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2007-26597 ResoRESOLUTION NO. 2007-26597 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA AUTHORIZING THE APPLICATION OF NOT EXCEEDING $3,500,000 IN AVAILABLE MONEYS TO DEFEASE AND, TO THE EXTENT APPLICABLE, REDEEM THE OUTSTANDING CITY OF MIAMI BEACH, FLORIDA RESORT TAX REVENUE REFUNDING BONDS, SERIES 1996; AUTHORIZING THE DEFEASANCE AND, TO THE EXTENT APPLICABLE, REDEMPTION OF SUCH BONDS; DELEGATING TO THE CITY MANAGER THE DETERMINATION OF CERTAIN DETAILS AND MATTERS CONCERNING SAID DEFEASANCE AND REDEMPTION; AUTHORIZING THE EXECUTION AND DELIVERY OF AN ESCROW DEPOSIT AGREEMENT AND APPOINTING AN ESCROW AGENT; AUTHORIZING OFFICERS AND EMPLOYEES OF THE CITY TO TAKE ALL NECESSARY ACTIONS; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, pursuant to Resolution No. 88-19369, adopted by the City Commission of the City of Miami Beach, Florida (the "City") on September 22, 1998, and Resolution No. 96-21957, adopted by the Mayor and City Commission of the City (collectively, the "City Commission") on April 17, 1996 (collectively, the "Bond Resolution"), the City has heretofore issued its $4,095,000 principal amount of City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996, dated as of May 1, 1996 (the "Resort Tax Bonds"), $3,060,000 of which Resort Tax Bonds are currently outstanding (the "Outstanding Bonds"); and WHEREAS, the Resort Tax Bonds were issued as bonds the interest on which is excluded from gross income for federal income tax purposes; and WHEREAS, the City has entered into a Management Agreement (the "Management Agreement") with Live Nation Worldwide, Inc. ("Live Nation"), for the management by Live Nation of the City-owned Jackie Gleason Theater of the Performing Arts, which facility was refinanced with the proceeds of the Resort Tax Bonds; and WHEREAS, in order for the Management Agreement not to negatively impact the exclusion from gross income of interest on the Resort Tax Bonds for federal income tax purposes, the Code (as defined in the Bond Resolution) requires that the Outstanding Bonds be defeased and, to the extent applicable, redeemed from a source not constituting proceeds of bonds the interest on which is excluded from gross income for federal income tax purposes (other than any proceeds on deposit in the Debt Service Reserve Account created under the Bond Resolution (the "Debt Service Reserve Account")); and MIAMI/4198192.2 WHEREAS, the City has determined to apply not exceeding $3,500,000 in legally available moneys not constituting proceeds of bonds the interest on which is excluded from gross income for federal income tax purposes (other than any proceeds on deposit in the Debt Service Reserve Account) (the "Available Moneys") to defease and, to the extent applicable, redeem the Outstanding Bonds in accordance with the provisions of the Bond Resolution, including the payment of all costs in connection with such defeasance and redemption; and WHEREAS, the City Commission has determined that it is in the best interest of the City to delegate to the City Manager, who shall rely upon the recommendations of the Finance Director (as defined in the Bond Resolution) and RBC Capital Markets, the City's financial advisor (the "Financial Advisor"), the determination of the Available Moneys to be applied to defease and, to the extent applicable, redeem the Outstanding Bonds and other actions in connection with such defeasance and redemption, all as provided and subject to the limitations contained in the Bond Resolution and this resolution. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA: Section 1. The above recitals are incorporated herein as findings. All terms used in capitalized form herein and not defined shall have the meanings set forth in the Bond Resolution. Section 2. The application of not exceeding $3,500,000 in Available Moneys to defease and, to the extent applicable, redeem the Outstanding Bonds, including the payment of all costs in connection with such defeasance and redemption, is hereby authorized and approved. The defeasance and, to the extent applicable, redemption of the Outstanding Bonds are hereby authorized and approved. The Outstanding Bonds maturing October 1, 2008 through and including October 1, 2016 shall be called for optional redemption on October 1, 2007 at a redemption price of 101 % of their principal amount in accordance with the provisions of the Bond Resolution. The City Manager, after consultation with the Finance Director and the Financial Advisor, is hereby authorized to determine the Available Moneys to be applied to defease and, to the extent applicable, redeem the Outstanding Bonds. Section 3. The City Manager and the City Clerk are hereby authorized to execute and deliver an Escrow Deposit Agreement to provide for the defeasance and, to the extent applicable, redemption of the Outstanding Bonds (the "Escrow Deposit Agreement"), with U.S. Bank National Association, which is hereby appointed escrow agent with respect to the Outstanding Bonds (the "Escrow Agent"), in substantially the form presented at the meeting at which this resolution was considered, subject to such changes, modifications, insertions and omissions and such filling-in of blanks therein as may be determined and approved by the City Manager, after consultation with the Finance Director and the City Attorney of the City. In connection with the defeasance and redemption of the Outstanding Bonds, there is hereby established under the MIAMI/4198192.2 2 provisions of the Escrow Deposit Agreement the "City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996 Escrow Deposit Trust Fund" to be held by the Escrow Agent. The purchase of Defeasance Obligations from the Available Moneys in order to provide for the defeasance and, to the extent applicable, redemption of the Outstanding Bonds is hereby authorized and approved. The execution and delivery of the Escrow Deposit Agreement by the City Manager and City Clerk shall be conclusive evidence of the City's approval of the determinations described in Section 2 above, the Escrow Deposit Agreement and the purchase of the Defeasance Obligations. Section 4. The officers, agents and employees of the City and the Escrow Agent, as applicable, are hereby authorized and directed to do all acts and things required of them for the defeasance and, to the extent applicable, redemption of the Outstanding Bonds under the applicable provisions of the Bond Resolution, the Escrow Deposit Agreement, the Code and this resolution, including the giving or filing of all required notices and forms. Section 5. This resolution shall become effective immediately upon its adoption. PASSED and ADOPTED this 11th day July , 2007. ATTEST: U~V City Clerk Robert Parcher F:\attoWGUR\RESOS-ORD\Resort Tax Revenue Refunding Bonds, Series 1996 Reso.DOC MIAMU4198192.2 3 APPROVED AS TO FORM & LANGUAGE ~. ~nr~ c~rc~r, iT~nn~ Condensed Title: COMMISSION ITEM SUMMARY A Resolution authorizing the application of not exceeding $3,500,000 in available moneys to defease and, to the extent applicable, redeem the outstanding City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996; authorizing the defeasance and, to the extent applicable, redemption of such bonds; delegating to the City Manager the determination of certain details and matters concerning said defeasance and redemption; authorizing the execution and delivery of an escrow deposit agreement and appointing an escrow agent; authorizing officers and employees of the City to take all necessary actions; and providing for an effective date. Ke Intended outcome 5u orted: Improve community rating of cultural activities. Im rove availabilit and accessibilit of ma~or events. Supporting Data (Surveys, Environmental Scan, etc.): 59% of residents say City does the right amount for Museum & Theaters; 62% of residents attend Jackie Gleason Theater once a month or less. Both residents and businesses mentioned live music/concerts as the main t e of cultural activit the would most like to see more of in the Cit . Issue: Shall the Mayor and City Commission approve the Resolution? Item Summa /Recommendation: The Administration recommends that the Mayor and City Commissioners authorize the application of not exceeding $3,500,000 in available moneys to defeased and, to the extent applicable, redeem the outstanding City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996; authorizing the defeasance and, to the extent applicable, redemption of such bonds. In order for the Management Agreement (for the Jackie Gleason Theater) with Live Nation Worldwide, Inc., not to negatively impact the exclusion from gross income of interest on the Resort Tax Bonds for federal income tax purposes, the Code (as defined in the Bond Resolution) requires that the Outstanding Bonds be defeased and, to the extent applicable, redeemed from a source not constituting proceeds of bonds the interest on which is excluded from gross income for federal income tax purposes (other than any proceeds on deposit in the Debt Service Reserve Account created under the Bond Resolution (the "Debt Service Reserve Account")). Advisory Board Recommendation: Financial Information: Source of Amount Account Funds• 1 $3,500,000 Fund 160 -Resort Tax 2% Fund Balance 2 3 O P Total Financial Impact Summary: City Clerk's Office Legislative Tracking: Patricia Walker, Chief Financial Officer Sign-Offs: Department Director Assistan 'ty Manager City Manager JAR PDW JMG ~ U U 1 ~ ~~ ~J AGENDA ITEM ~ ~~ J ( l DATE ~ ~ l1 ~U 7 m MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM To: Mayor David Dermer and Members of the City Commission FROM: Jorge M. Gonzalez, City Manager DATE: July 11, 2007 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA AUTHORIZING THE APPLICATION OF NOT EXCEEDING $3,500,000 IN AVAILABLE MONEYS TO DEFEASE AND, TO THE EXTENT APPLICABLE, REDEEM THE OUTSTANDING CITY OF MIAMI BEACH, FLORIDA RESORT TAX REVENUE REFUNDING BONDS, SERIES 1996; AUTHORIZING THE DEFEASANCE AND, TO THE EXTENT APPLICABLE, REDEMPTION OF SUCH BONDS; DELEGATING TO THE CITY MANAGER THE DETERMINATION OF CERTAIN DETAILS AND MATTERS CONCERNING SAID DEFEASANCE AND REDEMPTION; AUTHORIZING THE EXECUTION AND DELIVERY OF AN ESCROW DEPOSIT AGREEMENT AND APPOINTING AN ESCROW AGENT; AUTHORIZING OFFICERS AND EMPLOYEES OF THE CITY TO TAKE ALL NECESSARY ACTIONS; AND PROVIDING FOR AN EFFECTIVE DATE. ADMINISTRATION RECOMMENDATION Adopt the Resolution. KEY INTENDED OUTCOME SUPPORTED • Improve community rating of cultural activities • Improve availability and accessibility of major events Background On September 22, 1988, the City Commission adopted Resolution No. 88-19369, approving the issuance of $4,395,000 principal amount of City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1988 which financed in part projects within the Jackie Gleason Theater of the Performing Arts. On April 17, 1996 the City Commission adopted Resolution No. 96-21957 approving the issuance of $4,095,000 principal amount of City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996, dated as of May 1, 1996, (the "Resort Tax Bonds"),$3,060,000 of which Resort Tax Bonds are currently outstanding .The Resort Tax Bonds were issued as bonds the interest on which is excluded from gross income for federal income tax purposes. The City has entered into a Management Agreement (the "Management Agreement") with Live Nation Worldwide, Inc. ("Live Nation"), for the management by Live Nation of the City- owned Jackie Gleason Theater of the Performing Arts, which facility was refinanced with the proceeds of the Resort Tax Bonds. In order for the Management Agreement not to negatively impact the exclusion from gross income of interest on the Resort Tax Bonds for federal income tax purposes, the Code (as defined in the Bond Resolution) requires that the Outstanding Bonds be defeased and, to the extent applicable, redeemed from a source not constituting proceeds of bonds the interest on which is excluded from gross income for federal income tax purposes (other than any proceeds on deposit in the Debt Service Reserve Account created under the Bond Resolution (the "Debt Service Reserve Account")). The City has determined to apply not to exceed $3,500,000 in legally available moneys not constituting proceeds of bonds the interest on which is excluded from gross income for federal income tax purposes (other than any proceeds on deposit in the Debt Service Reserve Account) (the "Available Moneys") to defease and, to the extent applicable, redeem the Outstanding Bonds in accordance with the provisions of the Bond Resolution, including the payment of all costs in connection with such defeasance and redemption. The attached Resolution delegates to the City Manager, who shall rely upon the recommendations of the Chief Financial Officer/Finance Director (as defined in the Bond Resolution) and RBC Capital Markets, the City's financial advisor (the "Financial Advisor"), the determination of the Available Moneys to be applied to defease and, to the extent applicable, redeem the Outstanding Bonds and other actions in connection with such defeasance and redemption, all as provided and subject to the limitations contained in the Bond Resolution. The attached Resolution also appoints the U.S. Bank National Association, as escrow agent with respect to the Outstanding Bonds (the "Escrow Agent") and authorizes the City Manager and the City Clerk to execute and deliver an Escrow Deposit Agreement to provide for the defeasance and, to the extent applicable, redemption of the Outstanding Bonds (the "Escrow Deposit Agreement"), in substantially the form presented, subject to such changes, modifications, insertions and omissions and such filling-in of blanks therein as may be determined and approved by the City Manager, after consultation with the Chief Financial Officer/ Finance Director and the City Attorney of the City. In connection with the defeasance and redemption of the Outstanding Bonds, the attached Resolution also establishes under the provisions of the Escrow Deposit Agreement the "City of Miami Beach, Florida. Resort Tax Revenue Refunding Bonds, Series 1996 Escrow Deposit Trust Fund" to be held by the Escrow Agent. The Resolution authorizes and approves the purchase of Defeasance Obligations from the Available Moneys in order to provide for the defeasance and, to the extent applicable, redemption of the Outstanding Bonds. Additionally, the Resolution authorizes and directs the officers, agents and employees of the City and the Escrow Agent, as applicable, to do all acts and things required of them for the defeasance and, to the extent applicable, redemption of the Outstanding Bonds under the applicable provisions of the Bond Resolution, the Escrow Deposit Agreement, the Code and this resolution, including the giving or filing of all required notices and forms. JMG:pdw SSD DRAFT #2 06/28/07 CITY OF MIAMI BEACH, FLORIDA and U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent ESCROW DEPOSIT AGREEMENT Relating to RESORT TAX REVENUE REFUNDING BONDS, SERIES 1996 DATED AS OF _, 2007 MIAMU4198205.2 ESCROW DEPOSIT AGREEMENT THIS ESCROW DEPOSIT AGREEMENT (the "Agreement") made and entered into as of _, 2007, by and between the CITY OF MIAMI BEACH, FLORIDA (the "Cit}~') and U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent (the "Escrow Agent"). WITNESSETH: WHEREAS, the City has heretofore issued its $4,095,000 principal amount of City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996, dated as of May 1, 1996 (the "Resort Tax Bonds"), presently outstanding in the principal amount of $3,060,000, as more particularly described in Schedule A attached hereto and made part hereof (such outstanding Resort Tax Bonds, the "Prior Bonds"), pursuant to the provisions of Resolution No. 88-19369, adopted by the City Commission of the City on September 22, 1998, and Resolution No. 96-21957, adopted by the Mayor and City Commission of the City on April 17, 1996 (collectively, the "Bond Resolution"); and WHEREAS, the City desires to apply certain legally available moneys not constituting proceeds of bonds the interest on which is excluded from gross income for federal income tax purposes (other than proceeds on deposit in the Debt Service Reserve Account created under the Bond Resolution (the "Debt Service Reserve Account")) (the "Available Moneys") to defease and, to the extent applicable, redeem the Prior Bonds; and WHEREAS, the City will deposit said Available Moneys with the Escrow Agent to provide, with investment earnings thereon, sufficient moneys for the defeasance and, to the extent applicable, redemption of the Prior Bonds; and WHEREAS, the Available Moneys will be applied to the purchase of Government Obligations (as such term is hereinafter defined), which will mature and produce investment income and earnings at such time and in such amount, as will be sufficient to pay when due or upon the redemption thereof, the principal of, redemption premium and interest on the Prior Bonds as more specifically set forth herein; and WHEREAS, in order to provide for the proper and timely application of the Available Moneys deposited hereunder, the maturing principal amount of the Government Obligations purchased therewith, and investment income and earnings derived therefrom to the payment of the Prior Bonds, it is necessary for the City to enter into this Agreement with the Escrow Agent; NOW, THEREFORE, the City and the Escrow Agent, in consideration of the foregoing and the mutual covenants herein set forth and in order to secure the payment of the principal of, redemption premium and interest on all of the Prior Bonds according to their tenor and effect, do hereby agree as follows: MIAMU4198205.2 ARTICLE I CREATION AND CONVEYANCE OF TRUST ESTATE Section 1.01. Creation and Conveyance of Trust Estate. The City hereby grants, warrants, remises, releases, conveys, assigns, transfers, aliens, pledges, sets over and confirms unto the Escrow Agent and to its successors in the trust hereby created, and to it and its assigns forever, all and singular the property hereinafter described, to wit: DIVISION I All right, title and interest in and to (i) $ in Available Moneys derived from the Interest Account created under the Bond Resolution, (ii) $ derived from the Principal Account created under the Bond Resolution, Available Moneys derived from the Debt Service Reserve Account, and other Available Moneys. DIVISION II All right, title and interest in and to the Government Obligations described in Schedule B attached hereto and made a part hereof, together with the income and earnings thereon. DIVISION III Any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the City, or by anyone on behalf of the City to the Escrow Agent for the benefit of the Prior Bonds. DIVISION IV All property which is by the express provisions of this Agreement required to be subject to the pledge hereof and any additional property that may, from time to time hereafter, by delivery or by writing of any kind, by the City, or by anyone in its behalf, be subject to the pledge hereof. TO HAVE AND TO HOLD, all and singular, the Trust Estate (as such term is hereinafter defined), including all additional property which by the terms hereof has or may become subject to the encumbrances of this Agreement, unto the Escrow Agent, and its successors and assigns, forever in trust, however, for the sole benefit and security of the holders from time to time of the Prior Bonds, but if the principal of, redemption premium and interest on all of the Prior Bonds shall be fully and promptly paid when due, upon the maturity or redemption thereof, in accordance with the terms thereof, then this Agreement shall be and become void and of no further force and effect except as otherwise provided herein; otherwise the same shall remain in full force and effect, and upon the trusts and subject to the covenants and conditions hereinafter set forth. in Available Moneys (iii) $ in (iv) $ in MIAMU4198205.2 2 ARTICLE II DEFINITIONS Section 2.01. Definitions. In addition to words and terms elsewhere defined in this Agreement, the following words and terms as used in this Agreement shall have the following meanings, unless some other meaning is plainly intended. "Government Obligations" shall mean non-callable direct obligations of (including obligations issued or held in book entry form on the books ofj the Department of the Treasury of the United States of America. "Trust Estate", "trust estate" or "pledged property" shall mean the property, rights and interests described or referred to under Divisions I, II, III and IV in Article I above. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Words importing the singular number shall include the plural number and vice versa unless the context shall otherwise indicate. The word "person" shall include corporations, associations, natural persons and public bodies unless the context shall otherwise indicate. Reference to a person other than a natural person shall include its successors. ARTICLE III ESTABLISHMENT OF ESCROW DEPOSIT TRUST FUND; FLOW OF FUNDS Section 3.01. Creation of Escrow Deposit Trust Fund and Deposit of Money. There is hereby created and established with the Escrow Agent a special and irrevocable trust fund designated "City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996 Escrow Deposit Trust Fund" (the "Escrow Deposit Trust Fund"), to be held by the Escrow Agent for the sole benefit of the holders of the Prior Bonds and accounted for separate and apart from the other funds of the City and, to the extent required by law, of the Escrow Agent. Concurrently with the delivery of this Agreement, the City herewith causes to be deposited with the Escrow Agent and the Escrow Agent acknowledges receipt of Available Moneys for deposit in the Escrow Deposit Trust Fund in the amount of $ which, when invested in Government Obligations (other than $ to be held uninvested), will provide moneys sufficient to pay the principal of, redemption premium and interest on the Prior Bonds, upon the payment at maturity or redemption thereof, as more particularly described in Schedule C attached hereto and made a part hereof. Section 3.02. Payment of Prior Bonds. The Available Moneys received by the Escrow Agent will be sufficient to purchase $ par amount of Government Obligations, all as listed in Schedule B attached hereto and made a part hereof, which will mature in principal amounts and earn income at such times, all as described in Schedule B, so that sufficient moneys will be available to pay as the same are paid at maturity or redeemed all principal of, redemption premium MIAMU4198205.2 3 and interest on the Prior Bonds. Notwithstanding the foregoing, if the amounts deposited in the Escrow Deposit Trust Fund are insufficient to make said payments of principal, redemption premium and interest, the City shall cause to be deposited into the Escrow Deposit Trust Fund the amount of any deficiency immediately upon notice from the Escrow Agent. Section 3.03. Irrevocable Trust Created. The deposit of the Available Moneys and Government Obligations or other property hereunder in the Escrow Deposit Trust Fund shall constitute an irrevocable deposit of said Available Moneys and Government Obligations and other property hereunder for the sole benefit of the holders of the Prior Bonds, subject to the provisions of this Agreement. The holders of the Prior Bonds, subject to the provisions of this Agreement, shall have an express lien on all moneys and principal of and earnings on the Government Obligations and other property in the Escrow Deposit Trust Fund. The Available Moneys deposited in the Escrow Deposit Trust Fund and the matured principal of the Government Obligations and other property hereunder and the interest thereon shall be held in trust by the Escrow Agent, and shall be applied for the payment of Prior Bonds, as more specifically set forth in Schedule C hereto. Section 3.04. Purchase of Government Obli atg ions. The Escrow Agent is hereby directed immediately to purchase the Government Obligations listed on Schedule B from the Available Moneys as described in Sections 3.01 and 3.02 hereof. The Escrow Agent shall purchase the Government Obligations solely from the Available Moneys deposited in the Escrow Deposit Trust Fund as provided in Sections 3.01 and 3.02 hereof. The Escrow Agent shall apply the Available Moneys deposited in the Escrow Deposit Trust Fund and the Government Obligations purchased therewith, together with all income or earnings thereon, in accordance with the provisions hereof. The Escrow Agent shall have no power or duty to invest any moneys held hereunder or to make substitutions of the Government Obligations held hereunder or to sell, transfer or otherwise dispose of the Government Obligations held hereunder except as provided in this Agreement. The Escrow Agent is hereby directed not to invest $ of the Available Moneys deposited in the Escrow Deposit Trust Fund. The City covenants to take no action in the investment, reinvestment or security of the Escrow Deposit Trust Fund in violation of this Agreement and recognizes that any such action in contravention of this Agreement might cause the Prior Bonds to be classified as "arbitrage bonds" under the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the "Code"). Section 3.05. Substitution of Certain Government Obli ations. (a) If so directed in writing by the City on the date of delivery of this Agreement, the Escrow Agent shall accept in substitution for all or a portion of the Government Obligations listed in Schedule B, Government Obligations (the "Substituted Securities"), the principal of and interest on which, together with any Government Obligations listed in Schedule B for which no substitution is made and moneys held uninvested by the Escrow Agent, will be sufficient to pay all principal of, redemption premium and interest of the Prior Bonds as set forth in Schedule C hereof. The foregoing notwithstanding, the substitution of Substituted Securities for any of the Government Obligations listed in Schedule B may be effected only upon compliance with Section 3.05(b)(1) and (2) below. MIAMU4198205.2 4 (b) If so directed in writing by the City at any time during the term of this Agreement, the Escrow Agent shall sell, transfer, exchange or otherwise dispose of, or request the redemption of, all or a portion of the Government Obligations then held in the Escrow Deposit Trust Fund and shall substitute for such Government Obligations other Government Obligations, designated by the City, and acquired by the Escrow Agent with the proceeds derived from the sale, transfer, disposition or redemption of or by the exchange of such Government Obligations held in the Escrow Deposit Trust Fund, but only upon the receipt by the Escrow Agent of (1) an opinion of nationally recognized counsel in the field of law relating to municipal bonds stating that such substitution will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Prior Bonds and is not inconsistent with the statutes and regulations applicable to the Prior Bonds; and (2) verification by a firm of independent certified public accountants stating that the principal of and interest on the substituted Government Obligations, together with any Government Obligations and any uninvested moneys remaining in the Escrow Deposit Trust Fund will be sufficient, without reinvestment, to pay the remaining principal of, redemption premium and interest on the Prior Bonds as set forth in Schedule C hereof. Any moneys resulting from the sale, transfer, disposition or redemption of the Government Obligations held hereunder and the substitution therefor of other Government Obligations not required to be applied for the payment of such principal of, redemption premium and interest on the Prior Bonds (as shown in the verification report described in Section 3.05(b)(2) hereof delivered in connection with such substitution), shall be paid to the City free and clear of the lien of this Agreement. Upon any such substitution of Government Obligations pursuant to Section 3.05, Schedule B hereto shall be appropriately amended to reflect such substitution. The Escrow Agent shall be under no duty to inquire whether the Government Obligations as deposited in the Escrow Deposit Trust Fund are properly invested under the Code. The Escrow Agent may rely on all specific directions in this Agreement providing for the investment or reinvestment of the Escrow Deposit Trust Fund. Section 3.06. Transfers from Escrow Deposit Trust Fund. As the principal of the Government Obligations set forth in Schedule B shall mature and be paid, and the investment income and earnings thereon are paid, the Escrow Agent shall pay from such moneys to U.S. Bank National Association, in its capacity as Paying Agent with respect to the Prior Bonds (as Paying Agent and Registrar with respect to the Prior Bonds hereinafter referred to as the "Paying Agent"), no later than the payment dates for the Prior Bonds, as specified in Schedule C hereof, the amounts necessary to pay the principal of, redemption premium and interest on the Prior Bonds, as specified in Schedule C hereof. The City hereby irrevocably instructs the Paying Agent and the Escrow Agent to (i) pay the Prior Bonds maturing October 1, 2007 at maturity, and (ii) call the Prior Bonds maturing October 1, 2008 through and including October 1, 2016 for optional redemption on October 1, 2007 at a redemption price of 101% of the principal amount thereof in accordance with the Bond Resolution. The Prior Bonds maturing October 1, 2022 are not subject to optional redemption prior to maturity and will be redeemed and paid at maturity as scheduled from MIAMU4198205.2 5 Amortization Requirements (as defined in the Bond Resolution). The City, the Paying Agent and the Escrow Agent shall perform the responsibilities, described in the Bond Resolution, in connection with the redemption of such Prior Bonds, including the giving of notice of redemption as required therein, which the Paying Agent is hereby instructed to mail and publish. Section 3.07. Investment of Certain Moneys Remaining in Escrow Deposit Trust Fund. Subject to the provisions of Section 3.04, the Escrow Agent shall invest and reinvest, at the written direction of the City, in Government Obligations any moneys remaining from time to time in the Escrow Deposit Trust Fund until such time as they are needed. Such moneys shall be reinvested in such Government Obligations for such periods and at such interest rates, as the Escrow Agent shall be directed to invest by the City, which periods and interest rates shall be set forth in an opinion from nationally recognized counsel in the field of law relating to municipal bonds to the City and to the Escrow Agent, which opinion shall also be to the effect that such reinvestment of such moneys in such Government Obligations for such period and at such interest rates will not, under the statutes and regulations applicable to the Prior Bonds, cause the interest on the Prior Bonds to be included in gross income for federal income tax purposes and that such investment is not inconsistent with the statutes and regulations applicable to the Prior Bonds. Any interest income resulting from reinvestment of moneys pursuant to this Section 3.07 not required to be applied for the payment of the principal of, redemption premium, if any, and interest on the Prior Bonds shall be paid to the City free and clear of the lien of this Agreement. Section 3.08. Escrow Deposit Trust Fund Constitutes Trust Fund. The Escrow Deposit Trust Fund created and established pursuant to this Agreement shall be and constitute a trust fund for the purposes provided in this Agreement and shall be kept separate and distinct from all other funds of the City and, to the extent required by law, of the Escrow Agent and used only for the purposes and in the manner provided in this Agreement. Section 3.09. Transfer of Funds After All Payments Required by this Agreement are Made. After all of the transfers by the Escrow Agent to the payment of the principal of, redemption premium and interest on the Prior Bonds provided in Schedule C have been made, all remaining moneys and securities, together with any income and interest thereon, in the Escrow Deposit Trust Fund shall be paid to the City free and clear of the lien of this Agreement; provided, however, that no such transfers (except transfers made in accordance with Sections 3.05 and 3.07 hereof) shall be made until all of the principal of, premium and interest on the Prior Bonds have been paid. ARTICLE IV CONCERNING THE ESCROW AGENT Section 4.01. Liability of Escrow Agent. The Escrow Agent shall not be liable in connection with the performance of its duties hereunder except for its own negligence, misconduct or default. The Escrow Agent shall not be liable for any loss resulting from any investments made pursuant to the terms of this Agreement. The Escrow Agent shall not be liable for the accuracy of the calculations as to the sufficiency of moneys and of the principal amount of the Government Obligations and the earnings thereon to pay the Prior Bonds. So long as the Escrow Agent applies any moneys, Government Obligations and interest earnings therefrom to pay the Prior Bonds as MIAMU4198205.2 6 provided herein, and complies fully with the terms of this Agreement, the Escrow Agent shall not be liable for any deficiencies in the amounts necessary to pay the Prior Bonds caused by such calculations. The Escrow Agent shall have no lien, security interest or right of set-off whatsoever upon any of the moneys or investments in the Escrow Deposit Trust Fund for the payment of fees or expenses for the services rendered by the Escrow Agent under this Agreement. Section 4.02. Permitted Acts. The Escrow Agent and its affiliates may become the owner of all or may deal in the Prior Bonds as fully and with the same rights as if it were not the Escrow Agent. Section 4.03. Payment to Escrow Agent. The City shall pay to the Escrow Agent reasonable compensation for all services rendered by it hereunder and also its reasonable expenses, charges and other disbursements and those of its attorneys, agents and employees incurred in and about the administration and execution of the trusts hereby created, and the performance of its powers and duties hereunder, including, without limitation, all advances, counsel fees and other expenses reasonably made or incurred by the Escrow Agent in connection with such services, all as provided in Schedule D hereto. ARTICLE V MISCELLANEOUS Section 5.01. Amendments to this Agreement. This Agreement is made for the benefit of the holders from time to time of the Prior Bonds and shall not be repealed, revoked, altered or amended without the written consent of all such holders of the Prior Bonds, the Escrow Agent and the City; provided, however, that the City and the Escrow Agent may, without the consent of, or notice to, such holders, enter into such agreements supplemental to this Agreement which shall not adversely affect the rights of such holders and shall not be inconsistent with the terms and provisions of this Agreement for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in this Agreement; or (b) to grant to or confer upon the Escrow Agent for the benefit of the holders of the Prior Bonds any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Escrow Agent. The Escrow Agent shall be entitled to rely upon an unqualified opinion of a nationally recognized counsel in the field of law relating to municipal bonds with respect to compliance with this Section. Section 5.02. Severability. If any one or more of the covenants or agreements provided in this Agreement on the part of the City or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement MIAMU4198205.2 7 shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. Section 5.03. Agreement Binding. All the covenants, proposals and agreements in this Agreement contained by or on behalf of the City or by or on behalf of the Escrow Agent shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. Section 5.04. Notices to Escrow Agent and City. Any notice, demand, direction, request or other instrument authorized or required by this Agreement to be given to or filed with the Escrow Agent or the City, shall be deemed to have been sufficiently given or filed for all purposes of this Agreement if personally delivered and receipted for, or if sent by registered or certified United States mail, return receipt requested, addressed as follows: (a) As to the City - City of Miami Beach, Florida 1700 Convention Center Drive Miami Beach, Florida 33139 Attention: Finance Director (b) As to the Escrow Agent - U.S. Bank National Association 200 South Biscayne Boulevard Suite 1870 Miami, Florida 33131 Attention: Corporate Trust Group Any party hereto may, by notice sent to the other parties hereto, designate a different or additional address to which notices under this Agreement are to be sent. Section 5.05. Termination. This Agreement shall terminate when all transfers and payments required to be made by the Escrow Agent under the provisions hereof shall have been made. Section 5.06. Execution by Counterparts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. Section 5.07. Notice of Defeasance. The City hereby irrevocably instructs the Paying Agent to give to the Holders of the Prior Bonds and to Ambac Assurance Corporation, by first class mail, postage prepaid, as soon as practicable, and to file with each nationally recognized municipal securities information repository designated by the Securities and Exchange Commission, as soon as practicable, notice of the defeasance of the Prior Bonds, substantially in the form attached hereto as Schedule E. MIAMU4198205.2 Section 5.08. Governing Law. This Agreement shall be governed by the laws of the State of Florida. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its duly authorized officers and the City has caused its official seal to be hereunto affixed and attested as of the date first above written. (SEAL) Attest: By: City Clerk CITY OF MIAMI BEACH, FLORIDA By: City Manager U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent By: MIAMU4198205.2 9 SCHEDULE A Maturity Date 10/01/2007 10/01/2008 10/01 /2009 10/01/2010 10/01/2016 10/01/2022 PRIOR BONDS Principal Amount Interest Rate $ 125,000 5.200% 130,000 5.250 135,000 5.375 145,000 5.500 1,055,000 5.500 1,470,000 6.250 MIAMU4198205.2 SCHEDULE B INVESTMENT OF AVAILABLE MONEYS MIAMU4198205.2 SCHEDULE C SCHEDULE OF PAYMENTS ON PRIOR BONDS MIAMU4198205.2 SCHEDULE D ESCROW AGENT FEES AND EXPENSES (i) In consideration of the services to be rendered by the Escrow Agent under the Agreement, the City upon execution hereof agrees to pay the Escrow Agent aone-time fee of $ to be paid at closing for all services to be incurred as Escrow Agent in connection with such services, plus agrees to pay as incurred reimbursement at cost for ordinary out-of-pocket expenses. The term "ordinary out-of-pocket expenses" means expenses of holding, investing and disbursing the Escrow Deposit Trust Fund as provided herein and includes, but is not limited to publication costs, postage and legal fees as incurred. (ii) The City shall also reimburse the Escrow Agent for any extraordinary expenses incurred by it in connection herewith. The term "extraordinary expenses" includes (a) expenses arising out of the assertion of any third party to any interest in the Escrow Deposit Trust Fund or any challenge to the validity hereof, including reasonable attorneys' fees, (b) expenses relating to any substitution under Section 3.05 hereof or reinvestment under Section 3.07, and (c) expenses (other than ordinary expenses) not occasioned by the Escrow Agent's misconduct or negligence. (iii) The fees and expenses payable by the City under clause (i) or (ii) above shall not be paid from the Escrow Deposit Trust Fund, but shall be paid by the City from legally available funds of the City. MIAMU4198205.2 SCHEDULE E NOTICE OF DEFEASANCE City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996 Dated: May 1, 1996 Maturity Date October 1, 2007 October 1, 2008 October 1, 2009 October 1, 2010 October 1, 2016 October 1, 2022 Principal Amount Interest Rate CUSIP Numbers $ 125,000 5.200% 593238BD9 230,000 5.250 593238BE7 135,000 5.375 593238BF4 145,000 5.500 593238BG2 1,055,000 5.500 593238BH0 1,470,000 6.250 593238BJ6 NOTICE IS HEREBY GIVEN that monies have been deposited with U.S. Bank National Association, as Escrow Agent, for the payment of the principal, redemption premium and interest on the outstanding City of Miami Beach, Florida Resort Tax Revenue Refunding Bonds, Series 1996 noted above (the "Bonds"), and such monies, except to the extent maintained in cash, have been invested in direct obligations of the United States of America. The Escrow Agent and U.S. Bank National Association, as Paying Agent and Registrar with respect to the Bonds, have been irrevocably instructed to (i) pay the Bonds maturing October 1, 2007 at maturity and (ii) call the Bonds maturing October 1, 2008 through and including October 1, 2016 for optional redemption on October 1, 2007 at a redemption price of 101 % of the principal amount thereof. The Bonds maturing October 1, 2022 are not subject to optional redemption prior to maturity and will be redeemed and paid at maturity as scheduled from Amortization Requirements. The amount so deposited as aforesaid has been calculated to be adequate to pay, when due, the principal of, redemption premium and interest on the Bonds to and including their maturity or redemption dates described above. The Bonds are therefore deemed "to be paid" and not to be "Outstanding" within the meaning of the resolutions authorizing the Bonds. U.S. BANK NATIONAL ASSOCIATION, as Paying Agent Dated: _, 2007 * No representation is made as to the correctness of these CUSIP numbers either as printed on the Bonds or contained in this Notice. MIAMU4198205.2