Okaloosa County BOCC — August 6, 2013 — Resolution for Airport Revenue Refunding Bonds, Series 2013 — reading text

by any of such airlines would give rise to an unsecured claim of the County for damages, the amount of which in the case of a lease is limited by the Bankruptcy Code. See below for further detail about certain airlines serving the Airport. Federal Regulation Regarding Rates and Charges Disputes In August 1994, the President of the United States signed into law the FAA Authorization Act of 1994 (the "1994 Act"), which continues the pre-existing federal requirement that airline rates and charges set by airports be "reasonable" and mandates an expedited administrative process by which the Secretary of Transportation (the "Secretary") shall review rates and charges complaints, 49 U.S.C. § 47129. Under 49 U.S.C. § 47129 an affected air carrier may file a written complaint requesting a determination of the Secretary as to reasonableness within 60 days after such carrier receives written notice of the establishment or increase of such fee. During the pendency of the review, the airlines must pay the disputed portion of the fee to the airport under protest, subject to refund to the extent such fees are found to be unreasonable by the Secretary. The airport must obtain a letter of credit, surety bond or other suitable credit facility equal to the amount in dispute unless the airport and the complaining carriers agree otherwise. In January 1995, pursuant to the 1994 Act, the DOT issued a rule which was amended effective December 16, 1996 (the "Final Rule") outlining the rules of practice for filing complaints and adjudicating complaint matters involving federally assisted airports. This Final Rule is broader in application and covers matters other than just rates and charges complaints. The initial rule was accompanied by a policy statement setting forth the standards DOT would apply to resolving airport fee disputes under 49 U.S.C. § 47129. The initial policy statement was supplemented in September of 1995 and replaced on June 14, 1996 by the "Policy Regarding Airport Rates and Charges." In an August 1, 1997 decision, the U.S. Court of Appeals for the 43 District of Columbia Circuit ruled that the proposed policy regarding determining the "reasonableness" of fees was "arbitrary and capricious" Until DOT promulgates a new policy regarding rates and charges, the guiding principle for determining whether rates and charges established for use of airport assets is the requirement of federal law that such charges be "reasonable". Capacity of National Air Traffic Control and Airport Systems Demands on the national air traffic control system continue to cause aircraft delays and restrictions, both on the number of aircraft movements in certain air traffic routes and on the number of landings and takeoffs at certain airports. These restrictions affect airline schedules and passenger traffic nationwide. The FAA is gradually automating and enhancing the computer, radar, and communications equipment of the air traffic control system and assisting in the development of additional airfield capacity through the construction of new runways and the more effective use of existing runways. However, increasing demands on the national air traffic control and airport systems could cause increased delays and restrictions in the future. Availability of PFCs The plan of finance for refunding of the Refunded Indebtedness assumes certain amounts of PFCs will be available to pay debt service on the Series 2013 Bonds. No assurance can be given that this source of funding will actually be available in the amounts or on the schedule assumed. Future Tax Developments Future or pending federal legislative proposals (if enacted), regulations, rulings or court decisions may cause interest on the Series 2013 Bonds to be subject, directly or indirectly, to federal income taxation or cause interest on the Series 2013 Bonds to be subject, directly or indirectly, to State or local income taxation, or may otherwise prevent beneficial owners of the Series 2013 Bonds from realizing the full current benefit of the tax status of such interest. Legislation or regulation actions and future or pending proposals may also affect the economic value of the federal or state tax exemption or the market value of the Series 2013 Bonds. Prospective purchasers of the Series 2013 Bonds should consult their tax advisors regarding any future, pending or proposed federal tax legislation, regulations, rulings or litigation as to which Bond Counsel expresses no opinion. See "TAX EXEMPTION". LITIGATION General. The Board of County Commissioners, 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 4A 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 Trust Estate in accordance with the provisions of the Indenture. The Series 2013 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 refunding of the Refunded Indebtedness, (2) the validity of the Series 2013 Bonds, or any proceedings or transactions relating to their sale, issuance or delivery, (3) the pledge of the Trust Estate to secure payment of the Series 2013 Bonds, or (4) the operation of the Airports or the provisions for collection and application of the Net Revenues and Pledged PFC Revenues in accordance with the provisions of the Indenture. APPROVAL OF LEGALITY Certain legal matters incident to the issuance of the Series 2013 Bonds and with regard to the treatment of the interest on the Series 2013 Bonds for Florida and federal tax purposes (see "TAX MATTERS") are subject to the legal opinion of Nabors, Giblin & Nickerson, P.A., Bond Counsel. Bond Counsel's legal opinion, dated and premised on law in effect as of the date of original delivery of the Bonds, will be delivered to the Underwriters at the time of original delivery of the Bonds. The proposed text of the legal opinion is set forth as Appendix C hereto. The actual legal opinion 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 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 2013 Bonds will be passed upon for the County by John R. Dowd, County Attorney, and Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Disclosure Counsel. TAX EXEMPTION Opinion of Bond Counsel In the opinion of the Bond Counsel (see Appendix D), the interest on the Series 2013 Bonds is excludable from gross income and is treated as an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and 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 2013 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 45 2013 Bonds to become includable in gross income for federal income tax purposes retroactive to their date of issue. The County has covenanted in the Indenture to comply with all provisions of the Code necessary to, among other things, maintain the exclusion from gross income of interest on the Series 2013 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 2013 Bonds, including, among other things, restrictions relating to the use or investment of the proceeds of the Series 2013 Bonds and the payments of certain arbitrage earnings in excess of the "yield" on the Series 2013 Bonds to the Treasury of the United States. Noncompliance with such provisions may result in interest on the Series 2013 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 2013 Bonds. Prospective purchasers of Series 2013 Bonds should be aware that the ownership of Series 2013 Bonds may result in other collateral federal tax consequences. For example, ownership of the Series 2013 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 2013 Bonds, (2) the branch profits tax, and (3) the inclusion of interest on the Series 2013 Bonds in passive income for certain Subchapter S corporations. In addition, the interest on the Series 2013 Bonds may be included in gross income by recipients of certain Social Security and Railroad Retirement benefits. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE SERIES 2013 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORATE BONDHOLDERS, INCLUDING, BUT NOT LIMITED TO, THE CONSEQUENCES REFERRED TO ABOVE. PROSPECTIVE SERIES 2013 BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD. Other Tax Matters Interest on the Series 2013 Bonds may be subject to state or local income taxation under applicable state or local laws in other jurisdictions. Purchasers of the Series 2013 Bonds should consult their tax advisors as to the income tax status of interest on the Series 2013 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 2013 Bonds. In some cases these proposals have 46 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 2013 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 2013 Bonds and their market value. No assurances 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 2013 Bonds. For example, the President of the United States recently recommended the introduction of legislation which includes a provision that would subject a portion of the interest on tax-exempt bonds (including the Series 2013