its $5,000,000 Utilities System Revenue Bonds, Series 1993 (the "Bonds"). We have acted as your counsel in connection with your purchase of the Bonds pursuant to the Purchase Contract. We have examined the following documents: (i) a certified copy of Resolution No. R-93-58, adopted by the City on November 3, 1993, as restated, amended and supplemented (collectively, the "Bond Resolution"), authorizing the issuance of the Bonds; (ii) an executed counterpart of the Purchase Contract; (iii) a copy of the Preliminary Official Statement, dated December 6, 1993, relating to the Bonds; and (iv) a copy of the Official Statement, dated December 8, 1993 (the "Official Statement"), relating to the Bonds. We also have examined originals or copies, certified or otherwise identified to our satisfaction, of such other documents, records and instruments, as we have considered necessary or appropriate for the purpose of rendering this opinion. We are familiar with the provisions of the Securities Act of 1933, as amended (the "1933 Act"), the Trust Indenture Act of 1939, as amended (the "1939 Act"), and the rules, regulations and interpretations under those Acts. Based on the foregoing examination and review, we are of the opinion that, under existing law, it is not necessary in connection with the sale of the Bonds to the public to register the Bonds under the 1933 Act, or to qualify the Bond Resolution under the 1939 Act. Raymond James & Associates, Inc. December 16, 1993 Page 2 In accordance with our understanding with you, for purposes of this opinion we have relied on the opinions, all dated as of this date and delivered to the City in connection with the issuance of the Bonds, of: Nabors, Giblin & Nickerson, P.A., Tampa, Florida ("Nabors, Giblin") as bond counsel to the City, as to the validity of the Bonds and the exclusion from gross income for federal income tax purposes and other tax treatment of the interest on the Bonds; and Charles Ian Nash, Esquire, Melbourne, Florida ("C. Nash") counsel to the City, as to various matters set forth in his opinion. In further accordance with our understanding with you, we have rendered legal advice and assistance to you in the course of your investigations pertaining to, and your participation in the preparation of, the Official Statement. That assistance involved, among other things, inquiries concerning various legal and related matters, our review of certain records, documents and proceedings, and our participation in discussions with representatives of the City; Hartman & Associates, Inc., Orlando, Florida, as consulting engineers and financial feasibility consultants to the City; Nabors, Giblin as bond counsel; and C. Nash as City Attorney, all concerning the contents of the Official Statement and related matters. In accordance with our understanding with you, we are not passing upon, and do not assume responsibility for, the accuracy, completeness or fairness of the contents of the Official Statement. However, we can advise, in our capacity as counsel for you and on the basis of the information that has come to our attention, and in reliance on the certificates, opinions and documents we have reviewed, that in the course of our performance of the services referred to above and without having undertaken to verify independently the accuracy, completeness or fairness thereof or of the contents of the Official Statement, nothing has come to our attention which lead's us to believe that the Official Statement (excluding those portions noted in the following paragraph), at its date or as of this date, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading. Reference in this opinion to the Official Statement does not include any of the appendices to the Official Statement or any other financial, technical or statistical data included in the Official Statement or its appendices, as to all of which we express no opinion. This opinion is rendered to you solely for your benefit and may not be relied on by any other person or entity. Respectfully submitted, tt— Municipal Bond Investors Assurance Corporation 113 King Street Armonk, NY 10504 914 273 4545 December 16,1993 City of Sebastian MQ� 1225 Main Street Sebastian, Florida 32958 Raymond James & Associates, Inc. 2255 Glades Road, Suite 120A Boca Raton, Florida 33431 $5,000,000 City of Sebastian, Florida Utilities System Revenue Bonds Series 1993 Ladies and Gentlemen: 5.6 I am General Counsel of the Municipal Bond Investors Assurance Corporation, a New York corporation (the "Corporation'), and have acted as counsel to the Corporation in connection with the issuance of Financial Guaranty Insurance Policy No. 15019 (the "Policy") relating to $5,000,000 City of Sebastian, Florida, Utilities System Revenue Bonds, Series 1993. In so acting, I have examined a copy of the Policy and such other relevant documents as I have deemed necessary. Based upon the foregoing, I ani of the following opinion: 1. The Corporation is a stock insurance corporation, duly incorporated and validly existing under the laws of the State of New York and is licensed and authorized to issue the Policy under the laws of the State of New York. 2. The Policy has been duly executed and is a valid and binding obligation of the Corporation enforceable in accordance with its terms except that the enforcement of the Policy may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium, receivership and other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). tnily Louis G. General Lcun.rd J. Adler hemando C. Alam. Cas r L. Abo rcz Lilimra Armes Daniel H. Aronson David C. Ashburn Charles M. Auslander David T. Aarin Fred W. Raggett Kern L. B.mh Hilaric Baas V. Dawn Beighey Norman J. Benford Lisa J. Berger Dale S. Bergman Bridget Berry Mark F. Bid... Lorene Jon Bielby Mark D. Bloom Reginald L. Bauthillier, Jr. Howard Bregeo n Blake D. Bringgold Francis B. Brogan, Jr. Burl Bruton Bernardo Burstein David R. Chase Michael J. Cherniga Ary fhoockr Sur M. cnbh L. Frank C.rdero (L Dcryl Couch Albrn A Act Castillo Alan T. Dimond Trini L Donate Lucia A. Dougherty C.ml.. ft. Duff William B. Fuck Kenneth Edelman Charles W. Edgar, HI Arthur J. England, Jr. Gary M. Epstein Henry H. (Bucky) Fos Jeffrey R. Fried Robin F. Frydman Robert C. Gang Richard G Garrett Brien K. Can Jeffrey Gilbert Laurie L. Gilden Bruce H. Giles -Klein Richard J. Gi.m. Lawrence Godofsky Joel K. Goldman Steven E. Goldman Joel K Goldman (305) 579-0673 City of Sebastian Sebastian, Florida 6flEIMH t l' T O R N E 1' S % T 1. 1 u S..:v,nr M. C.dd_.rnid. J osrpb Q. Goldn.:ln Stay.. S. Goodman Muth. .w It C ...... . Di.nnc Crc,:be" Melvin N. Greenberg Sandra It Grecnblmt RuLcrt L. Gn.zsman Badwra A. ILII Paigc A. harper Fred F. 11... m 1. Alban. M. Hernandez C. Ilernandez-Lonstein Jeffrey A. Hirsch Kenneth C. Hoffman Larry J. Hoffman Kenneth A. Rork, Gerald J. Houlihan Keith A. James Martin Kalb Steven M. Katzman David 5. Kenin Steven J. Kravitz Ronald C. LaFace Steven A. Landy Steen B. Lapidus Nancy B. Lash Mohr M. I.vh,fl„1.1 Juror.. It S. la:+hew Marc S. I.:vin 0 ... r 4:virr Norman It. Li paff Carlos E. I....rIi. t Ju.n It Loumb:t Bruce E. Mucd.nuugl. Robert P. Mucin. Alfred J. Mol.fuuo Samantha 1). Malloy Ines Marrom-Priegues Enrique J. Martin Pedro J. Martinez -Frage Joel D. Maser Juan 1. MaynL Jr. Robert R. McDonald John T. Mcugcr Janet L. O'Brien Maury R. Olicker Rebecca R. Orand Debbie M. Orshefsky Aileen Ortega A. Frie.ner Pardo Stevan J. Pardo Rose Parish -Ramon Marshall R. P..tcrnack December 16, 1993 Raymond James & Associates, Inc. Boca Raton, Florida Squire, Sanders & Dempsey Jacksonville, Florida Sylvia S. I'nnn.:ys Oyr.n G. R.rracn Bober''. It. I'up. Albr:rr I! QuemrI Vivian Va:.os Qui",,. C. Ityan Iter.. Mark 1. Reitman L.is It o, Barry Scott Richard A. Jcffr)' Robinson Kenneth B. Robinson Raquel A. Rodriguez Alan H. Rolnick Marvin S Rosen Richard A. Rosenbaum Ronald M. Rosengarten David L. Ross Gary A. Saul Elliot If. Schcrker Mark P. Schnapp Clifford A. Schulman Paul E. Shapiro Randy 1. Shaw Paul A. Shclowitz Brian J- Sherr Enrique Silva Marlene K. Silverman Re: City of Sebastian, Florida, Utilities System Revenue Bonds, Series 1993 (the "1993 Bonds") Ladies and Gentlemen: 5.7 Stuart IL Singer holly It. Skolnick I rotes H Stephenson J.cl L. Smckcr Douglas R. Thornburg Robert H. Tra.rig Brian J. Walsh Keith Wasserstmm Jeffrey Weithorn David E. Wells Bradford D. West Howard W. Whitaker Jerrold A. Wish Timothy D. Wolfe Linda G. Wotton Julie A. Zahnlacr T. Wayne Davis, of Counsel Arnold J. Hoffman, of Counsel Patrick T. O'Brien, of Counsel K K. Roberts, of Counsel All.. SArwin, of Counsel Craig E. Stein- of Counsel Marc M. Watson, of Counsel Zachary H. Wolff, Retired We have acted as counsel to General Development Utilities, Inc. ("GDU") in connection with the sale of certain utility facilities to the City of Sebastian, Florida (the "City") to be funded by the City through the sale and delivery of the 1993 Bonds to Raymond James & Associates, Inc. (the "Underwriter'). In such capacity, we have reviewed a copy of the City of Sebastian, Florida/General Development Utilities, Inc. Water and Sewer System Asset Purchase and Sale Agreement, dated October 12, 1993, between GDU and the City (the "Agreement"), relating to the City's acquisition of certain water and sewer facilities from GDU. GREENBERC. TRAURtG. HOFFMAN. LIPOFE. ROSEN & QUENTEL, P.A. 1221 BRICKELL AVENUE MIAMI. FLORIDA 33131 305-579-0500 FAX 305-579-0717 MIAMI FORT LAUDERDALE WEST PALM BEACH TALLAHASSEE City of Sebastian; Raymond James & Associates, Inc.; Squire, Sanders & Dempsey December 16, 1993 Page 2 We are of the opinion that: (a) GDU is a duly organized Florida corporation in good standing within the State of Florida; (b) The Agreement has been duly authorized, executed and delivered by GDU, and assuming due authorization, execution and delivery thereof by the City, constitutes a valid, binding and enforceable agreement of GDU in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, readjustment of debt and other laws in effect from time to time affecting the rights of creditors generally and except to the extent that enforceability thereof may be limited by the application of principles of equity; (c) To the best of our knowledge, and without undertaking an independent investigation into any other matters, there is no action, suit, proceeding, injury or investigation at law or in equity before or by any court, government agency, public board or body, pending or, to the best of our knowledge, threatened against or affecting GDU, wherein an unfavorable decision, ruling or finding would have a materially adverse effect upon the transactions contemplated by or the validity of the Agreement; and (d) To the best of our knowledge, and without undertaking an independent investigation into any other matters, all authorizations, consents, approvals and reviews of governmental bodies or regulatory authorities then required for the execution or performance of the Agreement by GDU have been obtained or effected or will be obtained prior to the closing of the transaction contemplated in the Agreement and we have no reason to believe that GDU will be unable to obtain or effect any such additional authorization, consent, approval or review that may be required in the future for the performance by GDU of its obligations under the Agreement. This opinion is furnished to you solely for your benefit in connection with the original delivery of the 1993 Bonds by the City to the Underwriter, and this opinion may not be relied upon by any other person for any purpose. This opinion is not to be used, circulated, quoted or otherwise referred to in any other connection other than as may be required by law. Respectfully submitted, GREENBERG, TRAURIG, HOFFMAN, LIPOFF, ROSEN & QUENTEI, P.A. GREENBERG TRAURIC