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

Service Reserve Account times (II) the PFC Debt Service Percentage. Any remaining receipts of PFC Revenues shall be deposited into the 2013 PFC Coverage Subaccount in the amount necessary to maintain therein the 2013 PFC Coverage Amount, which is defined as 25% of the Debt Service on the Series 2013 Bonds during any Fiscal Year. PFC Revenue in the Passenger Facility Charge Fund in excess of the amount required to be transferred to the 2013 Pledged PFC Account and the 2013 PFC Coverage Subaccount shall remain in the Passenger Facility Charge Fund, and invested pursuant to the Indenture; however, such excess PFC Revenues may be pledged to secure other indebtedness or utilized for other PFC-eligible projects and are not pledged to secure the Series 2013 Bonds. The PFC Debt Service Percentage is defined in the Third Supplemental Indenture as determined by dividing the total costs of PFC Eligible Projects funded from proceeds of the Series 2003 Bonds by the total cost of the projects financed by the Series 2003 Bonds. The PFC Debt Service Percentage is expected to be % with respect to the Series 2013 Bonds. Monthly debt service on the Series 2013 Bonds and any required deposit to the 2013 Debt Service Reserve Account will be transferred from the 2013 Pledged PFC Account or, as necessary, the 2013 PFC Coverage Subaccount on or before the 25th day of each month to the required Accounts in the Bond Fund for payment of the Series 2013 Bonds and to the 2013 Debt Service Reserve Account if required to restore a deficiency therein. See "FORM OF THE 19 MASTER INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE, THE SECOND SUPPLEMENTAL INDENTURE AND THE THIRD SUPPLEMENTAL INDENTURE," Appendix "B" hereto. THE AIRLINE AGREEMENTS The County has executed Signatory Airline Operating Agreements and Terminal Building Leases ("Airline Agreements") with Delta Air Lines, American Airlines, United Airlines and US Airways, each of which operates as a signatory carrier at the Airport. The provisions of the Airline Agreements commenced (other than with respect to airlines that began service after such date) October 1, 2010 and unless terminated sooner, shall expire on September 30, 2013. Delta, American and U.S. Airways have extended their agreements for three years. Although United has agreed to an extension in principle, that extension is still in coordination. Pursuant to the terms of the Airline Agreement, the County calculates airline terminal rentals under a compensatory approach with revenue sharing credits under which the airlines pay for their specific use of the terminal area. The calculation of landing fees is determined based on a residual approach with revenue sharing credits. Non-Signatory airlines (of which there currently are none) are required to pay certain non-signatory rates. Amounts due under the Airline Agreements compose a substantial part of the Net Revenues. The Airline Agreements impose a terminal rental rate for airlines preferential hold rooms, office, counter and support space, per-passenger common use charges for outbound and inbound baggage space and a landing fee rate per enplaned passenger, a security charge and loading bridge charge. The terminal rate calculation combines direct and indirect operation and maintenance expenses and debt service and other requirements attributed to the terminal area cost center with certain credits relating thereto. The landing fee rate calculation combines direct and indirect operation and maintenance expenses and debt service and other requirements attributable to the airfield cost center with certain credits. The County has covenanted in the Indenture that it will not amend or terminate the Airline Agreements in any manner which would impair the ability of the County to comply with its Rate Covenant. See "SECURITY FOR THE SERIES 2013 BONDS -- Rate Covenant". For a discussion of the airlines, see "THE AIRLINES AND THE AIRLINE INDUSTRY". For a discussion of parking, concession, general aviation and other non-airline revenues, see "NORTHWEST FLORIDA REGIONAL AIRPORT -- Airport Financial Operations". THE COUNTY Background The County encompasses approximately 1,936 square miles, with approximately 24 miles of coastline along the Gulf of Mexico. It is bordered on the west by Santa Rosa County, on the north by the State of Alabama and on the east by Walton County. The County was created by an act of the legislature of Florida in 1915. The County seat is located at the City of Crestview in the northern portion of the County. Incorporated cities in the County include: Cinco Bayou, 20 Crestview, Destin, Fort Walton Beach, Laurel Hill, Mary Esther, Niceville, Shalimar and Valpariso. Population The total population of the County was 180,822 according to the 2010 Census. The population and commercial growth of the County is primarily in the coastal area of the County along the Guif of Mexico within the cities of Fort Walton Beach and Destin at the hub of the population center. Governing Body The County is governed by an elected five-member Board of County Commissioners (the "Board"). Each Commissioner is elected for a four-year term of office. The Board appoints a County Administrator to administer the County’s programs. The Clerk of the Circuit Court of the County is the clerk, auditor and comptroller for the Board. The County seat is in Crestview, with a branch office in Fort Walton Beach. In addition to the courthouse facilities, service complexes are located in the northern and southern sections of the County. Listed below are current members of the Board of County Commissioners and their term expiration dates. Date Current Date Current Name Term Began Term Expires Don R. Amunds, Chairman November 2010 November 2014 Dave Parisot, Vice-Chairman November 2010 November 2014 Wayne Harris November 2012 November 2016 Nathan Boyles November 2012 November 2016 Kelly Windes November 2012 November 2016 Budgetary Process The County’s annual budget is prepared pursuant to Chapters 129 and 200, Florida Statutes, and represents the County’s legal authority to levy taxes and expend funds for County purposes. On or before June 1 of each year 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 shall prepare and present to the Board a tentative budget for each Board fund. The Board will receive and examine 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. 21 Annual Audit Florida law requires that an annual audit of all County accounts and records be completed within nine months following the end of each Fiscal Year, by an independent certified public accountant retained by the County. 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 copy of the County’s Comprehensive Annual Financial Report for the fiscal year ended September 30, 2012 is available on the webpage of the Clerk of the Circuit Court for Okaloosa County. The Government Finance Officers’ Association has awarded the Certificate of Achievement for Excellence in Financial Reporting to the County for the past 25 years. 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 Indenture may be invested only in Permitted Investments. 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 Policy specifies that 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. NORTHWEST FLORIDA REGIONAL AIRPORT The following sets forth a summary description of the Northwest Florida Regional Airport and its operations. 22 General The Airport is located approximately six miles northwest of the City of Fort Walton Beach, Florida, in Okaloosa County, Florida, on approximately 130 acres of land on Eglin Air Force Base. Eglin Air Force Base is the largest Air Force base in the world, covering 724 square miles of land and approximately 123,000 square miles of water ranges in the Gulf of Mexico. The base is under the direction of the Air Material Command and the Air Armament Center. The Air Armament Center is responsible for planning, development, direction, and testing and evaluation of U.S. and allied air armament, navigation/guidance systems, and command and control systems for all air- delivered weapons. Eglin houses over fifty associate units of the Air Force, including specialized schools, operations and tactical wings, laboratories and research units. The Airport is located on the western side of the military airfield. The County has leased the property on which the Airport sits from the Department of the Air Force for many years. The current lease (the "Lease") was executed on July 30, 2007 and ends on July 16, 2038. The rent payable under the Lease is based on a base rental of $318,000 per year, escalated at 3% per year. The rent payable for fiscal year 2012 was $357,912. The Lease may be terminated by the Air Force for failure to cure a default under the Lease during a reasonable cure period, or at any time during any national emergency. The Lease may also be terminated or suspended 30 days after a determination by the Secretary of the Air Force that paramount military necessity at Eglin Air Force Base requires such suspension or termination. The County may terminate the Lease upon 90 days' notice. Under the Lease, the County is required to pay any taxes or assessments imposed upon the County with respect to the Airport property, to maintain the property in good order and condition, to repair or replace damaged property, to bear the risk of loss of the leased premises and to insure such risk. The Lease provides that all construction or alterations to the Airport must be approved by the Air Force and the County's operation of the Airport is subject to the priority and primacy of the Air Force's mission at Eglin Air Force Base, in the