$105,470,000 CITY OF JACKSONVILLE, FLORIDA BETTER JACKSONVILLE SALES TAX REVENUE BONDS, SERIES 2008

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1 NEW ISSUE FULL BOOK-ENTRY ONLY Ratings: See "RATINGS" herein. In the opinion of Co-Bond Counsel, assuming compliance with certain arbitrage rebate and other tax requirements referred to herein, under existing law, interest on the 2008 Bonds is excludable from gross income for federal income tax purposes and will not be treated as an item of tax preference in computing the alternative minimum tax. Interest on the 2008 Bonds will, however, be taken into account in computing an adjustment made in determining a corporate Bondholder s alternative minimum tax based on such a Bondholder s adjusted current earnings, and Holders of 2008 Bonds could be subject to the consequences of other provisions of the Internal Revenue Code of 1986, as amended, as further described herein. See "TAX MATTERS" herein. $105,470,000 CITY OF JACKSONVILLE, FLORIDA BETTER JACKSONVILLE SALES TAX REVENUE BONDS, SERIES 2008 Dated: Date of Delivery Due: As shown on inside cover The $105,470,000 City of Jacksonville, Florida Better Jacksonville Sales Tax Revenue Bonds, Series 2008 (the "2008 Bonds") are being issued by the City of Jacksonville, Florida (the "City") in the form of fully registered bonds in denominations of $5,000 or integral multiples thereof. Interest on the 2008 Bonds will be payable semiannually on April 1 and October 1 of each year, commencing April 1, 2009, to the Registered Owners of the 2008 Bonds shown on the registration books of the City held by Wells Fargo Bank, N.A., as Deputy Registrar and Paying Agent (the "Deputy Registrar and Paying Agent") on the fifteenth day (whether or not a business day) of the calendar month next preceding an interest payment date, by check or draft mailed to such Registered Owners by the Deputy Registrar and Paying Agent. The principal of the 2008 Bonds will be payable upon presentation and surrender of the 2008 Bonds at the principal corporate trust office of the Deputy Registrar and Paying Agent in Jacksonville, Florida. Upon initial issuance, the 2008 Bonds will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company ("DTC"), an automated depository for securities and clearinghouse for securities transactions. So long as DTC, or its nominee, is the registered owner of the 2008 Bonds, payment of the principal of and interest on the 2008 Bonds will be provided directly to DTC or its nominee, which is to remit such payments to the DTC Participants (as defined herein) which in turn are to remit such payments to Beneficial Owners (as defined herein) of the 2008 Bonds. See "BOOK-ENTRY ONLY SYSTEM" herein. The 2008 Bonds are redeemable prior to their stated maturities as described herein. The 2008 Bonds are being issued to provide funds which, together with other available funds of the City, will be used to provide moneys to: (a) fund, or to reimburse the City for expenses previously incurred in connection with, the acquisition and construction of certain capital projects forming a portion of The Better Jacksonville Plan, (b) deposit funds to the Subaccount in the Debt Service Reserve Account in the Sinking Fund, and (c) pay the costs of issuance of the 2008 Bonds. For additional information, see "THE PROJECTS" herein. The 2008 Bonds are special limited obligations of the City payable exclusively from the Pledged Funds, as herein described, on a parity with the City s outstanding Better Jacksonville Sales Tax Revenue Bonds, Series 2001, its outstanding Better Jacksonville Sales Tax Bonds, Series 2003 and its outstanding Better Jacksonville Sales Tax Bonds, Series See "SECURITY AND SOURCE OF PAYMENT FOR THE 2008 BONDS" herein. The 2008 Bonds shall not be or constitute a general indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation, but shall be payable solely from and secured by a lien upon and pledge of the Pledged Funds as described herein. The full faith and credit of the City is not pledged to the payment of the principal of, or interest on the 2008 Bonds. No owner of any of the 2008 Bonds shall ever have the right to require or compel the exercise of the ad valorem taxing power of the City for the payment thereof, and the 2008 Bonds shall not constitute a lien upon property owned or situated within the corporate territory of the City. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The 2008 Bonds are offered when, as and if issued and received by the Underwriters, subject to prior sale, withdrawal or modification of the offer without notice and subject to the unqualified approval of legality by Bryant Miller Olive P.A., Orlando, Florida, and Lawrence & Parker, P.A., Jacksonville, Florida, Co-Bond Counsel. Certain legal matters will be passed on for the City by its Office of General Counsel and by Greenberg Traurig, P.A., Orlando, Florida and Reginald Estell, Jr., P.A., Jacksonville, Florida, Co-Disclosure Counsel. Public Financial Management, Inc., Orlando, Florida served as financial advisor to the City in connection with the issuance of the 2008 Bonds. It is expected that the 2008 Bonds in definitive form will be available for delivery in New York, New York, on or about September 16, Dated: September 4, 2008 WACHOVIA BANK, NATIONAL ASSOCIATION

2 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS $77,180,000 Serial Bonds Date Principal Interest (October 1) Amount Rate Price Yield CUSIP No $2,665, % % GY ,985, GZ ,105, HA ,230, HB ,355, HC ,490, HD ,665, HE ,850, HF ,040, HG ,245, HH ,455, * HJ ,680, * HK ,915, * HL ,160, * HM ,415, * HN ,685, * HP ,970, * HQ ,270, * HR0 $13,480, % Term Bond due October 1, Priced at 99.00% - Yield 4.828% - CUSIP No HS8 $14,810, % Term Bond due October 1, Priced at % - Yield 5.020% - CUSIP No HT6 Neither the Issuer nor the City is responsible for the use of CUSIP numbers, nor is a representation made as to their correctness. The CUSIP numbers are included solely for the convenience of the reader of this Official Statement. * Priced to Call Date.

3 CITY OF JACKSONVILLE, FLORIDA 117 W. Duval Street Suite 300, City Hall Jacksonville, Florida (904) MAYOR John Peyton COUNCIL MEMBERS * Ronnie Fussell, President Richard Clark, Vice President William Bishop Kevin Hyde E. Denise Lee Michael Corrigan Glorious J. Johnson Don Redman Daniel J. Davis Mia Jones Art Shad Dr. Johnny Gaffney Warren A. Jones Clay Yarborough Arthur Graham Stephen Joost Jack Webb Ray Holt CHIEF ADMINISTRATIVE OFFICER Alan Mosley FINANCE DEPARTMENT Chief Financial Officer Treasurer G. Michael Miller Michael R. Givens GENERAL COUNSEL Richard A. Mullaney, Esq. Jacksonville, Florida CO-BOND COUNSEL Bryant Miller Olive P.A. Lawrence & Parker, P.A. Orlando, Florida Jacksonville, Florida CO-DISCLOSURE COUNSEL Greenberg Traurig, P.A. Reginald Estell, Jr., P.A. Orlando, Florida Jacksonville, Florida FINANCIAL ADVISOR Public Financial Management, Inc. Orlando, Florida * Following the invalidation of an election due to candidate ineligibility, the City Council currently only has 18 members. A new Council Member for the at-large Group 2 will be elected in the November 2008 general election.

4 This Official Statement does not constitute a contract between the City and any one or more owners of 2008 Bonds nor does it constitute an offer to sell or the solicitation of an offer to buy the 2008 Bonds in any jurisdiction to any person to whom it is unlawful to make such an offer in such jurisdiction. No dealer, salesman or any other person has been authorized by the City to give any information or to make any representations, other than those contained herein, in connection with the offering of the 2008 Bonds, and if given or made, such information or representations must not be relied upon as having been authorized by the City or any other person. The information set forth herein, including in the appendices, has been obtained from the City and other sources which are believed to be reliable. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create the implication that there has been no change in the matters described herein since the date hereof. In connection with the offering of the 2008 Bonds, the Underwriters may overallot or effect transactions which stabilize or maintain the market price of the 2008 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters may offer and sell the 2008 Bonds to certain dealers and others at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and such public offering prices may be changed from time to time by the Underwriters. THE 2008 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE BOND ORDINANCE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE 2008 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE 2008 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE 2008 BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the 2008 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements.

5 TABLE OF CONTENTS INTRODUCTION... 1 The 2008 Bonds... 1 Purpose of Issue... 2 Security for and Source of Repayment of the 2008 Bonds... 2 THE CITY OF JACKSONVILLE... 3 THE PROJECTS... 3 DESCRIPTION OF THE 2008 BONDS... 3 General... 3 Registration and Transfer... 4 Redemption... 4 Defeasance... 6 BOOK-ENTRY ONLY SYSTEM... 6 SECURITY AND SOURCE OF PAYMENT FOR THE 2008 BONDS... 9 Source of Payment... 9 No Pledge of Credit or Taxing Power... 9 Debt Service Reserve Subaccount Additional Bonds THE INFRASTRUCTURE SALES TAX Imposition and Collection...12 Distribution FLOW OF FUNDS Funds and Accounts Bond Funded Project Fund Cash-Funded Project Account Better Jacksonville Trust Fund Investments ESTIMATED SOURCES AND USES OF FUNDS COMBINED DEBT SERVICE SCHEDULE 2008 BONDS AND PARITY BONDS INFRASTRUCTURE SALES TAX REVENUES, DISTRIBUTIONS AND NET DEBT SERVICE COVERAGE INVESTMENT AND DEBT POLICIES FINANCIAL ADVISOR UNDERWRITING RATINGS LEGALITY TAX MATTERS General Tax Treatment of Bond Premium VALIDATION LITIGATION CONTINGENCY OF FEES ANNUAL FINANCIAL REPORTS Page (i)

6 CONTINUING DISCLOSURE SOURCES OF INFORMATION DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS AUTHORIZATION OF AND CERTIFICATION CONCERNING OFFICIAL STATEMENT EXECUTION APPENDIX A APPENDIX B APPENDIX C APPENDIX D GENERAL INFORMATION ON THE CITY OF JACKSONVILLE, FLORIDA EXTRACT OF MATERIAL PROVISIONS OF BOND ORDINANCE FORM OF BOND COUNSEL OPINION CONTINUING DISCLOSURE CERTIFICATE (ii)

7 $105,470,000 CITY OF JACKSONVILLE, FLORIDA BETTER JACKSONVILLE SALES TAX REVENUE BONDS, SERIES 2008 INTRODUCTION The purpose of this Official Statement of the City of Jacksonville, Florida (the "City"), including the cover page, inside cover page and Appendices, is to provide information with respect to the City's $105,470,000 Better Jacksonville Sales Tax Revenue Bonds, Series 2008 (the "2008 Bonds"). The 2008 Bonds are being issued pursuant to the provisions of Chapters 125 and 166, Florida Statutes, Section (2), Florida Statutes, the Charter of the City, Chapter 761 of the Ordinance Code of the City, other applicable provisions of law and Ordinance E of the City enacted on October 24, 2000, as amended and restated by Ordinance E of the City enacted on May 22, 2001 (the "Bond Ordinance"). Extracts of material provisions of the Bond Ordinance are appended hereto as Appendix B. All terms used in this Official Statement in capitalized form and not otherwise defined herein shall have the meanings ascribed to such terms in the Bond Ordinance. For a complete description of the terms and conditions of the 2008 Bonds, reference is made to the Bond Ordinance. The description of the 2008 Bonds and the documents authorizing and securing the same and the information from reports contained herein do not purport to be comprehensive or definitive. All references herein to such documents and reports are qualified in their entirety by reference to such documents. Copies of documents and reports not reproduced in this Official Statement and further information with regard to the City and the 2008 Bonds may be obtained from the City's Chief Financial Officer, Suite 300, 117 West Duval Street, Jacksonville, Florida 32202, telephone number (904) or from Public Financial Management, Inc., the City's Financial Advisor, 300 South Orange Avenue, Suite 1170, Orlando, Florida 32801, telephone number (407) The 2008 Bonds The 2008 Bonds are being issued in fully registered form in denominations of $5,000 and integral multiples thereof. Interest on the 2008 Bonds is payable semiannually on April 1 and October 1 in each year, commencing April 1, 2009, until maturity. The 2008 Bonds may be exchanged or transferred as provided in the Bond Ordinance and as described herein. The 2008 Bonds are redeemable prior to their stated maturities as described herein. See "DESCRIPTION OF THE 2008 BONDS - Redemption" herein for further details.

8 Purpose of Issue The City is issuing the 2008 Bonds in order to provide funds, which will be used to (a) fund, or to reimburse the City for expenses previously incurred in connection with, the acquisition and construction of capital projects constituting part of The Better Jacksonville Plan (see "THE PROJECTS" herein), (b) deposit funds to the Subaccount in the Debt Service Reserve Account in the Sinking Fund, and (c) pay the costs of issuance of the 2008 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. Security for and Source of Repayment of the 2008 Bonds The principal of and the interest on the 2008 Bonds will be payable from and will be secured by a first lien upon and pledge of the proceeds of (a) the revenues actually received by the City from the one-half of one percent (0.5%) discretionary sales surtax entitled The Better Jacksonville 1/2 Cent Sales Surtax levied by the City pursuant to Section (2), Florida Statutes and Ordinance E, enacted by the City Council on July 11, 2000 (the "Infrastructure Sales Tax"), (b) all moneys held in the funds and accounts created under the Bond Ordinance and investment income earned thereon, (c) Hedge Receipts, as that term is defined herein, and (d) for any series of Reserve Secured Bonds, the moneys held in the applicable subaccount in the Reserve Account (collectively, the "Pledged Funds"). See "SECURITY AND SOURCE OF PAYMENT FOR THE 2008 BONDS" herein. The 2008 Bonds and the Parity Bonds (as defined below) and any Bonds hereafter issued that are specifically designated to be secured by the same shall be secured by funds held in the Subaccount in the Debt Service Reserve Account. See "SECURITY AND SOURCE OF PAYMENT FOR THE 2008 BONDS - Debt Service Reserve Subaccount" herein. The 2008 Bonds will be issued on a parity as to lien on the Pledged Funds with the City's Better Jacksonville Sales Tax Revenue Bonds, Series 2001 outstanding in the principal amount of $194,120,000, the City's Better Jacksonville Sales Tax Revenue Bonds, Series 2003 outstanding in the principal amount of $190,680,000 and the City's Better Jacksonville Sales Tax Revenue Bonds, Series 2004 outstanding in the principal amount of $202,880,000 (collectively, the "Parity Bonds"), and any Additional Parity Obligations and Reimbursement Obligations hereafter issued or incurred. The 2008 Bonds shall not be or constitute a general indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation, but shall be payable solely from and secured by a lien upon and pledge of the Pledged Funds as described herein. The full faith and credit of the City is not pledged to the payment of the principal of or interest on the 2008 Bonds. No owner of any of the 2008 Bonds shall ever have the right to require or compel the exercise of the ad valorem taxing power of the City for payment thereof, and the 2008 Bonds shall not constitute a lien upon any property owned by or situated within the corporate territory of the City, except as provided in the Bond Ordinance. 2

9 THE CITY OF JACKSONVILLE On August 8, 1967, the electors of Duval County, Florida approved by referendum a charter of a consolidated government of the City of Jacksonville. Such consolidated government went into effect on October 1, 1968, and extends throughout Duval County, except that the Cities of Jacksonville Beach, Atlantic Beach and Neptune Beach and the Town of Baldwin (referred to as the Second, Third, Fourth and Fifth Urban Services Districts, respectively) remain as urban services districts and each retains its individual municipal charter. The City of Jacksonville, as so consolidated, is herein referred to as the "City." For additional information concerning the City, see "APPENDIX A GENERAL INFORMATION ON THE CITY OF JACKSONVILLE, FLORIDA" attached hereto. THE PROJECTS The Better Jacksonville Plan is a comprehensive undertaking by the City to provide road, transportation and infrastructure improvements, park and environmental improvements, economic development and public facilities that was approved by the City in July Improvements include road resurfacing, drainage, sidewalks, bike paths and landscaping, safety grade crossings and acquisition of rapid transit right of way; environmental land preservation and parks; environmental clean-up and septic tank remediation; economic development; improvements to the Jacksonville Zoo and Cecil Field; and construction of a new main library, library branch improvements, an arena, a baseball park and a county courthouse; among other improvements (collectively, the "Projects"). By a referendum held on September 5, 2000, the citizens of the City approved the imposition of the Infrastructure Sales Tax and the expenditure of up to $1,500,000,000 from the Infrastructure Sales Tax on the Projects encompassed within The Better Jacksonville Plan. The 2008 Bonds are the fourth in a series of Bond issues secured by the Pledged Funds anticipated to be issued by the City to fund portions of The Better Jacksonville Plan. The City contemplates issuing Additional Parity Obligations approximately every 12 to 18 months to fund The Better Jacksonville Plan to completion. General DESCRIPTION OF THE 2008 BONDS The 2008 Bonds shall be issued in such principal amounts as provided on the inside cover page hereof, will be dated the date of delivery thereof, and are issuable in fully registered form, in denominations of $5,000 and integral multiples thereof. The 2008 Bonds will bear interest at the rates per annum set forth on the inside cover page of this Official Statement, payable semiannually on April 1 and October 1 of each year (each an "Interest Payment Date"), commencing April 1, 2009, and mature on October 1 in the years and principal amounts set forth on the inside cover page of this Official Statement. Payment of interest on the 2008 Bonds shall be made by check or draft mailed to the person in whose name such 2008 Bond is registered at such person's address on the registration books maintained by Wells Fargo Bank, N.A., as Deputy Registrar and Paying Agent (the "Deputy Registrar and Paying Agent"), on behalf of the 3

10 City at the close of business on the fifteenth day of the month (whether or not a business day) next preceding each Interest Payment Date (the "Record Date"), irrespective of any transfer or exchange of such 2008 Bonds subsequent to the Record Date and prior to such Interest Payment Date, unless the City shall default in payment of interest due on such Interest Payment Date. In the event of any such default, such defaulted interest shall be payable to the person in whose name such 2008 Bond is registered at the close of business on a special record date which date shall be established by notice mailed on behalf of the City to the Registered Owners of the 2008 Bonds at the close of business on the fifth day preceding the date of mailing. Payment of the principal of and interest due at maturity on the 2008 Bonds shall be made as the same shall become due and payable upon the presentation and surrender of such 2008 Bonds to the Deputy Registrar and Paying Agent at its office in Jacksonville, Florida. If the date for payment of the principal of or interest on the 2008 Bonds shall be a day other than a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the nominal date of payment. The 2008 Bonds shall have all of the qualities and incidents of negotiable instruments under the Uniform Commercial Code and Investment Securities Law of the State of Florida. Each Registered Owner, in accepting any of the 2008 Bonds, shall be conclusively deemed to have agreed that the 2008 Bonds shall be and shall have all of the qualities and incidents of negotiable instruments. Registration and Transfer Payment of semiannual interest on the 2008 Bonds shall be made by check or draft mailed to the person in whose name the Bond is registered at the person's address as it appears on the registration books of the Deputy Registrar and Paying Agent at the close of business on the Record Date. See "DESCRIPTION OF THE 2008 BONDS - General" herein. For so long as a book-entry system is used for determining beneficial ownership of the 2008 Bonds, such interest shall be payable to DTC or its nominee. Disbursements of such payments to the DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners of the 2008 Bonds is the responsibility of the DTC Participants. The 2008 Bonds may be exchanged or transferred for a reasonable charge for every transfer or exchange sufficient to reimburse the City for any expenses incurred by it. Redemption Optional Redemption. The 2008 Bonds maturing before October 1, 2019 are not redeemable prior to their stated maturity dates. The 2008 Bonds maturing on October 1, 2019 and thereafter are subject to optional redemption prior to their stated maturity dates in whole or in part by the City, on any date on and after October 1, 2018, and if in part from such maturity or maturities (or interest rates within such maturities) as the City shall designate, and by lot within a maturity if less than an entire maturity is redeemed, at the redemption price of par, and without premium, together with accrued interest to the date of redemption. 4

11 Mandatory Redemption. The 2008 Bonds maturing on October 1, 2028 are subject to mandatory redemption in part prior to maturity by such a method as the Deputy Registrar and Paying Agent shall deem fair and appropriate at a redemption price equal to the principal amount to be redeemed thereof, plus accrued interest thereon to the date fixed for redemption, without premium, from Sinking Fund Installments in the amounts set forth below: Year (October 1) Sinking Fund Installment 2027 $6,585, * 6,895,000 *Maturity The 2008 Bonds maturing on October 1, 2030 are subject to mandatory redemption in part prior to maturity by such a method as the Deputy Registrar and Paying Agent shall deem fair and appropriate at a redemption price equal to the principal amount to be redeemed thereof, plus accrued interest thereon to the date fixed for redemption, without premium, from Sinking Fund Installments in the amounts set forth below: Year (October 1) Sinking Fund Installment 2029 $7,225, * 7,585,000 *Maturity Notice of Redemption. Notice of redemption shall, at least thirty (30) days and not more than forty-five (45) days prior to the redemption date, be (a) filed with the Deputy Registrar and Paying Agent; and (b) mailed, postage prepaid, to all Registered Owners of 2008 Bonds to be redeemed, at their addresses as they appear of record on the registration books of the Deputy Registrar and Paying Agent as of the date forty-five (45) days prior to the date fixed for redemption. Such notice shall include: (i) the CUSIP numbers of all 2008 Bonds being redeemed; (ii) the date of issue of the 2008 Bonds as originally issued; (iii) the rate of interest or approximate yield borne by each 2008 Bond being redeemed; (iv) the maturity date of each 2008 Bond being redeemed; (v) the publication date of the official notice of redemption; (vi) the name and address of the Deputy Registrar and Paying Agent; and (vii) any other descriptive information needed to identify accurately the 2008 Bonds being redeemed. Each notice of redemption shall be provided at least five (5) days prior to publication by registered or certified mail or overnight delivery service or telecopy to registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the 2008 Bonds including, without limitation, DTC, and to one or more national information services that disseminate notices of redemption of obligations such as the 2008 Bonds. Upon the payment of the redemption price of 2008 Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the 2008 Bonds being redeemed with the proceeds of such check or other transfer. Failure to so file 5

12 or mail any such notice of redemption shall not affect the validity of the proceedings for such redemption with respect to Registered Owners of 2008 Bonds to whom notice was duly mailed hereunder. Interest shall cease to accrue on any 2008 Bond duly called for redemption on the redemption date, if payment thereof has been duly provided as described in the Bond Ordinance. The privilege of transfer or exchange of any of the 2008 Bonds so called for redemption is suspended for a period commencing fifteen (15) days preceding the mailing of the notice of redemption and ending on the date fixed for redemption. Notice Regarding Available Funds for Redemption. Notice of any redemption of a 2008 Bond shall either (a) explicitly state that the proposed redemption is conditioned on there being on deposit in the applicable fund or account on the redemption date sufficient money to pay the full redemption price of the 2008 Bond to be redeemed, or (b) be sent only if sufficient money to pay the full redemption price of the 2008 Bonds to be redeemed is on deposit in the applicable fund or accounts. Defeasance If, at any time, the City shall have paid, or shall have made provision for payment of the principal of and interest due or to become due on all or any portion of the 2008 Bonds at the times and in the manner stipulated in the Bond Ordinance, the pledge of and lien on the Pledged Funds in favor of the Registered Owners of such 2008 Bonds shall no longer be in effect. For purposes of the preceding sentence, deposit of cash or Defeasance Securities (or other investments approved by the Insurer, if any) in irrevocable trust with a banking institution or trust company for the sole benefit of the Registered Owners of the 2008 Bonds, the principal and interest on which when received will be sufficient to make timely payments of the principal of and interest on all or a portion of the Outstanding 2008 Bonds, when due or upon redemption in accordance with irrevocable instructions of the City to effect such redemption, shall be considered "provision for payment" for such 2008 Bonds. For additional information on defeasance requirements see "APPENDIX B EXTRACT OF MATERIAL PROVISIONS OF BOND ORDINANCE" attached hereto. BOOK-ENTRY ONLY SYSTEM The information in this caption concerning The Depository Trust Company, New York, New York, ("DTC") and DTC's book-entry system has been obtained from DTC and the City makes any representation or warranty or takes any responsibility for the accuracy or completeness of such information. DTC will act as securities depository for the 2008 Bonds. The 2008 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for the single maturity of the 2008 Bonds, in the aggregate principal amount of the 2008 Bonds and will be deposited with DTC. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" 6

13 within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: "AAA." The DTC Rules applicable to its Participants are on file with the Securities Exchange Commission (the "SEC"). More information about DTC can be found at and Purchases of 2008 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2008 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2008 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2008 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2008 Bonds, except in the event that use of the book-entry system for the 2008 Bonds is discontinued. To facilitate subsequent transfers, all 2008 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the 2008 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2008 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2008 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or 7

14 regulatory requirements as may be in effect from time to time. Beneficial Owners of 2008 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2008 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of 2008 Bonds may wish to ascertain that the nominee holding the 2008 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Deputy Registrar and Paying Agent and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2008 Bonds within a series or maturity of a series are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such series or maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2008 Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the 2008 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the 2008 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Deputy Registrar and Paying Agent on the payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Deputy Registrar and Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest on the 2008 Bonds, as applicable, to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City and/or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its 2008 Bonds purchased or tendered, through its Participant, to the Deputy Registrar and Paying Agent, and shall effect delivery of such 2008 Bonds by causing the Direct Participant to transfer the Participant's interest in the 2008 Bonds, on DTC's records, to the Deputy Registrar and Paying Agent. The requirement for physical delivery of 2008 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the 2008 Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered 2008 Bonds to the Deputy Registrar and Paying Agent's DTC account. DTC may discontinue providing its services as securities depository with respect to the 2008 Bonds at any time by giving reasonable notice to the City or the Deputy Registrar and 8

15 Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, 2008 Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In such event, 2008 Bonds will be printed and delivered to DTC. The City does not have any responsibility or obligations to the DTC Participants, Indirect Participants or the Beneficial Owners with respect to (a) the accuracy of any records maintained by DTC or any DTC Participant or Indirect Participant; (b) the payment by DTC or any DTC Participant or Indirect Participant of any amount due to any Beneficial Owner in respect of the principal of and premium, if any, and interest on, or the Purchase Price with respect to, the 2008 Bonds; (c) the delivery or timeliness of delivery by DTC or any DTC Participant or Indirect Participant of any notice to any Beneficial Owner which is required or permitted under the terms of the Ordinance to be given to Bondholders; (d) the timely delivery or implementation of any optional or mandatory tender notices or payments to, among, or between the City, the Tender Agent, the Deputy Registrar and Paying Agent, DTC, the Participants or the Beneficial Owners; (e) the selection of the Beneficial Owners to receive payments in the event of any partial redemption of the 2008 Bonds; or (f) any consent given or other action taken by DTC, or its nominee, Cede & Co., as Bondholder. Source of Payment SECURITY AND SOURCE OF PAYMENT FOR THE 2008 BONDS The payment of Debt Service on the 2008 Bonds will be secured, equally and ratably with the Parity Bonds, and any other Bonds (including Additional Parity Obligations and Reimbursement Obligations) hereafter issued or incurred, by a first lien upon and pledge of the Pledged Funds. See, also, "THE INFRASTRUCTURE SALES TAX" herein. There are no Hedge Agreements currently outstanding with respect to the 2008 Bonds or the Parity Bonds. The 2008 Bonds shall be Reserve Secured Bonds and, together with the Parity Bonds and any Bonds hereafter issued that are specifically designated to be secured thereby, shall be secured by funds held in the Subaccount in the Debt Service Reserve Account. See "Debt Service Reserve Subaccount" below. No Pledge of Credit or Taxing Power The 2008 Bonds shall not be or constitute general obligations or indebtedness of the City as "bonds" within the meaning of any State constitutional, State statutory, City charter or City ordinance code provision or limitation but shall be special and limited obligations of the City payable solely from and secured by a lien upon and pledge of the Pledged Funds as provided in the Bond Ordinance. No Owner of any 2008 Bond shall ever have the right to require or compel the exercise of the ad valorem taxing power of the City or taxation in any form on any real or personal property of the City, to pay the 2008 Bonds or debt service thereon. 9

16 Debt Service Reserve Subaccount The City has created a subaccount (the "Subaccount") in the Debt Service Reserve Account in the Sinking Fund created in the Bond Ordinance. See "FLOW OF FUNDS" herein. An amount of $40,456,276.34, funded from proceeds of the Parity Bonds, was deposited in such Subaccount at the time of issuance of the Parity Bonds. Upon the issuance of the 2008 Bonds, the City shall deposit into the Subaccount a sum equal to $7,966,550, which will bring the amount on deposit therein to a sum equivalent to the "Reserve Requirement." "Reserve Requirement" is defined by the Bond Ordinance to mean, as of any date of calculation, an amount computed on a composite basis for all Parity Bonds equal to the least of (a) one hundred and twenty-five percent (125%) of the average annual Net Debt Service coming due on the Outstanding Reserve Secured Bonds of such series in the current and all future Bond Years, or (b) ten percent (10%) of the aggregate original principal amount of Outstanding Reserve Secured Bonds of such series, or (c) the maximum annual Net Debt Service coming due on the Outstanding Reserve Secured Bonds of such series in the then current or any future Bond Year. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. Moneys in the Subaccount in the Debt Service Reserve Account shall be used only for the purposes of the payment of principal of or interest on the Parity Bonds, the 2008 Bonds and any other Reserve Secured Bonds hereafter issued by the City and designated by the City at the time of issuance as being secured by amounts in the Subaccount (whether at maturity or by redemption) in the event there is a deficiency in the Debt Service Account for such purpose. If and when moneys on deposit in the Subaccount exceed the Reserve Requirement, such excess may be deposited to the Debt Service Account. Whenever the amount in the Subaccount, together with the other amounts in the Debt Service Account available for such purpose, are sufficient to fully pay all Outstanding Bonds secured by the Subaccount in accordance with their terms (including principal or applicable redemption price and interest thereon), the funds on deposit in the Subaccount may be transferred to the other accounts of the Debt Service Account for the payment of such Bonds. All deficiencies in the Subaccount resulting from a decrease in market value of the investments therein are to be restored within two years from the date of occurrence of such deficiency and all deficiencies therein resulting from a withdrawal therefrom are to be replenished as soon as possible. See "FLOW OF FUNDS - Better Jacksonville Trust Fund" herein. The City is permitted by the terms of the Bond Ordinance to substitute a bond insurance policy, letter of credit, line of credit or other credit or liquidity enhancement facility for funds held in the Subaccount in the Debt Service Reserve Account. The Bond Ordinance does not establish qualifications or limitations with respect to any such policy, letter of credit, line of credit or other enhancement facility or with respect to the issuer thereof. Additional Bonds In addition to the Parity Bonds and the 2008 Bonds, the Bond Ordinance provides for the issuance of Bonds (including Additional Parity Obligations and Reimbursement Obligations) for the payment of the cost of projects of the City constituting part of The Better Jacksonville Plan and the refunding of outstanding Bonds of the City. Prior to the authentication of such Bonds, certain conditions must be satisfied, including: 10

17 (a) except in the case of refunding Bonds, execution by an Authorized City Representative of a certificate stating that upon the issuance of such series of Bonds, the City will not be in default in the performance of any of the covenants, conditions, agreements or provisions contained in the Bond Ordinance; and (b) except in the case of any series of refunding Bonds which refund Bonds issued under the Bond Ordinance, subject to the Adjusted Debt Service Requirement on the refunding Bonds not being greater in any given Bond Year than the Adjusted Debt Service Requirement on the refunded Bonds, which refunded Bonds are defeased or paid on the date of issuance of the refunding Bonds, and except in the case of Reimbursement Obligations, receipt of a certificate of an Authorized City Representative who shall be a certified public accountant (i) stating that the books and records of the City relating to the collection and receipt of the Pledged Revenues have been examined by him; (ii) setting forth separately the amount of each component of the Pledged Revenues for any twelve (12) consecutive month period within the twenty-four (24) consecutive months immediately preceding the date of issuance of the Bonds of the series with respect to which such certificate is being given; (iii) calculating the Net Debt Service for each Bond Year on the Bonds of all series then Outstanding and the Bonds of the series with respect to which such certificate is given; and (iv) stating that the Pledged Revenues for such twelve (12) consecutive month period are at least equal to one hundred thirty-five percent (135%) of the maximum annual Net Debt Service on the Bonds of all series then Outstanding and the Bonds of the series with respect to which such certificate is given in the then current or any future Bond Year. Refunding Bonds may be issued at any time to refund all or any outstanding Bonds in order to obtain savings in the Aggregate Debt Service. One or more series of Reimbursement Obligations may be issued concurrently with the issuance of the Bonds of a series for which credit enhancement or liquidity support is being provided with respect to such Bonds (or a maturity or maturities or interest rate within a maturity thereof) by a third party. Such Reimbursement Obligations shall be issued for the purpose of evidencing the City's obligation to repay any advances or loans made to, or on behalf of, the City in connection with such credit enhancement or liquidity support; provided, however, that the stated maximum principal amount of any such series of Reimbursement Obligations shall not exceed the aggregate principal amount of the Bonds with respect to which such credit enhancement or liquidity support is being provided, and such number of days' interest thereon as the City shall determine prior to the issuance thereof, but not in excess of (i) in the case of a Bond Insurance Policy, all interest due with respect to a Bond Insurance Policy, or (ii) in the case of a Credit Facility, three hundred sixty-six (366) days' interest thereon, computed at the maximum interest rate applicable thereto, as provided in the applicable credit enhancement or liquidity support document. The City currently plans to issue Additional Parity Obligations in connection with its funding of The Better Jacksonville Plan. See "THE PROJECTS" herein. 11

18 Imposition and Collection THE INFRASTRUCTURE SALES TAX Pursuant to Chapter 212, Florida Statutes, as amended, the State of Florida (the "State") is currently authorized to levy and collect a tax on sales, use and other transactions, including a sales tax of six percent (6%) on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and dealer allowances as set forth therein. Section (2), Florida Statutes, authorizes counties to impose a discretionary sales surtax of an additional one-half percent (0.5%) or one percent (1%) pursuant to an ordinance enacted by a majority of the members of the local governing body and approved by referendum. The surtax applies to all transactions in the City that are subject to the State sales tax imposed on sales, use, rentals, admissions, and other transactions under Chapter 212, Florida Statutes. The surtax does not apply to the sales amount of tangible personal property greater than $5,000 or to long distance telephone service. Generally, the proceeds of the discretionary sales surtax may only be expended to finance, plan and construct "infrastructure" which is defined as any fixed capital expenditure or fixed capital outlay associated with the construction, reconstruction or improvement of public facilities that have a life expectancy of five or more years and any land acquisition, land improvement, design and engineering costs related thereto. Pursuant to Section (2)(e), Florida Statutes, local governments receiving discretionary sales surtax proceeds may pledge such proceeds for the purpose of servicing new bond indebtedness incurred pursuant to law. Section (2)(d)1., Florida Statutes, expressly states that neither the proceeds from the Infrastructure Sales Tax nor the interest accrued thereon shall be used for operational expenses of any infrastructure. Further restrictions prohibit local governments from using the Infrastructure Sales Tax to replace or supplant user fees or to reduce ad valorem taxes. On July 11, 2000, the City Council of the City, as the governing body of the consolidated government of the City of Jacksonville and Duval County, by a majority, enacted Ordinance E which provided for the levying and imposition, throughout the City, of an additional tax of 0.5% on all transactions occurring in the City in addition to the aforementioned 6% tax and the City's already existing local option transportation half-cent sales tax which is set at 0.5% (the "Transportation Sales Tax"). The proceeds of the Infrastructure Sales Tax are to be applied to pay costs of financing, planning, acquiring and constructing of various infrastructure improvements. See "THE PROJECTS" herein. On September 5, 2000, the levy of the Infrastructure Sales Tax was placed on the ballot and approved by a majority of the electors of the City who voted in the referendum. The Infrastructure Sales Tax is effective for a thirty-year period which commenced January 1, Effective October 1, 2001, the structure for the imposition of taxes on telecommunications and other communications services was completely changed by Chapter 202, Florida Statutes (the "CST Law"). The CST Law rescinded or modified various taxes imposed under certain telephone and other telecommunications and communications services (including the discretionary sales surtax on certain long distance services) and replaced the revenues from such taxes with revenues from a new state tax and a local option tax imposed on communication services (the "Communications Services Tax"). "Communications services" 12