Fort Walton Beach Resolution — 07-26-Defeasing 2005 Bond/Fairgrounds — reading text

the mathematical accuracy of the computations in the schedules provided to us, we prepared Exhibits A through D attached hereto and made a part hereof. herein. These The scope of our engagement consisted of performing the procedures described procedures were performed in a manner that we deem to be appropriate. The accompanying exhibits of proposed transactions were prepared on the basis of assumptions herein. We did not underlying the computations and in accordance with the procedures described independently confirm the information used with outside parties. OUR UNDERSTANDING OF THE TRANSACTION The Council issued its Revenue Bonds, Series 2005D (herein referred to as the " 2005D Bonds") on herein referred to as the September 23, 2005 to fund loans to the City of Fort Walton Beach, Florida ( and to certain other City") municipalitiesto finance various governmental projects. The Defeased as the Bonds represent the entire outstanding principal of those 2005D Bonds ( herein referred to 2005D Fort Walton Beach Bonds") that are allocable to the financing of the loan made to the City. Florida Municipal Loan Council November 27, 2007 Page 2 The City intends to prepay its loan on November 27, 2007, the proceeds of which will be used to purchase US. Treasury Securities and to provide cash which will be placed into an escrow account to defease the Defeased Bonds. The Escrow Agent will pay the debt service requirements of the Defeased Bonds on each scheduled payment date through and including October 1, 2015, without optional redemption prior maturity. to ESCROW ACCOUNT TRANSACTIONS We verified the mathematical accuracy of the accompanying calculations of the escrow account transactions proposed to defease the Defeased Bonds. The presently outstanding debt service requirements of the Defeased Bonds will be satisfied by the purchase of US. Treasury Securities ( as described in Exhibit A-2) plus $ 1. 53 in cash. The securities and cash will be placed in an irrevocable escrow account and held therein until the debt service requirements of the Defeased Bonds are paid as previously described. We read a copy of the Official Statement for the 2005D Bonds insofar as such obligations are described with respect to interest rates, interest payment dates, and maturity dates. We read a copy of Exhibit D to the Loan dated as of September 1, 2005 by and between the Council and Agreement the City ( herein referred to as the " Loan Agreement") insofar as the principal amounts and maturity dates of the 2005D Fort Walton Beach Bonds are described. We assumed these documents to be accurate and all debt service payments on the Defeased Bonds to be current as of November 27, 2007. We compared the above information set forth in such documents with the related information contained in the schedules provided to us and found the information to be consistent. We compared the subscribed interest rates of the US. Treasury Securities ( State and Local Government Series) to be purchased and placed in escrow with the maximum allowable interest rates as published in the SLGS Securities Daily Rate Table by the Bureau of the Public Debt for November 15, 2007 and found the subscribed rates to be less than or equal to the maximum allowable rates that were in effect on the subscription date for each respective maturity date. Based on the procedures and information set forth above, the computations provided to us and represented in Exhibits A through B, which indicate that the cash and securities proposed to be placed in escrow by the City will produce the amounts necessary to provide for the timely payment of the proposed debt payment schedule on the Defeased Bonds, are mathematically correct. YIELD ON THE 2005D FORT WALTON BEACH BONDS We verified the mathematical accuracy of the accompanying computations of the yield on the 2005D Fort Walton Beach Bonds as of September 23, 2005. For purposes of this calculation, yield is defined as the rate of interest which, using the assumptions and procedures set forth herein, discounts the payments to be made on the 2005D Fort Walton Beach Bonds to an amount equal to Fort Walton Beach 152762_ 1. DOC Florida Municipal Loan Council November 27, 2007 Page 3 made the target purchase price of the 2005D Fort Walton Beach Bonds. The computations were 5, 808. 60 the net using a 360- day year with interest compounded semi- annually and treated $ as original issue discount, $ 9, 777. 66 as the bond insurance premium, and $ 4, 666. 67 as the surety premium ( which results in a target purchase price of $2, 024, 747. 07). We read a copy of the Official Statement for the 2005D Bonds insofar as such obligations are described with respect to interest rates, interest payment dates, maturity dates, dated date and delivery date. We read a copy of Exhibit D to the Loan Agreement insofar as the principal amounts and maturity dates of the 2005D Fort Walton Beach Bonds are described. We read a copy of the Tax Certificate As To Arbitrage for the 2005D Fort Walton Beach Bonds insofar as the 2005D Fort Walton Beach Bonds are described with to initial offering prices, bond insurance premium respect and surety premium. We assumed these documents to be accurate and complete. We compared the above information set forth in such documents with the related information contained in the schedules attached hereto and found the information to be consistent. Based upon the procedures and information set forth above, the computations presented in Exhibits C and C- l, which indicate that the yield on the 2005D Bonds is 3. 58763%, are mathematically correct. YIELD ON THE INVESTMENT IN THE ESCROWED OBLIGATIONS PURCHASED TO DEFEASE THE DEFEASED BONDS We verified the mathematical accuracy of the accompanying computation of the yield on the investment in the escrowed U.S. Treasury Securities purchased to defease the Defeased Bonds based on an assumed settlement date of November 27, 2007 and a purchase price of $1, 687,244. 00. For as the rate of interest which, using the assumptions and purposes of this calculation, yield is defmed procedures set forth herein, discounts the cash receipts rrom the escrowed securities to an amount were made using a 360- equal to the purchase price of the escrowed securities. The computations with interest semi- annually and were based on the dates the funds are to be day year compounded received in the escrow account, net of the reinvestments in zero- coupon U. S. Treasury Securities as more described in Exhibit A, and assume that all other cash balances are not reinvested. fully Based upon the procedures and information set forth above, the computations provided to us and represented in Exhibit D, which indicate that the yield on the escrowed securities purchased to which is less than the yield the 2005D Fort Walton defease the Defeased Bonds is 3. 58692% ( on Beach Bonds), are mathematically correct. USE OF TillS REPORT It is understood that this report is solely for the information of and assistance to the addressees hereof in connection with the defeasance of the Defeased Bonds and is not to be used, relied upon, circulated, or otherwise referred to for any other purpose without our written consent, except quoted that ( i) the report may be used in its entirety as an exhibit to the escrow agreement for the Defeased Bonds, ( ii)the report may be included in the transcripts pertaining to the defeasance of the Defeased Fort Walton Beach 152762_ 1. DOC Florida Municipal Loan Council November 27, 2007 Page 4 Bonds, ( iii) the report may be relied upon by Bond Counsel in connection with its opmlOn or bond concerning the Defeased Bonds, ( iv) the report may be relied upon by any rating agency insurer that shall have rated or insured or that will rate or insure the Defeased Bonds, and ( vii) the report may be relied upon by the Escrow Agent for the Defeased Bonds. The scope of our engagement is deemed by the addressees hereto to be sufficient to assist such cited above. The parties in evaluating the mathematical accuracy of the various computations and should sufficiency of this scope is solely the responsibility of the specified users of this report additional that the would undertake in not be taken to supplant any inquiries or procedures users their consideration of the defeasance of the bonds related to the transaction described herein. We make no the sufficiency of the scope of this engagement. This report should representation regarding not be used by any party who does not agree to the scope set forth herein and who does not take responsibility for the sufficiency and appropriateness of such scope for their purposes. We have no obligation to update this report because of events, circumstances, or transactions occurring subsequent to the date of this report. Very truly yours, Fort Walton Beach 152762_ 1. DOC  EXHIBIT A FLORIDA MUNICIPAL LOAN COUNCIL DEFEASANCE OF THE PORTION OF THE REVENUE BONDS, SERIES 2005D ALLOCABLE TO THE CITY OF FORT W ALTON BEACH, FLORIDA ESCROW ACCOUNT CASH FLOW AS OF NOVEMBER 27, 2007 Total Cash Reinvestments In Adjusted Cash Cash Receipts From U.S. Treasury Zero- Coupon Receipts From Disbursements Securities U. S. Treasury