HomeMy WebLinkAbout626-10 Bond Counsel for Water/Sewer Refinancing RESOLUTION NO. 626-10
A RESOLUTION OF THE CITY COUNCIL OF THE ,CITY OF
ZEPHYRHILLS, FLORIDA AUTHORIZING THE AMENDMENT OF
THE INTEREST RATE ON THE CITY'S WATER AND SEWER
REVENUE REFUNDING BOND, SERIES 2000; APPROVING THE FORM
OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF AN
ALLONGE TO SUCH BOND TO EFFECT SUCH PURPOSE; MAKING
SUCH DETERMINATIONS AS ARE REQUIRED TO AFFORD SUCH
BOND, AS AMENDED, "BANK QUALIFIED" STATUS; AND
PROVIDING FOR AN EFFECTIVE DATE. .
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ZEPHYRHILL
FLORIDA, as follows:
SECTION 1. DEFINITIONS. The terms used in this Resolution shall have the respectiv
meanings assigned to them in Resolution No. 301 adopted on February 28, 1992, as amended
and supplemented from time to time, and as particularly supplemented by Resolution No. 487-00
adopted on September 11, 2000 (the "Authorizing Resolution"), unless the text hereof clears
otherwise requires.
SECTION 2. AUTHORITY FOR THIS RESOLUTION. This Resolution is adopte
pursuant to the provisions of the Authorizing Resolution, Part II, Chapter 166, Florida Statute ,
as amended, and other applicable provisions of law.
SECTION 3. FINDINGS. It is hereby found and determined that:
A. The City Council of Zephyrhills, Florida(the "Issuer") had previously adopted th
Authorizing Resolution which authorized the issuance of and delivery of the Issuer's Water an�
Sewer Revenue Refunding Bond, Series 2000 (the "Bond") to provide funds for the purpose of
refunding the Issuer's Water and Sewer Revenue Refunding Bonds, Series 1992.
B.. The Bond was issued on September 18, 2000 in the aggregate principal amount of
$3,948,000 to the Purchaser, and current holder of the Bond, SunTrust Bank(the "Bondholder").
C. The original interest rate on the Bond is 5.08% and the Bondholder has agreed t
amend the interest rate on the Bond to a rate equal to 3.28% effective March 9, 2010.
D. The Issuer and the Bondholder intend to execute and deliver Allonge No. 1 (th
"Allonge") to be appended to.and which will modify and amend and become part of the Bond t
effect such amendment of the interest rate on the Bond.
E. The Issuer desires to make such determinations as are required to afford the Bon c,
as amended, "bank qualified" status.
SECTION 4. FORM OF THE ALLONGE. The Allonge is to be in substantially the form set
forth in Exhibit A attached hereto, together with such non-material changes as shall be approved
by the Mayor, such approval to be conclusively evidenced by the execution thereof by the
Mayor. The Allonge shall be executed in the name of the Issuer with the manual or facsimil
signature of the Mayor and the official seal of the Issuer shall be imprinted thereo ,
countersigned with the manual or facsimile signature of the President of the City Council an
attested with the manual or facsimile signature of the Clerk. In case any one or more of th
officers who shall have signed or sealed the Allonge or whose facsimile signature shall appear
thereon shall cease to be such officer of the Issuer before the Allonge so signed and sealed ha
been delivered, such Allonge may nevertheless be delivered as herein provided and may be
issued as if the person who signed or sealed the Allonge had not ceased to hold such office. The
Allonge may be signed and sealed on behalf of the Issuer by such person who at the actual tim
of the execution of such Allonge shall hold the proper office of the Issuer, although, at the dat
of the Allonge, such person may not have held such office or may not have been so authorize 4.
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 Allonge
shall actually be delivered.
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SECTION 5. BANK QUALIFIED. The Issuer hereby designates the Bond, as amended, as a
"qualified tax-exempt obligation" within the meaning of Section 265(b) (3) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Issuer and any subordinate entities of the
Issuer and any issuer of"tax-exempt" debt that issues "on behalf of' the Issuer do not reasonably
expect during the calendar year 2010 to issue more than$30,000,000 of"tax-exempt" obligations
including the Bond, as amended, exclusive of any private activity bonds as defined in Section
141(a) of the Code (other than qualified 501(c) (3) bonds as defined in Section 145 of the Code).
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SECTION 6. EFFECTIVE DATE. This Resolution shall become effective on Marc
9,2010 .
RESOLVED in regular meeting on this 8th day of March, A.D., 2010.
J I WILKESON,
City Council President
ATTEST:
LINDA D, B AN, City_Clerk
W. CLIF C OF ,Mayor
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EXHIBIT A
ALLONGE NO. 1
This Allonge No. 1, dated as of March 9, 2010, is to be attached to and is part of the Cit
of Zephyrhills, Florida Water and Sewer Revenue Refunding Bond, Series 2000 dated Septembe
18, 2000, consisting of one Bond in the original principal amount of$3,948,000, payable to the
• order of SunTrust Bank,and maturing June 1,2015 (the "Bond").
Effective as of the date hereof,the interest rate on the Bond is 3.28%.
CITY OF ZEPHYRHILLS,FLORIDA
(SEAL)
By:
W. Cliff McDuffie, Mayor
COUNTERSIGNED:
Jodi Wilkeson, President of the City Council
ATTESTED:
Linda.D. Boan, City Clerk
SunTrust Bank, the registered owner of the Bond, hereby understands, acknowledges an
consents to the foregoing.
SUNTRUST BANK
By:
Name: Adam L. Horn
Title: Vice President
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ALLONGE NO. 1 TO
CITY OF ZEPHYRHILLS, FLORIDA
WATER AND SEWER REVENUE REFUNDING BOND,
SERIES 2000.
MARCH 9, 2010
ALLONGE NO.1 TO CITY OF ZEPHYRHILLS,FLORIDA
WATER AND SEWER REVENUE REFUNDING BOND, SERIES 2000
CLOSING DOCUMENTS LIST
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1. Allonge Opinion
2. Resolution No..301 adopted by the City Council on February 28, 1992
3. Resolution No.487-00 adopted by the City Council on September.11,2000
4. Resolution No. 626-10 adopted by the City Council on March 8,2010
5. (a) Specimen Bond
(b) Specimen Allonge No. 1
6. Tax Certificate
7. IRS 8038-G Form
8. Final Numbers
9. Disbursements and Charges Summary
Distribution List:
(2) City of Zephyrhills,Florida
(1) Bryant Miller Olive P.A.
(1) SunTrust Bank
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March 9, 2010
SunTrust Bank
Tampa,Florida
Re:. AAAllonge No.1 to City of Zephyrhills,Florida
Water and Sewer Revenue Refunding Bond,Series 2000
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of Zephyrhills, Florida (the "Issuer") in
connection with the issuance of the above-referenced Bond (the "Bond"), including the
execution and delivery of Allonge No. 1 to be attached thereto and to be made a part thereof
("Allonge No. 1"). The delivery of this opinion to the addressee above does not create an
attorney-client relationship.
As to questions of fact material to our opinion, we have relied upon representations of
• the Issuer contained in Resolution No. 301 adopted on February 28, 1992, as amended and
supplemented from time to time, and as particularly supplemented by Resolution No. 487-00
• adopted on September 11, 2000 (the "Authorizing Resolution"), and a Resolution adopted on
March 8, 2010 approving the execution of Allonge No. 1, the certified proceedings and other
certifications furnished to us by or on behalf of the Issuer without undertaking to verify the
same by independent investigation. Jr addition, the opinions set forth below are subject to the
same limitations, reliance, assumptions and caveats as are set forth in our approving opinion
dated September 18,2000 relating to the Bond.
Based on our examination, we are of the opinion, as of the date hereof and under
existing law, as follows:
1. The Bond, including Allonge No. 1, is a valid and binding limited obligation of
the Issuer enforceable in accordance with its terms, payable solely from the Pledged Revenues
in the manner and to the extent provided in the Authorizing Resolution.
2. The execution and delivery of Allonge No. 1 will not in and of itself adversely
affect the exclusion of. the interest on the Bond,from gross income for federal income tax
purposes.
SunTrust Bank
March 9,2010
Page 2
Our opinions expressed herein are predicated upon present law, facts and
circumstances, and we assume no affirmative obligation to update the opinions expressed
herein if such laws,facts or circumstances change after the date hereof.
Very truly yours,
BRYANT MILLER OLIVE P.A.
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Form 8038-G Information Return for Tax-Exempt Governmental Obligations
► Under Internal Revenue Code section 149(e) OMB No.1545-072
(Rev. November 2000) ► See separate Instructions.
Department of the Treasury • Caution:If the issue price is under$100,000, use Form 8038-GC.
Internal Revenue Service
Reporting Authority If Amended Return, check here ► ❑
1 Issuer's name 2 Issuer's employer identification numb r
City of Zephyrhills,Florida 59 ; 6000455
3 Number and street(or P.O. box if mail is not delivered to street address) Room/suite 4 Report number
5335 Eighth Street 3 1
5 City,town, or post office,state, and ZIP code 6 Date of issue
Zephyrhills,Florida 33540
7 Name of issue $2,084,000 City of Zephyrhills,Florida Water and Sewer Revenue 8 CUSIP number
Refunding Bonds,Series 2000 N/A
9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal represents ve
Steven F.Spina,City Manager ( 813 )780-0011
Type of Issue (check applicable box(es) and enter the issue price) See instructions and attach schedule
11 ❑ Education . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 ❑ Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . 12
13 ❑ Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 ❑ Public safety. . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 ❑ Environment(including sewage bonds) . . . . . . . . . . . . . . . . . . 15
16 ❑ Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 ❑✓ Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2,084,000.1 0
18 ❑ Other. Describe ► 18
19 If obligations are TANS or RANs, check box nstallment► ❑ If obligations are BANS, check box ► ❑
20 If obli ations are in the form of a lease or i sale, check box ► ❑
Description of Obligations. Complete for the entire issue for which this form is being filed.
(a)Final maturity date (b)Issue price (c)Stated redemption (d)Weighted (e)Yield
price at maturity average maturity
21 06/01/2015 $ 2,084,000.00 $ 2,084,000.00 2.8804 years 3.2812
M.ifliiiva Uses of Proceeds of Bond Issue (including underwriters' discount)
22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .. 22 0.1 0
23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . . 23 2,084,000.1 0
24 Proceeds used for bond issuance costs (including underwriters'discount) . 24 A4,000.00
25 Proceeds used for credit enhancement . . . . . . . . . . . 25
26 Proceeds allocated to reasonably required reserve or replacement fund . . 26
27 Proceeds used to currently refund prior issues . . . . . . . . . 27 2,0
28 Proceeds used to advance refund prior issues . . . . . . . . 28 29 Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . 2,084,000. 0
30 Nonrefundin roceeds of the issue (subtract line 29 from line.23 and enter amount here
Description of Refunded Bonds (Complete this part only for refunding bonds.)
31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . ► 2.8804 ye rs
32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . ► ye rs
33 Enter the last date on which the refunded bonds will be called . . . . . . . . . . . ►
34 Enter the date(s) the refunded bonds were issued ► March 17,2000
Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . 35
36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract(see instructions) L36a
b Enter the final maturity date of the guaranteed investment contract ►
37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units I 37a
b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of he
issuer ► and the date of the issue ►
38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(IIl) (small issuer exception), check box ►
39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . ►
40 If the issuer has identified a hedge, check box ► Li
Under penalties of perjury.I declare that I have examined this return and accompanying schedules and statements,and to the best of my knowle ge
and belief,they are true,correct,and complete.
Sign
Here March 9,2010 Steven F.Spina,City Manager
' Signature of issuer's authorized representative Date 'Type or print name and title
For Paperwork Reduction Act Notice, see page 2 of the Instructions. cat.No.63773S Form 8038-G (Rev.11-2000)
$2,084,000
City of Zephyrhills,Florida
Water and Sewer Revenue Refunding Bond, Series 2000
REISSUANCE ON MARCH 9,2010
TAX CERTIFICATE AS TO ARBITRAGE AND
THE PROVISIONS OF SECTIONS 141-150 OF
THE INTERNAL REVENUE CODE OF 1986,AS AMENDED
In connection with the reissuance by the City of Zephyrhills, Florida (the "City") of its
Water and Sewer Revenue Refunding Bond, Series:2000, outstanding in the aggregate principal
amount of $2,084,000 (the "Series 2000 Bond") and pursuant to Section 1.148-2(b)(2) of the
Income Tax Regulations (the "Regulations"), the City makes and enters into the following Tax
.Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code
of 1986, as amended (the"Code"):
1. The Series 2000 Bond was issued pursuant to the Constitution and laws of the
State of Florida,including particularly Chapter 166,Part II,Florida Statutes, and pursuant to the
terms of Resolution No. 301, adopted by the City Council of the City (the "Council") on
February 28, 1992, as amended and supplemented from time to time, and as particularly
supplemented by Resolution No. 487-00 adopted by the City Council of the City on September
11, 2000 (collectively, the "Resolution"). The City' and SunTrust Bank, the original purchaser
and current holder of the Series 2000 Bond (the "Bank") have agreed to reduce the interest rate.
on the Series 2000 Bond from 5.08% to 3.28%. Resolution No. 626-10, adopted by the City
Council on March 8, 2010 (the "2010 Resolution"), authorizes the execution and delivery of
Allonge No. 1 reflecting the reduction of the interest rate. Such change in the interest rate
constitutes a significant modification to the Series 2000 Bond within the meaning of Section
1.1001-3(e) of the Regulations. As a result, the Series 2000 Bond is deemed reissued on the date
hereof for federal income tax purposes, including, in particular,for purposes of Section 103 and
Sections 141 through 150 of the Code. For purposes of this Certificate, the reissued Series 2000
Bond is hereinafter referred to as the "Bond," and any further references to the Series 2000 Bond
shall refer to the Series 2000 Bond as originally issued on September 18, 2000. Unless otherwise
specifically defined, all capitalized terms used in this Certificate shall have the same meanings
as those set forth in the Resolution or in the Regulations.
2. The Series 2000 Bond was issued to currently refund the City's Water and Sewer
Revenue Refunding Bonds, Series 1992 (the "Series 1992 Bonds"). The Series 1992 Bonds were
issued for,the purpose of advance refunding the outstanding principal amount of the City's
Water and Sewer Revenue Refunding and Improvement Bonds, Series 1986 (the "Series 1986
Bonds"). A portion of the Series 1986 Bonds (the"1986 New Money Portion") was issued for the
purpose of financing improvements to the City's water and sewer system (the "1986 Project").
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The remaining portion of the Series 1986 Bonds was issued to currently refund two outstanding
promissory notes of the City (collectively, the "Prior Notes") which had been issued for the
purpose of financing improvements to the water and sewer system(the "Original Project"). The
1986 Project and the Original Project are hereinafter collectively referred to as the "Refinanced
Projects."
3. The City does not expect to sell or otherwise dispose of any property comprising
a part of the Refinanced Projects prior to the final maturity date of the Bond, except such minor
parts "or portions thereof as may be disposed of due to normal wear, obsolescence, or
depreciation in the ordinary course of business.
4. As of the date of issuance of the Series 1986 Bonds, the City reasonably expected
that at least 85% of the spendable proceeds of the 1986 New Money Portion would be expended
within 3 years of the date that the Series 1986 Bonds were issued. In addition, not more than
50% of the proceeds of the 1986 New Money Portion were invested in obligations having a
substantially guaranteed yield for a period of 4 years or more. As of the respective dates of
issuance of the Prior Notes, the City reasonably expected that at least 85% of the spendable
proceeds of the Prior Notes would be expended within 3 years of the date that such Prior Notes
were issued. In addition,not more than 50%of the proceeds of the Prior Notes were invested in
obligations having a substantially guaranteed yield for a period of 4 years or more.
5. There are no funds or accounts established pursuant to the Resolution or
otherwise, other than the Sinking Fund, which are.reasonably expected to be used to pay debt
service on the Bond, or which are pledged as collateral for the Bond (or subject to a negative
pledge) and for which there is a reasonable assurance on the part of the Bank that amounts
therein will be available to pay debt service on. the Bond if the City encounters financial
difficulties.
6. The- Sinking Fund will be used primarily to achieve a proper matching of
Pledged Revenues and debt service on the Bond within each bond year and amounts deposited
thereto will be depleted at least once a year except for any carryover amount which will not in
the aggregate exceed the greater of(A)the earnings on such fund for the immediately preceding
bond year, or (B) one-twelfth of the debt service on the Bond for the immediately preceding
bond year.
7. As of the date hereof, there are no unspent proceeds of the Series 2000 Bond, the
Series 1992 Bonds,the.Series 1986 Bonds, or the Prior Notes.
8. The following represents the expectations of the City with respect to the
investment of funds on deposit in the aforementioned funds and accounts:
(a) All amounts on deposit in the Sinking Fund may be invested at an
unrestricted yield for a period of thirteen months from the date of deposit of such
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amounts to such Fund. Investment earnings with respect to amounts on deposit in the
Sinking Fund which are retained therein may be reinvested at an unrestricted yield for a
period of thirteen months from the date of receipt of the amount earned. It is expected
that all such investment earnings, if any, will be used within thirteen months of their
receipt to pay principal or interest on the Bond.
(b) Amounts described in this subparagraph (a) that may not be invested at
an unrestricted yield shall be invested at a yield not in excess of 3.281224 or be invested
in tax-exempt obligations under Section 103(a) of the Code the interest on which is not
an item of preference within the meaning of Section 57(a)(5) of the Code.
9. For purposes of this Certificate, "yield" means that yield which when used in
computing the present worth of all payments of principal and interest to be paid on an
obligation produces an amount equal to the purchase price of such obligation. The yield on
obligations acquired with the proceeds derived from the sale of the Bond and from amounts
deposited in the Sinking Fund and the yield on the Bond shall be calculated by the.use of the
same frequency interval of compounding interest. In the case of the Bond, the purchase price is
$2,084,000, which is the outstanding principal amount of the Bond on the date hereof. The
interest rate on the Bond was arrived at as a result of an arms length negotiation between the
City and the Bank. The Bank has certified that it is not acting as a broker or other intermediary
for the purpose of reselling the Bond to other investors. See Exhibit A attached hereto. Any
investments acquired with amounts that may not be invested at an unrestricted yield pursuant
• to Paragraph 8 above shall be purchased at prevailing market prices and shall be limited to
• I securities for which there is an established market, shall be United States Treasury Obligations-
State and Local Government Series, or shall be tax-exempt obligations under 103(a) of the Code
the interest on which is not an item of tax preference within the meaning of Section 57(a) (5) of
the Code. In accordance with such meaning of the term "yield", the yield on the Bond has been
determined to be not less than 3.281224.
10. The weighted average maturity of the Bond does not exceed 120 percent of the
reasonably expected remaining economic life of the assets comprising the Refinanced Projects
(within the meaning of Section 147(b) of the Code).
11. No action which overburdens the tax-exempt bond market (within the meaning
of Section 1.148-10(a) of the Regulations) has been or is expected to be taken in connection with
the Bond. In particular, no portion of the Bond has been issued earlier, or allowed to remain
outstanding longer, than is otherwise reasonably necessary to accomplish the governmental
purposes of the Bond. Furthermore, each action taken or expected to be taken in connection
with the Bond would reasonably be taken if the interest on the Bond were not excluded from
gross income for federal income tax purposes (assuming that the hypothetical taxable interest
rates would be the same as the actual tax-exempt rates on the Bond).
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12. There are no other obligations of the City that (A) are being sold at substantially
the same time as the Bond (within 15 days), (B) are being sold pursuant to a common plan of
financing together with the Bond, and (C) will be paid out of substantially the same source of
funds (or will have substantially the same claim to be paid out of substantially the same source
of funds) as the Bond.
13. The City is not aware of any facts or circumstances that would cause it to
question the accuracy of the representations made by the Bank in the letter attached as
Exhibit A hereto.
14. The City has covenanted that so long as the Bond remains outstanding, the
moneys on deposit in any fund or account maintained in connection with the Bond will not be
used in any manner that would cause the Bond to be "arbitrage bonds" within the meaning of
Section 148 of the Code and the Regulations. Accordingly, the City shall comply with the
guidelines and instructions in the Arbitrage Letter of Instructions from Bond Counsel, dated the
date hereof,by which the City shall,except as otherwise provided in such,Letter of Instructions,
pay or cause,to be paid to the United States an amount equal to the sum of (i) the excess of the
aggregate amount earned from the investment of"Gross Proceeds" of the Bond from the date of
issue over the amount that would have been earned if such amounts had been invested at a
yield equal to the yield on the Bond, plus (ii) the income or earnings attributable to the excess
amount described in(i). See Exhibit B attached hereto.
15. The City will not take any action which would cause the Bond to.be "private
activity bonds" within the meaning of Section 141 of the Code. The City will not'permit any
person other than a governmental unit or as a member of the general public (a "Nonexempt
Person") to use, through sale, lease, management contract, or similar agreement, portions of the
Refinanced Projects which, in the aggregate exceed 10 percent of the Refinanced Projects (based
upon the cost of such portions of the Refinanced Projects). The percentage limitation described
in the preceding sentence shall be reduced to 5 percent if the private use of the Refinanced
Projects is not related to any governmental use or is disproportionate'to governmental use, all
as described in Section 141(b)(3) of the Code.
16. The City acknowledges that in determining whether all or any portion of the
Refinanced Projects is used, directly or indirectly, in the trade or business of a Nonexempt
Person for purposes of Paragraph 15 above, use of any portion of the Refinanced Projects by a
Nonexempt Person pursuant to a lease, management contract, service contract or other
arrangement must be examined. The City represents that all management and service contracts
with persons who are not employees of the City for use of any portion of the Refinanced
Projects will comply with the guidelines set forth:in IRS Revenue Procedure 97-13. The City
represents that all future management and service contracts that it may enter into with respect
to the Refinanced Projects will comply with the provisions of Revenue Procedure 97-13 or any
subsequently promulgated revenue procedure or regulations of the Internal Revenue Service,
unless the City receives an opinion from Bond Counsel that such contract will not adversely
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impact the exclusion of interest on the Bond from gross income for purposes of federal income
taxation.
17. The City represents that the Refinanced Projects have been owned and operated
in a manner which complies with the requirements set forth in Paragraph 15 above from the
dates that the Refinanced Projects were placed in service until the date hereof. The City
reasonably expects that the Refinanced Projects will be owned and operated throughout the
term of the Bond in a manner which complies with the requirements set forth in Paragraph 15
above. The City will not change the ownership or use of all or any portion of the Refinanced
Projects in a manner that fails to comply with Paragraph 15 above, unless the it receives an
opinion of Bond Counsel that such change of,ownership or use will not adversely affect the
exclusion of interest on the Bond from gross income for federal income tax purposes.
18. None of the proceeds of the Bond will be used (directly or indirectly) to make or
finance loans to persons other than governmental units.
19. The payment of the principal of and interest on the Bond is not and will not be
guaranteed directly or indirectly by the federal government within the meaning of Section
149(b) of the Code.
20. This Certificate is, in part, to serve as a guideline in implementing the
requirements of Sections 141 to 150 of the Code. ' If regulations, rulings, announcements and
notices validly promulgated under the Code contain requirements which differ from those
outlined here which must be satisfied for the Bond to be tax-exempt or in order to avoid the
imposition of penalties under Section 148 of the Code, pursuant to the covenants contained in
the Resolution, the City is obligated to take such steps as are necessary to comply with such
requirements. If under those pronouncements, compliance with any of the requirements of this
Certificate is not necessary to maintain the exclusion of interest on the Bond from gross income
and alternative minimum taxable income (except to the extent of certain adjustments applicable
to corporations) or to avoid the imposition of penalties under Section 148 of the Code, the City
shall not be obligated to comply with that requirement. The City has been advised to seek the
advice of competent counsel with a nationally; recognized- expertise- in matters affecting
exclusion of interest on municipal bonds from gross income in fulfilling its obligations under
the Code to take all steps as are necessary to maintain the tax-exempt status of the Bond.
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21. To the best,of our knowledge, information and belief, the factual expectations set
forth in this Certificate are reasonable.
IN WITNESS WHEREOF,I have hereunto set our hands this 9th day of March,2010.
CITY OF ZEPHYRHILLS,FLORIDA
By:
Its: Mayo
Its: resident of City Council
By:
Its: City Manager
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EXHIBIT A
March 9,2010
Mayor and City Council
City of Zephyrhills,Florida
Re: City of Zephyrhills, Florida
Water and Sewer Revenue Refunding Bond,Series 2000
Ladies and Gentlemen:
The undersigned, as the original purchaser, and current holder of the above-referenced
Series 2000 Bond (the "Bank"), hereby represents that in connection with the change in the
interest rate on the Series 2000 Bond that the Bank is not acting as a broker or other
intermediary for the purpose of reselling the Series 2000 Bond to other investors.
SUNTRUST BANK
By:
Name: Adam L.Horn
Title: Vice President
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Exhibit A-
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EXHIBIT B
March 9, 2010
Mayor and City Council
City of Zephyrhills,Florida
Re: Arbitrage Letter of Instructions
Ladies and Gentlemen:
This letter instructs you as to certain requirements of Section 148 of the Internal Revenue
Code of 1986, as amended (the "Code"), with respect to the City of Zephyrhills, Florida,
Revenue Refunding Bond,Series 2000 (the "Series 2000 Bond")being reissued for federal income
tax purposes on the date hereof. Capitalized terms used in this letter, not otherwise defined
herein, shall have the same meanings as set forth in your Tax Certificate as to Arbitrage and the
Provisions of Sections 141-150 of the Internal Revenue Code of 1986, as amended (the "Tax
Certificate").executed on the date hereof.
This letter is intended to provide you with general guidance regarding compliance with
Section 148(f) of the Code. Because the requirements of the Code are subject to amplification
and clarification, you should seek supplements to this letter from time to time to reflect any
additional or different requirements of the Code. In particular, you should be aware that
regulations implementing the rebate requirements of Section 148(f) (the "Regulations") have
been issued by the United States Treasury Department. This complex set of regulations will,by
necessity, be subject to continuing interpretation and clarification through future rulings or
other announcements of the United States Treasury Department. You should seek further
advice of Bond Counsel as to the effect of any such future interpretations before the
computation and payment of any arbitrage rebate.
For the purposes of this Letter, (i) any instructions relating to a fund or account shall be
deemed to apply only to the portion of such fund or account allocable to the Series 2000 Bond
and(ii) any reference to"the date hereof"shall be deemed to mean March 9,2010.
Section 1. Tax.Covenants. Pursuant to the Resolution(as defined in,the Tax Certificate),
the City has made certain covenants designed to assure that interest with respect to the Series
2000 Bond is and shall remain excluded from gross income for federal income tax purposes.
The City has agreed, and by this Letter does hereby covenant, that it will not directly or
indirectly use or permit the use of any proceeds of the Series 2000 Bond or any other funds or
{25658/001/00418613.DOCv3}
Exhibit B-1
take or omit to take any action that would cause the Series 2000 Bond to be "arbitrage bonds"
within the meaning of Section 148 of the Code and that would cause interest on the Series 2000
Bond to be included in gross income for federal income tax purposes under the provisions of
the Code. You have further agreed by this letter to comply with all other requirements as shall
be determined by Bond Counsel (as hereinafter defined) to be necessary or appropriate to
assure that interest on the Series 2000 Bond will be excluded from gross income for federal
income tax purposes. To that end, the City will-comply with all requirements of Section 148 of
the Code to the extent applicable to the Series 2000 Bond. In the event that at any time the City
is of the opinion that for purposes.of this Section 1 it is necessary to restrict or to limit the yield
on the investment of any moneys held by the City, the City shall take such action.as may be
necessary.
Section 2. Definitions. Unless the context otherwise requires, in addition to the use of
the terms defined in the Tax Certificate, the following capitalized terms have the following
meanings:
"Bond Counsel" shall mean Bryant Miller'Olive P.A., or other nationally recognized
bond°counsel.
"Bond Year" shall mean the one year period that ends at the close of business on the day
in the calendar year that is selected by the City. The first and last bond years may be short
periods.
"Bond Yield" shall mean that discount rate that, when used in computing the present
value on the Delivery Date of all unconditionally payable payments of principal, interest and
retirement price paid and to be paid on the Series 2000 Bond, produces an amount equal to the
present value on the Delivery Date,using the same discount rate, of the aggregate Issue Price of
the Series 2000 Bond. Yield is computed under the Economic Accrual Method using any
consistently applied compounding interval of not more than one year. Short first and last
compounding intervals may be used. Other reasonable, standard financial conventions, such as
the 30 days per month/360 days per year convention, may be used in computing yield but must
be consistently applied. The yield on the Series 2000 Bond, computed by SunTrust Bank in this
manner,is 3.281224.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the applicable
Treasury Regulations promulgated thereunder.
"Computation Date" shall mean any date selected by the City as a computation date
pursuant to Section 1.148-3(e) of the Regulations, and the Final Computation Date.
"Computation Credit Amount" means an amount, as of each Computation Credit Date,
equal to$1,000 or such other amount specified by Section 1.148-3(d)(1)(iv) of the Regulations.
{25658/001/00418613.DOCv3}
Exhibit B-2
"Computation Credit Date"means the last day of each Bond Year during which there are
amounts allocated to Gross Proceeds of the Series 2000 Bond that are subject to the rebate
requirement of Section 148(f) of the Code,and the Final Computation Date.
"Delivery Date"shall mean March 9,2010.
"Economic Accrual Method" shall mean the method of computing yield that is based on
the compounding of interest at the end of each, compounding period (also known as the
constant interest method or the actuarial method).
"Final Computation Date" shall mean the date that the last bond that is part of the Series
2000 Bond is discharged.
"Gross Proceeds" shall mean with respect to the Series 2000 Bond, any proceeds of the
Series 2000'Bond and any funds (other than the proceeds of the Series 2000 Bond) that are a part
of a reserve or replacement fund for the issue, which amounts include amounts which are (A)
actually or constructively received by the City from the sale of the Series 2000 Bond (other than
amounts used to pay Accrued Interest on the Series 2000 Bond as set forth in the Tax
Certificate);. (B) treated as transferred proceeds' (as defined in Section 1.148-9(b) of the
Regulations); (C) treated as Replacement Proceeds under Section 1.148-1(c) of the Regulations;
(D) invested in a reasonably required reserve or replacement fund (as defined in Section 1.148-
2(f) of the Regulations); (E) pledged by the City as, security for payment of debt service on the
Series 2000 Bond; (F) received with respect to obligations acquired with proceeds of the Series
2000 Bond; (G) used to pay debt service on the Series 2000 Bond; and (H) otherwise received as
a result of investing any proceeds of the Series 2000 Bond. The determination of whether an
amount is included within this definition shall be made without regard to whether the amount
is credited to any fund or account established under the Resolution or (except in the case of an
amount described in(E) above)whether the amount is subject to the pledge of such instrument.
"Guaranteed Investment Contract" means any Nonpurpose Investment that has
specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated
interest rate, and also includes any agreement to supply investments on two or more future
dates(e.g.,a forward supply contract).
"Installment Payment Date" shall mean a Computation Date that is not later than 5 years
after the Delivery Date and subsequent Computation Dates which occur no later than 5 years
after the immediately preceding Installment Payment Date.
"Investment Property" shall mean any security or obligation, any annuity contract or
other investment-type property within the meaning of Section 148(b)(2) of the Code. The term
Investment Property shall not include any obligation the interest on which is excluded from
gross income (other than a Specified Private Activity Bond within the meaning of Section
57(a)(5)(C) of the Code) and shall not include an obligation that is a one-day certificate of
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Exhibit B-3
indebtedness issued by the United States Treasury, pursuant to the Demand Deposit State and
Local Government Series Program described in 31 CFR,part 344.
"Issue Price"shall mean$2,084,000.
"Issue Yield" shall mean the Bond Yield unless the Series 2000 Bond is described in
Section 1.148-4(b)(3) or (4) of the Regulations, in which case, the Issue Yield shall be the Bond
Yield as recomputed in accordance with such provisions of the Regulations.
"Nonpurpose Investment" shall mean any Investment Property in which Gross Proceeds
are invested, other than any Purpose Investment as defined in Section 1.148-1(b) of the
Regulations. For purposes of this Letter, Investment Property acquired with revenues on
deposit in the.Sinking Fund to be used to pay debt service on the Series 2000 Bond within 13
months of the date of deposit therein shall be disregarded.
"Nonpurpose Payment" shall, with respect to a Nonpurpose Investment allocated to the
Series 2000 Bond, include the following: (1) the amount actually or constructively'paid to
acquire the Nonpurpose Investment;.(2) the Value of an investment not acquired with Gross
Proceeds on the date such investment is allocated to the Series 2000 Bond, and (3) any payment
of Rebatable Arbitrage to the United States Government not later than the date such amount
was required to be paid. In addition, the Computation Credit Amount shall be treated as a
Nonpurpose Payment with respect to the Series 2000 Bond on each Computation Credit Date.
"Nonpurpose Receipt" shall mean any receipt or payment with respect to a Nonpurpose
Investment allocated;to the Series 2000 Bond. For this purpose the term "receipt" means any
amount actually or constructively received with; respect to the investment. In the event a
Nonpurpose Investment ceases to be allocated to the Series 2000 Bond other than by reason of a
sale or retirement, such Nonpurpose Investment shall be treated as if sold on the date of such
cessation for its Value. In addition, the Value of each Nonpurpose Investment at the close of
business on each Computation Date shall be taken into account as a Nonpurpose Receipt as of
such date, and each refund of Rebatable Arbitrage pursuant to Section 1.148-3(i) of the
Regulations shall be treated as a Nonpurpose Receipt.
"Rebatable Arbitrage" shall mean as of any Computation Date the excess of the future
value of all Nonpurpose Receipts with respect to the Series 2000 Bond over the future value of
all Nonpurpose Payments with respect to the Series 2000 Bond. The future value of a
Nonpurpose Payment or a Nonpurpose Receipt as of any Computation Date is determined
using the Economic Accrual Method and equals the value of that payment or receipt when it is
paid or received (or treated as paid or received), plus interest assumed to be earned and
compounded over the period at a rate equal to the Issue Yield, using the same compounding
interval and financial conventions used in computing that yield.
{25658/001/00418613.DOCv3}
Exhibit B-4
I i
"Retirement Price" shall mean, with respect to a bond, the amount paid in connection
• with the retirement or redemption of the bond.
"Value" means value as determined under Section 1.148-5(d) of the Regulations for
investments.
Section 3. Rebate Requirement.
(a) Pursuant to,this Letter there shall be established a fund separate from any
other fund established and maintained under the Resolution designated the Rebate
Fund (the "Rebate Fund"). The City shall administer or cause to be administered the
Rebate Fund and invest any amounts held therein in Nonpurpose Investments.
Amounts deposited pursuant to the instructions contained in this letter shall not be
transferred from the Rebate Fund except as provided in this Section 3.
(b) Except as otherwise provided in Appendix I hereto, the City specifically
covenants that it will pay or cause to be paid to the United States Government the
following amounts:
(1) No later than 60 days after each Installment Payment Date, an
amount which, when added to the future value of all previous rebate payments
made with respect to the Series 2000 Bond, equals at least 90 percent of the
Rebatable Arbitrage calculated as of each such Installment Payment Date;and
(2) No later than 60 days after the Final Computation Date, an
• amount which, when added to the future value of all previous rebate payments
made with respect to the Series 2000 Bond, equals 100 percent of the Rebatable
Arbitrage as of the Final Computation Date.
(c) Any payment of Rebatable:Arbitrage made within the 60-day period
described in Section 3(b)(1) and (2) above may be treated as paid on the Installment
Payment Date or Final computation date to which it relates.
• (d) On or before 55 days following each Installment Payment Date and the
Final Computation Date, the.City shall determine the amount of Rebatable Arbitrage to
be paid to the United States Government as required by Section 3(b) of this Letter.
Upon making this determination,the City shall take the following actions:
• (1) If the amount of Rebatable Arbitrage is calculated to be positive,
deposit the required amount of Rebatable Arbitrage to the Rebate Fund;• {25658/001/00418613.DOCv3}
Exhibit B-5
(2) If the amount of Rebatable Arbitrage is calculated to be negative
and money is being held in the Rebate Fund, transfer from the Rebate Fund the
amount on deposit in such fund; and
(3) On or before 60 days following the Installment Payment Date or
Final Computation Date, pay the amount described in Section 3(b) of this Letter
to the United States Government at the Internal Revenue Service Center, Ogden,
Utah 84201. Payment shall be accompanied by Form 8038-T. A rebate payment
is paid when it is filed with the Internal Revenue Service at the above location.
(e) The City shall keep proper books of record and,accounts containing
complete and correct entries of all transactions relating to the receipt, investment,
disbursement, allocation and application of the money related to the Series 2000 Bond,
including money derived from, pledged to, or to be used to make payments on the
Series 2000 Bond. Such records shall specify the account or fund to which each
investment(or portion thereof) held by the City is to be allocated and shall set forth, in
the case of each investment security, (a) its purchase price; (b) nominal rate of interest;
(c) the amount of accrued interest purchased (included in the purchase price); (d) the
par or face amount; (e) maturity date; (f) the amount of original issue discount or
premium (if any); (g) the type of Investment Property; (h) the frequency of periodic
payments; (i) the period of compounding; (j) the yield to maturity; (k) date of
disposition; (1) amount realized on disposition (including accrued interest); and (m)
market price data sufficient to establish the fair market value of any Nonpurpose
investment as of any Computation Date, and as of the date such Nonpurpose
Investment becomes allocable to, or ceases to be allocable to, Gross Proceeds of the
Series 2000 Bond.
Section 4. Prohibited Investments and Dispositions.
(a) No Investment Property shall be acquired with Gross Proceeds for an
amount (including transaction costs) in excess of the fair market value of such
Investment Property. No Investment Property shall be sold or otherwise disposed of
for an amount (including transaction costs) less than the fair market value of the
Investment Property.
(b) For purposes of subsection 4(a), the fair market value of any Investment
Property for which there is an established market shall be determined as provided in
subsection 4(c). Except as otherwise provided in subsections 4(e) and (f), any market
especially established to provide Investment Property to an issuer of governmental
obligations shall not be treated as an established market.
(c) The fair market value of any Investment Property for which there is an
established market is the price at which a willing buyer would purchase the investment
{25658/001/00418613.DOCv3}
Exhibit B-6
from a willing seller in a bona fide, arm's-length transaction. Fair market value is
generally determined on the date on which a contract to purchase or sell the Investment
Property becomes binding (i.e., the trade date rather than the settlement date). If a
United States Treasury obligation is acquired directly from or disposed of directly to
the United States Treasury, such acquisition or disposition shall be treated as
establishing a market for the obligation and as establishing the fair market value of the
obligation.
(d) Except to the extent provided in subsections (e) and (f), any Investment
Property for which there is not an established market shall be rebuttably presumed to
be acquired or disposed of for a price that is not equal to its fair market value.
(e) In the case of a certificate of deposit that has a fixed interest rate, a fixed
payment schedule, and a substantial penalty for early withdrawal, the purchase price of
such a certificate of deposit is treated as its fair market value on its purchase date if the
yield on the certificate of deposit is not less than (1) the yield on reasonably comparable
direct obligations of the United States; and (2) the highest yield that is published or
posted by the provider. to be currently available from the provider on reasonably
comparable certificates of deposit offered to the public.
(f) The purchase price of a Guaranteed Investment Contract is treated as its
fair market value on the purchase date if the City complies with the competitive
bidding procedures set forth in Section 1.148-5(d)(6)(iii) of the Regulations.
Section 5. Accounting for Gross Proceeds. In order to perform the calculations required
by the Code and the Regulations, it is necessary to track the investment and expenditure of all
Gross Proceeds. To that end,the City must adopt a reasonable and consistently applied method
of accounting for all Gross Proceeds.
Section 6. Administrative Costs of Investments.
(a) Except as otherwise provided in this Section, an allocation of Gross
Proceeds of the Series 2000 Bond to a payment or receipt on a Nonpurpose Investment
is not adjusted to take into account any costs or expenses paid, directly or indirectly, to
purchase, carry, sell or retire the Nonpurpose Investment (administrative costs). Thus,
administrative costs generally do not increase the payments for, or reduce the receipts
from,Nonpurpose Investments.
(b) In determining payments and receipts on Nonpurpose Investments,
Qualified Administrative Costs are taken into account by increasing payments for, or
reducing the receipts from, the Nonpurpose Investments. Qualified Administrative
Costs are reasonable, direct administrative costs, other than carrying costs, such as
separately stated brokerage or selling commissions, but not legal and accounting fees,
{25658/001/00418613.DOCv3}
Exhibit B-7
recordkeeping, custody, and similar costs. General overhead costs and similar indirect
costs of the City such as employee salaries and office expenses and costs associated with
computing Rebatable Arbitrage are not Qualified Administrative Costs
(c) Qualified Administrative Costs include all reasonable administrative
costs, without regard to the limitation on indirect costs stated in subsection (b) above,
incurred by:
(i) A publicly offered regulated investment company (as defined in
Section 67(c)(2)(B) of the Code); and
II
(ii) _ A commingled fund in which the City and any related parties do
not own more than 10 percent of the beneficial interest in the fund.
II
(d) For a Guaranteed Investment Contract, a broker's commission paid on
behalf of either the City or the provider is not a Qualified Administrative Cost to the
extent that the commission exceeds the amount set forth in Section 1.148-5(e)(iii) of the
Regulations.
Section 7. Records;Bond Counsel Opinion.
(a) The City shall retain all records with respect to the calculations and
instructions required by this Letter for at least 6 years after the date on which the last of
the principal of and interest on the Series 2000 Bond has been paid, whether upon
maturity,redemption or acceleration thereof.
(b) Notwithstanding any provisions of this Letter, if the City shall be
provided an opinion of Bond Counsel that any specified action required under this
Letter 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 2000 Bond, the City may conclusively rely on such opinion in complying with
the requirements of this Letter.
{25658/001/00418613.DOCv3}
Exhibit B-8
Section 8. Survival of Defeasance. Notwithstanding anything in this Letter to the
contrary, the obligation of the City to remit the Rebate Requirement to the United States
Department of the Treasury and to comply with all other requirements contained in this Letter
must survive the defeasance or payment of the Series 2000 Bond.
Very truly yours,
BRYANT MILLER OLIVE P.A.
Received and acknowledged:
City of Zephyrhills,Florida
By:
Its: City Manager
Dated: March 9,2010
{25658/001/00418613.DOCv3}
Exhibit B-9
APPENDIX I
Spending Exception to Rebate
(a) Generally. All, or certain discrete portions, of an issue are treated as meeting the
Rebate Requirement of Section 148(f) of the Code if the spending exception set forth in this
Appendix is satisfied. Use of the spending exception is not mandatory. An issuer may apply
the Rebate Requirement to an issue that otherwise satisfies the spending exception.
(b) Six-Month Exception. An issue is treated as meeting the Rebate Requirement
under this exception if (i) the gross proceeds of the issue are allocated to expenditures for the
governmental purposes of the issue within the six-month period beginning on the issue date
(the "six-month spending period") and (ii)the Rebate Requirement is met for amounts not
required to be spent within the six-month spending period (excluding earnings on a bona fide
debt service fund).. For purposes of the six-month exception, "gross proceeds" means Gross
Proceeds other than amounts (i)in a bona fide debt service fund, (ii)in a reasonably required
reserve or replacement fund, (iii)that, as of the issue date, are not reasonably expected to be
Gross Proceeds but that become Gross Proceeds after the end of the six-month spending period,
(iv)that represent Sale Proceeds or Investment Proceeds derived from payments under any
Purpose Investment of the issue and (v) that represent repayments of grants (as defined in
Treasury Regulation Section 1.148-6(d)(4)) financed by the issue.
(c) Expenditures for Governmental Purposes of the Issue. For purposes of the
spending exception, expenditures for the governmental purposes of an issue include payments
for interest, but not principal, on the issue and for principal or interest on another issue of
obligations.
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Appendix I-1