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

the Sheriff, the Clerk of the Circuit Court and the Supervisor of Elections must each submit to the Board a tentative budget request for their respective offices for the ensuing fiscal year. No later than 15 days after the Property Appraiser certifies the tax roll, the County Budget Officer prepares and presents to the Board a tentative budget for each Board fund. The Board receives and examines the tentative budget for each fund and, subject to the notice and hearing requirements, make such changes as it deems necessary provided that the budget remains in balance. A summary of the tentative budget is prepared by the Board, advertised, publicly reviewed and revised prior to final approval and adoption before the end of the fiscal year on September 30. Annual Audit Florida law requires that an annual audit of all County accounts and records be completed within one year following the end of each Fiscal Year, by an independent certified public accountant retained by the County and paid from its public funds. Description of Financial Practices The financial statements of the County are prepared in conformity with generally accepted accounting principles as applied to local government finances. The County uses funds and accounts groups to report on its financial position and the results of its operations. A more detailed description of the financial practices of the County is included in the Notes to the County's financial statements included herein as Appendix A. A copy of the County's Comprehensive Annual Financial Report for the fiscal year ended September 30, 2013 is available from the office of the Clerk of the Circuit Court. 30  The Government Finance Officers' Association has awarded the Certificate of Achievement for Excellence in Financial Reporting to the County for the fiscal year ending September 30, 2013 and the County expects to receive this award again for 2014. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to industry standards. Investment Policy Moneys on deposit in the funds and accounts created under the Resolution may be invested only in Authorized Investments (as defined in the Resolution). Additionally, investment of surplus funds of the County is subject to state law, including, in particular, Section 218.415, Florida Statutes, which requires the adoption of a formal written investment policy for each unit of local government within the state. In the absence of such a formal written investment policy, investment of surplus funds is limited to certain specified types of investments. The Board of County Commissioners has adopted a formal investment policy (the "Investment Policy") which governs the investment of surplus County funds. The County's Investment Policy applies to all funds held by or for the benefit of the Board and provides for monthly reporting and quarterly detailed analysis of the investment portfolio of the County. The Investment Policy specifies the types of investments permitted and specifically prohibits the investment in derivative financial products. The investment of bond proceeds may be further limited or expanded by the respective bond resolution or covenants. The Clerk of the Circuit Court, a separate, elected, constitutional officer of the County, has been designated by the Board of County Commissioners to serve as investment manager pursuant to Section 125.31, Florida Statutes. A copy of the Investment Policy may be obtained from the office of the Clerk of the Circuit Court. LEGAL MATTERS Legal Opinions Certain legal matters incident to the issuance of the Series 2014 Bonds and with regard to the treatment of the interest on the Series 2014 Bonds for federal tax purposes (see "TAX EXEMPTION") are subject to the legal opinions of Nabors, Giblin, & Nickerson, P.A., Bond Counsel. The signed legal opinions, dated and premised on law in effect as of the date of original delivery of the Series 2014 Bonds, will be delivered to the Underwriters at the time of original delivery of the Series 2014 Bonds. The proposed text of the legal opinions are set forth as Appendix D hereto. The actual legal opinions to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. The opinion will speak only as of its date and 31 subsequent distribution of such legal opinion by recirculation of the Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referenced in the opinion subsequent to its date. Certain legal matters incident to the issuance of the Series 2014 Bonds will be passed upon for the County by Nabors, Giblin & Nickerson, P.A., as the County Attorney. Litigation General. The Board, the Clerk, the Sheriff, the County Property Appraiser and the County Tax Collector are defendants from time to time in various lawsuits. The County Attorney represents the Board. The County Property Appraiser, the Clerk, the Sheriff, and the County Tax Collector each have separate counsel. It is the opinion of the County Attorney with respect to litigation pending against the Board that the Board either (1) has meritorious defenses against claims asserted in such litigation, (2) is immune from liability under principles of sovereign immunity, or (3) has adequate insurance coverage or reserves against liability with respect to such claims. There can be no assurance, however, that the Clerk and the Board will not incur liability for which adequate reserves do not exist, as a result of such litigation. In the event of such liability, the Board could be required, among other responses, to expend reserves, reduce the level of services, or borrow money in order to satisfy such liability. It is not expected that any such liability would affect the obligation of the Board to apply the proceeds of the Pledged Funds in accordance with the provisions of the Resolution. The Series 2014 Bonds. There is no pending or, to the knowledge of the County, threatened litigation against the County which in any way questions or affects (1) the Project, (2) the validity of the Series 2014 Bonds, or any proceedings or transactions relating to their sale, issuance, or delivery, (3) the pledge of the Pledged Funds to secure payment of the Series 2014 Bonds, or (4) the provisions for collection and application of the Pledged Funds in accordance with the provisions of the Resolution. While Bond Counsel has reviewed certain portions of this Official Statement, it has not been engaged by the County to confirm or verify, and expresses and will express no opinion as to, the accuracy, completeness or fairness of any statements in this Official Statement, or in any other reports, financial information, offering or disclosure documents or other information pertaining to the County, or the Series 2014 Bonds that may be prepared or made available by the County, the Underwriters or others to the holders of the Series 2014 Bonds or other parties. 32  TAX MATTERS RELATED TO THE SERIES 2014 BONDS Opinion of Bond Counsel In the opinion of the Bond Counsel (see Appendix D), the interest on the Series 2014 Bonds is excludable from gross income and is not a specific item of tax preference for federal income tax purposes under existing statutes, regulations, rulings and court decisions. However, interest on the Series 2014 Bonds will be includable in the computation of adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations by the Internal Revenue Code of 1986, as amended (the "Code"). Failure by the County to comply subsequent to the issuance of the Series 2014 Bonds with certain requirements of the Code regarding the use, expenditure and investment of bond proceeds and the timely payment of certain investment earnings to the Treasury of the United States may cause interest on the Series 2014 Bonds to become includable in gross income for federal income tax purposes retroactive to their date of issue. The County has covenanted in the Resolution to comply with all provisions of the Code necessary to, among other things, maintain the exclusion from gross income of interest on the Series 2014 Bonds for purposes of federal income taxation. In rendering its opinion, Bond Counsel has assumed continuing compliance with such covenants. Internal Revenue Code of 1986 The Code contains a number of provisions that apply to the Series 2014 Bonds, including, among other things, restrictions relating to the use of investment of the proceeds of the Series 2014 Bonds and the payment of certain arbitrage earnings in excess of the "yield" on the Series 2014 Bonds to the Treasury of the United States. Noncompliance with such provisions may result in interest on the Series 2014 Bonds being included in gross income for federal income tax purposes retroactive to their date of issue. Collateral Tax Consequences Except as described above, Bond Counsel will express no opinion regarding the federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of, the Series 2014 Bonds. Prospective purchasers of the Series 2014 Bonds should be aware that the ownership of the Series 2014 Bonds may result in other collateral federal tax consequences. For example, ownership of the Series 2014 Bonds may result in collateral tax consequences to various types of corporations relating to (1) denial of interest deduction to purchase or carry such Series 2014 Bonds, (2) the branch profits tax, and (3) the inclusion of interest on the Series 2014 Bonds in passive income for certain Subchapter S 33 corporations. In addition, the interest on the Series 2014 Bonds may be included in gross income by recipients of certain Social Security and Railroad Retirement benefits. PURCHASE, OWNERSHIP, SALE OR DISPOSTION OF THE SERIES 2014 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL OR CORPORATE BONDHOLDERS, INCLUDING, BUT NOT LIMITED TO, THE CONSEQUENCES DESCRIBED ABOVE. PROSPECTIVE BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD. Other Tax Matters INTEREST ON THE SERIES 2014 BONDS MAY BE SUBJECT TO STATE OR LOCAL INCOME TAXATION UNDER APPLICABLE STATE OR LOCAL LAWS IN OTHER JURISDICTIONS. PURCHASERS OF THE SERIES 2014 BONDS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE INCOME TAX STATUS OF INTEREST ON THE SERIES 2014 BONDS IN THEIR PARTICULAR STATE OR LOCAL JURISDICTIONS. During recent years legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Series 2014 Bonds. In some cases these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the market value of obligations similar to the Series 2014 Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the Series 2014 Bonds and their market value. No assurance can be given that additional legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the Series 2014 Bonds. For example, proposals have been discussed in connection with deficit spending reduction, job creation and other