State of Florida Division of Bond Finance. Notice

Transcription

1 State of Florida Division of Bond Finance Notice The following Official Statement is placed on the internet as a matter of convenience only and does not constitute an offer to sell or the solicitation of an offer to buy bonds. Although the information has been formatted in a manner which should exactly replicate the printed Official Statement, physical appearance may differ due to electronic communication difficulties or particular user equipment. In order to assure accuracy, users should obtain a copy of and refer to the printed Official Statement. The user of this Official Statement assumes the risk of any discrepancies between the printed Official Statement and the electronic version of this document. Copies of the printed Official Statement may be obtained from: Florida Division of Bond Finance 1801 Hermitage Boulevard Suite 200 Tallahassee, Florida bond@sbafla.com Phone: (850) Fax: (850)

2 NEW ISSUE - BOOK-ENTRY ONLY This Official Statement has been prepared by the Corporation to provide information about the Series 2010A Bonds. Selected information is presented on this cover page for the convenience of the reader. To make an informed decision, a prospective investor should read this Official Statement in its entirety. Unless otherwise indicated, capitalized terms have the meanings given in Appendix A. Dated: Date of Delivery $225,000,000 Florida Water Pollution Control Financing Corporation Water Pollution Control Revenue Bonds, Series 2010A Due: July 15, as shown on the inside front cover Ratings Bond Ratings Fitch Ratings AAA Moody s Investors Service Aaa Standard & Poor s Ratings Services AAA See MISCELLANEOUS - Ratings herein. Tax Status In the opinion of Bond Counsel, under existing law (i) assuming continued compliance with certain covenants and the accuracy of certain representations, interest on the Series 2010A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) the Series 2010A Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Redemption The Series 2010A Bonds are subject to optional and extraordinary mandatory redemption as provided herein. See REDEMPTION PROVISIONS herein for more complete information. Security for Bonds The Series 2010A Bonds are special limited obligations of the Corporation, payable solely from, and secured by a pledge of a portion of the Corporation s interest in the Pledged Loans, including payments of principal and interest thereon, and other moneys and investments held in certain Accounts established by the Indenture, including the Reserve Account, all as more specifically provided in the Indenture (the Trust Estate ). The Series 2010A Bonds do not constitute a debt or obligation of the State of Florida or any instrumentality or political subdivision thereof nor a pledge of the faith and credit or taxing power of the State of Florida or any instrumentality or political subdivision thereof. The Corporation has no taxing power. Lien Priority The Series 2010A Bonds will have a first lien on the Trust Estate on a parity with the Outstanding Bonds in the aggregate principal amount of $323,565,000 and any Additional Bonds hereafter issued. Purpose The Series 2010A Bonds are being issued for the purpose of financing the cost of water pollution control projects and activities described in the State Act. Additional Bonds Additional Bonds secured on a parity with the Series 2010A Bonds and the Outstanding Bonds may be issued upon delivery to the Trustee by the Corporation of a Coverage Certificate showing Projected Revenues equal to at least 115% of the amount necessary to pay principal and interest on the Bonds. The description of the requirement for the issuance of Additional Bonds is only a summary of the complete requirement. See SECURITY AND SOURCE OF PAYMENT FOR BONDS - Additional Bonds herein for more complete information. Interest Payment Dates January 15 and July 15 commencing on January 15, Regular Record Dates December 31 and June 30. Closing/Delivery It is anticipated that the Series 2010A Bonds will be available for delivery in New York, New York on August 19, Form/Denomination The Series 2010A Bonds will initially be registered in the name of Cede & Co., as nominee for the Depository Trust Company, New York, New York ( DTC ). Individual purchases will be made in book-entry form only through Direct Participants (defined herein) in denominations of $1,000 and integral multiples thereof. Purchasers of the Bonds will not receive physical delivery thereof. See DESCRIPTION OF THE SERIES 2010A BONDS Book-Entry Only Bonds. Trustee/Paying Agent U.S. Bank National Association Financial Advisor Public Financial Management, Inc., Memphis, Tennessee Bond Counsel Squire, Sanders & Dempsey L.L.P., Miami, Florida. Corporation Contact Florida Water Pollution Control Financing Corporation, (850) Maturity Structure The Series 2010A Bonds will mature on the dates and bear interest at the rates set forth on the inside front cover. July 27, 2010

3 MATURITY SCHEDULE Initial CUSIP Due (July 15) Principal Amount Interest Rate Price or Yield* First Optional Redemption Date and Price** DN $ 3,120, % 0.36% DP ,630, DQ ,575, DR ,205, DS ,490, DT ,635, DU ,500, DV ,110, DW ,440, DX ,690, DY ,650, July 15, 101% DZ ,230, July 15, EA ,365, July 15, EB ,375,000 July 15, EC ,575, July 15, ED ,995, July 15, EE ,355, July 15, EF ,900, July 15, EG ,195, July 15, EH ,965, July 15, 101 * Price and yield information provided by the underwriters. ** The Series 2010A Bonds are also subject to extraordinary mandatory redemption. See REDEMPTION PROVISIONS - Extraordinary Mandatory Redemption. Copyright 2010, American Bankers Association. CUSIP data herein is provided by Standard & Poor s, CUSIP Service Bureau, a division of McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services.

4 No dealer, broker, salesperson or other person has been authorized by the Corporation or the Department to give any information or make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Corporation or the Department. This Official Statement does not constitute an offer to sell or exchange nor a solicitation of an offer to buy or exchange any of the securities offered hereby by any person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. The information contained in this Official Statement has been obtained from the Corporation, the Department, the Borrowers and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness by, and it is not to be construed as a representation by, the Corporation or the Department. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of the Official Statement nor any sale or exchange made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Corporation, the Department, or the Borrowers since the date hereof. FLORIDA WATER POLLUTION CONTROL FINANCING CORPORATION BOARD OF DIRECTORS Chief Financial Officer Alex Sink Secretary of the Department of Environmental Protection Michael Sole Budget Director, Office of the Governor Jerry McDaniel Chief Executive Officer Ashbel C. Williams Financial Advisor Public Financial Management, Inc. Memphis, Tennessee Bond Counsel Squire, Sanders & Dempsey L.L.P. Miami, Florida

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6 TABLE OF CONTENTS PAGE INTRODUCTION... 1 AUTHORITY FOR THE ISSUANCE OF THE SERIES 2010A BONDS... 2 General Legal Authority... 2 Florida Water Pollution Control Financing Corporation... 2 Department of Environmental Protection... 2 Administrative Approval... 3 DESCRIPTION OF THE SERIES 2010A BONDS... 3 General... 3 Book-Entry Only Bonds... 3 REDEMPTION PROVISIONS... 4 Optional Redemption... 4 Extraordinary Mandatory Redemption... 4 Selection of Bonds for Redemption... 5 Notice of Redemption... 5 Purchase in Lieu of Redemption... 6 PURPOSE... 6 SOURCES AND USES OF FUNDS... 6 THE CLEAN WATER SRF... 6 The Bond Program... 6 The Trust Fund... 7 THE BORROWERS... 7 Eligible Borrowers... 8 Loan Agreements Generally... 8 Pledged Loan Borrowers... 9 Material Borrowers... 9 Future Borrowers... 9 SECURITY AND SOURCE OF PAYMENT FOR BONDS... 9 Special Obligations... 9 Parity Bonds Trust Estate Pledged Loans Excluded Assets Reserve Account Flow of Funds Additional Bonds HISTORICAL DEBT SERVICE COVERAGE PROJECTED CASH FLOWS ANNUAL DEBT SERVICE DEBT SERVICE SCHEDULE TAX MATTERS General Original Issue Premium MISCELLANEOUS Investment of Funds Ratings Underwriting Litigation Legal Matters Validation Financial Advisor Continuing Disclosure Authorization of Official Statement... 19

7 PAGE APPENDIX A - Definitions... A-1 APPENDIX B - Principal Documents Form of Master Indenture... B-I Form of Series 2008A Supplemental Indenture...B-II Form of Series 2010A Supplemental Indenture... B-III Form of Loan Agreement... B-IV Form of Service Contract... B-V APPENDIX C - Information Concerning Certain Borrowers Closed Loans... C-I Open Loans... C-II Potential Bond Program Borrowers... C-III Material Borrowers... C-IV APPENDIX D - Proposed Form of Opinion of Bond Counsel... D-1 APPENDIX E - Form of Continuing Disclosure Agreement... E-1 APPENDIX F - Provisions for Book-Entry Only System Registered Bonds... F-1

8 OFFICIAL STATEMENT $225,000,000 Florida Water Pollution Control Financing Corporation Water Pollution Control Revenue Bonds Series 2010A For definitions of certain capitalized terms used in the text hereof, see Appendix A. INTRODUCTION This Official Statement, including the cover page and the appendices hereto, provides certain information concerning the sale by the Florida Water Pollution Control Financing Corporation (the Corporation ), a nonprofit publicbenefit corporation in the State of Florida (the State ), of its $225,000,000 original principal amount Water Pollution Control Revenue Bonds, Series 2010A (the Series 2010A Bonds ). The Series 2010A Bonds are special limited obligations of the Corporation, payable solely from, and secured by a pledge of the Corporation s interest in the Pledged Loans, excluding Debt Management Fees, and other moneys and securities held in certain Accounts and Subaccounts established by the Indenture, all as more specifically provided in the Indenture (defined below) (the Trust Estate ). The Series 2010A Bonds do not constitute a debt or obligation of the State of Florida or any instrumentality or political subdivision thereof nor a pledge of the faith and credit or taxing power of the State of Florida or any instrumentality or political subdivision thereof. The Corporation has no taxing power. Under Title VI of the Federal Water Pollution Control Act of 1972, as amended (the Federal Act ), part of the federal water pollution control program is implemented by state water pollution control revolving loan fund programs. To implement the Federal Act, the State established a clean water state revolving fund loan program (the Clean Water SRF ) that is comprised of the Wastewater Treatment and Stormwater Management Revolving Loan Trust Fund (the Trust Fund ) administered by the State Department of Environmental Protection (the Department ) and the Bond Program (defined below). The Department is authorized by the State Act (defined below) to provide financial assistance through any program authorized under the provisions of the Federal Act. The State Act was amended during the 2000 legislative session to create the Corporation for the purpose of financing or refinancing the costs of wastewater treatment and stormwater management projects and activities upon the request of the Department. The Bonds are issued to provide moneys for a program of loans (the Bond Program Loans ) by the Corporation to eligible borrowers (the Bond Program Borrowers ) to finance or refinance projects and activities permitted under the Federal Act, including, but not limited to, wastewater treatment and stormwater management facilities (the Bond Program ). The revolving loan fund created from the proceeds of the Bonds and a previous assignment of certain Trust Fund loans by the Department to the Corporation constitute the Bond Program, and together with the Trust Fund, comprise the Clean Water SRF. The State Act was also amended during the 2010 legislative session to expand the purpose of the Corporation to include providing funding to assist public drinking water systems in achieving compliance with the State and Federal Safe Drinking Water Acts. This Official Statement speaks only as of its date, and the information contained herein is subject to change. This Official Statement contains descriptions of, and information regarding the Corporation, the Department, the Clean Water SRF, the application of the proceeds of the Series 2010A Bonds and the security and sources of payment for the Series 2010A Bonds. Certain information in this Official Statement involves projections and assumptions which are not represented as fact and such projections and assumptions may not prove to be accurate. Such descriptions and information do not purport to be comprehensive and the descriptions of documents contained herein are qualified in their entirety by reference to such documents and to laws and principles of equity relating to or affecting creditors rights. End of Introduction 1

9 General Legal Authority AUTHORITY FOR THE ISSUANCE OF THE SERIES 2010A BONDS The Series 2010A Bonds are authorized to be issued under Sections and , Florida Statutes, as amended (the State Act ). Florida Water Pollution Control Financing Corporation The Corporation was created as a nonprofit public-benefit corporation during the 2000 legislative session by an amendment to the State Act. The Corporation is authorized to issue bonds for the purpose of loaning money to eligible borrowers to finance or refinance the cost of water pollution control projects and activities upon the request of the Department as described in the State Act (the Bond Program ). The Corporation is also authorized to loan money to eligible borrowers for certain other activities set forth in the State Act. All other activities involved in implementing the Federal Act and the State Act are the responsibility of the Department. During the 2010 legislative session, the Florida Legislature adopted Chapter , Laws of Florida, which expanded the activities of the Corporation to include providing funding to assist public drinking water systems in achieving and maintaining compliance with the Florida Safe Drinking Water Act and the federal Safe Drinking Water Act, as amended, and to conserve and protect the quality of waters of the State (collectively, Drinking Water Projects ). However, Series 2010A Bond proceeds will not be used to fund Drinking Water Projects. The Corporation is governed by the Board of Directors, consisting of the State s Chief Financial Officer, the Governor s Budget Director, and the Secretary of the Department of Environmental Protection, or their respective designees. The State Act designates the Executive Director of the State Board of Administration (the SBA ) as the chief executive officer of the Corporation who administers and directs the activities of the Corporation. Administrative support services are provided for the Corporation by the SBA. The office of the Corporation is located at 1801 Hermitage Boulevard, Tallahassee, Florida. Its telephone number is (850) and its mailing address is Post Office Box 13300, Tallahassee, Florida Service Contract. The Corporation is authorized by the State Act to enter into service contracts with the Department which may provide for the transfer to the Corporation of loans made by the Department for use by the Corporation for various purposes, including, but not limited to, being pledged to pay debt service on the Bonds. The service contracts may also establish the operating relationship between the Department and the Corporation and, subject to annual appropriation by the State Legislature, may also provide for the transfer of funds in the Trust Fund to the Corporation. The Corporation and the Department executed a Service Contract dated as of June 1, 2001 (the Service Contract ), which established the respective duties and responsibilities of the parties with respect to the Bond Program. The Service Contract provides that the Corporation primarily issues bonds while the Department administers most other aspects of the Bond Program. The Service Contract requires the Corporation to issue bonds only upon the request of the Department. The Service Contract further requires the Department to take all actions necessary to enforce the Loan Agreements and other agreements and to assist the Corporation in its operations. For a copy of the Service Contract, see APPENDIX B, PRINCIPAL DOCUMENTS Form of Service Contract hereto. Department of Environmental Protection Section , Florida Statutes, established the Department. The head of the Department is the Secretary, who is appointed by the Governor with the concurrence of the Cabinet. The Cabinet consists of the Attorney General, the Commissioner of Agriculture, and the Chief Financial Officer. The Secretary of the Department is Michael Sole. Mr. Sole 2

10 has announced his resignation effective September 10, The Governor has appointed Mimi Drew as Interim Secretary of the Department effective September 10, Ms. Drew is currently the Department s Deputy Secretary of Regulatory Programs. The Department is authorized by the State Act to provide financial assistance for the implementation of water pollution control projects through any program authorized under the provisions of the Federal Act. The Secretary of the Department is charged with the responsibility for implementing the Federal Act in the State. The Division of Water Resource Management administers the Federal Act with approximately 27 full-time equivalent employees assigned to such purpose. The Department s telephone number for activities relating to the Federal Act and the State Act is (850) Administrative Approval The Series 2010A Bonds will be issued and secured pursuant to a Master Trust Indenture dated as of June 1, 2001, (the Master Indenture ), as amended by Article VI of that certain Series 2008A Supplemental Trust Indenture dated as of January 1, 2009 (the "Series 2008A Supplemental Indenture"), and as supplemented by a Series 2010A Supplemental Trust Indenture dated as of August 1, 2010 (the Series 2010A Supplemental Indenture and, collectively with the Master Indenture, as amended by Article VI of the Series 2008A Supplemental Indenture, and as further supplemented and amended from time to time, the Indenture ), each between the Corporation and U.S. Bank National Association (formerly known as U.S. Bank Trust National Association), as trustee (the Trustee ). The Series 2010A Bonds, together with the Outstanding Series 2001, Series 2003 and Series 2008A Bonds and any additional bonds issued under the Indenture (the Additional Bonds ), are collectively referred to herein as the Bonds. Each series of Additional Bonds will be issued under a subsequent supplemental indenture. General DESCRIPTION OF THE SERIES 2010A BONDS The Series 2010A Bonds are dated the date of their delivery and will mature as set forth on the inside front cover. Interest is payable on each January 15 and July 15 (each January 15 and July 15 being hereinafter referred to as an Interest Payment Date ), commencing January 15, All of the Series 2010A Bonds are issuable only as fully registered bonds and in denominations of $1,000 or any integral multiple thereof. Book-Entry Only Bonds The Series 2010A Bonds will initially be issued exclusively in book-entry form. Ownership of one bond for each maturity (as set forth on the inside front cover) of the Series 2010A Bonds, each in the aggregate principal amount of such maturity, will be initially registered in the name of Cede & Co. as registered owner and nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Series 2010A Bonds. Individual purchases of the Series 2010A Bonds will be made in book-entry form only, and the purchasers will not receive physical delivery of the Series 2010A Bonds or any certificate representing their beneficial ownership interest in the Series 2010A Bonds. See APPENDIX F - PROVISIONS FOR BOOK-ENTRY ONLY SYSTEM OR REGISTERED BONDS for a description of DTC, certain responsibilities of DTC, the Corporation and the Trustee, and the provisions for registration and registration for transfer of the Series 2010A Bonds if the book-entry only system of registration is discontinued. 3

11 REDEMPTION PROVISIONS Optional Redemption Except as provided herein (See "Extraordinary Mandatory Redemption - Extraordinary Mandatory Redemption" herein), the Series 2010A Bonds maturing in the years 2011 through 2020 are not redeemable prior to their stated dates of maturity. The Series 2010A Bonds maturing on or after July 15, 2021 shall be subject to redemption prior to maturity, at the option of the Corporation, (i) in part, by maturities to be selected by the Corporation on or after July 15, 2020, in whole or in part on any date, and if in part in such amounts and from such maturities as the Corporation may determine, at the principal amount of the Series 2010A Bonds so redeemed, together with interest accrued to the date of redemption, plus the following premium expressed as a percentage of the principal amount of the Series 2010A Bonds so redeemed, if redeemed in the following period: Redemption Period Premium July 15, 2020 through July 14, 2021 One Percent (1%) July 15, 2021 and thereafter Without Premium Extraordinary Mandatory Redemption 2006 Tax Act. In May 2006, Congress enacted and the President signed into law the Tax Increase Prevention and Reconciliation Act of 2005 (the 2006 Tax Act ). The 2006 Tax Act imposes certain requirements and conditions for the interest on bonds issued by state and local governments for pooled financing programs to be and remain excluded from gross income for federal income tax purposes. Among those requirements are provisions requiring the redemption of bonds if certain amounts of the bond proceeds are not used for loans within one-year and three-year periods following the issuance of the bonds. With respect to the one-year period, the 2006 Tax Act requires: (i) as of the date of issuance of an issue of bonds, the issuer must reasonably expect that within the one-year period commencing on the date of issuance, at least 30 percent of the net proceeds of the issue would have been used directly or indirectly to make or finance loans to ultimate borrowers; and (ii) to the extent that less than 30 percent of the net proceeds are actually used as described in clause (i), the issuer must use an amount of net proceeds equal to the excess of 30 percent of the net proceeds over the amount of proceeds actually used to make loans by the close of such one-year period to redeem bonds within 90 days after the end of such period. With respect to the three-year period, the 2006 Tax Act requires: (i) as of the date of issuance of an issue of bonds, the issuer must reasonably expect that within the three-year period beginning on the date of issuance, at least 95 percent of the net proceeds of the issue would be used directly or indirectly to make or finance loans to ultimate borrowers; and (ii) to the extent that less than 95 percent of the proceeds of the issue are actually used as described in clause (i), the issuer must use an amount of proceeds equal to the excess of 95 percent of the proceeds over the amount of proceeds actually used to make loans by the close of such three-year period to redeem outstanding bonds within 90 days after the end of such period. The Corporation and the Department will each certify on the date of issuance of the Series 2010A Bonds that it reasonably expects the Corporation to expend more than 30 percent and 95 percent of the proceeds available to fund Loans during the applicable one-year and three-year periods as required by the 2006 Tax Act. In addition, in order to enable the Corporation to comply with the potential application of the above-described provisions of the 2006 Tax Act, the Series 2010A Bonds will be subject to the Extraordinary Mandatory Redemption as described below. Extraordinary Mandatory Redemption. The Series 2010A Bonds maturing on or after the one-year and three-year anniversaries of the date of issuance of the Series 2010A Bonds, shall be subject to redemption and payment prior to maturity on October 15, 2011 and October 15, 2013, respectively, in whole or in part, in an amount necessary to maintain the exclusion from gross income for federal income tax purposes pursuant to the Code of the interest on the Series 2010A Bonds at the Redemption Prices set forth below (approximately 105% of the amortized issue price for each maturity of the Series 2010A 4

12 Bonds set forth on the inside cover page of this Official Statement), expressed as percentages of the principal amount of each maturity of the Series 2010A Bonds so redeemed, plus accrued interest thereon to the date of redemption: October 15,_2011 October 15, 2013 October 15, 2011 October 15, 2013 Maturity (July 15) Amortized Issue Price Redemption Price Amortized Issue Price Redemption Price Maturity (July 15) Amortized Issue Price Redemption Price Amortized Issue Price Redemption Price % % % % % % % % Selection of Bonds for Redemption If fewer than all of the Series 2010A Bonds shall be called for redemption, the particular maturities of the Series 2010A Bonds to be redeemed shall be selected by the Corporation in its discretion. If fewer than all of the Series 2010A Bonds of any one maturity shall be called for redemption, the particular Series 2010A Bonds or portions thereof to be redeemed from such maturity shall be selected by the Trustee at random in such manner as the Trustee in its discretion may deem fair and appropriate. Notwithstanding the foregoing, during such time as the Series 2010A Bonds are Book-Entry Bonds, the Securities Depository shall select the Series 2010A Bonds for redemption within the particular maturities according to the stated procedures of the Securities Depository. See DESCRIPTION OF THE SERIES 2010A BONDS - Book-Entry Only Bonds above. Notice of Redemption The Trustee shall give notice of the call for any redemption of Series 2010A Bonds, other than Series 2010A Bonds subject to extraordinary mandatory redemption, by first class mail, postage prepaid, not less than 30 nor more than 60 days before the redemption date to the Holders of any Series 2010A Bonds or portion of Series 2010A Bonds to be redeemed at their last address appearing on the registration books maintained by the Trustee. For Series 2010A Bonds subject to extraordinary mandatory redemption, the Trustee shall give notice of the call for redemption by first class mail, postage prepaid, not less than 15 nor more than 90 days before the redemption date to the Holders of such Series 2010A Bonds or portion of to be redeemed at their last address appearing on the registration books maintained by the Trustee. The Series 2010A Bonds so called for redemption will cease to bear interest on the specified redemption date and shall no longer be secured by the Indenture, provided that funds for such redemption are on deposit at the time with the Trustee. While the Series 2010A Bonds are in book-entry form, the notice of redemption shall be sent to DTC and not to the Beneficial Owner, as defined in Appendix F hereto, of the Series 2010A Bonds. In the case of a redemption of Series 2010A Bonds at the option of the Corporation, a notice of redemption may state (i) that it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the redemption date, or (ii) that the Corporation retains the right to rescind the redemption notice on or prior to the scheduled redemption date (in either case, a Conditional Redemption ), and such notice and redemption will be of no effect if such moneys are not so deposited or if the notice is rescinded. Any Conditional Redemption may be rescinded in whole or in part at any time prior to the fifth Business Day preceding the redemption date if the Corporation delivers a written direction to the Trustee to rescind the redemption notice. The Trustee shall give prompt notice of such rescission to the affected Bondholders. Any Series 2010A Bonds subject to Conditional Redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default. The failure of the Corporation to make funds available in part or in whole on or before the date that is five Business Days prior 5

13 to redemption date shall not constitute an Event of Default in the case of a Conditional Redemption, and the Trustee shall give immediate notice to the affected Bondholders that the redemption did not occur and that the Series 2010A Bonds called for redemption and not so paid remain Outstanding. Purchase in Lieu of Redemption The Corporation may purchase or direct the Trustee to purchase Series 2010A Bonds of any particular maturity in lieu of redemption of such Series 2010A Bonds. PURPOSE The Series 2010A Bonds are being issued by the Corporation to finance Bond Program Loans to eligible borrowers to pay all or a portion of the cost of water pollution control projects and activities under a federal program of financial aid to states which is administered by the Department. The proceeds of the Series 2010A Bonds are expected to be used, in addition to making Bond Program Loans, to fund the increase in a common reserve for the Series 2010A Bonds and the Outstanding Bonds resulting from the issuance of the Series 2010A Bonds, and to pay Underwriters compensation and other administrative, legal, financing and miscellaneous costs of issuing the Series 2010A Bonds. See SOURCES AND USES OF FUNDS and SECURITY AND SOURCE OF PAYMENT FOR BONDS herein. SOURCES AND USES OF FUNDS Sources of Funds Series 2010A Bonds Principal... $225,000,000 Net Bid Premium... 30,116,735 Total Sources... $255,116,735 Uses of Funds Deposit to Loan Account... $235,680,691 Deposit to Reserve Account... 18,764,477 Underwriter s Discount ,555 Costs of Issuance ,012 Total Uses... $255,116,735 THE CLEAN WATER SRF The Clean Water SRF is comprised of the Bond Program and the Trust Fund administered by the Department, each discussed below. The Bonds are secured only by the Trust Estate. The Trust Fund, the Capitalization Grants and the State match funds are not part of the Trust Estate or the Bond Program, and none of the Trust Fund, the Capitalization Grants and the State match funds are not pledged to the Bonds. Further, except for the Department Loans assigned to the Corporation, which thereby become Pledged Loans, none of the loans made from the Trust Fund is pledged to the Bonds. Although the Department is permitted to assign loans from the Trust Fund to the Corporation to be pledged as part of the Trust Estate, the Department is not required to do so and whether any such assignment will take place in the future cannot be determined at this time. The Bond Program The Corporation s program of issuing bonds, including the Series 2010A Bonds, for the purpose of loaning money to finance or refinance the cost of water pollution control projects and activities upon the request of the Department, is referred to herein as the Bond Program. Bonds issued by the Corporation in furtherance of the Bond Program are payable solely from and secured by a pledge of the Corporation s interest in the Pledged Loans (excluding Debt Management Fees), 6

14 and other moneys and securities held in certain Accounts and Subaccounts established by the Indenture, all as more specifically provided in the Indenture. See SECURITY AND SOURCE OF PAYMENT FOR BONDS herein. The Pledged Loans consist of the Department Loans that have been assigned to the Corporation by the Department and the Bond Program Loans that have been made by the Corporation. See SECURITY AND SOURCE OF PAYMENT FOR BONDS Pledged Loans herein. Moneys from the repayment of Pledged Loans, to the extent not applied to (i) fund debt service on Outstanding Bonds, (ii) replenish the Reserve Account, (iii) fund the Rebate Account, or (iv) in the discretion of the Department, fund any other lawful purpose, are used, in conjunction with amounts provided from the proceeds of Bonds to fund Bond Program Loans to Borrowers. See SECURITY AND SOURCE OF PAYMENT FOR BONDS and THE BORROWERS herein. The Department, as administrator of the Clean Water SRF, monitors the progress of projects and receives reports from Borrowers pursuant to the terms of the applicable Loan Agreements. Pursuant to the Loan Agreements, the Borrowers pay a one time Loan Service Fee of two percent (2%) of the amount borrowed. See APPENDIX B, PRINCIPAL DOCUMENTS - Form of Loan Agreement herein. The Loan Service Fee is considered a Debt Management Fee and is not pledged to the Bonds. The Trust Fund Prior to the creation of the Corporation and the Bond Program, the Clean Water SRF was comprised solely of the Trust Fund. The Trust Fund is capitalized from two sources: funds received from the Federal Government in the form of Capitalization Grants and moneys received from the State in the form of a matching contribution. The Capitalization Grants and State match funds received by the Department are deposited in the Trust Fund and are used to fund loans to eligible borrowers. Repayments of those loans are returned to the Trust Fund. Capitalization Grants are made pursuant to agreements (the Capitalization Grant Agreements ) between the State and the United States Environmental Protection Agency (the EPA ). As a condition to receiving a Capitalization Grant, the State, among other conditions, must provide additional funding in an amount equal to at least 20% of each Capitalization Grant. Historically, the State has provided such matching funding from legislative appropriations. For each Capitalization Grant Agreement, the Department prepares a Capitalization Grant application and an Intended Use Plan. The Intended Use Plan identifies projects to be provided financial assistance from the Clean Water SRF, the goals of the Clean Water SRF and the criteria and method established for the distribution of Clean Water SRF funds. The Capitalization Grant Agreement contains a schedule of payments based on the Intended Use Plan, with payments to be made by the EPA in quarterly installments. The State Act authorizes the Department to transfer revenues from the Trust Fund, subject to appropriation by the State legislature, and to assign loans from the Trust Fund to the Corporation to be pledged as security for the Bonds. The Department has previously assigned loans from the Trust Fund to the Corporation, which have been pledged to the Bonds (the Department Loans ). See SECURITY AND SOURCE OF PAYMENT FOR BONDS below. The Department retains the option of assigning additional loans from the Trust Fund to the Corporation at a future date, which loans would then become Pledged Loans. Until such time as moneys in the Trust Fund are appropriated by the State legislature to the Corporation or loans from the Trust Fund are assigned to the Corporation to be pledged as part of the Trust Estate, such moneys and loans are not pledged to the Bonds. The Trust Fund is not part of the Trust Estate and is not pledged to the Bonds. THE BORROWERS Loan applications from prospective borrowers are evaluated and prioritized by the Department on the basis of the expected effects of the proposed projects on the water quality and protection of public health. From this evaluation, the Department then compiles a priority list for making loans from the Clean Water SRF (the Priority List ). Prospective 7

15 Borrowers are selected from the Priority List and identified in the Intended Use Plan that is submitted to the EPA each year in connection with the Department s application for a Capitalization Grant. The Department decides whether to fund a particular loan from the Trust Fund or the Bond Program. Eligible Borrowers Local Governmental Agencies and other entities are eligible to be borrowers from the Clean Water SRF, including the Trust Fund and the Bond Program. Currently, each borrower with respect to Pledged Loans is a Local Governmental Agency. Only Local Government Agencies are eligible borrowers under the Bond Program and are referred to herein as Borrowers. A Local Governmental Agency is defined in section (2), Florida Statutes, as any municipality, county, district or authority or any agency thereof, having jurisdiction over collection, transmission, treatment or disposal of sewage, industrial wastes, stormwater or other wastes and includes a district or authority the principal responsibility of which is to provide airport, industrial or research park, or port facilities to the public. The State Act requires that a Borrower submit evidence of creditworthiness and the Department s rules require that Borrowers provide reasonable assurance that it has the financial capabilities to complete the Project and repay the Loan. However, the Department does not base the priority of a Local Governmental Agency s loan application on the Priority List on creditworthiness. The State Act and Department rules must be satisfied by each Borrower, but neither the Department nor the Corporation makes any representation concerning the creditworthiness of any particular Borrower or its ability to make payments as provided in its Loan Agreement. Loan Agreements Generally The terms of loans to Borrowers are set out in Loan Agreements. Each Loan Agreement is negotiated by the Department and the terms of the Loan Agreements will vary. For a form of Loan Agreement see APPENDIX B, PRINCIPAL DOCUMENTS Form of Loan Agreement hereto. The following is a general description of the Loan Agreement provisions. Loans are offered at below market interest rates, and most loans do not exceed terms of 20 years from the estimated date of project completion. Repayments are made either annually or semiannually following the period of project construction, in either case in level installments throughout the loan term. The Loan Agreements generally include provisions for Debt Management Fees and Grant Allocation Assessments which are payable to the Department or the Corporation to be used for program purposes. Debt Management Fees are not pledged to the Bonds. Loan Agreements identify the revenues pledged to repay the Pledged Loans: typically the net revenues from the Borrower s water and sewer system, subject to a prior lien of other water and sewer system debt. In some cases, the loan is secured by special assessments pledged by the Borrower. In addition, Borrowers covenant to budget, by amendment if necessary, loan repayments from other legally available funds of the Borrower. Borrowers may issue additional debt with a parity or senior lien on the revenues securing the Pledged Loans, provided the Department s written consent is obtained. Such consent will be granted if the Borrower demonstrates to the Department that the pledged revenues and any additional revenues pledged to the proposed debt, are projected to be not less than 115% of the annual debt service requirements on all debt to which the revenues are pledged, including the Pledged Loan, any other loans from the Trust Fund, and the proposed debt. Borrowers may issue debt without complying with the foregoing if the security and source of payment of such debt are subordinate to the Pledged Loan. Almost all loans in the Bond Program are subordinate to outstanding debt of the Borrower. Upon an event of default under a Pledged Loan, the Department may generally accelerate repayment of the Pledged Loan, increase the interest rate, or exercise any remedy available at law or in equity in order to cause the Borrower to comply with the provisions of the Pledged Loan and the Loan Agreement. 8

16 If a Borrower is delinquent on payments required under a Loan Agreement, the State Act requires the Department to certify the delinquency to the State s Chief Financial Officer. The Chief Financial Officer is required to forward to the Department the amount of the delinquent payments from funds due the Borrower under any available revenue-sharing or taxsharing fund established by the State. Any such payment to be transferred from the Department to the Corporation is subject to annual appropriation by the State Legislature. Pledged Loan Borrowers Pledged Loans include Department Loans, existing Bond Program Loans and new Bond Program Loans which may be made from proceeds of the Bonds and other funds on deposit in the Loan Account or the Revenue Account. Pursuant to the Indenture, under certain circumstances, the Corporation may remove Department Loans and Bond Program Loans from the category of Pledged Loans. See SECURITY AND SOURCE OF PAYMENT FOR BONDS - Excluded Assets herein. The current Borrowers with respect to Pledged Loans are listed in Appendix C. The Corporation expects to use the net proceeds of the Series 2010A Bonds to help satisfy the funding requirements for existing Bond Program Loans. The satisfactory completion of projects, determination of interest rates, modification of projects and other factors may cause the determination of which Bond Program Loans will receive funding from the Series 2010A Bonds to change. Accordingly, the terms of a Loan Agreement with respect to the Bond Program Loans and the identity of which Bond Program Borrowers will receive funding from the Series 2010A Bonds are subject to change and cannot be assured by the Corporation. Material Borrowers The Corporation and the Department have determined that financial and operating information of Borrowers will be provided only as to certain Borrowers which receive one or more Pledged Loans on which annual debt service is equal to or greater than 10% of the total annual debt service on all Pledged Loans in the applicable Fiscal Year (the Material Borrowers ). See APPENDIX C, INFORMATION CONCERNING CERTAIN BORROWERS Material Borrowers hereto for financial and operating information regarding the Material Borrowers as of the date of this Official Statement. Future Borrowers Future Borrowers are not limited to those listed in Appendix C. In addition, the Department has the option to (i) assign additional loans made by the Department to the Corporation at a future date which would then become Pledged Loans, or (ii), provided certain conditions set forth in the Indenture related to Excluded Assets are met, remove certain loans from the category of Pledged Loans. See SECURITY AND SOURCE OF PAYMENT FOR BONDS - Excluded Assets herein. Special Obligations SECURITY AND SOURCE OF PAYMENT FOR BONDS The Series 2010A Bonds are special limited obligations of the Corporation, payable solely from, and secured by a pledge of the Corporation s interest in the Pledged Loans, excluding Debt Management Fees, and other moneys and securities held in certain Accounts and Subaccounts established by the Indenture, all as more specifically provided in the Indenture. The Series 2010A Bonds do not constitute a debt or obligation of the State of Florida or any instrumentality or political subdivision thereof nor a pledge of the faith and credit or taxing power of the State of Florida or any instrumentality or political subdivision thereof. The Corporation has no taxing power. 9

17 Parity Bonds The Series 2010A Bonds will be secured equally and ratably by a first lien on the Trust Estate on a parity with the Series 2001, Series 2003, and Series 2008A Bonds Outstanding in the principal amount of $323,565,000 and any Additional Bonds hereafter issued. See PROJECTED CASH FLOWS herein. Trust Estate The Corporation has pledged the Trust Estate for the benefit of the Bondholders. The Trust Estate consists of the Corporation s interest in the Pledged Loans and all payments of principal and interest thereon and Grant Allocation Assessments and proceeds thereof (excluding Debt Management Fees), and moneys and investments held in the Loan Account, the Revenue Account, the Bond Account and the Reserve Account, including any Subaccounts therein. The Trust Estate does not include the Administration Account, the Costs of Issuance Account, and the Rebate Account. For a detailed description of the various Accounts, Subaccounts and revenues securing the Bonds, see APPENDIX B, PRINCIPAL DOCUMENTS Form of Master Indenture and - Form of Series 2008A Supplemental Indenture herein. Pledged Loans Pledged Loans consist of the Department Loans and the Bond Program Loans, other than any Department Loans and Bond Program Loans which become Excluded Assets. The obligations to make payments on Pledged Loans are generally subordinate to other obligations of the Borrowers that have a superior lien on the revenues the Borrowers have pledged to repay the Pledged Loans. Under certain circumstances, Borrowers may also issue additional debt with a parity or senior lien on the revenues pledged to their Pledged Loan. See THE BORROWERS Loan Agreements Generally above. The proceeds of the Bonds in the Loan Account under the Indenture will be used to make Bond Program Loans. The Corporation may identify Borrowers and the terms of the Bond Program Loans at the time a Series of Bonds is issued. However, all or some of the Bond Program Loans so identified may not actually be made, and the Corporation reserves the right to make Bond Program Loans in amounts other than initially identified and to Borrowers other than the expected Bond Program Borrowers initially identified. The current principal balance of the Pledged Loans pledged as security for the Bonds is approximately $958.4 million, including approximately $286.4 million of Department Loans and approximately $672.0 million of Bond Programs Loans. Until completion of the construction for the project being financed with a Bond Program Loan, the final amount of the Loan may vary from the initial amount. For a description of the Pledged Loans and the amounts of payments due thereon see APPENDIX C - INFORMATION CONCERNING CERTAIN BORROWERS. Projected cash flows from these loans are shown in PROJECTED CASH FLOWS herein. Excluded Assets The Corporation may cause specified Pledged Loans, Investment Obligations and moneys (the Assets ) to be released from the lien of the Indenture (the Excluded Assets ). To release Assets, the Corporation must file with the Trustee a Coverage Certificate which estimates that Projected Revenues will equal at least 115% of the amount necessary to pay the principal and interest due on the Outstanding Bonds on each Bond Payment Date, without taking into account amounts, if any, expected to be received from the proposed Excluded Assets. Reserve Account Upon the delivery of the Series 2010A Bonds, the Trustee will deposit in the Reserve Account, from proceeds of the Series 2010A Bonds, an amount equal to the increase in the Reserve Requirement resulting from the issuance of the Series 2010A Bonds. The Reserve Account secures all Outstanding Bonds equally and ratably and will be used to pay principal and interest on Bonds upon any deficiency in the Bond Account. 10

18 The Corporation may from time to time cause Reserve Account Guaranties to be delivered to the Trustee for deposit in the Reserve Account in order to provide for all or a portion of the Reserve Requirement; provided, however, that if a Rating is in effect on any Outstanding Bond at the time of delivery of any Reserve Account Guaranty, either (a) the provider of such Reserve Account Guaranty shall be rated in one of the two highest Rating Categories of a Rating Agency or (b) the Trustee shall receive evidence satisfactory to it that the acceptance of the Reserve Account Guaranty will not result in the reduction or withdrawal of such Rating on any Outstanding Bond. Presently, the Reserve Account contains no Reserve Account Guaranties. The Reserve Requirement is an amount equal to the least of (a) ten percent (10%) of the original principal amount of all Bonds Outstanding, (b) the largest amount of principal and interest scheduled to be due and payable with respect to all Bonds Outstanding in the then current or any succeeding Fiscal Year, (c) 125% of the average amount of principal and interest scheduled to be due and payable with respect to all Bonds Outstanding in the then current or any succeeding Fiscal Year, or (d) the maximum amount as may be permitted from time to time under the Code. See APPENDIX B, PRINCIPAL DOCUMENTS Form of Master Indenture hereto. Flow of Funds Principal and interest payments and Grant Allocation Assessments on Pledged Loans (excluding Debt Management Fees) flow into the General Subaccount of the Revenue Account, from which they are first available to deposit in the Bond Account to pay the principal, Redemption Price and interest due on the Bonds on each Bond Payment Date occurring on or prior to the next Interest Payment Date. Moneys in the General Subaccount in excess of the amount necessary to deposit in the Bond Account are used to replenish the Reserve Account. Moneys in the General Subaccount are also applied to fund the Rebate Account. Moneys on deposit in the General Subaccount in excess of the amount required to be deposited in the Bond Account, the Reserve Account and the Rebate Account, unless otherwise directed by the Department, are released by the Trustee to the Department or the Corporation, free and clear of the lien of the Indenture, for any lawful purpose. Such released excess moneys are generally used by the Department to fund additional Bond Program Loans; however, a portion of the excess moneys constituting Grant Allocation Assessments may be transferred to the Trust Fund for use therein. Prepayments of Pledged Loans are deposited in the Prepayment Subaccount of the Revenue Account to be deposited in the Bond Account if funds on deposit in the Bond Account and the Reserve Account are insufficient to pay debt service on the Bonds. If a Coverage Certificate indicates that Required Coverage will exist during each year that Bonds are scheduled to be Outstanding, Prepayments may be used, among other purposes, to make additional Bond Program Loans or the Trustee may release Prepayments to the Department or the Corporation, free and clear of the lien of the Indenture, to be used for any lawful purpose. For a more complete description of the flow of funds, see APPENDIX B, PRINCIPAL DOCUMENTS Form of Master Indenture and - Form of Series 2008A Supplemental Indenture hereto. Additional Bonds Additional Bonds may be issued under the Indenture if (a) a Coverage Certificate estimates that during each year any Bonds are scheduled to be Outstanding, Projected Revenues available for deposit in the Bond Account to pay the principal and interest on the Bonds will be at least 115% of the amount necessary to pay principal and interest due on Outstanding Bonds on each Bond Payment Date and (b) deposits (including any Reserve Account Guaranties) in the Reserve Account are not less than the Reserve Requirement for all Bonds. The requirement for a Coverage Certificate under the Indenture does not apply to certain Additional Bonds that are Refunding Bonds. Any Additional Bonds will be secured under the Indenture on a parity with all Bonds issued under the Indenture, including the Outstanding Bonds and the Series 2010A Bonds. See APPENDIX B, PRINCIPAL DOCUMENTS Form of Master Indenture and - Form of Series 2008A Supplemental Indenture hereto. 11