C Tax Compliance CertificateTAX COMPLIANCE CERTIFICATE
OF ISSUER
Pertaining to
$3,941,059
City of Miami Beach, Florida
Non -Ad Valorem Revenue Note, Series 1999
The City of Miami Beach, Florida (the "Issuer" or "City"), by its officer signing this
Certificate, certifies, represents, and covenants as follows with respect to the captioned obligations
(the "Issue"), dated as of June 28, 1999. All statements in this Certificate are of facts or, as to
events to occur in the future, reasonable expectations.
I. DEFINITIONS
1.10. Attachment A. The definitions and cross-references set forth in Attachment A
apply to this Certificate and its Attachments. All terms relating to a particular issue, such as Sale
Proceeds, relate to the Issue, unless indicated otherwise. (For example, "Sale Proceeds" refers to
Sale Proceeds of the Issue, unless indicated otherwise.)
1.20. Special Definitions. In addition, the following definitions apply to this
Certificate and its Attachments:
"Non -Ad Valorem Revenues" means all revenues of the Issuer derived from any
source other than ad valorem taxation on real or personal property, which are legally available to
make the payments required under the Resolution.
"Project" means the costs attributable to the undergrounding of an electric
transmission line between 40th Street and the Venetian Substation of Florida Power & Light
Company in Miami Beach, Florida, and includes Issuance Costs, all of which are governmental
purposes for purposes of the Code.
"Purchaser " means Florida Power & Light Company.
"Rebate Instructions" means the Rebate Instructions attached hereto as Attachment
A-1.
"Resolution" means Resolution No. 98-22891 (the "Original Resolution") adopted
by the Issuer on September 9, 1998, as amended by Resolution No. 99-23220 adopted by the Issuer
on June 23, 1999.
Reference to a Section means a section of the Code. Reference by number only (for example,
"2.10") means that numbered paragraph of this Certificate. Reference to an Attachment means an
attachment to this Certificate.
hL.vm, 23074f00Nk Document M 26591
II. ISSUE DATA
2.10. Issuer. The Issuer is a Governmental Unit.
2.20. Purpose of Issue. The Issue is being issued to pay costs of the Project.
2.30. Dates. The Sale Date is June 28, 1999 and the Issuance Date is June 28, 1999.
2.40. Issue Price. As set forth in Attachment B, the Issue Price is $3,941,059.00,
computed as follows:
Par amount of Issue
Original issue premium or (discount)
Pre -Issuance Accrued Interest
Issue Price
$3,941,059.00
0.00
0.00
$3.941.059.00
2.50. Sale Proceeds. Net Proceeds. and Net Sale Proceeds. The Sale Proceeds, Net
Proceeds, and Net Sale Proceeds are as follows:
Issue Price
Less: Pre -Issuance Accrued Interest
Sale Proceeds
Less: Deposit to reserve fund
Net Proceeds
Less: Minor Portion
Net Sale Proceeds
$3,941,059.00
0.00
$3,941,059.00
0.00
$3,941,059.00
100.000.00
$3.841.059.00
2.60. Disposition of Sale Proceeds and Pre -Issuance Accrued Interest. There is no
Pre -Issuance Accrued Interest. $3,601,281.00 of the Sale Proceeds is evidenced by the discharge of
a liability of the Issuer to the Purchaser for the costs of the Project in the same amount and
$339,778.00 paid to the Issuer by the Purchaser in cash on the Issuance Date will be deposited by
the Issuer in a segregated account and will be used to pay costs of the Project.
2.70. Hither Yielding Investi'lents. Gross Proceeds will not be invested in Higher
Yielding Investments except for those Gross Proceeds identified in 3.10 and 3.20, but only during
the applicable Temporary Periods there described for those Gross Proceeds.
2.80. Single Issue. No other obligations have been or will be sold less than 15 days
before or after the Sale Date of the Issue pursuant to the Same Plan of Financing with the Issue that
are expected to be paid from substantially the same source of funds as the Issue, determined without
regard to guarantees from a person who is not a Related Party to the Issuer. Accordingly, no
obligations other than those that comprise the Issue are a part of the same issue with the Issue.
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Miami. 23074.00030; Donmirni M 2659v
Periods.
III. ARBITRAGE (NONREBATE) MATTERS
3.10. Use of Net Sale Proceeds and Pre -Issuance Accrued Interest; Temporary
(A) Pre -Issuance Accrued Interest . There is no Pre -Issuance Accrued Interest.
(B) Costs of the Proiect. All of the Net Sale Proceeds will be used to pay costs of
the Project within 3 years from the Issuance Date, which 3 -year period is the Temporary Period for
such Net Sale Proceeds since the following three tests are reasonably expected to be satisfied:
(i) At least 85% of the Net Sale Proceeds will be allocated to expenditures
on the Project by the end of the Temporary Period;
(ii) Within 6 months of the Issuance Date, the Issuer will incur or has
incurred substantial binding obligations to third parties to expend at least 5%
of the Net Sale Proceeds on the Project; and
(iii) Completion of the Project and allocation of the Net Sale Proceeds to
expenditures on the Project will proceed with due diligence.
Any Sale Proceeds that remain unspent on the third anniversary of the Issuance
Date, which is the expiration date of the Temporary Period for such Proceeds, shall not be invested
in Higher Yielding Investments with respect to the Issue after that date except as part of the Minor
Portion. In complying with the foregoing sentence, the Issuer may take into account "yield
reduction payments" (within the meaning of Regulations § 1.148-5(c)) timely paid to the United
States.
3.20. Use of Investment Proceeds: Temporary Periods. Any Investment Proceeds
will be used to pay costs of the Project. Such Investment Proceeds may be invested in Higher
Yielding Investments during the Temporary Period identified in 3.10(B) or, if longer, one year from
the date of receipt, such period being the Temporary Period for such Proceeds.
3.30. No Bond Fund, Replacement Fund or Assured Available Funds. The Issuer
has not established and does not expect to establish or use any sinking fund, debt service fund,
redemption fund, reserve or replacement fund, or similar fund, or any other fund to pay Debt
Service on the Issue. Except for Proceeds of a Refunding Issue, if any, and, to the extent provided
in the Resolution, Non -Ad Valorem Revenues, no other money or Investment Property is or will be
pledged as collateral or used for the payment of Debt Service (or for the reimbursement of any
others who may provide money to pay that Debt Service), or is or will be restricted, dedicated,
encumbered, or set aside in any way as to afford the holders of the Issue reasonable assurance of the
availability of such money or Investment Property to pay Debt Service.
3.40. No Overissuance. The Proceeds are not reasonably expected to exceed the
amount needed for the governmental purposes of the Issue as set forth in 2.20.
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Miami, 23074410010. Doamivl N 2659x 1
3.50. Other Uses of Proceeds Negated. Except as stated otherwise in this
Certificate, none of the Proceeds will be used:
(A) to pay principal of or interest on, refund, renew, roll over, retire, or replace any
other obligations issued by or on behalf of the Issuer or any other Governmental Unit,
(B) to replace any Proceeds of another issue that were not expended on the project
for which such other issue was issued,
(C) to replace any money that was or will be used directly or indirectly to acquire
Higher Yielding Investments,
(D) to make a loan to any person or other Governmental Unit,
(E) to pay any Working Capital Expenditure other than expenditures identified in
Regulations § 1.148-6(d)(3)(ii)(A) and (B) i.e., Issuance Costs, Qualified Administrative Costs,
reasonable charges for a Qualified Guarantee or for a Qualified Hedge, interest on the Issue for a
period commencing on the Issuance Date and ending on the date that is the later of three years from
such Issuance Date or one year after the date on which the project financed or refinanced by the
Issue was or will be placed in service, payments of the Rebate Amount, and costs, other than those
already described, that do not exceed 5% of the Sale Proceeds and that are directly related to Capital
Expenditures financed or deemed financed by the Issue, principal or interest on an issue paid from
unexpected excess Sale Proceeds or Investment Proceeds, and principal or interest on an issue paid
from investment earnings on a reserve or replacement fund that are deposited in a Bona Fide Debt
Service Fund), or
(F) to reimburse any expenditures made prior to the date the Original Resolution
was adopted.
No portion of the Issue is being issued solely for the purpose of investing Proceeds in Higher
Yielding Investments.
3.60. Disposition of Proiect. The Issuer does not intend to sell or otherwise dispose
of the Project or any portion thereof during the term of the Issue except for dispositions of property
in the normal course at the end of such property's useful life to the Issuer.
3.70. No Other Replacement Proceeds. That portion of the Issue that is to be used
to finance Capital Expenditures has a weighted average maturity that does not exceed 120% of the
weighted average reasonably expected economic life of the property resulting from such Capital
Expenditures.
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Miami. 230744100W O. Document a 2659v 1
IV. REBATE MATTERS
4.10. Issuer Obligation Regarding Rebate. Consistently with its covenants
contained in the Resolution, the Issuer will calculate and make, or cause to be calculated and made,
payments of the Rebate Amount in the amounts and at the times and in the manner provided in
Section 148(f) and the Rebate Instructions with respect to Gross Proceeds to the extent not
exempted under Section 148(0(4) and the Rebate Instructions.
4.20. No Avoidance of Rebate Amount. No amounts that are required to be paid to
the United States will be used to make any payment to a party other than the United States through a
transaction or a series of transactions that reduces the amount earned on any Investment Property or
that results in a smaller profit or a larger loss on any Investment Property than would have resulted
in an arm's length transaction in which the Yield on the Issue was not relevant to either party to the
transaction.
4.30. Excentions. Notwithstanding the foregoing, the computations and payments
of amounts to the United States referred to in IV. need not be made to the extent that the Issuer will
not thereby fail to comply with any requirements of Section 148(f) and the Rebate Instructions
based on an opinion of bond counsel.
V. OTHER TAX MATTERS
5.10. Not Private Activity Bonds. No obligation of the Issue will be a Private
Activity Bond based on the following:
(A) Not more than 5% of the Proceeds, if any, is or will be used for any Private
Business Use and not more than 5% of the Debt Service, if any, is or will be, directly or indirectly,
(i) secured by any interest in property to be used for a Private Business Use or payments with
respect to such property or (ii) to be derived from payments with respect to property, or borrowed
money, used for any Private Business Use.
(B) Less than 5% of the Proceeds or $5,000,000, whichever is less, if any, will be
used to make or finance loans to any Private Person.
5.20. Issue Not Federally Guaranteed. The Issue is not Federally Guaranteed.
5.30. Not Hedge Bonds. At least 85% of the Spendable Proceeds will be used to
carry out the governmental purposes of the Issue within three years from the Issuance Date. Not
more than 50%, if any, of the 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 four years or more). The reasonable
expectations stated above are not based on and do not take into account (A) any expectations or
assumptions as to the occurrence of changes in market interest rates or changes of federal tax law or
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Mianu. 23074-0003U. Docu aiM 2659v
regulations or rulings thereunder or (B) any prepayments of items other than items that are
customarily prepaid.
5.40. Internal Revenue Service Information Return. Within the time and on the
form prescribed by the Internal Revenue Service under Section 149(e), the Issuer will file with the
Internal Revenue Service an Information Return setting forth the required information relating to the
Issue. The information reported on that Information Return will be true, correct, and complete to
the best of the knowledge and belief of the undersigned.
5.50. No Adverse Effect on Tax Status. The Issuer will make no use of the
Proceeds of the Issue or take any action or permit any other action to be taken that would affect
adversely the exclusion of interest on the Issue from gross income for federal income tax purposes.
5.60. Responsibility of Officer. The officer signing this Certificate is one of the
officers of the Issuer responsible for issuing the Issue.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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Miami. 23074-00030: Document N 2659, 1
In making the representations in this Certificate, the Issuer relies in part on the
representations of the Purchaser set forth in the Purchaser's Certificate attached hereto as
Attachment B. To the best of the knowledge, information, and belief of the undersigned, all
expectations stated in this Certificate and in Attachment B are the expectations of the Issuer and are
reasonable, all facts stated are true, and there are no other existing facts, estimates, or circumstances
that would or could materially change the statements made in this Certificate or in Attachment B.
The certifications and representations made in this Certificate are intended to be relied upon as
certifications described in Regulations § 1.148-2(b). The Issuer acknowledges that any change in
the facts or expectations from those set forth in this Certificate or in Attachment B may result in
different requirements or a change in status of the Issue or interest thereon under the Code, and that
bond counsel should be contacted if such changes are to occur.
The date of this Certificate is June 28, 1999.
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Miami. 23076d003Q D0.111011 M 2659, 1
CITY OF MIAMI BEACH, FLORIDA
By: C.Ci `�-�-�
Finance Director
List of Attachments
Attachment A -- Definitions for Tax Compliance Certificate
Attachment A-1 -- Rebate Instructions
Attachment B -- Purchaser's Certificate
Miami 23074.4ID030-. Document N 2659v 1
Attachment A
Definitions for Tax Compliance Certificate
The following terms, as used in Attachment A and in the Tax Compliance
Certificate to which it is attached and in the other Attachments to the Tax Compliance Certificate,
have the following meanings unless therein otherwise defined or unless a different meaning is
indicated by the context in which the term is used. Capitalized terms used within these definitions
that are not defined in Attachment A have the meanings ascribed to them in the Tax Compliance
Certificate to which this Attachment A is attached. The word "issue," in lower case, refers either to
the Issue or to another issue of obligations or portion thereof treated as a separate issue for the
applicable purposes of Section 148, as the context requires. The word "obligation" or "obligations,"
in lower case, includes any obligation, whether in the form of bonds, notes, certificates, or any other
obligation that is a "bond" within the meaning of Section 150(a)(1). All capitalized terms used in
this Certificate include either the singular or the plural. All terms used in this Attachment A or in
the Tax Compliance Certificate to which this Attachment A is attached, including terms specifically
defined, shall be interpreted in a manner consistent with Sections 103 and 141-150 and the
applicable Regulations thereunder except as otherwise specified. All references to Section, unless
otherwise noted, refer to the Code.
"Advance Refunding Issue" means any Refunding Issue that is not a Current
Refunding Issue. Where appropriate, the term Advance Refunding Issue shall include the Advance
Refunding Portion of a multipurpose issue.
"Advance Refunding Portion" means that portion of a multipurpose issue that is
allocable to a separate governmental purpose and that would be treated as an Advance Refunding
Issue if it were in fact a separate issue.
"Available Amounts" means any amounts that are available to the Issuer to pay
Working Capital Expenditures of the type financed by the issue, excluding Proceeds of the issue,
but including cash, investments, and other amounts held in accounts or otherwise by the Issuer or a
Related Party if those amounts may be used by the Issuer for Working Capital Expenditures of the
type being financed by the Issue without legislative or judicial action and without a legislative,
judicial, or contractual requirement that those amounts be reimbursed.
"Available Construction Proceeds" means an amount equal to (a) the sum of (i) the
Issue Price of the issue, (ii) Investment Proceeds on that Issue Price, (iii) earnings on any reasonably
required reserve or replacement fund allocated to the issue not funded from the Issue Price, and (iv)
Investment Proceeds and earnings on (ii) and (iii), (b) reduced by the portions, if any, of the Issue
Price of the issue (i) attributable to Pre -Issuance Accrued Interest and earnings thereon, (ii) allocated
to the Underwriter's discount, (iii) used to pay other Issuance Costs of the issue, and (iv) deposited
in a reasonably required reserve or replacement fund allocated to the issue. Available Construction
Proceeds do not include Investment Proceeds or earnings on a reasonably required reserve or
replacement fund allocated to the issue for any period after the earlier of (a) the close of the 2 -year
period that begins on the Issuance Date or (b) the date the construction of the Projects financed by
Library Miami. Document M 2676%1
the issue is substantially completed. If the issue consists of a New Money Portion and a Refunding
Portion and the New Money Portion is a Construction Issue, this definition shall be applied by
substituting "New Money Portion" for "issue" each place the latter term appears. If the issue or the
New Money Portion, as applicable, is not a Construction Issue, and the Issuer makes the election
under Regulations § 1.148-7(j)(1) and Section 148(f)(4)(C)(v) to treat the issue or the New Money
Portion as two separate issues consisting of the Construction Portion and the Nonconstruction
Portion, this definition shall be applied by substituting "Construction Portion" for "issue" each place
the latter term appears.
"Bona Fide Debt Service Fund" means a fund, including a portion of or an account
in that fund (or in the case of a fund established for two or more bond or note issues, the portion of
that fund properly allocable to an issue) or a combination of such funds, accounts or portions that is
used primarily to achieve a proper matching of revenues with Debt Service on an issue within each
Bond Year and that is depleted at least once each year except for a reasonable carryover amount not
to exceed the greater of the earnings thereon for the immediately preceding Bond Year or
one -twelfth of the annual Debt Service on the issue for the immediately preceding Bond Year.
"Bond Year" means the annual period relevant to the application of Section 148(0 to
the issue, except that the first and last Bond Years may be less than 12 months long. The last day of
a Bond Year shall be the close of business on the day preceding the anniversary of the Issuance
Date of the issue unless the Issuer selects another date on which to end a Bond Year in the manner
permitted by the Code.
"Capital Expenditures" means costs of a type that are properly chargeable to capital
account (or would be so chargeable with a proper election) under general federal income tax
principles.
"Code" means the Internal Revenue Code of 1986, the Regulations (whether
temporary or final) under that Code or the statutory predecessor of that Code, and any amendments
of, or successor provisions to, the foregoing and any official rulings, announcements, notices,
procedures and judicial determinations regarding any of the foregoing, all as and to the extent
applicable. Unless otherwise indicated, reference to a Section includes any applicable successor
section or provision and such applicable Regulations, rulings, announcements, notices, procedures
and determinations pertinent to that Section.
"Commingled Fund" means any fund or account of the Issuer that contains both
Gross Proceeds of an issue and amounts in excess of $25,000 that are not Gross Proceeds of that
issue if the amounts in the fund or account are invested and accounted for collectively, without
regard to the source of funds deposited in the fund or account.
"Commingled Investment Proceeds" means, in the case of certain issues specified in
Regulations § 1.148-6(d)(6), Investment Proceeds of such issue (other than Investment Proceeds
held in a Refunding Escrow) that are deposited in a Commingled Fund with substantial tax or other
revenues from governmental operations of the Issuer and that are reasonably expected to be spent
for governmental purposes within 6 months from the date of deposit in the Commingled Fund,
using any reasonable accounting assumptions.
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"Computation Date" means each date on which the Rebate Amount for an issue is
required to be computed under Regulations §1.148-3(e). In the case of a Fixed Yield Issue, the first
Computation Date shall not be later than 5 years after the Issuance Date of the issue. Subsequent
Computation Dates shall be not later than 5 years after the immediately preceding Computation
Date for which an installment payment of the Rebate Amount was paid. In the case of Variable
Yield Issue, the first Computation Date shall be the last day of any Bond Year irrevocably selected
by the Issuer ending on or before the fifth anniversary of the Issuance Date of such issue and
subsequent Computation Dates shall be the last day of each Bond Year thereafter or each fifth Bond
Year thereafter, whichever is irrevocably selected by the Issuer after the first date on which any
portion of the Rebate Amount is required to be paid to the United States. The final Computation
Date is the date an issue is retired.
"Conduit Borrower" means the obligor on a purpose investment.
"Conduit Financing Issue" means an issue the Proceeds of which are reasonably
expected to be used to fmance at least one Conduit Loan.
"Conduit Loan" means a purpose investment acquired by an issuer with Proceeds of
a Conduit Financing Issue, thereby effecting a loan to the Conduit Borrower.
"Construction Expenditures" means Capital Expenditures allocable to the cost of
real property (including the construction or making of improvements to real property, but excluding
acquisitions of interests in land or other existing real property) or constructed personal property
within the meaning of Regulations §1.148-7(g).
"Construction Issue" means an issue at least 75 percent of the Available
Construction Proceeds of which are to be used for Construction Expenditures with respect to
property which is or is to be owned by a Governmental Unit or a 501(c)(3) Organization. If an
election under Section 148(f)(4)(C)(v) and Regulations §1.148-7(j) is made to bifurcate an issue or
the New Money Portion, that portion of the issue or the New Money Portion which satisfies the 75
percent test stated in the preceding sentence and which finances 100% of the Construction
Expenditures is the Construction Issue.
"Controlled Group" means a group of entities controlled directly or indirectly by the
same entity or group of entities within the meaning of Regulations § 1.150-1(e).
"Current Refunding Issue" means a Refunding Issue that is issued not more than 90
days before the last expenditure of any Proceeds of the Refunding Issue for the payment of Debt
Service on the Prior Issue. Where appropriate, the term Current Refunding Issue shall include the
Current Refunding Portion of a multipurpose issue.
"Current Refunding Portion" means that portion of a multipurpose issue that
constitutes a separate governmental purpose and that would be treated as a Current Refunding Issue
if it were in fact a separate issue.
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Library Mum.. Document # 2676v1
"Debt Service" means principal of and interest and any redemption premium on an
issue.
"Excess Gross Proceeds" means all Gross Proceeds of an Advance Refunding Issue
or Advance Refunding Portion that exceed an amount equal to 1 percent of the Sale Proceeds of
such Advance Refunding Issue or Advance Refunding Portion, other than Gross Proceeds allocable
to: (a) payment of Debt Service on the Prior Issue; (b) payment of Pre -Issuance Accrued Interest on
the Advance Refunding Issue or Advance Refunding Portion and interest on the Advance
Refunding Issue or Advance Refunding Portion that accrues for a period up to the completion date
of any capital project financed by the Prior Issue, plus one year; (c) a reasonably required reserve or
replacement fund for the Advance Refunding Issue or Advance Refunding Portion or Investment
Proceeds of such fund; (d) payment of Issuance Costs of the Advance Refunding Issue or Advance
Refunding Portion; (e) payment of administrative costs allocable to repaying the Prior Issue,
carrying and repaying the Advance Refunding Issue or Advance Refunding Portion, or investments
of the Advance Refunding Issue or Advance Refunding Portion; (f) Transferred Proceeds allocable
to expenditures for the governmental purpose of the Prior Issue; (g) interest on purpose
investments; (h) Replacement Proceeds in a sinking fund for the Advance Refunding Issue or
Advance Refunding Portion; and (i) fees for a Qualified Guarantee for the Advance Refunding
Issue, the Advance Refunding Portion or the Prior Issue.
"Federally Guaranteed" means that (a) the payment of Debt Service on an issue, or
the payment of principal or interest with respect to any loans made from the Proceeds of an issue, is
directly or indirectly guaranteed in whole or in part by the United States or by an agency or
instrumentality of the United States, within the meaning of Section 149(b), or (b) more than 5% of
the Proceeds of an issue will be invested directly or indirectly in federally insured deposits or
accounts. The preceding sentence does not apply to (a) Proceeds invested during the initial
Temporary Period until such Proceeds are needed to pay costs of the Project, (b) investments of a
Bona Fide Debt Service Fund, (c) direct purchases from the United States of obligations issued by
the United States Treasury, or (d) other investments permitted by Section 149(b) or Regulations
§1.149(b) -1(b).
"501(c)(3) Organization" means an organization described in Section 501(c)(3) and
exempt from tax under Section 501(a).
"Fixed Yield Issue" means an issue of obligations the Yield on which is fixed and
determinable on the Issuance Date.
"Governmental Unit" means a state, territory or possession of the United States, the
District of Columbia, or any political subdivision thereof referred to as a "State or local
governmental unit" in Regulations §1.103-1(a). "Governmental Unit" does not include the United
States or any agency or instrumentality of the United States.
"Gross Proceeds" means Proceeds and Replacement Proceeds of an issue.
"Higher Yielding Investments" means any Investment Property that produces a
Yield that (a) in the case of Investment Property allocable to Replacement Proceeds of an issue and
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Library Miami, Document M 2676v1
Investment Property in a Refunding Escrow, is more than one thousandth of one percentage point
(.00001) higher than the Yield on the applicable issue, and (b) for all other purposes of this
Certificate, is more than one-eighth of one percentage point (.00125) higher than the Yield on the
applicable issue.
"Investment Proceeds" means any amounts actually or constructively received from
investing Proceeds of an issue in Investment Property.
"Investment Property" means investment property within the meaning of Sections
148(b)(2) and 148(b)(3), including any security (within the meaning of Section 165(g)(2)(A) or
(B)), any obligation, any annuity contract and any other investment -type property (including certain
residential rental property for family units as described in Section 148(b)(2)(E) in the case of any
bond other than a Private Activity Bond). Investment Property includes a Tax -Exempt Obligation
that is a "specified private activity bond" as defined in Section 57(a)(5)(C) but does not include
other Tax -Exempt Obligations.
"Issuance Costs" means any financial, legal, administrative and other fees or costs
incurred in connection with the issuance of an issue, including any underwriter's compensation
withheld from the Issue Price.
"Issuance Date" means the date of physical delivery of an issue by the Issuer in
exchange for the purchase price of the issue.
"Issue Price" means in the circumstances applicable to the issue:
(1) Public Offerine. In the case of obligations actually
offered to the general public in a bona fide public offering at the
initial offering price for each maturity set forth in the Certificate of
the Underwriter or Placement Agent attached to the Tax Compliance
Certificate, the aggregate of the initial offering price for each
maturity (including any Pre -Issuance Accrued Interest and original
issue premium), which is not more than the fair market value thereof
as of the Sale Date, and at which initial offering price not less than
10% of the principal amount of each maturity, as of the Sale Date,
was sold or reasonably expected to be sold (other than to bond
houses, brokers or other intermediaries). In the case of publicly
offered obligations that are not described in the preceding sentence,
Issue Price means the aggregate of the initial offering price to the
public of each maturity set forth in the Certificate of the Underwriter
or Placement Agent attached to the Tax Compliance Certificate,
which is not more than the fair market value thereof as of the Sale
Date, and at which initial offering price not less than 10% of the
principal amount of each maturity was sold to the public.
(2) Private Placement. In the case of obligations sold by
private placement, the aggregate of the prices, including any Pre -
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Library Miami Document M 2676v1
Issuance Accrued Interest and original issue premium, paid to the
Issuer by the first purchaser(s) (other than bond houses, brokers or
other intermediaries).
"Minor Portion" means an amount equal to the lesser of $100,000 or 5% of the Sale
Proceeds of the issue.
"Net Proceeds" means the Sale Proceeds of an issue less the portion thereof, if any,
deposited in a reasonably required reserve or replacement fund for such issue.
"Net Sale Proceeds" means the Sale Proceeds of an issue less the portion thereof, if
any, deposited in a reasonably required reserve or replacement fund for such issue and invested as a
part of a Minor Portion for such issue.
"New Money Issue" means an issue that is not a Refunding Issue.
"New Money Portion" means that portion of a multipurpose issue other than the
Refunding Portion.
"Nonpurpose Investments" means any Investment Property that is acquired with
Gross Proceeds as an investment and not in carrying out any governmental purpose of the issue.
"Nonpurpose Investments" does not include any investment that is not regarded as "investment
property" or a "nonpurpose investment" for the particular purposes of Section 148 (such as certain
investments in U.S. Treasury obligations in the State and Local Government Series and certain
temporary investments), but does include any other investment that is a "nonpurpose investment"
within the applicable meaning of Section 148.
"Original Issue" means an issue for new money purposes (or the New Money
Portion of a multipurpose issue) all or a portion of the Debt Service on which was or will be paid or
provided for with Proceeds of a Refunding Issue.
"Pre -Issuance Accrued Interest" means interest on an obligation that accrued for a
period not greater than one year before its Issuance Date and that will be paid within one year after
such Issuance Date.
"Preliminary Expenditures" means any Capital Expenditures that are preliminary
expenditures, within the meaning of Regulations § 1.150-2(0(2) or former Regulations § 1.103-
18(i)(2), as applicable, i.e., architectural, engineering, surveying, soil testing, reimbursement bond
issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or
rehabilitation of a project other than land acquisition, site preparation, and similar costs incident to
commencement of construction. The amount of Preliminary Expenditures may not exceed 20% of
the aggregate issue price of the issue that financed or is reasonably expected to finance the project
for which the preliminary expenditures are or were incurred.
6
L.ibm, Mum,. Document e 2676v1
"Prior Issue" means an issue of obligations all or a portion of the Debt Service on
which is paid or provided for with Proceeds of the Issue which is a Refunding Issue. The Prior
Issue may be a Refunding Issue.
"Private Activity Bond" means (a) obligations of an issue more than 5% of the
Proceeds of which are or are to be used for a Private Business Use and more than 5% of the Debt
Service on which is or is to be paid from or secured by payments with respect to property, or
secured by property, used for a Private Business Use, or (b) obligations of an issue 5% or more of
the Proceeds of which are or are to be used to make or finance loans to any Private Person.
"Private Business Use" means use (directly or indirectly) in a trade or business
carried on by any Private Person other than use as a member of, and on the same basis as, the
general public. Any activity carried on by a Private Person (other than a natural person) shall be
treated as a trade or business. In the case of a Qualified 501(c)(3) Bond, Private Business Use
excludes use by a 501(c)(3) Organization that is not an unrelated trade or business activity by such
501(c)(3) Organization within the meaning of Section 513(a).
"Private Person" means any natural person or any artificial person, including a
corporation, partnership, trust or other entity, that is not a Governmental Unit and that is not acting
solely and directly as an officer or employee of or on behalf of the Issuer or another Governmental
Unit. "Private Person" includes the United States and any agency or instrumentality of the United
States.
"Proceeds" means any Sale Proceeds, Investment Proceeds, and Transferred
Proceeds of an issue. "Proceeds" do not include Replacement Proceeds.
"Qualified Administrative Costs" means reasonable direct administrative costs,
(other than carrying costs), such as separately stated brokerage or selling commissions, but not legal
and accounting fees, recordkeeping, custody, and similar costs. General overhead costs and similar
indirect costs of the Issuer such as employee salaries and office expenses and costs associated with
computing the Rebate Amount are not Qualified Administrative Costs.
"Qualified 501(c)(3) Bonds" means an issue of bonds that satisfies the requirements
of Section 145(a).
"Qualified Guarantee" means any guarantee of an obligation that constitutes a
"qualified guarantee" within the meaning of Regulations § 1.148-4(0.
"Qualified Hedge" means a "qualified hedge" as defined in Regulations
§ 1.148-4(h)(2).
"Rebate Amount" means the excess of the future value, as of any date, of all receipts
on Nonpurpose Investments acquired with Gross Proceeds of an issue over the future value, as of
that date, of all payments on Nonpurpose Investments acquired with Gross Proceeds of such issue,
computed in accordance with Section 148(0 and Regulations §1.148-3.
7
Libra') Mums, Document */ 2676v1
"Refunded Bonds" means that portion of a Prior Issue the Debt Service on which,
after the Issuance Date of a Refunding Issue, is to be paid from Proceeds or Replacement Proceeds
of either such Refunding Issue or the Prior Issue.
"Refunding Bonds" means obligations of a Refunding Issue.
"Refunding Issue" means an issue the Proceeds of which are or are to be used to pay
Debt Service on Refunded Bonds and to finance Issuance Costs, Pre -Issuance Accrued Interest or
permitted capitalized interest, a reasonably required reserve or replacement fund, and similar costs
of the Refunding Issue.
"Refunding Escrow" means one or more funds established as part of a single
transaction, or a series of related transactions, containing Proceeds of a Refunding Issue and any
other amounts to provide for payment of Debt Service on one or more Prior Issues.
"Refunding Portion" means that portion of a multipurpose issue the Proceeds of
which are or are to be used to pay Debt Service on Refunded Bonds and to finance Issuance Costs,
Pre -Issuance Accrued Interest or permitted capitalized interest, a reasonably required reserve or
replacement fund, and similar costs properly allocable to such Refunding Portion.
"Regulations" or "Reg." means applicable Treasury Regulations.
"Reimbursement Allocation" means an allocation of the Proceeds of an issue for the
Reimbursement of Prior Capital Expenditures that meets each of the following requirements: (a) is
evidenced on the books or records of the Issuer maintained with respect to the issue, (b) the
allocation entry identifies either actual prior Capital Expenditures, or the fund or account from
which the prior Capital Expenditures were paid, and (c) evidences the Issuer's use of Proceeds of
such issue to reimburse a Capital Expenditure for a governmental purpose that was originally paid
from a source other than the Proceeds of such issue.
"Reimbursement of Prior Capital Expenditures" means a Reimbursement Allocation
of Proceeds of an issue to a Capital Expenditure paid prior to the Issuance Date of such issue, which
satisfies clause (a), (b) or (c), as appropriate.
(a) A Reimbursement Allocation satisfies clause (a) if:
(i)
The Reimbursement Allocation was made from
Proceeds of an issue issued prior to March 3, 1992;
and
(ii) The Capital Expenditure reimbursed was paid in
anticipation of reimbursement from the Proceeds of
obligations issued by a Governmental Unit.
8
labmn Mtum. Doc m. I X 2676v1
(b)
Ltbnv MUM, Document SI 2676v1
A Reimbursement Allocation satisfies clause (b) if the Reimbursement
Allocation was made from Proceeds of an issue issued after March 2, 1992
and before July 1, 1993, and if it satisfies either subclause (i) or (ii).
(i) Subclause (i) is satisfied if:
(1) The Capital Expenditure reimbursed was paid
after September 8, 1989 and before March 2,
1992;
(2) There is objective evidence that, at the time
such Capital Expenditure was paid by the
Issuer (except Preliminary Expenditures), the
Issuer expected to reimburse such Capital
Expenditure with Proceeds of a borrowing
(whether taxable or tax-exempt);
(3)
The expectation stated in subclause (2) was
reasonable by being consistent with the
budgetary and financial circumstances of the
Issuer i.e., no funds from sources other than
the Issue were, or were reasonably expected
to be, reserved, allocated on a long-term
basis, or otherwise set aside by the Issuer or
any member of the same Controlled Group as
the Issuer pursuant to their budget or fmancial
policies with respect to such Capital
Expenditure);
(4) The Reimbursement Allocation occurred
within 1 year after the later of the date on
which such Capital Expenditure was paid or
the date on which the property resulting from
such Capital Expenditure was placed in
service; and
(5)
The reimbursed amounts were not used
within one year after the date of the
Reimbursement Allocation to (A) refund
obligations issued by any Governmental Unit,
(B) create or increase the balance in a sinking
fund with respect to any obligation of the
Issuer or to replace funds that have been, are
being, or will be used for sinking fund
purposes, (C) create or increase the balance in
a reserve or replacement fund with respect to
9
any obligation of the Issuer, or to replace
funds that have been, are being, or will be so
used for reserve or replacement fund
purposes, or (D) reimburse any person for any
expenditure or payment that was originally
paid with proceeds of any obligation of the
Issuer (other than an internal borrowing from
one of its own funds).
(ii) Subclause (ii) is satisfied if:
(1) Such Capital Expenditure was paid after
March 1, 1992;
(2) On or before the date such Capital
Expenditure was paid by the Issuer (except
Preliminary Expenditures), the Issuer
declared its reasonable intention to reimburse
such Capital Expenditure with proceeds of a
borrowing (whether taxable or tax-exempt) in
a declaration of intent meeting the
requirements of former Regulations
§ 1.103-18(f) or Regulations §1.150-2(f)(2);
and
(3) The requirements set forth in subclauses
(i)(3), (4) and (5) of this clause (b) are met.
(c) A Reimbursement Allocation satisfies clause (c) if the Reimbursement
Allocation was made from Proceeds of an issue issued after June 30, 1993
and either subclause (i) or (ii) is satisfied.
(i) Subclause (i) is satisfied if:
(1) The Capital Expenditure reimbursed was paid
after September 8, 1989 and before March 2,
1992;
(2) There is objective evidence that, at the time
the Capital Expenditure was paid by the
Issuer (except Preliminary Expenditures), the
Issuer expected to reimburse such Capital
Expenditure with Proceeds of a borrowing
(whether taxable or tax-exempt);
10
Libra", Mum Document N 2676v1
(3)
The expectation stated in subclause (i)(2) was
reasonable by being consistent with the
budgetary and financial circumstances of the
Issuer; and
(4) The Reimbursement Allocation occurred or
will occur within 18 months after the later of
the date the original expenditure was paid or
the date the project financed by such
expenditure was placed in service or
abandoned, but in no event more than 3 years
after the original expenditure was paid.
(ii) Subclause (ii) is satisfied if:
(1) The Capital Expenditure was paid after March
1, 1992;
(2) Within 60 days after payment of the original
expenditure (except Preliminary
Expenditures), the Issuer adopted an official
intent for the original expenditure that
satisfies Regulations § 1.150-2(e); and
(3)
The Reimbursement Allocation occurred or
will occur within 18 months after the later of
the date the original expenditure was paid or
the date the project financed by such
expenditure was placed in service or
abandoned, but in no event more than 3 years
after the original expenditure was paid.
"Related Party" means, in reference to a Governmental Unit or 501(c)(3)
Organization, any member of the same Controlled Group, and, in reference to any person that is not
a Governmental Unit or 501(c)(3) Organization, a related person as defined in Section 144(a)(3).
"Replacement Proceeds" means with respect to an issue amounts (including any
investment income but excluding any Proceeds of that issue) replaced by Proceeds of that issue
under Section 148(a)(2). Replacement Proceeds include amounts, other than Proceeds, held in a
sinking fund, pledged fund or reserve or replacement fund for the issue.
"Sale Date" means with respect to an issue (or a portion of an issue) the first date
upon which there is a binding contract in writing with the Issuer for the sale and purchase of the
issue (or of respective obligations of the issue if sold by the Issuer on different dates) on specific
terms that are not later modified or adjusted in any material respect. In the case of a variable yield
obligation, the Sale Date is the Issuance Date thereof.
11
Library Mum. Dammam 26760
"Sale Proceeds" means that portion of the Issue Price actually or constructively
received by the Issuer upon the sale or other disposition of an issue, including any underwriter's
compensation withheld from the Issue Price, but excluding Pre -Issuance Accrued Interest.
"Same Plan of Financing" is determined based on such factors as the purposes for
the obligations and the structure of the financing. For example, generally (A) obligations to finance
a single facility or related facilities are part of the same plan of financing; (B) short-term obligations
to finance working capital expenditures and long-term obligations to finance capital projects are not
part of the same plan of financing; and (C) certificates of participation in a lease and general
obligation obligations secured by tax revenues are not part of the same plan of financing.
"Spendable Proceeds" means the Net Sale Proceeds of an issue.
"Tax -Exempt Obligation" means any obligation or issue of obligations (including
bonds, notes and lease obligations treated for federal income tax purposes as evidences of
indebtedness) the interest on which is excluded from gross income for federal income tax purposes
within the meaning of Section 150, and includes any obligation or any investment treated as a
"tax-exempt bond" for the applicable purpose of Section 148.
"Tax -Exempt Organization" means a Governmental Unit or a 501(c)(3)
Organization.
"Temporary Period" means the period of time, as set forth in the Tax Compliance
Certificate, applicable to particular categories of Proceeds of an issue during which such category of
Proceeds may be invested in Higher Yielding Investments without the issue being treated as
arbitrage bonds under Section 148.
"Transferred Proceeds" means that portion of the Proceeds of an issue (including
any Transferred Proceeds of that issue) that remains unexpended at the time that any portion of the
principal of that issue is discharged with the Proceeds of a Refunding Issue and that thereupon
becomes Proceeds of the Refunding Issue as provided in Regulations § 1.148-9(b). Transferred
Proceeds do not include any Replacement Proceeds.
"Variable Yield Issue" means any issue that is not a Fixed Yield Issue.
"Working Capital Expenditures" means any costs of a type that do not constitute
Capital Expenditures, including current operating expenses.
"Yield" has the meaning assigned to it for purposes of Section 148, and means that
discount rate (stated as an annual percentage) that, when used in computing the present worth of all
applicable unconditionally payable payments of Debt Service and all payments for a Qualified
Guarantee, if any, paid and to be paid with respect to an obligation @aid and to be paid during and
attributable to the Yield Period in the case of a Variable Yield Issue), produces an amount equal to
(a) the Issue Price in the case of a Fixed Yield Issue or the present value of all the Issue Prices
during the Yield Period in the case of a Variable Yield Issue, or (b) the purchase price for yield
12
Lubmn Mumu, Document N 26760
purposes in the case of Investment Property, all subject to the applicable methods of computation
provided for under Section 148, including variations from the foregoing. The Yield on Investment
Property in which Proceeds or Replacement Proceeds of an issue are invested is computed on a
basis consistent with the computation of Yield on that issue, including the same compounding
interval (of not more than one year selected by the Issuer).
"Yield Period" means, in the case of the first Yield Period, the period that
commences on the Issuance Date and ends at the close of business on the first Computation Date
and, in the case of each succeeding Yield Period, the period that begins immediately after the end of
the immediately preceding Yield Period and ends at the close of business on the next succeeding
Computation Date.
The terms advance refunding, "current refunding", "bond", "obligation",
"reasonable retainage", "reasonably required reserve or replacement fund", "reserve or replacement
fund", "loan", "sinking fund", "multipurpose issue", "purpose investment", "variable yield
obligation", "yield reduction payment", "other replacement proceeds", and other terms relating to
Code provisions used but not defined in this Certificate shall have the meanings given to them for
purposes of Sections 103 and 141 to 150 unless the context indicates another meaning.
(End of Attachment A)
13
Library Manu, Doc, mens N 2676v1
ATTACHMENT A-1
to
Tax Compliance Certificate of Issuer
Pertaining to
$3,941,059
City of Miami Beach, Florida
Non -Ad Valorem Revenue Note, Series 1999
INSTRUCTIONS FOR COMPLIANCE WITH REBATE
REQUIREMENTS OF SECTION 148(0 OF THE CODE.
The Issuer' covenanted in the operative documents (i.e., Ordinance/Resolution/Trust
Indenture and Tax Compliance Certificates) to comply with the arbitrage rebate requirement of
Section 148(0 of the Code. These Instructions provide guidance for that compliance, including the
spending exceptions that free the Issue from all or part of the rebate requirements.
PART I: GENERAL
SECTION 1.01. REBATE GENERALLY.
The Rebate Amount2 with respect to the Issue must be paid (rebated) to the United
States to prevent the bonds of the Issue from being arbitrage bonds, the interest on which is subject
to federal income tax. In general, the Rebate Amount is the amount by which the actual earnings on
Nonpurpose Investments purchased (or deemed to have been purchased) with Gross Proceeds of the
Issue exceed the amount of earnings that would have been received if those Nonpurpose
Investments had a Yield equal to the Yield on the Issue.3 Stated differently, the Rebate Amount for
the Issue as of any date is the excess of the Future Value, as of that date, of all Receipts on
Nonpurpose Investments over the Future Value, as of that date, of all Payments on Nonpurpose
Investments, computed using the Yield on the Issue as the Future Value rate.4
2.
3
4
For purposes of these Instructions, the term "Issuer" includes the borrower in a conduit financing issue.
Capitalized terms that are not defined in these Instructions are defined in Attachment A to the Tax Compliance
Certificate of the Issuer.
Amounts earned on the Bona Fide Debt Service Fund for the Issue are not taken into account in determining the
Rebate Amount since the average annual Debt Service on the Issue does not exceed $2,500,000.
The scope of these Instructions does not permit a detailed description of the computation of the Rebate Amount
with respect to the Issue. If you need assistance in computing the Rebate Amount on the Issue or want Squire,
Sanders & Dempsey L.L.P. to do the computations, please feel free to contact the Squire, Sanders & Dempsey
L.L.P. attorney with whom you normally consult.
latter). AL.ni. Document /0 2681x1
If the Issue is a Fixed Yield Issue, the Yield on the Issue generally is the Yield to
maturity, taking into account mandatory redemptions prior to maturity. If the Issue is a Variable
Yield Issue, the Yield on the Issue is computed separately for each Yield Period selected by the
Issuer.
SECTION 1.02. SPECIAL DEFINITIONS.
For purposes of these Instructions, the following terms shall have the following
meanings.
"Available Construction Proceeds" means an amount equal to (a) the sum of (i)
the Issue Price of the issue, (ii) Investment Proceeds on that Issue Price, (iii) earnings on any
reasonably required reserve or replacement fund allocated to the issue not funded from the Issue
Price, and (iv) Investment Proceeds and earnings on (ii) and (iii), (b) reduced by the portions, if any,
of the Issue Price of the issue (i) attributable to Pre -Issuance Accrued Interest and earnings thereon,
(ii) allocated to the Underwriter's discount, (iii) used to pay other Issuance Costs of the issue, and
(iv) deposited in a reasonably required reserve or replacement fund allocated to the issue. Available
Construction Proceeds do not include Investment Proceeds or earnings on a reasonably required
reserve or replacement fund allocated to the issue for any period after the earlier of (a) the close of
the 2 -year period that begins on the Issuance Date or (b) the date the construction of the Projects
financed by the issue is substantially completed. If the issue consists of a New Money Portion and a
Refunding Portion and the New Money Portion is a Construction Issue, this definition shall be
applied by substituting "New Money Portion" for "issue" each place the latter term appears. If the
issue or the New Money Portion, as applicable, is not a Construction Issue, and the Issuer makes the
election under Regulations §1.148-7(j)(1) and Section 148(f)(4)(C)(v) to treat the issue or the New
Money Portion as two separate issues consisting of the Construction Portion and the
Nonconstruction Portion, this defmition shall be applied by substituting "Construction Portion" for
"issue" each place the latter term appears.
"Bifurcated Issue" means a New Money Issue or the New Money Portion of a
Multipurpose Issue that the Issuer, pursuant to Section 148(f)(4)(C)(v) and Regulations § 1.148-7(j),
has elected in its Tax Compliance Certificate to bifurcate into a Construction Portion and a
Nonconstruction Portion.
"Bond Counsel's Opinion" means an opinion or opinions of a nationally recognized
bond counsel firm whose opinion is given with respect to the Issue when issued, or its successors or
other nationally recognized bond counsel appointed by the Issuer.
"Bond Year" means the annual period relevant to the application of Section 148(0 to
the issue, except that the first and last Bond Years may be less than 12 months long. The last day of
a Bond Year shall be the close of business on the day preceding the anniversary of the Issuance
Date of the issue unless the Issuer selects another date on which to end a Bond Year in the manner
permitted by the Code.
"Computation Date" means each date on which the Rebate Amount for an issue is
required to be computed under Regulations §1.148-3(e). In the case of a Fixed Yield Issue, the first
2
Library Mune Document 8 268 Iv I
Computation Date shall not be later than 5 years after the Issuance Date of the issue. Subsequent
Computation Dates shall be not later than 5 years after the immediately preceding Computation
Date for which an installment payment of the Rebate Amount was paid. In the case of a Variable
Yield Issue, the first Computation Date shall be the last day of any Bond Year irrevocably selected
by the Issuer ending on or before the fifth anniversary of the Issuance Date of such issue and
subsequent Computation Dates shall be the last day of each Bond Year thereafter or each fifth Bond
Year thereafter, whichever is irrevocably selected by the Issuer after the first date on which any
portion of the Rebate Amount is required to be paid to the United States. The final Computation
Date is the date an issue is retired.
"Construction Expenditures" means Capital Expenditures allocable to the cost of
real property (including the construction or making of improvements to real property, but excluding
acquisitions of interests in land or other existing real property) or constructed personal property
within the meaning of Regulations § 1.148-7(g).
"Construction Issue" means an issue at least 75 percent of the Available
Construction Proceeds of which are to be used for Construction Expenditures with respect to
property which is or is to be owned by a Governmental Unit or a 501(c)(3) Organization. If an
election has been made in the Issuer's Tax Compliance Certificate to bifurcate an issue or the New
Money Portion, the Construction Portion (i.e., that portion of the issue or the New Money Portion
which satisfies the 75 percent test stated in the preceding sentence and which finances 100% of the
Construction Expenditures) is treated as the Construction Issue and the balance of the issue or the
New Money Portion is treated as the Nonconstruction Portion.
"Fixed Yield Issue" means an issue of obligations the Yield on which is fixed and
determinable on the Issuance Date.
"Future Value" means the value of a Payment or Receipt at the end of a period
determined using the economic accrual method as 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 Yield on the Issue, using the same compounding interval and
financial conventions that were used to compute that Yield.
"Guaranteed Investment Contract" means any Nonpurpose Investment that has
specifically negotiated withdrawal or retirement provisions and a specifically negotiated interest rate
and any agreement to supply investments on two or more future dates (e.g., a forward supply
contract).
"Multipurpose Issue" means an issue that consists of a Refunding Portion and a New
Money Portion.
"Payment" means payments actually or constructively made to acquire Nonpurpose
Investments, as specified in Regulations § 1.148-3(d)(1)i) through (v).
"Qualified Administrative Costs" means the reasonable, direct administrative costs,
other than carrying costs, of purchasing or selling Nonpurpose Investments such as separately stated
3
Ubnn Mum1. Document # 2681v1
brokerage or selling commissions. Qualified Administrative Costs do not include legal and
accounting fees, recordkeeping, custody, and similar costs, general overhead costs and similar
indirect costs of the Issuer such as employee salaries and office expenses and costs associated with
computing the Rebate Amount. In general, Qualified Administrative Costs are not reasonable
unless they are comparable to administrative costs that would be charged for the same investment or
a reasonably comparable investment if acquired with a source of funds other than Gross Proceeds of
Tax -Exempt Obligations.
"Reasonable Retainage" means an amount, not to exceed 5% of the Net Sale
Proceeds of the Issue, that is retained for reasonable business purposes relating to the property
financed with Proceeds of the Issue. For example, Reasonable Retainage may include a retention to
ensure or promote compliance with a construction contract in circumstances in which the retained
amount is not yet payable, or in which the Issuer reasonably determines that a dispute exists
regarding completion or payment.
"Rebate Analyst" means an independent individual, firm or entity experienced in the
computation of the Rebate Amount pursuant to Section 148(0 of the Code.
"Receipt" means amounts actually or constructively received from Nonpurpose
Investments as specified in Regulations § 1.148-3(d)(2)(i) through (iii).
"Variable Yield Issue" means any issue that is not a Fixed Yield Issue.
"Yield Period" means, in the case of the first Yield Period, the period that
commences on the Issuance Date and ends at the close of business on the first Computation Date
and, in the case of each succeeding Yield Period, the period that begins immediately after the end of
the immediately preceding Yield Period and ends at the close of business on the next succeeding
Computation Date.
PART II: EXCEPTIONS TO REBATE
SECTION 2.01. SPENDING EXCEPTIONS.
The rebate requirements with respect to the Issue are deemed to have been satisfied
if any one of three spending exceptions (the 6 -Month, the 18 -Month, or the 2 -Year Spending
Exception, collectively, the "Spending Exceptions") is satisfied. The Spending Exceptions are each
independent exceptions. The Issue need not meet the requirements of any other exception in order
to use any one of the three exceptions. For example, a Construction Issue may qualify for the
6 -Month Spending Exception or the 18 -Month Spending Exception even though the Issuer makes
one or more elections under the 2 -Year Exception with respect to the Issue.
The following rules apply for purposes of all of the Spending Exceptions except as
otherwise noted.
4
Ltbror Mums. Doa mem M 2601v1
Refunding Issues. The only spending exception available for a Refunding Issues is
the 6 -Month Spending Exception.
Special Transferred Proceeds Rules. In applying the Spending Exceptions to a
Refunding Issue, unspent Proceeds of the Prior Issue that become Transferred Proceeds of the
Refunding Issue are ignored. If the Prior Issue satisfies one of the rebate Spending Exceptions, the
Proceeds of the Prior Issue that are excepted from rebate under that exception are not subject to
rebate either as Proceeds of the Prior Issue or as Transferred Proceeds of the Refunding Issue.
However, if the Prior Issue does not satisfy any of the Spending Exceptions and is
not otherwise exempt from rebate, the Transferred Proceeds from the Prior Issue will be subject to
rebate, even if the Refunding Issue satisfies the 6 -Month Spending Exception. The Rebate Amount
will be calculated on the Transferred Proceeds on the basis of the Yield of the Prior Issue up to each
transfer date and on the basis of the Yield of the Refunding Issue after each transfer date.
Application of Spending Exceptions to a Multipurpose Issue. If the Issue is a
Multipurpose Issue, the Refunding Portion and the New Money Portion are treated for purposes of
the rebate Spending Exceptions as separate issues. Thus, the Refunding Portion is eligible to use
only the 6 -Month Spending Exception. The New Money Portion is eligible to use any of the three
Spending Exceptions.
Expenditures for Governmental Purposes of the Issue. Each of the spending
exceptions requires that expenditures of Gross Proceeds be for the governmental purposes of the
Issue. These purposes include payment of interest (but not principal) on the Issue.
SECTION 2.02. 6 -MONTH SPENDING EXCEPTION.
The Issue will be treated as satisfying the rebate requirements if all of the Gross
Proceeds of the Issue are allocated to expenditures for the governmental purposes of the Issue
within the 6 -month period beginning on the Issuance Date and the Rebate Amount, if any, with
respect to earnings on amounts deposited in a reasonably required reserve or replacement fund or a
Bona Fide Debt Service Fund if and to the extent that such Fund is subject to rebate (see footnote 3)
is timely paid to the United States. If no bond of the Issue is a Private Activity Bond (other than a
Qualified 501(c)(3) Bond) or a tax or revenue anticipation bond, the 6 -month period is extended for
an additional 6 months if the unexpended Gross Proceeds of the Issue at the end of the 6 -month
period do not exceed the lesser of 5% of the Proceeds of the Issue or $100,000.
For purposes of the 6 -Month Spending Exception, Gross Proceeds required to be
spent within 6 months do not include amounts in a reasonably required reserve or replacement fund
for the Issue or in a Bona Fide Debt Service Fund for the Issue.
5.
For purposes of these Instructions, references to "Refunding Issue" include the Refunding Portion of a
Multipurpose Issue.
5
Libor Alum. Document it 2681.1
SECTION 2.03. 18 -MONTH SPENDING EXCEPTION.
The Issue (or the New Money Portion if the Issue is a Multipurpose Issue) is treated
as satisfying the rebate requirement if the conditions set forth in (A), (B) and (C) are satisfied.
(A) All of the Gross Proceeds of the Issue (excluding amounts in a reasonably
required reserve or replacement fund for the Issue or in a Bona Fide Debt Service Fund for the
Issue) are allocated to expenditures for the governmental purposes of the Issue in accordance with
the following schedule, measured from the Issuance Date:
(1) at least 15% within 6 months;
(2) at least 60% within 12 months; and
(3) 100% within 18 months, subject to the Reasonable Retainage
exception described below.
(B) The Rebate Amount, if any, with respect to earnings on amounts deposited in a
reasonably required reserve or replacement fund or in a Bona Fide Debt Service Fund for the Issue,
to the extent such Fund is subject to rebate (see footnote 3), is timely paid to the United States.
And,
(C) The Gross Proceeds of the Issue qualify for the initial 3 -year Temporary Period.
If the only unspent Gross Proceeds at the end of the 18th month are Reasonable
Retainage, the requirement that 100% of the Gross Proceeds be spent by the end of the 18th month
is treated as met if the Reasonable Retainage, and all earnings thereon, are spent for the
governmental purposes of the Issue within 30 months of the Issuance Date.
For purposes of determining whether the spend -down requirements have been met
as of the end of each of the first two spending periods, the amount of Investment Proceeds that the
Issuer reasonably expects as of the Issuance Date to earn on the Sale Proceeds and Investment
Proceeds of the Issue during the 18 -month period are included in Gross Proceeds of the Issue. The
final spend -down requirement includes actual Investment Proceeds for the entire 18 months.
The 18 -Month Spending Exception does not apply to the Issue (or the New Money
Portion, as applicable) if any portion of the Issue (or New Money Portion) is treated as meeting the
rebate requirement under the 2 -Year Spending Exception discussed below. This rule prohibits use
of the 18 -Month Spending Exception for the Nonconstruction Portion of a Bifurcated Issue. The
only Spending Exception available for the Nonconstruction Portion of a Bifurcated Issue is the
6 -Month Spending Exception.
6
Librar, Mums. Document it 2681v1
SECTION 2.04. 2 -YEAR SPENDING EXCEPTION FOR CERTAIN CONSTRUCTION
ISSUES.
(A) In general. A Construction Issue no bond of which is a Private Activity Bond
(other than a Qualified 501(c)(3) Bond or a Bond that finances property to be owned by a
Governmental Unit or a 501(c)(3) Organization) is treated as satisfying the rebate requirement if the
Available Construction Proceeds of the Issue are allocated to expenditures for the governmental
purposes of the Issue in accordance with the following schedule, measured from the Issuance Date:
(1) at least 10% within 6 months;
(2) at least 45% within 1 year;
(3) at least 75% within 18 months; and
(4) 100% within 2 years, subject to the Reasonable Retainage exception
described below.
Amounts in a Bona Fide Debt Service Fund or a reasonably required reserve or
replacement fund for the Issue are not treated as Gross Proceeds for purposes of the expenditure
requirements. However, unless the Issuer has elected otherwise in the Tax Compliance Certificate,
earnings on amounts in a reasonably required reserve or replacement fund for the Issue are treated
as Available Construction Funds during the 2 -year period and therefore must be allocated to
expenditures for the governmental purposes of the Issue.
If the Issuer elected in the Tax Compliance Certificate to exclude from Available
Construction Proceeds the Investment Proceeds or earnings on a reasonably required reserve or
replacement fund for the Issue during the 2 -year spend -down period, the Rebate Amount, if any,
with respect to such Investment Proceeds or earnings from the Issuance Date must be timely paid to
the United States. If the election is not made, the Rebate Amount, if any, with respect to such
Investment Proceeds or earnings after the earlier of the date construction is substantially completed
or 2 years after the Issuance Date must be timely paid to the United States. The Rebate Amount, if
any, with respect to earnings on amounts in a Bona Fide Debt Service Fund must be timely paid to
the extent such Fund is subject to the rebate requirements (see footnote 3).
The Issue does not fail to satisfy the spending requirement for the fourth spend -down
period i.e., 100% within 2 years of the Issuance Date) if the only unspent Available Construction
Proceeds are amounts for Reasonable Retainage if such amounts (together with all earnings on such
amounts) are allocated to expenditures within 3 years of the Issuance Date.
For purposes of determining whether the spend -down requirements have been met as of
the end of each of the first 3 spend -down periods, Available Construction Proceeds include the
amount of Investment Proceeds or earnings that the Issuer reasonably expected as of the Issuance
Date to earn during the 2 -year period. For purposes of satisfying the final spend -down requirement,
Available Construction Proceeds include actual Investment Proceeds or earnings from the Issuance
Date through the end of the 2 -year period.
7
Library Murm, Document M 26810
Available Construction Proceeds do not include Gross Proceeds used to pay Issuance
Costs financed by the Issue, but do include earnings on such Proceeds. Thus, an expenditure of
Gross Proceeds to pay Issuance Costs does not count toward meeting the spend -down requirements,
but expenditures of earnings on such Gross Proceeds to pay Issuance Costs do count.
(B) 1'A% nenaltv in lieu of rebate for Construction Issues. If the Issuer elected in
the Tax Compliance Certificate for a Construction Issue, or for the Construction Portion of a
Bifurcated Issue, to pay a 1',4% penalty in lieu of the Rebate Amount on Available Construction
Proceeds in the event that the Construction Issue fails to satisfy any of the spend -down
requirements, the 1'/2% penalty is calculated separately for each spend -down period, including each
semi-annual period after the end of the fourth spend -down period until all Available Construction
Proceeds have been spent. The penalty is equal to 0.015 times the underexpended Proceeds as of
the end of the applicable spend -down period. The fact that no arbitrage is in fact earned during such
spend -down period is not relevant. The Rebate Amount with respect to Gross Proceeds other than
Available Construction Proceeds (e.g., amounts in a reasonably required reserve or replacement
fund or in a Bona Fide Debt Service Fund, to the extent subject to rebate (see footnote 3)) must be
timely paid.
PART III: COMPUTATION AND PAYMENT.
SECTION 3.01. COMPUTATION AND PAYMENT OF REBATE AMOUNT.
If none of the Spending Exceptions described above is satisfied (and if the 1-1/2%
penalty election for a Construction Issue or the Construction Portion of a Bifurcated Issue has not
been made), then within 45 days after each Computation Date, the Issuer shall compute, or cause to
be computed, the Rebate Amount as of such Computation Date. The first Computation Date is a
date selected by the Issuer, but shall be not later than 5 years after the Issuance Date. Each
subsequent Computation Date shall end 5 years after the previous Computation Date except that, in
a Variable Yield Issue, the Issuer may select annual Yield Periods. The final Computation Date
shall be the date the last obligation of the Issue matures or is fmally discharged.
Within 60 days after each Computation Date (except the fmal Computation Date), the
Issuer shall pay to the United States not less than 90% of the Rebate Amount, if any, computed as of
such Computation Date. Within 60 days after the final Computation Date, the Issuer shall pay to the
United States 100% of the Rebate Amount, if any, computed as of the fmal Computation Date. In
computing the Rebate Amount, a computation credit of $1,000 may be taken into account on the
last day of each Bond Year to the Computation Date during which there are unspent Gross Proceeds
that are subject to the rebate requirement, and on the final maturity date.
If the operative documents pertaining to the Issue establish a Rebate Fund and require
the computation of the Rebate Amount at the end of each Bond Year, the Issuer shall calculate, or
cause to be calculated, within 45 days after the end of each Bond Year the Rebate Amount, taking
into account the computation credit of $1,000 for each Bond Year. Within 50 days after the end of
each Bond Year, if the Rebate Amount is positive, the Issuer shall deposit in the Rebate Fund such
amount as will cause the amount on deposit therein to equal the Rebate Amount, and may withdraw
8
Ltbnry M.im, Document 8 2681v I
any amount on deposit in the Rebate Fund in excess of the Rebate Amount. Payments of the Rebate
Amount to the Internal Revenue Service on a Computation Date shall be made first from amounts
on deposit in the Rebate Fund and second from other amounts specified in the operative documents.
Each payment of the Rebate Amount or portion thereof shall be payable to the Internal
Revenue Service and shall be made to the Internal Revenue Service Center, Philadelphia, PA 19255
by certified mail. Each payment shall be accompanied by Internal Revenue Service Form 8038-T
and any other form or forms required to be submitted with such remittance.
SECTION 3.02. BOOKS AND RECORDS.
(A) The Issuer or Trustee, as applicable, 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 Gross Proceeds of the Issue. Such
records shall specify the account or fund to which each Nonpurpose Investment (or portion thereof)
held by the Issuer or Trustee is to be allocated and shall set forth as to each Nonpurpose Investment
(1) its purchase price, (2) identifying information, including par amount, interest rate, and payments
dates, (3) the amount received at maturity or its sales price, as the case may be, including accrued
interest, (4) the amounts and dates of any payments made with respect thereto, and (5) the dates of
acquisition and disposition or maturity.
The Issuer, Trustee, or Rebate Analyst, as applicable, shall retain the records of all
calculations and payments of the Rebate Amount until six years after the retirement of the last
obligation that is a part of the Issue.
SECTION 3.03. FAIR MARKET VALUE.
No Nonpurpose Investment shall be acquired for an amount in excess of its fair
market value. No Nonpurpose Investment shall be sold or otherwise disposed of for an amount less
than its fair market value.
The fair market value of any Nonpurpose Investment shall be the price at which a
willing buyer would purchase the Nonpurpose Investment from a willing seller in an arms -length
transaction. Fair market value generally is determined on the date on which a contract to purchase
or sell the Nonpurpose Investment becomes binding (i.e., the trade date rather than the settlement
date). Except as otherwise provided in this Section, a Nonpurpose Investment that is not of a type
traded on an established securities market (within the meaning of Section 1273 of the Code) is
rebuttably presumed to be acquired or disposed of for a price that is not equal to its fair market
value.
(A) Obligations purchased directly from the Treasury. The fair market value of a
United States Treasury obligation that is purchased directly from the United States Treasury is its
purchase price.
9
L�bun Mums. Document 8 268 Iv
(B) Safe harbor for Guaranteed Investment Contracts. The purchase price of a
Guaranteed Investment Contract shall be treated as its fair market value on the purchase date if all
the following conditions are met:
(1) The Issuer or broker makes a bona fide solicitation for a specified
Guaranteed Investment Contract and receives at least three bona fide bids from reasonably
competitive providers (of Guaranteed Investment Contracts) that have no material financial
interest in the Issue.
(2) The Issuer purchases the highest -yielding Guaranteed Investment Contract
for which a qualifying bid is made (determined net of broker's fees);
(3) 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 Obligations;
(4) The determination of the terms of the Guaranteed Investment Contract takes
into account as a significant factor the Issuer's reasonably expected drawdown schedule for
the amounts to be invested, exclusive of amounts deposited in a Bona Fide Debt Service
Fund and a reasonably required reserve or replacement fund;
(5) The terms of the Guaranteed Investment Contract, including collateral
security requirements, are reasonable; and
(6) 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.
(C) Safe harbor for certificates of deposit. The purchase price of a certificate of
deposit shall be treated as its fair market value on the purchase date if all of the following
requirements are met:
(1) The certificate of deposit has a fixed interest rate, a fixed payment schedule,
and a substantial penalty for early withdrawal; and
(2) The Yield on the certificate of deposit is not less than (a) the Yield on
reasonably comparable direct obligations of the United States, or (b) 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.
Certificates evidencing the foregoing requirements should be obtained before
purchasing any Guaranteed Investment Contract or certificate of deposit.
10
lArttry Muw, Document M. 2681 v 1
SECTION 3.04. CONSTRUCTIVE SALE/PURCHASE.
(A) Nonpurpose Investments that are held by the Issuer or Trustee as of any
Computation Date (or Bond Year if the computations are required to be done annually) shall be
treated for purposes of computing the Rebate Amount as of such date as having been sold for their
fair market value as of such date. Investment Property which becomes allocated to Gross Proceeds
of the Issue on a date after such Investment Property has actually been purchased shall be treated for
purposes of the rebate requirements as having been purchased by the Issuer on such date of
allocation at its fair market value on such date.
(B) For purposes of constructive or deemed sales or purchases of Investment
Property (other than Investment Property in the Escrow Fund or that is otherwise not invested for a
Temporary Period or is not part of a reasonably required reserve or replacement fund for the Issue)
must be valued at its fair market value on the date of constructive or deemed sale or purchase
(C) Except as set forth in (B), fixed rate Investment Property that is (1) issued with
not more than 2% of original issue discount or original issue premium, (2) issued with original issue
premium that is attributable exclusively to reasonable underwriters' compensation or (3) acquired
with not more than 2% of market discount or market premium, may be treated as having a fair
market value equal to its outstanding stated principal amount, plus accrued interest. Fixed rate
Investment Property also may be treated as having a fair market value equal to its present value.
SECTION 3.05. ADMINISTRATIVE COSTS.
(A) Administrative costs shall not be taken into account in determining the
payments for or receipts from a Nonpurpose Investment unless such administrative costs are
Qualified Administrative Costs. Thus, administrative costs or expenses paid, directly or indirectly,
to purchase, carry, sell, or retire Nonpurpose Investments generally do not increase the Payments
for, or reduce the Receipts from, Nonpurpose Investments.
(B) Qualified Administrative Costs are taken into account in determining the
Payments and Receipts on Nonpurpose Investments and thus increase the Payments for, or decrease
the Receipts from, Nonpurpose Investments. In the case of a Guaranteed Investment Contract, a
broker's commission or similar fee paid on behalf of either the Issuer or the provider is an
administrative cost that is not a Qualified Administrative Cost to the extent that the present value
(computed using the taxable discount rate used by the parties to compute the commission or, if not
readily ascertainable, a reasonable taxable discount rate) of the commission, as of the date the
contract is purchased, exceeds the present value of annual payments equal to 0.05 percent of the
weighted average amount reasonably expected to be invested each year during the term of such
contract.
11
Libnn Mum. Document ti 2681v1
PART IV: COMPLIANCE AND AMENDMENT
SECTION 4.01. COMPLIANCE.
The Issuer, Trustee or Rebate Analyst, as applicable, shall take all necessary steps to
comply with the requirements of these Instructions in order to ensure that interest on the Issue is
excluded from gross income for federal income tax purposes under Section 103(a) of the Code.
However, compliance shall not be required in the event and to the extent stated therein the Issuer
and the Trustee receive a Bond Counsel's Opinion that either (A) compliance with such requirement
is not required to maintain the exclusion from gross income for federal income tax purposes of
interest on the Issue, or (B) compliance with some other requirement in lieu of such requirement
will comply with Section 148(f) of the Code, in which case compliance with the other requirement
specified in the Bond Counsel's Opinion shall constitute compliance with such requirement.
SECTION 4.02. LIABILITY.
If for any reason any requirement of these Instructions is not complied with, the
Issuer and the Trustee, if applicable, shall take all necessary and desirable steps to correct such
noncompliance within a reasonable period of time after such noncompliance is discovered or should
have been discovered with the exercise of reasonable diligence. The Trustee shall have no duty or
responsibility to independently verify any of the Issuer's, or the Rebate Analyst's, calculations with
respect to the payments of the Rebate Amount due and owing to the United States. Under no
circumstances whatsoever shall the Trustee be liable to the Issuer, any bondholder or any other
person for any inclusion of the interest on the Issue in gross income for federal income tax purposes,
or any claims, demands, damages, liabilities, losses, costs or expenses resulting therefrom or in any
way connected therewith, so long as the Trustee acts only in accordance with these Instructions and
the operative documents pertaining to the Issue.
June 28, 1999
12
Libor) Mums Docvmem k 2681v1
SQUIRE, SANDERS & DEMPSEY L.L.P.
Attachment B
To Tax Compliance Certificate of
City of Miami Beach, Florida
Purchaser's Certificate
Florida Power & Light Company (the "Purchaser"), as Purchaser of the $3,941,059
City of Miami Beach, Florida Non -Ad Valorem Revenue Note, Series 1999, dated June 28, 1999 (the
"Issue"), issued by the City of Miami Beach, Florida (the "Issuer"), based on its knowledge regarding
the sale of the Issue, certifies that:
(1) Issue Price — Section 148. The Purchaser is purchasing the Issue from the Issuer
at a purchase price of $3,941,059.00 (there being no accrued interest) as an investment of the
Purchaser and not for purposes of resale. Thus, the Issue Price of the Issue is $3,941,059.00.
(2) Issue Price -- Information Return. For purposes of the Information Return
required by Section 149(e) of the Internal Revenue Code to be filed with the Internal Revenue Service
in connection with the Issue, the Issue Price of the entire Issue is $3,941,059.00, of which
$3,601,281.00 will be paid by the discharge of a liability of the Issuer to the Purchaser in such amount
in exchange for that portion of the Issue and the balance of $339,778.00 will be paid in cash.
(3) Yield. The yield on the Issue, calculated in accordance with Section 148(h) of the
Code and Treasury Regulations § 1.148-4, is 4.7507%, being that yield that, when used in computing
the present worth of all payments of principal and interest to be paid on the Issue, computed on the
basis of a year consisting of 360 days and semi annual compounding, produces an amount equal to the
aggregate Issue Price of the Issue as stated in paragraph (1) above.
(4) Authorized Officer. The undersigned is an officer of Florida Power & Light
Company and is authorized to execute and deliver this Certificate for itself in connection with the
issuance of the Issue. It is understood that the certifications contained herein will be relied on by the
Issuer in making certain of its representations in its Tax Compliance Certificate and by Squire, Sanders
& Dempsey L.L.P., as bond counsel, in rendering certain of its opinions in connection with the issuance
of the Issue.
Dated: June 28, 1999 FLORIDA POWER & LIGHT COMPANY
By: ),14-6,„„;
.P
Title: Treasurer and Assistant Secretary
B-1
Mint 23O743 0; DaanelM. 2639v1