Okaloosa County BOCC — November 4, 2014 — Preliminary Official Statement — reading text

occurred and be continuing under the Resolution Investment of Moneys The Construction Fund, the Revenue Fund and the Debt Service Fund shall be continuously secured in the manner by which the deposit of public funds are authorized to be secured by the laws of the State. Moneys on deposit in the Construction Fund, the Revenue Fund and the Debt Service Fund, other than the Reserve Account, may be invested and reinvested in Authorized Investments maturing not later than the date on which the moneys therein will be needed for the purposes of such fund or account. Moneys on deposit in the Reserve Account may be invested or reinvested in Authorized Investments which shall mature no later than five (5) years from the date of acquisition thereof. Notwithstanding any other provision hereof, all amounts on deposit in the Construction Fund or Payment Account representing accrued or capitalized interest shall be held by the County, shall be pledged solely to the payment of interest on the corresponding series of Bonds and shall be invested only in United States Obligations, as defined in the Resolution, maturing at such times and in such amounts as are necessary to pay the interest to which they are pledged. Any and all income received by the County from the investment of moneys in the Construction Fund, the Payment Account, the Revenue Fund and each subaccount of the Reserve Account (to the extent such income and the other amounts therein are less than the Reserve Account Requirement applicable thereto), shall be retained in such respective fund, account or subaccount. Any and all income received by the County from the investment of moneys in each subaccount of the Reserve Account (to the extent such income and the other amounts therein are greater than the Reserve Account Requirement applicable thereto) shall be deposited in the Payment Account. 20 All investments shall be valued at the lower of market value (exclusive of accrued interest) and cost. Nothing contained in the Resolution shall prevent any Authorized Investments acquired as investments of or security for funds held under the Resolution from being issued or held in book-entry form on the books of the Department of the Treasury of the United States. Investments (except investment agreements) in funds and accounts established under the Resolution shall be valued by the County as frequently as deemed necessary by any Insurer or Credit Bank, but not less often than semi-annually, and, in the case of the Reserve Account, upon any draw therefrom, nor more often than monthly, at the market value thereof, exclusive of accrued interest. The County shall terminate any repurchase agreement upon a failure of the counterparty thereto to maintain the requisite collateral percentage after the restoration period and, if not paid by the counterparty in federal funds against transfer of the repo securities, liquidate the collateral. The County shall give notice to any provider of an investment agreement in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid. The Paying Agent or the County shall, upon actual knowledge of the withdrawal or suspension of either of the ratings of an investment agreement provider or a drop in the ratings thereon below "A", so notify each Insurer and Credit Bank and, if so directed by such Insurer or Credit Bank, shall demand further collateralization of the agreement or liquidation thereof. PLEDGED FUNDS Sources of Payment General. The Series 2014 Bonds are payable solely from and secured by a pledge of and lien upon the proceeds of the local government half-cent sales tax allocated for and distributed monthly to the County pursuant to Chapter 218, Part VI, Florida Statutes (the "Sales Tax Revenues") and, (2) until applied in accordance with the provisions of the Resolution, all moneys, including investments thereof, in the funds and accounts established in the Resolution, other than the Rebate Fund (collectively, hereinafter called the "Pledged Funds"). THE SERIES 2014 BONDS, THE PREMIUM, IF ANY, AND THE INTEREST THEREON SHALL NOT BE OR CONSTITUTE GENERAL 21 OBLIGATIONS OR INDEBTEDNESS OF THE COUNTY (OR "BONDS" WITHIN THE MEANING OF THE CONSTITUTION OF THE STATE OF FLORIDA), BUT SHALL BE PAYABLE FROM AND SECURED SOLELY BY A LIEN UPON AND A PLEDGE OF THE PLEDGED FUNDS AS PROVIDED IN THE RESOLUTION. NO REGISTERED OWNER OR OWNERS OF ANY SERIES 2014 BONDS SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF THE AD VALOREM TAXING POWER OF THE COUNTY OR TAXATION IN ANY FORM ON ANY PROPERTY WITHIN OR WITHOUT THE COUNTY TO PAY THE SERIES 2014 BONDS, THE PREMIUM, IF ANY, OR THE INTEREST THEREON OR BE ENTITLED TO PAYMENT OF SUCH PRINCIPAL, PREMIUM, IF ANY, AND INTEREST FROM ANY OTHER FUNDS OF THE COUNTY EXCEPT FROM THE PLEDGED FUNDS IN THE MANNER PROVIDED IN THE RESOLUTION. THE SERIES 2014 BONDS, THE PREMIUM, IF ANY, AND THE INTEREST THEREON SHALL NOT HAVE OR BE A LIEN UPON ANY PROPERTY OF OR IN THE COUNTY, OTHER THAN THE PLEDGED FUNDS IN THE MANNER PROVIDED IN THE RESOLUTION. Local Government Half-Cent Sales Tax. The Local Government Half-Cent Sales Tax is remitted to the County pursuant to Chapter 218, Part VI, Florida Statutes, as amended (the "Half-Sales Tax Act"). The Florida Revenue Act of 1949, Chapter 212, Part I, Florida Statutes, as amended (the "Sales Tax Act") authorizes the levy and collection by the State of Florida of a sales tax upon, among other things, the sales price of each item or article of tangible personal property sold at retail in the State of Florida, subject to certain exceptions and dealer allowances as set forth in the Sales Tax Act. The sales tax in Florida is currently six percent. The sales tax is collected on behalf of the State of Florida by businesses at the time of sale at retail, use, consumption, or storage for use or consumption, of taxable property and remitted to the State on a monthly basis. The Sales Tax Act provides for penalties and fines, including criminal prosecution, for non-compliance with the provisions thereof. All funds received and collected by the State of Florida are required to be deposited in the General Revenue Fund of the State and then distributed to various funds as enumerated in the Sales Tax Act. After various enumerated distributions, a portion of the amount remitted by a sales tax dealer within a participating county is required to be transferred into the Local Government Half-Cent Sales Tax Clearing Trust Fund (the "Trust Fund") and earmarked for distribution to the governing body of that participating county and of each participating municipality within that county pursuant to formulas set forth in the Sales Tax Act. The sales tax does not include any sales tax revenues which may be distributed to the County from the Discretionary Sales Tax Clearing Trust Fund pursuant to Sections 212.054 and 212.055, Florida 22 Statutes or any discretionary communications service tax imposed by the County on communications services pursuant to Section 202.19, Florida Statutes. The Sales Tax collected within a county and distributed to local government units is distributed among the county and the municipalities therein in accordance with the following formula: County Share (percentage of total Half-Cent = unincorporated + 2/3 incorporated Sales Tax receipts) area population area population __________________________________ total county + 2/3 incorporated population area population Municipality Share (percentage of total Half-Cent = municipality population Sales Tax receipts) __________________________________ total county + 2/3 incorporated population area population For purposes of the foregoing formula, "population" is based upon the latest official State estimate of population certified prior to the beginning of the local government fiscal year. Should any unincorporated area of Okaloosa County become hereafter incorporated as a municipality, the share of the sales tax received by the County would be reduced. The sales tax is distributed from the Trust Fund on a monthly basis to participating units of local government. The Sales Tax Act permits the County to pledge its share of the sales tax for the payment of principal of and interest on any capital project. To be eligible to participate in the sales tax, the counties and municipalities must comply with certain requirements set forth in the Sales Tax Act. These requirements include those concerning the reporting and auditing of its finances, the levying of ad valorem taxes or receipt of other revenue sources, and certifying certain requirements pertaining to the employment and compensation of law enforcement officers, the employment of fire fighters, the auditing of certain dependent special districts, and the method of fixing millage rates for the levying of ad valorem taxes. Although the Sales Tax Act does not impose any limitation upon the number of years during which the County can receive distribution of the sales tax from the Trust Fund, there may be future amendments to the Sales Tax Act. To be eligible to 23 participate in the Trust Fund in future years, the County must comply with certain eligibility and reporting requirements of the Sales Tax Act, otherwise, the County will not be entitled to any Trust Fund distributions for twelve (12) months following a "determination of noncompliance" by the State Department or Revenue. The County has complied with all of the requirements set forth in the Sales Tax Act. Historical Sales Tax Revenues The following table sets forth the historical Sales Tax Revenues collected by the County for the fiscal years ended September 30, 2009 through 2013 (audited). Sales Tax Revenues(1) 2009 2010 2011 2012 2013 $11,219,873 $10,988,985 $11,949,441 $12,084,729 $12,637,573 (1) For the Fiscal Year ending September 30, 2014, the County's current projection for Sales Tax Revenues is $13,064,555, a 3.38% increase over 2013. Source: Okaloosa County Finance Department. Distribution of Sales Tax Revenues The County's percentage of the County-wide total distributions of the Sales Tax in each of the State Fiscal Years Ended June 30, 2009 through 2013, inclusive, has been 68%. The municipalities, including Cinco Bayou, Crestview, Destin, Fort Walton Beach, Laurel Hill, Mary Esther, Niceville, Shalimar and Valparaiso, in the aggregate have received 32% of the Countywide total, according to the Florida Legislature Committee on Intergovernmental Relations. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 24 Debt Service Coverage from Sales Tax Revenues The estimated Sales Tax Revenues coverage of maximum annual debt service on the Series 2009 Bonds and Series 2014 Bonds are set forth below: 2010 2011 2012 2013 2014 Sales Tax Revenues $10,988,985 $11,949,441 $12,084,729 $12,637,573 $13,064,555 Maximum Annual Debt Service on the Series 2009 Bonds and Series 2014 Bonds Sales Tax Revenues Coverage of Debt Service on the Series 2009 Bonds and Series 2014 Bonds