policies and procedures...policies and procedures pursuant to the rules of the commission, the board...

Policies and Procedures

Pursuant to the Rules of the Commission, the board of directors may, from time to time, establish policies and procedures in carrying out the business of the Commission. These policies and procedures are intended to establish best practices for the board of directors and management in fulfilling their responsibilities. Such policies shall be in writing and consistent with the Interlocal Agreement, Rules, Bond Resolutions and other Program Documents of the Commission. Policies and Procedures are adopted by a majority vote of the board of directors and remain in effect until amended or rescinded by a majority vote.

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SUNSHINE STATE GOVERNMENTAL FINANCING COMMISSION

POLICIES & PROCEDURES

Customized Financing Services for Member Borrowers Background Since 1986, the Commission has issued over $800 million in variable rate debt instruments representing approximately 16 borrowers and over 60 loans. With the exception of its policies on fixed-rate debt issuance, the Commission has structured debt programs for two or more borrowers participating in a single or multiple series. As part of its 1998 biennial strategic planning session, the Board established an objective ‘to develop and respond to member and other borrowers’ needs for customized and ancillary financing products, either on an individual or multi-participant arrangement’. In furtherance of this policy objective, the Board has selectively responded to requests for proposals from prospective borrowers on a pooled and customized basis. The Board has also recognized that the credit quality and financing needs of some of its members may create market and economic opportunities conducive to arranging customized financial products for individual member needs. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policy and procedures regarding the creation of customized financing services for member borrowers: As an extension to its core financing services, the Commission may respond to requests

from one or more individual members to explore and investigate opportunities to customize the Commission’s services to the exclusive use of one or more members. In considering such requests, the Board shall consider (1) the relevance, feasibility, and application of specialized services to other members of the Commission, (2) the marketability of the customized financial product to potential investors, and (3) the allocation of development costs and implementation costs within the context of established Board policies.

The Board shall consider and evaluate the purpose and need for financial undertaking;

the size and type of financing (new, refinancing, or synthetic); the credit quality of the requesting borrower; the security for the proposed debt; prior experience with the Commission’s programs; and any future obligations and responsibilities created for the Commission for any continuing disclosure requirements or other commitment of Commission resources.

Customized financial services involving the issuance of variable rate debt shall be of

sufficient size to warrant a separate standalone series for one or more borrowers. Initially, the target size of a standalone series shall be $25 million. Depending on the type of service requested, the minimum underlying credit rating of the requesting member shall be “AA” or better by a nationally recognized rating agency.

Services requiring the issuance of debt may be structured with the Commission serving

as the conduit issuer or with the Commission serving as a contracted agent with the member borrower.

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In structuring customized member services, the Commission, in consultation with the requesting member, may solicit the services of professionals, consultants, or other service providers on a competitive and/or a negotiated basis.

This policy and these procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission this 6th day of October, 2000.

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Issuance of Fixed Rate Debt Background Since 1986, the Commission has issued over $538 million in variable rate debt instruments representing approximately 15 borrowers. In 1995, the Commission issued fixed rate debt at the request of and on behalf of the City of Jacksonville in the amount of $25 million. After reviewing and evaluating various financial services opportunities in 1996, including the possibility of creating a fixed rate program, the Board of Directors indicated a desire to concentrate its financing services in the area of variable rate debt programs. The Board indicated an interest in issuing fixed rate debt only on an exception basis at the request of one or more of its members. In 1997, the Board of Directors received a second fixed rate financing request from the City of West Palm Beach involving a refinancing of its variable rate debt with the Commission. Following consideration and approval of the City’s request, the Board requested that policies and procedures be developed in regard to the issuance of fixed rate debt by the Commission. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policy and procedures regarding the issuance of fixed rate debt by the Commission: The Board of Directors will consider requests for fixed rate loans from one or more

members and non-members of the Commission on an exception and as-needed basis. In considering such requests, the Board shall evaluate the borrower’s eligibility under the Commission’s general credit criteria, the purpose and need for the loan, the type of financing (new or refinancing), the loan size and maturity, the security for the loan, prior experience with the Commission’s programs, obligations and responsibilities of the Commission for continuing disclosure requirements, and such other relevant information requested by the Board.

Fixed rate bond issues may be conducted on a negotiated and competitive basis based on

the requirements of the borrowing member or members and the Commission. For fixed rate issues, at least four (4) investment banking firms (the “underwriters”), recognized nationally and/or regionally for their experience in working with Florida issuers with high investment grade ratings, shall be selected by the Board to comprise the Commission’s underwriting team. The Board will consider the requirements and preferences, if any, of the requesting borrower(s) in determining the method of sale for fixed rate debt and the selection of one or more members of the underwriting team.

For competitive fixed rate transactions, the Board shall select an underwriter based on a

“limited” competitive sale among the members of the underwriting team. The “limited” competitive sale shall be conducted under such guidelines, procedures, and timing considerations as determined and recommended to the Board by the Commission’s staff and financial advisor.

For negotiated fixed rate transactions, the Board shall select one or more underwriters

from the underwriting team based on the characteristics of the underlying borrower(s); the issue size; the type and complexity of the project financing; the qualifications, market access, and

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distribution strength of the members of the underwriting team; and such other guidelines or criteria requested by the Board or recommended by the Commission’s staff and financial advisor.

This policy and these procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission this 20th day of June, 1997.

Sunshine State Governmental Financing Commission

Policy & Procedures Validation of Debt Issuances

Background

Generally, any governmental entity in the State of Florida that plans to issue debt has the option of validating its bonds in the circuit court in the county where it is located. Florida’s bond validation process is voluntary with the result having a court determine or validate the issuer’s authority to incur bonded debt and the legality of all related proceedings, including the taxes or revenues to be pledged as security for the indebtedness.

The Interlocal Agreement creating the Commission in 1985 required all debt issuance of the Commission to be validated in accordance with Chapter 75, Florida Statutes. This requirement was prompted by members of the Commission due to the newness of pooled bond issues by multi-jurisdictional authorities, limited state statutory authority, and an ongoing national debate on federal tax reform placing greater restrictions on tax-exempt issuers.

Since 1985, the Commission has completed three bond validations for its financing programs

through judgment of the Circuit Court in and for Leon County, Florida. On December 16, 1985, the Commission validated $300,000,000 for the original Series 1986 Multimodal Revenue Bond Program. On January 2, 1991, the Commission validated $500,000,000 approving the issuance of commercial paper revenue notes under the Series 1994 Commercial Paper Revenue Note Program. On March 10, 2000, an additional $600,000,000 was validated under this program, also referenced as the Multiple Series Commercial Paper Note Program.

These validation judgments were based on fairly broad parameters including the issuance of

fixed and variable rate debt; tax exempt and taxable debt; insured and uninsured debt; shorter or longer term maturities; one or more series, using revenue bonds, commercial paper notes, or other debt instruments under a form trust indenture and form loan agreement. In addition, the validation addressed qualifying projects permitted under State law.

During a contested validation in late 1999, the Board of Directors recommended its member

governments ratify a change to its governing documents removing a mandatory requirement for bond validation. The validation initiated in 1999 was successfully completed in 2000 and, by unanimous consent of the Members of the Commission, the Interlocal Agreement was amended no longer requiring a mandatory validation prior to the issuance of the Commission’s debt

Municipal home rule powers in the state constitution provide municipalities with broad

authority to incur indebtedness and most bonds are issued by governments in Florida without a court-determined validation. Bond attorneys routinely provide issuers with unqualified legal opinions on the public purpose and the tax exemption of an issuer’s bonds prior to their issuance. The bond validation process provides an additional level of protection by having the court’s action forever conclusive allowing the validity of the bond issuance to never be called in question in any court by any person.

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Since 2000, the Commission routinely allocated new debt obligations against the unused capacity remaining in the 2000 validation. In 2005, the Commission created two new standalone series for Miami-Dade County and Palm Beach County and issued approximately $230,000,000 in commercial paper revenues notes that were not allocated to the 2000 validation. In 2006, the Commission successfully validated an additional $950 million for capital project financings.

The purpose of these policies and procedures is to provide consistent guidelines for the validation of future financing programs and debt obligations of the Commission. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policies and procedures regarding the validation of new debt issuances of the Commission and the corresponding allocation of new loan originations to any unused portion remaining under an existing validation:

At the option of the Board of Directors, any new financing program of the

Commission may be validated pursuant to Chapter 75, Florida Statutes. The Board

shall consider the nature of the proposed financing program and similarities to the

broad parameters of the existing financing programs previously validated by the

Commission. In addition, the Board shall consider the risks, benefits, time and costs

of undertaking a validation proceeding.

To the extent possible, it is the intent of the Board of Directors to establish new

financing programs and issue all future debt obligations for the financing , refinancing

or reimbursing the costs of qualified capital projects and working capital projects,

including but not limited to liabilities associated with public pension and other post-

employment benefits, pursuant to an existing or future bond validation proceeding.

An exception may be granted to an individual borrower; provided a standalone

financing program was established exclusively for the borrower outside the purview

of an existing validation. The Board of Directors shall consider the available unused

capacity remaining under an existing validation prior to approving a new loan request.

New loans to be assigned to an existing financing program or separate series

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established pursuant to a validation judgment shall continue to be allocated against

the available unused capacity of the existing validation.

Further, the Board of Directors may require the validation of a borrower’s loan

agreement based on the type of financing proposed, the pledged security for the loan,

the nature and proposed use of the projects being financed, or the authority of the

borrower to enter into the loan agreement with the Commission. Nothing herein shall

preclude a member or other participating borrower from initiating a validation

proceeding for debt issued on its behalf by the Commission, provided the costs of the

special validation are the sole responsibility of the borrower.

These policies and procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held on the 4th day of November, 2005 and subsequently amended and readopted on February 10, 2006 and June 16, 2008.

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Financial Advisory Services

Background Since 1986, the Commission has issued over $900 million in variable and fixed rate debt instruments representing approximately 17 borrowers. During this time, the Board of Directors has contracted with a single firm to provide financial advisory services to the Commission. Historically, the financial advisor has primarily provided the following services: general marketing of the Commission’s programs and services; identify new product offerings and new service opportunities and recommend improvements in existing programs; provide analysis of the creditworthiness of prospective borrowers; communicate with bond insurers, liquidity providers, and rating agencies on Commission activities; and report on new and developing financing structures, general credit enhancement pricing trends, or alternative pricing structures. In addition to these ongoing services, the financial advisor has provided services to borrowers in connection with loans from the Commission. Compensation for financial advisory services has been based on an ongoing retainer paid by the Commission and on a transactional basis paid directly by borrowers. With the resignation of the financial advisor in October 2000, the Board of Directors requested the SSGFC staff evaluate the role and scope of services of the financial advisor relative to the current needs of the Commission and prospective borrowers. In November 2000, the SSGFC staff recommended that certain services performed in the past by the financial advisor be assumed by the program administrator and that the Commission consider revising its current policy on the use of financial advisory services. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policy and procedures regarding the use of financial advisory services by the Commission: Existing and prospective borrowers may elect to use their own financial advisor, select

one of the financial advisors recognized by the Commission, or choose to forgo the use of a financial advisor in utilizing the services of the Commission. First-time borrowers are encouraged, but not required, to use the services of a financial advisor.

From time to time, the Board of Directors may contract with one or more financial

advisory firms to serve as a recognized and affiliated financial advisor with the Commission. Firms selected must have established qualifications, experience, and maintain a representative client base suitable for the offering of the Commission’s programs and services. Such recognition and affiliation shall not constitute the financial advisory firm’s endorsement of the Commission’s program and services. As an affiliated program principal, the financial advisor will be listed in the Commission’s marketing literature, receive ongoing and timely information on its financing programs, and be advised of board meetings and annual meetings. A recognized financial advisor may offer its services to the Commission in identifying and structuring new

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programs or in enhancing the marketability of existing programs. In addition, the financial advisor may market the Commission’s programs to its clients or prospective clients that meet the Commission’s eligibility requirements.

In the event the Commission elects to develop a new financing program or requires the

specialized services of a financial advisor, the Board of Directors may contract with any financial advisory firm meeting the needs of the Commission. Any competitive or negotiated engagement for services shall be in writing and approved by the Board of Directors.

An affiliated financial advisor also serving as a recognized underwriter for the

Commission’s fixed rate financing program shall not automatically be excluded from consideration as a financial advisor or an underwriter on a fixed rate transaction. In the event a financial advisor is engaged by the Commission to provide services on a fixed rate transaction, such firm shall be prohibited from participating in the transaction as an underwriter. [Refer to Policies and Procedures for the Issuance of Fixed Rate Debt]

The Board of Directors may utilize the services of the program administrator to provide

limited and ongoing financial advisory services to the Commission. Such services may include the general marketing of the Commission’s programs and services; identify new product offerings and new service opportunities and recommend improvements in existing programs; advise of the creditworthiness of prospective borrowers; communicate with bond insurers, liquidity providers, and rating agencies on Commission activities; and report on new and developing financing structures, general credit enhancement pricing trends, or alternative pricing structures. In addition, the program administrator will be required to coordinate the services of the affiliated financial advisors and provide other assistance to borrowers on behalf of the Commission.

This statement of policy and procedure was adopted by the Board of Directors of the Sunshine State Governmental Financing Commission this 2nd day of February, 2001.

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Allocation of Bonds and Notes Among Remarketing Agents and Dealers The purpose of these policies and procedures is to establish guidelines for the allocation of bonds and notes among the Commission’s designated remarketing agents and dealers. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policies and procedures regarding the allocation of bonds and notes among the Commission’s designated remarketing agents and dealers:

The use of one or more remarketing agents and dealers and the corresponding assignment of bonds and notes to remarketing agents and dealers shall be at the discretion of the Board of Directors. The following factors shall be considered in the assignment or reassignment of bonds and notes among remarketing agents and dealers: (1) current market pricing and the administrative convenience of the Commission, (2) a demonstrated dealer-client relationship exists with a prospective borrower, and (3) the efforts of a single dealer resulted in the development of a program series, components thereof, or the origination of a loan with a prospective borrower. To the extent possible, any adjustments in the total allocation of bonds and notes among the dealers shall be prospectively, however the reassignment of existing bond or note allocations may be made following a review and evaluation of the historical performance of the dealers by the Board of Directors. For market efficiency purposes, the assignment of tax exempt AMT notes or taxable notes may be allocated to a single dealer until such time as the total size of the outstanding tax exempt AMT notes or taxable notes economically justifies a multiple-dealer allocation.

These policies and procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this sixteenth day of January, 1998 and subsequently amended on the eleventh day of February, 2000 and on the third of November, 2005.



Selection and Retention of Liquidity Support Facilities

and the Use of the Liquidity Facility Replacement Reserve Fund

Background Since the inception of the Series 1994 commercial paper program, the Commission has elected to use separate bond insurance for credit enhancement and a separate line of credit for liquidity support. Initially, the Florida State Board of Administration, a non-traditional provider, served as the Commission’s first standalone liquidity provider and was later replaced by commercial banks during the 1998 commercial paper program restructuring. Since 2000, the Commission has been successful in employing a multi-provider strategy to manage liquidity renewal risks to provide greater cost stability for existing participants while building additional capacity for future loan demand. These efforts have occurred in a business environment where several long term liquidity providers have left the municipal market and alternative structures, including public pension funds and auction rate products, have somewhat lessened the demand for traditional lines of credit and liquidity support from domestic and international banking facilities. Unlike bond insurance, which can be obtained to secure each borrower’s loan agreement for the term of the loan, the availability of long-term liquidity support is more uncertain, but is essential for maintaining an investor market for the Commission’s variable rate debt obligations. Liquidity support presents the greatest challenge for managing a pooled variable rate program and will continue to be the keystone of the Commission’s pooled variable rate programs. Liquidity support facilities for the Commission have been secured on a negotiated basis and by competitive bidding using requests for proposals. Term renewals for existing facilities have been negotiated, subject to other acceptable terms and competitive pricing considerations. Substitute or replacement facilities have also been secured by competitive selection and on a negotiated basis. The replacement of a liquidity facility was initially envisioned as an infrequent or exceptional occurrence, but has become a more routine decision for managing liquidity support for the Commission. The addition and/or replacement of liquidity support facilities can potentially come with substantial costs to the Commission and ultimately its participants. In addition to the extensive time and efforts involved with the use of multiple dealers, liquidity facility substitutions can disrupt dealer maturity strategies and affect investor demand by artificially creating note maturity dates coinciding with the expiration of the terminated facility. Timing and yield considerations relating to investor demand are also impacted when large positions of the issuer’s commercial paper notes are placed in the market once the new facility is activated. These temporary setbacks are far outweighed by the longer-term goal of maintaining the availability of high credit facilities with stable and consistent pricing, and providing future loan capacity that can be best achieved by actively managing the liquidity support function. Staffing and associated costs of the Commission’s professionals are also directly impacted by liquidity substitutions. These additional services and related costs were not initially addressed under the ongoing retainer arrangements with the professionals and have been negotiated on an as-needed basis. The initial liquidity facility substitutions incurred costs between $75,000 and $100,000. The Commission and its advisors

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have made great strides in refining the process of substituting liquidity facilities and managing associated costs under revisions to the retainer agreements. Through ongoing negotiations with those institutions and professionals involved, total substitution costs for the most recent liquidity substitutions now average below $50,000. Under the Commission’s cost allocation policies, liquidity replacement costs are passed on to program participants in a lump sum. These one-time transactional costs can effectively increase annual program carrying costs by 1.5 to 2.0 basis points. In an effort to smooth out these pass-through costs to borrowers, the Commission established a Liquidity Facility Replacement Reserve Fund in November 2004 within the accumulated fund balance of the Combined Program Administrative Expense Fund to help defray the transactional costs associated with liquidity facility substitutions. Additional guidelines on the funding and operation of this reserve fund are addressed in the Commission’s Policies and Procedures for the Combined Program Administrative Expense Fund. The use of a multiple-provider liquidity support strategy for its variable rate programs requires active monitoring of the liquidity support markets and current pricing trends. In addition, the Commission uses a combination of shorter-term and longer-term facilities to manage renewal risks and provide greater pricing stability for liquidity support, particularly in the pooled commercial paper series. Terms of less than one-year currently do not require banks to set aside capital reserves, which results in lower pricing to the issuer and more frequent renewals. Facility terms greater than one-year do require the banks to set aside capital reserves resulting in higher pricing. Different institutions have different internal pricing models and term preferences. The Commission strives to match the best pricing options available in the liquidity markets to its ongoing program needs. The Commission has also indicated a preference for competitively priced, longer-term facilities greater than five years, evidenced by the 16-year facility with Dexia Credit Local for the Series 1986 revenue bond program and the 10+-year facilities with Depfa Bank in the commercial paper program. The purpose of these policies and procedures is to establish guidelines for (1) the use, selection and retention of liquidity support facilities within the context of a multiple provider strategy; (2) the ongoing monitoring of liquidity support pricing trends, pricing reviews, and facility negotiations as may be required; and (3) the use of the Liquidity Facility Replacement Reserve Fund.

Authorization

Pursuant to the Interlocal Agreement creating the Sunshine State Governmental

Financing Commission (the “Commission”) and the Rules of the Commission, as

amended and restated, the Board of Directors (the “Board”) hereby adopts the

following policies and procedures regarding the selection and retention of liquidity

support facilities within the context of a multiple provider strategy; for the ongoing

monitoring of liquidity support pricing trends, pricing reviews, and facility

negotiations as may be required; and for the use of the Liquidity Facility Replacement

Reserve Fund:

The Commission shall consider and utilize one or more liquidity support facilities in

connection with its pooled variable rate offerings. Except for separately created series

established for individual member governments, the Commission shall engage at least

two liquidity support facilities for its pooled offerings to manage liquidity renewal

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risks, to provide pricing stability, and to build additional capacity for future loan

demand.

Liquidity support facilities selected by the Commission shall be highly rated with

short-term ratings of at least ‘A-1’ and long-term ratings of at least ‘AA’ or the

equivalent ratings from one or more nationally recognized rating agencies. Any

existing liquidity facility failing to maintain these minimum ratings shall be monitored

and considered for replacement at the earliest possible convenience of the Commission

following a review and consultation with the Commission’s dealers and other

advisors.

The Commission’s executive staff and program administrator shall be generally

responsible for monitoring liquidity markets, proposed regulatory actions, the

availability of prospective liquidity support facilities, and general pricing trends, and

reporting such findings to the board of directors.

Competitive bidding via requests for proposals shall be utilized for the selection of a

liquidity support facility for a new series of variable rate obligations or to replace an

existing facility that has voluntarily resigned or announced its intention not to renew

an existing facility.

The renewal and extension of an existing facility shall be accomplished on a

negotiated basis taking into consideration current credit and ratings outlooks, prior

and existing working relationships, capacity for future loans, pricing trends for

comparable renewals periods, the availability of alternative providers of liquidity, and

transactional replacement costs. If, in the opinion of the Commission’s executive staff

based on the recommendations of the program administrator or other advisors,

market or other circumstances do not warrant the renewal of an existing facility under

the proposed terms of the provider, the Commission may seek alternate proposals via

a request-for-proposals in connection with a competitive selection process.

During any five-year or longer term with an existing liquidity facility, the executive

staff shall, at least annually, review current liquidity markets and pricing trends. If, in

the opinion of the Commission’s executive staff based on the recommendations of the

program administrator or other advisors, market or other circumstances do no

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warrant the current pricing of an existing facility, the Commission shall attempt to

renegotiate the pricing for the remaining term of an existing facility or may mutually

agree to extend the facility for a new renewal period and revised pricing terms,

provided such extension does not exceed the original term of the liquidity facility. In

evaluating comparable pricing terms, the Commission may consider pricing options

available from other liquidity providers; however, the Commission’s representatives

shall not simultaneously enter into negotiations with more than one liquidity facility,

unless the Commission has received responses to a request-for-proposals in

connection with a competitive selection process.

The use of the Liquidity Facility Replacement Reserve Fund to defray transactional

costs incurred with the replacement of an existing liquidity facility shall be at the sole

discretion of the board of directors.

The following considerations shall be made in evaluating the use of the replacement

reserve fund: (1) available funding in the accumulated reserve fund, (2) the total

transactional costs to be involved, (3) the remaining term of the existing facility or the

remaining terms of the combined loans assigned to the existing facility, and (4) the

allocation of the reserve sub accounts relative to the program series for which the

replacement liquidity facility is contemplated.

These policies and procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 16th day of May, 2005.



Use of Derivative Instruments as an

Appropriate Financing Tool for Borrowers

Background Since 1986, the Commission has, from time to time, explored the development of a program enabling members to consider various uses of derivative instruments. As a conduit issuer and instrumentality of its member governments, the Commission lacks the financial credit capacity to serve as a counter party in derivative transactions. In recent years derivative products have gained wider acceptance among investors and governmental issuers as efficient financing tools prompting the Commission to again explore the development of a pre-arranged derivative program. As short-term variable rates approached historical lows, several borrowers recently approached the Commission seeking economical swap options as an alternative to traditional fixed-rate conversions. The purpose of these policies and procedures is (1) to offer members and other borrowers the opportunity to utilize synthetic financing tools within the context of a managed debt portfolio, (2) to establish general guidelines for a synthetic program and the use of derivative instruments by users, (3) to establish educational and disclosure guidelines for employing derivative instruments, (4) to develop procedures for securing timely and competitive bids from qualified swap providers, (5) to offer specialized financial expertise in evaluating the suitability, risk parameters, and cost effectiveness of employing derivative instruments, and (6) to recognize the Commission role as an intermediary between members and qualified swap providers. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policies and procedures regarding the development of synthetic financing program and the use of derivative instruments as an appropriate financing tool for borrowers:

The Commission’s synthetic program shall be designed to provide participants with cost effective alternatives to traditional market instruments. The program shall be structured to meet the unique needs of its participants recognizing the diversity of credit ratings among its members. Participation shall be limited to governmental units with outstanding indebtedness to the Commission. No pooling of credits or sharing of risks shall be permitted, requiring each derivative transaction to be structured as a standalone participant transaction. The Commission shall serve as an intermediary between the participant borrower and the swap counterparty, utilizing third-party trust and custodial services from a qualified commercial banking institution.

The synthetic program shall generally offer the following services:

(1) the opportunity for independent evaluation by a nationally recognized financial

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advisory firm with knowledgeable and experienced professionals regarding the cost effectiveness and suitability of a derivative instrument to a particular borrower’s needs,

(2) pre-pricing structuring and educational services by a qualified financial advisory

firm with special expertise in derivative products (3) pre-negotiated, “market-neutral” master documents that can be customized for a

participant’s particular needs, (4) a pre-qualified, bidding group of nationally recognized and qualified counter

parties, and (5) a competitive bidding process and independent price evaluation conducted by an

independent and qualified financial advisor with knowledgeable and experienced professionals.

Synthetic products to be offered by the Commission generally include interest rate swaps (variable to fix, fix to variable, etc.), forwards, futures, options, caps, floors, collars, or other derivative instruments suitable for prudent use by public entities and for the purposes of managing borrowing costs and/or managing (limiting) exposures to certain types of risk. Some of these products exchange payment obligations, others limit the downside (or rising interest rate) risk while still others trade off a limit on the upside (or falling interest rate) opportunity in exchange for a lower cost of providing the downside risk protection. Each of these products must be evaluated by participants as alternatives to traditional, intermediate, or long term options, considering their comparable cost, ease of entry and exit provisions, degree of potential risk exposure (quantified to the greatest extent possible), and suitability to a participant’s overall debt management strategy. The Commission, through its consultants, shall assist participants in evaluating the purpose, need and suitability of a potential derivative transaction; term and notional swap amount; the credit quality of the participant; the nature and sufficiency of the underlying security; prior experience with the Commission’s programs; and any future obligations or other commitment of Commission resources. The Commission is committed to providing members, appropriate educational assistance and qualified legal and financial expertise to enable participants to gain sufficient understanding to determine the suitability of a derivative instrument to their particular needs. When addressing derivative products, there are several structuring concerns, which participants must take into consideration. A major risk involves the credit quality of the counterparty (the entity with which the participant is exchanging commitments) and, thus, the likelihood of their continued ability to honor their obligations. In evaluating the use of derivative securities, participants should also consider the following criteria:

(1) the credit rating of the provider of the derivative (i.e., counterparty) shall be

limited to a rating ‘AA’ or better or ‘A’ or with collateral requirements, from a national bond rating service,

(2) the counterparty will be required to collateralize its obligation to a participant

with U.S. Treasury Securities in the event of a downgrade of its credit below a

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rating category acceptable to the participant, or will assign its obligation without cost to the participant to another counterparty that meets the minimum credit criteria stated above,

(3) provisions for terminating the agreement with the counterparty that will not

result in an extraordinary economic loss to the participant, (4) an acceptable level of the taxability risk between the counterparty and the

participant, in the event that the participant’s agreement to issue tax-exempt debt as a part of the derivative transaction is impaired by federal legislation or judicial ruling, and

(5) a determination that any risks to the participant as a result of entering into the

transaction have been eliminated, or mitigated to the maximum extent possible under prevailing market conditions, and that the credit rating of the participant will not be negatively impacted.

The Commission’s policies and procedures for the use of derivative instruments as an appropriate financing tool for borrowers shall be continually monitored and evaluated to reflect current industry standards, market relevancy and legal sufficiency.

These policies and procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 22nd day of March, 2002.

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Policies and Procedures for

Federal Tax Law Compliance

The purpose of these amended and restated policies and procedures is to establish conduit issuer guidelines for general compliance with federal tax law requirements and other regulatory compliance, and adherence with loan covenants under debt obligations issued for and on behalf of participating members and borrowers. Background Compliance with certain applicable federal tax requirements normally occurs at the closing of the bond transaction, while other federal tax and other regulatory or covenant requirements require on-going monitoring after the issuance of the bonds. Post-issuance federal tax requirements generally fall into two categories: (1) qualified use of proceeds and financed property; and (2) arbitrage yield restriction and rebate. Qualified use requirements require monitoring of the various direct and indirect uses of bond-financed property over the life of the bonds and calculations of the percentage of nonqualified uses. The expenditure of bond proceeds in adherence to arbitrage rebate compliance requirements may also require monitoring over the life of the bonds to determine whether the yields on investments acquired with bond proceeds are properly restricted. Excess arbitrage is the interest earned on the investment of unspent loan proceeds above the interest paid on the loan. Federal tax laws imposed in the mid-1980’s imposed significant restrictions on the use of tax exempt bond proceeds and required future bond issues to adhere to arbitrage rebate requirements in a complicated framework of tax compliance regulations. The Commission serves as the conduit issuer and is treated as the “taxpayer” for federal tax purposes. As such, the conduit issuer is the party generally responsible for tax compliance and is the noticed party regarding compliance examinations conducted by the Internal Revenue Service. Participating members and other borrowers are responsible for payment of debt service on the conduit bond issuance and are contractually obligated through their loan agreements and tax regulatory agreements to maintain the tax exempt status of the bonds and compliance with federal tax law restrictions for the use of loan proceeds, arbitrage rebate requirements, and related post-issuance compliance procedures. Federal tax requirements that are generally issuance-related may require some level of post-issuance due diligence and oversight by the conduit issuer. The on-going nature of post-issuance compliance requirements applicable to tax-exempt bonds places a great level of due diligence on borrowers to actively monitor compliance throughout the entire period their loans and the Commission’s bonds remain outstanding. Each borrower’s on-going due diligence and the use of annual compliance certificates will significantly improve the

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conduit issuer’s ability to identify noncompliance and prevent violations from occurring, or timely correct identified violations (when prevention is not possible), to ensure the continued tax-exempt status of the bonds. The goal of establishing and following these policies and procedures is to identify and resolve noncompliance on a timely basis and to help preserve the tax-exempt status of the Commission’s debt obligations. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors of the Commission hereby adopt the following amended and restated policies and procedures regarding the management of arbitrage rebate liabilities, post issuance compliance, and the adherence to regulatory guidelines in order to preserve the tax-exempt status of the Commission’s outstanding debt issues:

Use of Qualified Experts and the Performance of Annual Rebate Calculations Because of the conduit nature of the Commission’s financings, the complexity of arbitrage rebate regulations, and the severity of non-compliance penalties; the Commission shall engage the services of nationally recognized rebate professionals to assure strict compliance with federal arbitrage regulations. Borrowers are required to use the compliance consulting services engaged by the Commission; however, a borrower may petition the Commission for an exception to this requirement. Arbitrage rebate calculations shall be completed in accordance with required Internal Revenue Service reporting dates, which are five (5) years after the delivery date of each issue/loan origination, and each fifth year thereafter until the bonds or notes have matured, redeemed early or retired. Services of the rebate consultant shall include, but not be limited to the following: (1) verification that the debt issuance and related borrowings of the Commission are subject to the arbitrage rebate requirements, including a determination and verification of any exception to rebate requirements; (2) review, verification, and/or calculation of the bond yield for each bond issue and related borrowings; (3) unless otherwise directed by the Commission, annual computation and verification of the allowable yield limit for the issue and/or each corresponding participant borrowing (i) the estimated cumulative rebate liability, if any, as of the elected bond year end for annual calculation periods, or (ii) amount of excess earnings, if any, rebatable to the U.S. Treasury for the 5th year (or final) installment date as required by Treasury regulations; and (4) calculation of each borrower’s excess investment earnings and

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cumulative rebate liability, taking into account any proceeds that are or have become subject to the yield restriction requirements. Arbitrage Rebate Liability Management Participating borrowers are encouraged to minimize the cost of arbitrage rebate and yield restriction while strictly complying with the applicable federal laws. Accordingly, borrowers are encouraged to adhere to spending or other exceptions provided by the arbitrage rebate regulations and avoid untimely delays in spending loan proceeds. Participating borrowers are also encouraged to establish and maintain a system of recordkeeping to monitor temporary investment activity and the expenditure of loan proceeds to assist with compliance requirements. These efforts should include monitoring the expenditure of loan proceeds, tracking investment earnings on unspent proceeds, and providing earnings data on a timely basis to the Commission’s consultants. Borrowers are also responsible for the retention of records to substantiate rebate compliance for the life of the loan plus an additional three years under current IRS guidelines. If a loan is refunded, the retention period extends to the life of the refunding obligations plus an additional three years. Borrowers with commercial paper loans are encouraged to consider alternative calculation methodologies, such as yield period optimization, to further minimize arbitrage rebate liabilities. Because commercial paper notes are treated as a variable rate issue for arbitrage rebate purposes, a yield period optimization methodology can substantially reduce the rebate liability on the notes by eliminating the adverse effects of comparing the “weighted” investment yield to the “unweighted” note yield. Essentially, this methodology “slices” the required five-year period into the optimal combination of various shorter periods, which allows a better match between the investment yield and the note yield. Such methodologies are permitted under a complex array of federal arbitrage regulations; however they do require optimal interest rate scenarios to be cost effective when compared to traditional methodologies for calculating arbitrage rebate.

Post Issuance Compliance The Commission shall adhere to all covenants in the Program Documents

related to federal tax law compliance at the time of issuance of its bonds. In addition, the Commission shall meet its obligations as the conduit issuer for post issuance compliance, and coordinate and assist conduit borrowers in their compliance with federal tax laws. These written policies and procedures (“Written Procedures”) shall apply prospectively to all new debt issuances of the Commission and retroactively to all outstanding debt issuances to the extent these Written Procedures are consistent with existing covenants in the existing Program Documents.

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With advice and assistance from its consultants, the Commission may rely upon interpretive guidance from the U.S. Treasury – Internal Revenue Service or other regulatory agencies and to the extent possible be guided by the recommended practices for post-issuance compliance, including the use of checklists jointly developed by the Government Finance Officers Association (GFOA) and the National Association of Bond Lawyers (NABL) and modified for relevance to the Commission’s debt undertakings. For outstanding bonds, the Commission shall assist and monitor borrower submissions of any annual certifications or affirming statements for compliance with all terms and conditions set forth in the loan agreement, including the tax regulatory agreements. If the Commission becomes aware, through the review of any annual borrower certifications or otherwise, that a borrower has taken actions which may jeopardize the tax-exempt status of an issue of bonds, the Commission shall consult with Bond Counsel and the borrower to determine the appropriate remedial action to be taken with respect to the bonds to ensure that any and all nonqualified bonds are remediated according to the requirements of the Code and the Regulations. For the issuance of new conduit bonds, the Commission may, at the time of issuance, require the submission of written procedures adopted by the borrower for maintaining adequate records and post-issuance compliance for loans with the conduit issuer or debt issued independently by the borrower. In the event the submission of the borrower’s written procedures is a precedent condition to loan origination, the following requirements shall apply to the participating borrowers:

At a minimum, the borrower’s written procedures shall require (i) that the borrower maintain adequate records, including, but not limited to, records tracking the expenditures of the proceeds of the tax-exempt bonds and the investment earnings on such proceeds and that substantiate compliance by the borrower with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) that the borrower comply with arbitrage rebate compliance, including the timely calculation and payment of all arbitrage rebate required by federal income tax law, (iii) that the borrower conduct due diligence at regular intervals with regard to compliance with the Code provisions regarding tax-exempt bonds, and (iv) that the borrower appoint an officer or employee to monitor its compliance with the borrower’s written procedures and ensure that such person receive appropriate education and training in connection therewith.

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The borrower shall agree, either in the borrower’s written procedures or under the terms of the documents related to the issuance of the tax-exempt bonds, that within ninety (90) days after the discovery of (i) its non-compliance with, or deviation from, the requirements of the borrower’s written procedures or (ii) any other event that leads the borrower to believe that the requirements of federal income tax law related to maintaining the exclusion from gross income of interest on the tax-exempt bonds have not been met, the borrower shall provide to the Commission in writing a description of (a) such non-compliance and (b) actions proposed to be undertaken by the borrower to remediate such non-compliance or the impact of such non-compliance, including, without limitation, the entry into a voluntary closing agreement with the Internal Revenue Service.

Since federal tax law compliance is ultimately loan specific and borrower dependent, the costs associated with federal tax law compliance, including arbitrage rebate payments, liability management compliance fees, legal and other professional fees resulting from an IRS inquiry or examination of the borrower’s loan obligations; shall be the sole responsibility of individual borrowers pursuant to these policies and procedures and the Rules of the Commission. Separate policies and procedures for arbitrage rebate compliance and post issuance compliance were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at public meetings held on November 3, 2005 and March 9, 2012, respectively. These amended, restated, and consolidated Policies and Procedures for Federal Tax Law Compliance were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 6th day of December, 2013.

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for Management Oversight, Accounting, and

Financial Management and Financial Reporting Background

The Commission was created pursuant to an interlocal agreement between its member governments that also creates the basis for the Commission’s governance. Each member government appoints a representative to the Commission. These representatives elect a five-member board of directors to oversee and administer the Commission’s financing programs. The Board has appointed an Executive Director and Deputy Director, who are responsible for the execution of the policies of the Commission and managing the day-to-day business of the Commission, including preparing an annual budget for the board’s consideration, approving expenditures necessary in the operation of the Commission, and keeping and maintaining the books, files, records and accounts of the Commission. The Executive Staff are uncompensated volunteers who depend upon various contractual relationships, approved by the Board of Directors, to assist them in fulfilling their responsibilities. The executive staff has the responsibility to provide oversight of certain management functions and day-to-day operational responsibilities that have been delegated to independent consultants, including a program administrator and an accounting services provider.

The program administrator contractually provides for a physical place of business, serves as the registered agent for the Commission, and maintains a virtual office and Internet presence for the Commission through its web site, which also serves as an informational and electronic document repository. The program administrator assists the executive staff by preparing the official meeting minutes, developing a proposed annual budget and the annual report of operations, developing proposed agendas for meeting, posting required public notices of such meetings, administers the combined program administration expense fund, and is responsible for maintaining the physical custody of the public records, files, and all other documents required to be kept in accordance with the Commission's governing documents and applicable law. In general, the program administrator’s duties include all functions reasonable and necessary to carry out the Commission’s policies under the direction of the executive staff.

The program administrator also serves as the Commission's dissemination and disclosure agent for purposes of complying with the continuing disclosure requirements of Rule 15c2-12 of the Securities and Exchange Commission. The program administrator provides general assistance to borrowers and their financial advisors relative to securing loans from the Commission; however any services deemed to be municipal advisory services under applicable

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federal law or regulations are performed in the program administrator’s capacity as a part-time employee of the Commission.

The accounting services provider, who has been contractually engaged by the board of directors to prepare the Commission’s annual financial statements in accordance with generally accepted accounting principles for governments in the United States and to coordinate the annual financial audit performed by the Commission’s independent auditors. The accounting services provider works closely with the program administrator in the administration of the financial affairs of the Commission, including the preparation of the comprehensive annual financial report. In addition, the duties of the accounting services provider include compiling interim, unaudited financial reports on a semi-annual basis; maintaining subsidiary ledgers of the trustee's monthly transactions, including billings and collections for participant loans; reviewing and verifying the trustee’s allocation worksheets and supporting reports for accrued bond interest expense, investment earnings for reserve funds; and transactions related to program-specific payment requisitions or the Commission’s allocable program administration expenses. Additionally, the accounting services provider prepares and files annual financial reports on behalf of the Commission as required by law with applicable state agencies and is responsible for the maintenance and safekeeping of the Commission’s financial records, files, books, accounts, and supporting documents.

A qualified auditing firm selected by the Commission’s board of directors performs an annual audit of the agency's financial statements in accordance with government accounting standards established by the Government Accounting Standards Board (GASB). The external auditing firm also prepares a written report to those charged with the agency’s governance addressing the Commission's internal control and the assessment of control risk in connection with the annual financial audit. This report may address reportable conditions relating to any significant deficiencies in the design or operation of internal control that, in the external auditor's judgment, could adversely affect the Commission's ability to record, process, summarize, and report financial data consistent with the assertions of the agency's management in the general purpose financial statements. Compliance with laws, regulations, contracts, rules, and policies applicable to the Commission are generally not part of the financial audit and are the responsibility of the Commission's executive management. In addition, the Commission's executive management is responsible for establishing and maintaining effective internal control over financial reporting and disclosing any significant deficiencies and material weaknesses in the design or operation of such controls over which it has knowledge. The Commission's executive management and auditors work cooperatively to identify any weaknesses in the control or financial structure and prepares recommendations for improvement.

In assisting the board of directors in their oversight of the operation and governance of

the Commission, the executive staff is responsible for recommending: an annual operating budget, board agendas, meeting minutes, annual report of operations, policies and procedures, and other management reports required by the Commission. The executive staff is also responsible for overseeing the financial management and reporting, including a review of interim financial statements and interim reports on the combined program administrative expense fund. In connection with the annual financial audit, the executive staff is responsible for assisting in the selection and retention of auditing services and reviewing the draft of the comprehensive annual financial report.

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The Commission has limited ability to separate duties in the preparation of financial

statements. The following procedures have generally been used by the Commission’s management in mitigating the risk of potential errors: (1) the establishment of review procedures to be performed by someone other than the accounting services provider, i.e. the program administrator (2) the reconciliation of trustee billing statements to bond and loan amortization schedules and any credits derived from investment income, (3) the reconciliation of year-end accrued interest to subsequent billings by the trustee, (4) to the extent possible, seek independent review or verification of accounting entries for any new or refunding bond issuances, (5) separation of duties between the program administrator and the accounting services provider regarding the administration of the Commission’s combined program administrative expense fund and the review of billings to borrowers, and (6) provide for consistent and appropriate accounting for transfers and credits between the Commission and its borrowers.

The purpose of these policies and procedures is to establish reasonable, consistent, and accurate accounting and financial reporting for the Commission and its participants. These policies and procedures are also intended to address any past auditor recommendations, to assist and guide future financial audits of the Commission, and to provide written guidelines for management oversight of the accounting and financial management and reporting responsibilities of the Commission. Authorization

Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission and the Rules of the Commission, as amended and restated, the Board of Directors hereby adopt the following policies and procedures: Management Oversight

1. In overseeing the contractual work performed by the Commission’s service providers, the Executive Staff may rely on the Program Administrator’s input and representations. The Executive Staff may delegate certain management responsibilities to the Program Administrator, including the negotiation of services and fees for certain service providers. The Executive Staff shall monitor the business relationship disclosure certificates submitted by the Commission’s contracted parties for general compliance and report any potential conflicts to the Board of Directors.

2. The Commission’s Board of Directors, Executive Staff and service providers are geographically dispersed. The Program Administrator and the Accounting Services Provider are the Board of Directors’ and the Executive Staff’s “eyes and ears” for the day-to-day operation of the Commission’s financing programs. They receive all correspondence, initiate most communications, receive trustee reports and coordinate with auditors and other contractual parties on behalf of the Commission. The Executive Staff and the Board of Directors rely on the Program Administrator and Accounting

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Services Provider to bring to their immediate attention any unusual activity. In order to assure the continuous flow of information and provide adequate management oversight, the Executive Staff will meet with the Program Administrator and the Accounting Services Provider quarterly. The meetings will review all recent activity, upcoming board agenda materials, comparison of actual expenditures with budgets, review of disbursements and proposed budgets. Staff meetings may be in person or held via conference call as determined by the Executive Staff.

3. The Executive Staff will meet with the auditors at the at the beginning of the audit and at the conclusion of the audit to review the financial statements, any adjusting entries or management letter findings, and the auditor’s report to those charged with governance prior to consideration by the Board of Directors. Such meeting maybe in person or telephonically as deemed necessary by the Executive Staff.

4. Each meeting agenda of the Board of Directors shall include a “Report from the Executive Director” for the routine reporting of the Executive Staff’s management oversight responsibilities as provided in these policies and procedures. The Executive Staff shall also provide an annual review of the Commission’s Policies and Procedures and Strategic Planning Objectives for relevance and provide any recommendations for revisions or refinements.

Accounting Functions 1. Prior to the distribution to borrowers, debt service billings prepared by the trustee shall be

thoroughly reviewed for accuracy and approved primarily by the Accounting Services Provider and secondarily by the Program Administrator.

2. Each member or participant borrower having outstanding debt with the Commission shall be treated as a separate enterprise fund for accounting purposes.

3. All revenue account or other available cash earnings will be credited to the member or participant borrower on each subsequent debt service invoice prepared by the trustee.

4. Earnings received on the reserve accounts will be credited to the member or participant borrower on each subsequent debt service invoice prepared by the trustee.

5. The fair value of the investments with available cash held in the reserve accounts shall be the amount used in the calculation of the reserve credits available at year end. The minimum amount required to be on deposit in the reserve account as prescribed by the Program Documents shall he the amount used to calculate reserve fund credits. The required minimum interest reserve funding balances for variable rate programs shall be monitored for compliance during each participating borrower’s billing cycle. The Accounting Services Provider and the Trustee shall certify the minimum required funding

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requirements for any interest reserve fund have been satisfied annually as of the last day of the Commission’s fiscal year – September 30th. Any excess interest reserve greater than the required minimum balance shall be credited to the member or participant borrower in the next billing cycle as prescribed by the Program Documents.

6. Any bond discounts or premiums and loan discounts or premiums shall be amortized on a straight-line basis over the life of the related loan/bond issue. Bond issuance costs, net of costs of insurance, shall be expensed as incurred.

7. Accounting estimates, including those used for unamortized bond discounts/premiums, are an integral part of the preparation of the Commission's financial statements. The estimating process recommended by the Accounting Services Provider to management shall be based on all relevant and available facts and shall encompass their knowledge and experience about past and current events and certain assumptions about future events. The estimating process shall be continually reviewed by the Executive Staff, subject to the periodic oversight of the Board of Directors. A review of the estimating process used by management shall be a focus of the annual financial audit.

Financial Management and Reporting

1. The Accounting Services Provider and the Program Administrator shall meet periodically with the Executive Staff to review expenditures related to each standalone financing program and the common administrative expenditures occurring during the prior reporting period, any unanticipated borrower repayments that may affect the current year’s budget, and provide such other informational reports as maybe requested by the Executive Staff. The Accounting Services Provider and/or the Program Administrator shall immediately report to the Executive Staff any discovered billing errors allocable to borrowers or other problems that may require consultation with the Commission’s auditors, legal advisers, or other contracted parties retained by the Commission.

3. As an intergovernmental bond financing authority representing active debt issuers with comprehensive annual financial reports (CAFR) recognized by the Government Financial Officers Association (GFOA) for excellence in financial reporting, the Commission shall continue a policy of preparing a CAFR for recognition by the GFOA.

4. Unaudited, interim financial statements shall be prepared by the Accounting Services

Provider and submitted to the Executive Staff and the Program Administrator not later than sixty (60) calendar days of the end of the designated interim reporting period, currently semiannually ending on March 31 and September 30. Upon review by the Executive Staff, interim financial reports shall be made available to the Board of Directors and posted on the Commission’s web site by the Program Administrator.

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5. Annual financial statements prepared by the Accounting Services Provider with assistance provided by the Program Administrator shall be submitted for review to the Executive Staff prior to the submission to the external auditor.

6. The financial statements will be presented in accordance with Generally Accepted Accounting Principles (GAAP) using an enterprise fund basis of presentation.

7. Audited financial statements, when approved by the Commission's Board of Directors, shall be made available to the Commission’s Members and disseminated electronically via an authorized web site repository in accordance with the Commission's Policies and Procedures for Investors Relations and Continuing Disclosure Program or other regulatory requirements.

8. The following policies and procedures adopted by the Board of Directors are incorporated by reference herein: Policies and Procedures for the Allocation of Program and Other General Administrative Costs Among Members and Non-Member Borrowers; and the Policies and Procedures for the Operation of the Combined Program Administration Expense Fund, the Operating Reserve Fund, the Program Development Fund.

Internal Control Systems

1. The Commission recognizes its limited contract staffing does not provide for a broad

range of separation of duties in connection with accounting functions and financial reporting. In reviewing the Commission’s internal control systems with its auditors, the Executive Staff shall take reasonable and appropriate measures to avoid internal control deficiencies or other weaknesses for maintaining the highest level of integrity in the accounting and financial reporting functions. All invoices prior to payment will be approved by either the Executive Director or Deputy Director and the Program Administrator.

2. Any suspicion, discovery, or investigation of a fraudulent act by an employee, consultant, or other contracted party with the Commission shall be brought to the immediate attention of the Commission’s Executive Staff.

These policies and procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 2nd day of November, 2018.

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for the Selection, Evaluation and Retention of Professional Services

Providers

Background The Commission is governed pursuant to the Interlocal Agreement between its member governments. Each member government appoints a representative to the Commission. These representatives elect a five-member board of directors to oversee and administer the Commission’s financing programs. The board of directors has appointed an executive director and deputy director, who are responsible for the execution of the policies of the Commission and managing the day-to-day business of the Commission. The executive staff serves as the liaison for member governments, regulatory agencies, the general public, professional services providers or program principals, and others conducting business with the Commission. The Rules of the Commission authorize the board of directors to employ consultants and other professionals as it deems necessary to accomplish the purposes of the Commission.

The purpose of these policies and procedures is to establish reasonable, consistent written

guidelines for the selection and retention of the Commission’s professional services providers. Authorization

Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission and the Rules of the Commission, as amended and restated, the Board of Directors hereby adopt the following policies and procedures for the selection and retention of professional services providers.

General Policy. The Board of Directors shall select the most competent and qualified providers of professional services which best meets the needs of the Commission and in the most economical and efficient manner in accordance with all applicable federal and state laws. It will be the responsibility of the Executive Staff to solicit proposals, negotiate terms and evaluate all professional service providers. The Board of Directors

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will approve all such contracts and will have the exclusive rights to terminate and modify such contracts.

Services specific relative to a loan for a customized standalone program shall require the consent of the participating borrower or borrowers where they are responsible for the costs of such services. In addition, the cost of certain professional services, which are uniquely required by a participating borrower, and engaged by the Commission, shall be the sole responsibility of the borrower pursuant to the Commission’s Policies and Procedures Allocation of Program Costs and Other General Administrative Costs Among Members and Non-Member Borrowers. The Chairman shall evaluate the Executive Staff and recommend such changes to the Board as he/she deems necessary. The Chairman may request an executive session with the Board to discuss his findings and recommendations. Executive Staff are volunteers and do not have a contract or specific duties other than those identified in the Rules of the Commission and other specific policies. The Board at any time can amend either the Rules of the Commission or its policies and procedures to redefine the duties and responsibilities of Executive Staff including dismissing, restructuring or replacing them. Executive Staff Responsibilities. The Executive Staff is charged with the responsibility of soliciting proposals from service providers, negotiating contracts, recommending such contracts to the Board and monitoring the performance and fees of all contractual service providers. In fulfilling their responsibilities, they shall meet periodically with the providers either in person or telephonically as they deem appropriate to examine the work requirements, the performance of such work and the compensation arrangements. They may, as needed, solicit the input of General Counsel, Program Administrator, the Accounting Services Provider or individual Board Members to ensure that they fully understand the work requirements, skills and qualifications needed, and the quality of services being provided. The staff will report annually to the Board regarding services that are coming up for renewal in the coming year, evaluations completed during the prior year and recommendations for changes or modifications to existing contracts. The Board of Directors may direct the Executive Staff to engage in a specific review, direct specific issues to be evaluated or may direct them to undertake specific actions including release of an RFP/RFQ or other solcitiation for services.

These policies and procedures were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 2nd day of November, 2018.


Strategic Planning Objectives

Periodically, the Commission conducts informal and collaborative workshop discussions between the officers, board members, staff, member representatives, and program principals. The following policy statements and strategic planning objectives were refined and affirmed by the Board of Directors in 2019 to provide continuing guidance toward accomplishing the mission and purposes of the Commission:

1. Membership should be available to a limited number of eligible municipalities, counties, and other eligible public agencies. While most of the current members have retired their outstanding loans, these inactive members remain as parties to the Commission’s Interlocal Agreement allowing their authorized representatives the opportunity to voluntarily participate in Commission’s activities. The Commission’s leadership should continue to encourage the involvement of all member representatives in its governance; however the Commission should also be responsive to any member’s request to terminate its membership under applicable provisions in the Interlocal Agreement.

2. The Commission’s financing services are membership driven and are limited to qualified and similarly creditworthy borrowers to facilitate (1) greater access to certain financial markets, (2) to generate savings from operational cost efficiencies afforded by a cooperative debt financing program and (3) to provide flexibility in the development of financing structures tailored to recognized and active debt issuers. The Commission should be responsive to the ongoing financing needs of current members as its highest priority. The Commission should seek to provide its participants the greatest level of flexibility to manage their capital needs.

3. In recognition of the dramatic changes in the municipal financial markets and the ongoing efforts by lending institutions to address potential credit risks, the Commission should be responsive to services that result in the highest credit standards obtainable for market acceptance. While changing capital markets and current membership demand have resulted in standalone financial structures tailored to the needs of individual members, the Commission should remain attuned to market opportunities to provide pooled or other cooperative financial services for its membership.

4. In the event an individual member experiences financial hardship, the Commission should strive to be diligent in assisting the distressed member while protecting the integrity of all its members and the market presence of the issuing entity as a whole.

5. The Commission’s elected and appointed leadership should reflect the highest level of expertise and experience available in the management and oversight of its debt obligations and financial services. The composition of the Board of Directors should include those members with outstanding loans to the extent possible. Public officials serving in the capacity of a chief financial officer, debt managers, or as an elected official are encouraged to serve as the member representative and/or board member. Generally, continuity of the Commission's leadership should be encouraged through the designation of alternate board members by the member’s governing body.

6. Under the supervision of the Board of Directors, the management of the Commission shall be the general responsibility of the volunteer executive staff with advice and support provided by professional service providers. The executive staff shall be responsible for developing and recommending a succession plan for both staff and other professionals to ensure the continuity and consistency of the Commission’s services and operations. The Commission, through its staff, program principals, and elected leaders, should stay attuned to major changes and trends in the municipal finance industry and related regulatory and political influences. The Board, when appropriate, will consider telephonic Board meetings to minimize the cost to the organization and the time of its members.

7. Under favorable and conducive credit markets, the Commission should strive to be a multi-faceted, broad-based financial services provider in servicing its membership. A combination of variable and fixed rate financing services, such as multimodal programs, and other specialized services should also be available for qualifying capital projects requiring tax exempt, taxable, tax credit, or other special tax treatment financing. Given indications of continued uncertainty in the tax-exempt municipal markets, specialized financing services, including the use of synthetic instruments, should be carefully considered and made available only when their potential risks have been fully evaluated and their use limited to mitigating interest rate risk and creating greater efficiencies in the Commission's lending programs.

8. The Commission recognizes the benefits of an active investor relations program incorporating mandatory and voluntary participant compliance with continuing disclosure obligations. The Commission will, to the extent possible, follow GFOA Best Practices and Advisories so as to continue to maintain the trust and confidence of regulators, investors, analyst and other market participants.

9. During periods of financial instability or general economic distress, the Commission should strive to maintain market access for current members and borrowers under the most favorable terms available in the marketplace. When credit market access is severely limited or other adverse factors have become prolonged and detrimental to the long-term best interests of borrowers, the Commission should make every reasonable effort to assist borrowers in refunding their loan obligations or exiting its financing programs.

10. The Commission’s leadership recognizes the entity has no inherent mandate for its perpetual existence and exists as long as it continues to serve the needs of its membership. To this end, the Commission shall continually strive to fulfill its fundamental purpose and mission as a going

concern for its most active stakeholders. Further, the Commission should seek to provide its members with the most flexibility to assume their existing loans to direct obligations of the issuer without risk and at minimal costs. All future loans will include general language, such as provisions for bond exchanges or other suitable instruments, to enable borrowers the option and the flexibility to assume their debt obligations independent of the Commission. To the extent the Board decides to dissolve the entity it will move forward in a thoughtful deliberative process ensuring the minimal impact upon all of its participants.

11. The Commission’s leadership shall regularly review the strategic planning objectives, governing documents and operating policies for relevance.

These amended and restated strategic planning objectives were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 18th day of March, 2019.

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Allocation of Program Costs and Other General Administrative Costs

Among Members and Non‐Member Borrowers

Background

In 1986, the Commission issued its first $300 million in variable rate debt

instruments for nine city and county governments that comprised the original

member borrowers of the Commission. In 1994, the Board of Directors authorized

the establishment of a new commercial paper program for the issuance of taxable

and tax‐exempt variable rate notes. Since 1994, more than $1.5 billion in loans has

been issued on behalf of fifteen participating members and non‐member

municipalities, counties, and public agencies. In 1995, the Commission issued its

first fixed rate debt at the request of and on behalf of the City of Jacksonville.

Multiple program series and the use of fixed rate debt issues by the Commission

require the development of a cost allocation plan. One of the major advantages of

a pre‐structured pooled financing program is the ability of participating

borrowers to save financing costs by sharing certain fixed issuance costs and on‐

going administrative costs. Under a pooled intergovernmental program, each

participant is typically responsible for its proportionate share of program‐wide

expenses pursuant to a fair and equitable allocation policy.

On March 17 1995, a discussion was held during a meeting of the Board of

Directors regarding the allocation of costs between the existing programs. The

need to allocate certain costs between various program series was also reported to

member representatives present at the Commissionʹs annual meeting also held on

March 17, 1995.

The staff proposed a method for the allocation of costs between the two

separately established loan programs. It was recommended that if a cost element

could be uniquely identified as a direct cost of a specific program then that cost

should be charged directly to that particular program. For example, fees related

to a letter of credit for the 1986 program are to be charged only to those particular

borrowers in the 1986 program. On the other hand, fees relating to the liquidity

support provider for the 1994 commercial paper program will be similarly

charged to the participating borrowers only in that program. It was further

recommended that those administrative or other program costs which cannot be

specifically referenced to a particular program series and for which a common

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benefit exists to the Commission and the participating borrowers, collectively,

that such costs will be allocated to both programs in a manner proportionate to

the total amount of loans outstanding in each particular program. Accordingly,

common costs allocated to a particular program series were allocated among

participating borrowers in a manner proportionate to a borrowerʹs loan to the

total amount of loans outstanding in each particular program series.

The financial crisis in 2008 resulted in the meltdown of the monoline insurance

industry and credit downgrades for debt insured by bond insurance. Refunding

alternatives requiring other forms of credit enhancement became extremely

limited. When direct lending from banks became available in 2009, many of the

Commission’s insured, variable rate loans were refunded from funding sources

outside of the Commission. In the absence of a viable bond insurance market and

extremely limited credit enhancement opportunities for an alternative pooling

structure, several of the Commission’s financing programs were discontinued or

restructured to initially accommodate borrowers with higher credit ratings not

requiring credit enhancement. As credit enhancement markets slowly opened

up, the Commission worked with other members to customize restructuring and

refunding opportunities to their specific debt management needs. The

Commission’s retrenchment efforts continued through 2011, resulting in the

redemption of all debt obligations involving the pooling of loans among multiple

borrowers using a common trust indenture. In addition, many of the

outstanding variable rate loans were refunded with fixed rate obligations under

standalone programs for those borrowers electing to continue their debt

obligations with the Commission.

With approximately forty percent of the Commission’s total outstanding debt in

fixed rate obligations in late 2011, the Commission’s executive staff recommended

reductions in the organization’s operating cost structure to reflect commensurate

support services associated with fixed rate debt obligations. And, with the

continued uncertainty in the capital markets and future loan demand

undeterminable, the Commission staff also recommended across‐the‐board

budget reductions in the general support and administration of the Commission

to reflect the austerity measures experienced throughout the governmental sector.

The purpose of these amended and restated policies and procedures is to

maintain a fair and equitable cost allocation plan for and between the

Commissionʹs most active borrowers recognizing a varying strata of debt

obligations, the continuation of a global economic crisis, an uncertain future for

municipal capital markets, and the possibility of further retrenchment of the

financing services available through the Commission; all leading to a reduction in

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the basic professional and support services (accounting and administration,

financial advisory, arbitrage rebate compliance services, and legal services)

required by the Commission.

Authorization

Pursuant to the Interlocal Agreement creating the Sunshine State Governmental

Financing Commission (the ʺCommissionʺ) and the Rules of the Commission, as

amended and restated, the Board of Directors (the ʺBoardʺ) hereby adopts the

following policies and procedures regarding the allocation of costs for and

between the various program series:

Allocation of Costs Unique to a Particular Program or Series

To the extent feasible and practical, the fees, costs, expenses or other

authorized charges to the Commission shall be designated to a particular

program series, where such costs are unique to that particular program (i.e. Series

1986 Revenue Bond Program, Commercial Paper Note Program, Fixed Rate Bond

Program, Private Placement Note Program, including any standalone bond or

note series created for a single borrower). For purposes of this policy, the

establishment of a separate trust indenture shall determine the existence of a

separate financing program or series.

Such fees and expenses generally include, but are not limited to, the following:

(1) the fees and expenses of the Trustee and its counsel owed to it under

the Indenture;

(2) the fees and expenses of the Issuing and Paying Agent and its counsel

owed to it under the Indenture and the Issuing and Paying Agency Agreement;

(3) the fees and expenses of the Remarketing Agent/Dealer owed to it

under the Remarketing Agent/ Dealer Agreement;

(4) the fees and expenses of the Liquidity Providers and their counsel

owed to them under the Liquidity Facilities and any other reasonable fees and

expenses in connection with the Liquidity Facilities,

(5) the fees and expenses of the Credit Facility Providers and their counsel

owed to them under the Credit Facility and any other reasonable fees and

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expenses in connection the Credit Facility;

(6) the rating fees of Moodyʹs, S&P and/or Fitch as required in the

development and maintenance of the Program;

(7) the fees and expenses associated with the replacement of the Trustee,

Issuing and Paying Agent, Remarketing Agent/Dealer, Liquidity Facility

Provider, Credit Facility Provider, or Rating Agency in connection with the

restructuring of the Program;

(8) such other reasonable fees or expenses uniquely associated with the

Program.

The above fees, costs, and expenses shall be allocated among participating

borrowers based on the relationship of the participating borrowerʹs outstanding

loan balance to the total amount of loans outstanding in a particular program

series, pursuant to the definition of Proportionate Share in the Loan Agreement.

Allocation of Costs Common and Not Unique to a Particular Program or Series

In those cases, where fees, costs, expenses or other authorized charges are

not unique to a particular program and may be required or encumbered for the

benefit of the Commission and participating borrowers, collectively, such costs

shall be allocated to participating borrowers based on a proportionate share of the

total amount of loans outstanding in each particular program.

In conjunction with the development of the annual operating budget of the

Commission, the Board of Directors shall approve a cost allocation plan for the

upcoming fiscal year based on the existing and projected loan balances for all

borrowers and all programs. A program administration fee defined, as a

percentage (Operating Expense Ratio or CPAEF Ratio) of each borrowerʹs total

outstanding principal balance, shall be assessed and applied to each borrowerʹs

loan payments in the operation of the Commission’s Combined Program

Administrative Expense Fund (CPAEF). Such fee may be modified by the Board

of Directors as required to meet the current and projected obligations of the

Commission. Notwithstanding the requirements in the respective loan

agreements of participants for the allocation of common costs on a proportionate

share basis, the Board of Directors may differentiate between fixed, variable, and

other debt obligations in establishing an annual Operating Expense Ratio for

assessing borrowers in the administration of its financing programs. To the

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extent possible, assessments for allocating common program costs for fixed rate

loans shall be billed and collected in arrears on the borrower’s semi‐annual or

annual debt payment dates, or the Commission’s fiscal year ending date,

whichever occurs earlier. Additionally, assessments for loans privately placed,

and not requiring the services of a trustee, shall be billed and collected in a

similar manner.

Such common fees and expenses generally include, but are not limited to,

the following:

(1) certain legal fees and expenses of the Bond Counsel and the Counsel

to the Commission;

(2) certain fees and expenses of consultants and professionals, including

accountants, auditors, program administrators, financial advisors, and

investment advisors, engaged by the Commission;

(3) certain rating agency fees associated with the development and

maintenance of underlying assessments for determining credit eligibility of

participating borrowers, not otherwise attributable to a participating borrowerʹs

loan or a member;

(4) general operating expenses of the Commission, including fees or

charges assessed by regulatory agencies, if any.

The above fees, costs, and expenses or other authorized shall be allocated

among participating borrowers based on the relationship of the participating

borrowerʹs outstanding loan balance to the total amount of loans outstanding

with the Commission.

Allocation of Other Costs Unique to Borrowers

Transactional costs required in connection With the origination of a loan

shall be the responsibility of the participating borrower. Such costs may include

(1) professional fees and/or related expenses required by the Commission and

disclosed to the borrower, (2) other professional fees and expenses obligated

directly by the borrower, and (3) any loan origination fees or other administrative

charges assessed by the Commission.

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Certain ongoing costs unique to a particular borrower, i.e. arbitrage rebate

compliance services, shall be allocated to individual borrowers upon their

incurrence.

Notwithstanding the covenants and obligations of the Governmental Unit,

as defined and referenced in each participating borrowerʹs Loan (Agreement,

borrowers shall not be obligated to pay any of the fees, expenses and costs

uniquely identified to a program series once a loan in that program series is paid

in full; provided, however, that the borrower shall remain obligated to pay such

fees, expenses and costs of the Commission to the extent such fees, expenses and

costs accrued prior to the date that the outstanding loan was paid in full.

The Board of Directors reserve the right to waive or assess nominal fees,

expenses or other authorized charges to members of the Commission that no

longer have outstanding loan balances, provided such fees and expenses are

reasonable and directly relate to the benefit of continued membership on the

Commission.

These policies and procedures, as amended and restated, were adopted by the

Board of Directors of the Sunshine State Governmental Financing Commission at

a public meeting held this 16th day of September, 2011.


Policies and Procedures for the Operation of the

Combined Program Administrative Expense Fund, the Operating Reserve Fund, and the

Program Development Fund

Background On September 7, 2001, the Board of Directors adopted Policies and Procedures for the Allocation of Program Costs and Other General Administrative Costs Among Members and Non-Member Borrowers. These policies provide for the allocation of various expenses between programs and between participating borrowers on a proportionate basis of their outstanding loans to the total loans outstanding in each financing program. In addition, these policies require those costs that can be uniquely identified with a particular program to be assessed to borrowers only in that particular program. These policies further require common administrative costs that are not uniquely identified with a particular program series be allocated to all programs in a manner proportionate to the total amount of loans outstanding in each particular program. The Board of Directors is required to approve a cost allocation plan for the upcoming fiscal year based on the existing and projected loan balances for all borrowers in each particular program. A program administration fee based on a percentage of each borrower’s loan payments is assessed on each borrower’s loan. Prior to establishing the Combined Program Administrative Expense Fund, certain administrative expenses were disbursed by the trustee of the Series 1986 Revenue Bond Program and subsequently reimbursed at year end by the trustee of the Commercial Paper Note Program based for that program’s allocable share of the Commission’s common administrative expenses. This system created additional year-end accounting requirements during the audit process and delayed the reconciliation of “due to and due from participant transfers” for common administrative expenses. During fiscal year 2000-01, compensation for accounting, program administration, and certain bond counsel services no longer allowed for program-specific allocations. The Commission’s programs grew substantially from 2001 until late 2007. With the financial crisis beginning in 2008, the Commission’s pooled programs have steadily retracted and have been restructured to customized programs for individual borrowers. In 2011-2012, the Board of Directors reduced ongoing common program administration costs and restructured the Commission’s program allocation costs differentiating between fixed and variable rate loan obligations. The purpose of these policies and procedures is to provide consistent guidelines for the continued operation of the Combined Program Administrative Expense Fund.

Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following amended and restated policies and procedures regarding the internal operation of the Combined Program Administrative Expense Fund and the designation of the Operating Reserve Fund and the Program Development Fund: General Upon the adoption of the annual cost allocation plan approved by the Board, the

Program Administrator shall notify the respective trustee, if any, of the board-approved, program administration fee for the upcoming fiscal year. The respective trustee shall use the program administration fee in billing each borrower its prorated share or allocable share of the common administration expenses for the Commission’s Programs. Revenues to be received under the approved operating budget for program administration fees shall be separately accounted for by Program. Upon receipt of all monthly, quarterly, semi-annual, or annual payments from borrowers, the trustee shall transfer by wire an equivalent amount of the allocable program administrative cost to the Investment Account of the Combined Program Administrative Expense Fund. Written instructions shall be on file with the respective trustee authorizing the Investment Account as the only account for the receipt of outgoing wire transfers for administrative expenses. Each wire transfer shall include a written notice to the Program Administrator referencing the amount and a breakdown of the wire transfer, if attributable to multiple programs, series, or loans.

Investment Account

The Investment Account shall be referenced as the “Sunshine State

Governmental Financing Commission – Combined Program Administrative Expense Fund” and established with the Florida State Board of Administration’s Local Government Surplus Funds Trust Fund or other authorized public depository institution in Florida.

Periodic statements of deposits and withdrawals in the Investment

Account shall be maintained with the Program Administrator with an informational copy provided to the Accounting Services Provider. The Program Administrator shall be responsible for the day-to-day management of the Investment Account and is authorized to provide instructions to the designated banking institution for disbursement of outgoing electronic transfers or wire payments.

Changes in the initial account setup information provided to the

designated banking institution shall require at least two signatures from the following individuals: the Executive Director, the Deputy Executive Director, or the Program Administrator.

Disbursement Account – Qualified Banking Institution in Tallahassee, Florida

The Program Administrator shall establish a business checking account

in the name of the Sunshine State Governmental Financing Commission with a qualified banking institution in Tallahassee, Florida. In addition, the Program Administrator may establish a secondary investment account (money market account) with such qualified banking institution to help defray banking charges and related fees in the administration of the business checking account. The Program Administrator, the Executive Director and Deputy Executive Director are authorized signatures on the Disbursement Account.

Changes in the initial account setup information provided to the

designated banking institution shall require at least two signatures from the following individuals: the Executive Director, the Deputy Executive Director, or the Program Administrator.

All disbursements from the Disbursement Account shall be supported by

invoices and requisition approvals and shall be consistent with the Commission’s policies and procedures, specifically the Policies and Procedures for the Reimbursement of Travel and Other Out-of-Pocket Disbursements for Board Members, Staff and Program Principals and the Policies and Procedures for the Allocation of Program Costs and Other General Administrative Costs Among Members and Non-Member Borrowers, as amended.

Disbursements may be made by paper or electronic voucher and are not

subject to a minimum denomination. Outgoing wire transfers or payment disbursements shall have a minimum denomination of $5,000. Paper vouchers may have original or facsimile signatures from one or more of the authorized signatories.

The Program Administrator is authorized to make disbursements on a

routine basis, not more frequently than quarterly, for professional service fees. Retainer fees shall be paid upon the receipt of funds from the trustee that have been billed and collected monthly in arrears for variable rate loans. Disbursements for the reimbursement of eligible expenses may be more frequently subject to available funds in the Disbursement Account. The following fees and expenses are hereby authorized:

(1) authorized legal fees and expenses of the Bond Counsel and the Counsel to the Commission;

(2) authorized fees and expenses of consultants and professionals, including accountants, auditors, program administrators, financial advisors, and investment advisors, engaged by the Commission;

(3) authorized rating agency fees associated with the development and maintenance of underlying assessments for determining credit eligibility of participating borrowers;

(4) general operating expenses of the Commission, including fees

or charges assessed by regulatory agencies, if any. Any exceptions to the above-listed fees and expenses must be approved

by the Board of Directors. The operation of the Combined Program Administrative Expense Fund

shall be accounted for and reported separately in the unaudited and audited financial statements of the Commission.

Operating Reserve Fund The Board, in connection with the adoption of the annual cost allocation

plan, shall approve the current balance held in the Operating Reserve Fund within the Combined Program Administrative Expense Fund. Funding of the reserve account is discretionary and shall be derived solely from any excess operating revenues from the previous fiscal year or accumulated excess reserve funds from prior fiscal years. The Operating Reserve Fund shall be an unrestrictive account within the accumulated fund balance of the Combined Program Administrative Expense Fund. Reserve funds may be temporarily advanced to the Disbursement Account for cash flow purposes in meeting payment obligations for those expenditures authorized in the Commission’s operating budget or separately approved by the board of directors.

Program Development Fund

The Board, in connection with the adoption of the annual cost allocation plan, shall approve the current balance held in the Program Development Fund within the Combined Program Administrative Expense Fund. Funding of the Program Development Fund is discretionary and shall be funded by interfund transfers from the Operating Reserve Fund or from sources outside of the Combined Program Administrative Expense Fund. The Program Development Fund shall be designated as a separate demand deposit account in a Florida qualified public depository institution. Disbursements shall be restricted in use for the purpose of advance funding feasibility or other development costs associated with new financing programs proposed and authorized by the board of directors. Monies currently held in the Program Development Fund represent accumulated surplus funds from various discontinued pooled financing programs, not allocable to specific Programs or borrowers.

The Operating Reserve Fund and the Program Development Fund shall exist so long as any Bonds or other obligations of the Commission or

obligations of any participating Governmental Unit issued under the Program remain outstanding. In the event of the Commission’s dissolution, all amounts held in the Operating Reserve Fund and the Program Development Fund shall be allocated among the participating Governmental Units in accordance with dissolution provisions prescribed in the Rules of the Commission. The total dollar amount held collectively in the Operating Reserve Fund and the Program Development Fund shall not exceed one-half (1/2) percent of the total outstanding loans.

Reporting and Monitoring Responsibilities The Program Administrator shall monitor the fund balances and cash flow requirements in the operation of the Combined Program Administrative Expense Fund. Any proposed modifications to the program administration fee approved in the cost allocation plan shall be brought to the immediate attention of the Executive Director and the Deputy Executive Director. The Program Administrator shall provide periodic financial reports on the activity in the Combined Program Administrative Expense Fund to the Accounting Services Provider along with any detailed supporting schedules as may be required. Copies of such reports shall be provided to the Executive Director, Deputy Executive Director, external auditor, or other authorized parties upon request.

These policies and procedures were originally adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held on November 30, 2001 and were subsequently amended on November 4, 2004 and March 6, 2012.



Telephonic Participation Meetings of the Board of Directors

Board Members, Alternate Representatives, and interested parties may participate telephonically or through other communications media technology as defined by Florida Statue in meetings of the Commission (a “telephonic meeting”), provided the business to be conducted is conducive to telephonic participation as determined by the Chairman or a majority of the Board Members or Member Representatives present, including those attending telephonically, and the telephonic meeting has been duly noticed as a telephonic meeting in accordance with statutory requirements (See FS 163.01(18)(2012). A Board Member, Alternate Representative, other authorized person, or an interested party attending a meeting telephonically shall be deemed present. Passed and adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 22nd day of May, 2013.



Reimbursement of Travel and Other Out-of-Pocket Disbursements

for Board Members, Staff, and Program Principals

Background Pursuant to authorizing actions of the Board of Directors of the Sunshine State Governmental Financing Commission (SSGFC), the travel expenses of Board members and SSGFC staff have traditionally been reimbursed on an as-needed basis for their attendance at Board meetings or in connection with other authorized travel conducted on behalf of the Commission. In addition, the Commission provides a stipend in the form of a director’s fee for attendance at Board meetings by publicly elected officials serving on the Board of Directors. The reimbursement of travel costs and other out-of-pocket disbursements of program principals and other consultants are authorized pursuant to written agreements with these professional service providers. A “reasonableness” standard has traditionally been applied in determining the appropriateness of the reimbursement request. Travel reimbursements have typically included receipted expenses for coach airfares, rental cars, mileage use of a privately owned vehicle, meals, parking fees, and hotel and related expenses, if applicable. Other reimbursable expenses have included certain hosted meal expenses incurred for meetings of the Board of Directors, the Annual membership meeting, and staff meetings with program principals or prospective service providers to the Commission. Out-of-pocket disbursements for contractual services have included direct costs attributable to the business of the Commission, such as, telephone and telecopy/fax charges, copy charges, legal and other advertising, paper and related office supplies, postage and private courier services, filing fees, and meeting and related meal expenses. Rates and charges to the Commission have varied by consultant based on actual costs or based on customary industry standards. The purpose of these policies and procedures is to establish written, uniform guidelines for the reimbursement of travel and other out-of-pocket expenses for Board members, staff and program principals. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policies and procedures regarding the reimbursement of travel and other out-of-pocket expenses for Board members, staff, program principals, and other consultants doing business with the Commission:

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The Commission shall not advance any funds for purposes of travel or other authorized disbursements. All requests for reimbursements shall be submitted on a timely basis to the Commission’s Program Administrator and appropriately documented. The Program Administrator shall review and approve such requests in accordance with these guidelines. Should the Program Administrator be unable to determine the appropriateness of any reimbursement request, it should be reviewed by the Executive Director, followed by the Board of Directors. Once approved as a program allocable cost, the Program Administrator shall submit a requisition to trustee for disbursement of funds to the requesting party. Such disbursements shall be accounted for in accordance with the Commission’s Policies and Procedures for the Allocation of Expenses between Program Series.

1. Board members and SSGFC staff shall be reimbursed for their out-of-pocket travel

expenses for their attendance at meetings of the Board of Directors. Such requests shall be voluntary and submitted on an as-needed basis. The payee-governmental agency, company, or individual- shall be indicated on the reimbursement request. Publicly elected officials serving as Board members are eligible to receive a director’s fee of $300 per attended meeting. The Program Administrator shall provide a certificate of attendance at Board meetings for each elected official.

2. Program principals and other consultants shall be eligible for reimbursement of out-

of-pocket expenses in accordance with their respective agreements and these guidelines which shall apply to the general administration of the Commission’s lending programs and to any direct expenses billed separately to program participants in connection with a loan closing.

3. Program principals shall be represented at Commission meetings by one individual,

unless additional representation is requested by the Commission’s authorized representative or provided at the cost and convenience of the program principal.

4. Reimbursable travel should be conducted economically and in the best interests of

the Commission. When available and when feasible, discounted airfares should be used, however, under no circumstances shall first-class fares be eligible for reimbursement.

5. Use of privately own vehicles shall be reimbursed at the currently published IRS

approved mileage rate. Out-of-Pocket Disbursements 6. Long distance telephone toll or credit card calls based on actual cost plus applicable

taxes and surcharges. 7. Telecopy/fax transmissions shall be reimbursed at a rate not to exceed $.25 per page,

plus applicable long distance charges. 8. Copy and reproduction charges shall be reimbursed at a rate not to exceed $.25 per

page. Color copies shall be reimbursed based on actual costs. 9. Receipted expenses for postage and express courier services.

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10. Receipted expenses for advertising costs, filing fees, and paper and related office supplies directly attributable to the business of the Commission.

11. In cases where a receipted expense does not reflect the Commission’s exclusive use, a

signed certificate shall accompany the reimbursement request indicating the allocable portion to be reimbursed.

12. In cases where special services or products are required in connection with

contractual responsibilities, program principals should employ competitive bidding from at least three vendors or suppliers for any reimbursable disbursements exceeding $2,500. In such cases, advance approval from the Commission’s authorized representative is recommended.

13. With the advent of email correspondence and electronic document review, non-

reproductive document printing charges are becoming a more commonly requested reimbursable expense. Document printing charges, in connection with copying and other reproductive services, are reimbursable provided such costs are incurred for the benefit of the Commission and not incurred solely for the internal convenience of the program principal.

14. To the extent feasible, program principals are encouraged to use Internet services and

other electronic media currently available to assist in managing out-of-pocket expenses charged to the Commission.

These policies and procedures may be amended from time to time by a majority vote of the Board of Directors. Passed and adopted by the Board of Directors at a public meeting held this 14th day of August, 1998 and as amended November 5, 2004.

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Investor Relations & Continuing Disclosure Program Background The Sunshine State Governmental Financing Commission (the "Commission") and its participant borrowers ("Borrowers") have entered into separate continuing disclosure obligations pursuant to Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended, whereby the Commission and such Borrowers are required to provide annual disclosure as to certain matters and provide notice of certain material events with respect to certain publicly offered fixed rate and variable rate indebtedness of the Commission. While there is no current regulatory requirement to implement a continuing disclosure obligation for all variable rate securities (such as the Commission's commercial paper indebtedness) or non-regulated, private placement undertakings, the Commission recognizes the value of a proactive investor relations program and corresponding continuing disclosure of Commission activities and related Borrower undertakings by investors, program principals, other market participants, member governments, and the general public. The purpose of these policies and procedures is (1) to establish and maintain an investor relations program for communicating with investors and other market participants, (2) to develop parameters for content and dissemination of disclosure information, (3) to implement a timely and effective communication system and to establish internal procedures for continuing disclosure undertakings, and (4) to encourage, recognize and support the independent continuing disclosure activities of participant Borrowers and to serve as a conduit source of information for investors. Authorization Pursuant to the Interlocal Agreement creating the Commission and the rules of the Commission, as amended and restated, the Board of Directors (the "Board") hereby adopts the following amended and restated policies and procedures regarding the development and maintenance of an investor relations and continuing disclosure

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program for meeting the needs of investors and other market participants at both the Commission and participant Borrower levels:

Commission Compliance with Rule 15c2-12

At a minimum, the Commission shall comply with all continuing disclosure requirements legally applicable to it, in connection with Commission-issued indebtedness.

Borrower Compliance with Rule 15c2-12

The Commission shall encourage and, where appropriate and without subjecting itself to legal liability or obligation, endeavor to assist its participant Borrowers in complying with all continuing disclosure requirements legally applicable to them, in connection with Commission-issued indebtedness.

Voluntary Compliance with Rule 15c2-12

The Commission shall strive, to the extent reasonably possible and without subjecting itself to legal liability or obligation, to voluntarily comply with the requirements of Rule 15c2-12 for Commission-issued indebtedness that would otherwise be exempt from the requirements of Rule 15c2-12, and shall likewise encourage its participant Borrowers to do the same. The proposed format of such compliance would be the same as otherwise required by Rule 15c2-12.

Interim Reporting

Notwithstanding the information disclosed in the Commission's offering documents and the reporting of significant events described herein, the Commission intends to use its best efforts to provide investors and other interested parties with the most current information available on the Commission's financial and loan activities to assist with regulatory compliance and other credit monitoring activities required by the Commission's bondholders.

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Communications and Internal Procedures

As the Commission's designated disclosure and dissemination agent, the program administrator shall be responsible for coordinating communications to municipal market participants in consultation with the Commission's executive staff, disclosure counsel, bond counsel, and other program principals. In addition, the Commission's staff and program administrator shall monitor investor relations with its remarketing agents and dealers, respond to questions and informational requests, and assist prospective investors as may be required. Further, the Commission's staff shall be responsible for developing internal procedures in support of the continuing disclosure requirements of this policy.

Use of Internet Technology for Simultaneous Information Dissemination

The Commission shall incorporate web-based disclosure and other electronic media as a part of its investor relations and continuing disclosure program. In implementing and maintaining a web-based disclosure and communications system, the Commission shall adhere to interpretive guidance from the SEC or other regulatory agencies and be guided by the recommended practices of the Government Finance Officers Association, the National Association of Bond Lawyers, the National Federation of Municipal Analysts, or similar professional interests.

Investor Policy and Continuing Disclosure Development

The Commission's policies and procedures for its investor relations and continuing disclosure program shall be continually monitored and evaluated to reflect new or amended regulatory requirements and to conform to current industry standards and available communication technologies.

These policies and procedures, originally adopted at a public meeting held on March 22, 2002 by the Board of the Commission, are hereby amended, restated and re-adopted at a public meeting held this 10th day of June, 2019.

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RESOLUTION NO. 19‐02

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SUNSHINE

STATE GOVERNMENTAL FINANCING COMMISSION RESCINDING

CERTAIN POLICIES AND PROCEDURES ESTABLISHING MINIMUM

CREDIT ELIGIBILITY FOR PARTICIAPTING BORROWERS INCLUDING

THE USE OF INDEPENDENT ANNUAL CREDIT ASSESSMENTS BY A

NATIONALLY RECOGNIZED RATING AGENCY; ACKNOWLEDGING

THE SERVICES OF MOODY’S INVESTORS SERVICE IN PROVIDING THESE

SERVICES SINCE 1999; PROVIDING NOTICE FOR THE DISCONTINUANCE

OF THE RATING ASSESSMENT SERIVCES; AND PROVIDING FOR AN

IMMEDIATE EFFECTIVE DATE.

WHEREAS, the Rules of the Commission authorize the Board of Directors to

establish policies and procedures in carrying out the business of the Commission which

shall be adopted by a majority vote and shall remain in effect until amended or rescinded

by a majority vote; and

WHEREAS, the Commission’s Board of Directors adopted policies and procedures

for establishing minimum credit eligibility for participating borrowers including the use of

independent underlying rating assessments performed by a nationally recognized rating

agency; and

WHEREAS, Moody’s Investors Service was engaged in 1999 to provide the initial

underlying rating assessments of the pledged loan security for borrowers at that time and

annually thereafter for borrowers seeking new loans or maintaining outstanding loans

with the Commission; and

WHEREAS, the Commission’s Executive Staff, after consulting with the

Commission’s Bond Counsel and Financial Advisor, has recommended the repeal of the

current policies and procedures providing for minimum credit criteria and use of annual

rating agency assessments based on a declining use of the Commission’s lending services

and has recommended the termination of related services performed by Moody’s Investors

Service; and

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WHEREAS, the Commission’s Disclosure Counsel has opined the Commission’s

request for the discontinuance of the underlying rating assessments performed by Moody’s

Investors Service does not constitute a ratings change pursuant to the reporting

requirements of significant events under SEC Rule 15c2‐12.

NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Sunshine

State Governmental Financing Commission as follows:

SECTION 1: The policies and procedures adopted by the Board of Directors in 2001

establishing minimum credit eligibility for participating borrowers including the use of

independent underlying rating assessments performed by a nationally recognized rating

agency are hereby rescinded.

SECTION 2: The Executive Director is authorized and directed to notify Moody’s

Investor Services requesting their annual rating assessment services be discontinued and

terminated.

SECTION 3: This resolution shall take effect immediately upon passage and

continue in full force and effect until amended or repealed or by adoption of a subsequent

resolution.

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PASSED AND APPROVED BY THE BOARD OF DIRECTORS OF THE SUNSHINE

STATE GOVERNMENTAL FINANCING COMMISSION at special meeting held this 18th

day of March, 2019.

SUNSHINE STATE GOVERNMENTAL

FINANCING COMMISSION

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Minimum Credit Eligibility Criteria and the

Use of Underlying Credit Assessments Background Pursuant to Section 2.02, of the Interlocal Agreement, the Sunshine State Governmental Financing Commission was created for the purpose of enabling and benefiting a limited number of participating governmental borrowers that regularly undertake capital financing projects and have “similar substantial credit worthiness and high investment grade ratings” recognized by nationally recognized rating agencies. In 1986, the Commission issued its first $300 million in variable rate debt instruments for nine city and county governments which comprised the original member borrowers of the Commission. Due to federal tax law changes in 1986, this loan program has a finite loan capacity and will sunset in the year 2016. To accommodate an increased demand for financing services, the Board of Directors authorized the establishment of a new variable rate program in 1994 for the issuance of taxable and tax-exempt commercial paper notes. Since its inception, this program has generated approximately $325 million in tax exempt, tax-exempt AMT, and taxable loans for members and non-member borrowers. The credit parameters for participation in the Commission’s financing programs are broadly defined and have remained unchanged since the creation of the Commission. The Board of Directors strives to maintain a minimum “A” rating for eligibility, however, many borrowers and prospective borrowers do not have established general obligation and revenue bond ratings. In many cases, the Board must rely on anecdotal information and the advice of professionals in determining a borrower’s general eligibility. Given the flexibility and the purpose of the Commission’s programs, most participant loans are secured by a general covenant to budget and appropriate from available non-ad valorem revenues. Few borrowers have separate ratings for non-ad valorem covenant debt. During 1996-97, one of the loan participants reported financial difficulties and ratings for the City of Miami were reduced to below investment grade status. An oversight committee appointed by the Governor was established to oversee the City’s financial matters and third-party escrow accounts were established for making all appropriate debt service payments to the Commission. The City continues to meet its loan obligations with the Commission, however, the City is currently ineligible for any new loans. The SSGFC staff worked with City representatives to provide on-going status reports to the Board of Directors on the City’s financial status. The commercial paper program was restructured in 1998 to provide for a separate series for the City of Miami’s loans. Additional credit enhancement costs were also required for less-than-investment-grade credits. In June 1998, the Board of Directors adopted the following strategic planning objectives relating to membership and eligibility issues:

1. Membership should continue to be offered to a limited number of eligible municipalities, counties, and other eligible

public agencies.

2. Financing services should continue to be targeted to a limited audience of qualified and similarly creditworthy borrowers while emphasizing the lending program’s attributes of providing (1) accessibility to the lowest cost financial markets, (2) savings from operational cost efficiencies and (3) flexibility tailored to recognized and relatively active debt issuers.

3. In cases of financial hardship, the Commission should strive to be diligent in assisting an affected member while undertaking such required actions to protect and to maintain the integrity of all its members and the program as a whole.

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The Board of Directors has explored various ways to more effectively evaluate the credit quality of existing and prospective borrowers. Rating agencies can provide underlying credit assessments, which, in turn, can provide the Commission with the opportunity to independently verify and apply more refined credit standards as a condition of eligibility. Annual assessments will also allow the Board to monitor the high credit quality of members and other borrowers for general compliance with the Commission’s purposes. The purpose of these policies and procedures is (1) to secure independent credit assessments for each participating borrower from a nationally recognized rating agency (2) as a prerequisite to making a new loan, (a) to require each prospective borrower to undergo an underlying credit assessment by a nationally recognized rating agency, engaged by the Commission or by the prospective borrower, and (b) to require an underlying credit assessment for any existing borrower suspected of experiencing financial difficulties, (3) to evaluate and to recommend specific credit ratings for establishing minimum credit eligibility, and (4) to establish other eligibility criteria for approving loans by the Commission. Authorization Pursuant to the Interlocal Agreement creating the Sunshine State Governmental Financing Commission (the “Commission”) and the Rules of the Commission, as amended and restated, the Board of Directors (the “Board”) hereby adopts the following policies and procedures regarding the use of underlying credit assessments performed by one or more nationally recognized rating agencies: The Commission shall engage a nationally recognized rating agency for the purposes of assessing the credit quality of individual participants in the Commission’s financing programs, subject to the written consent of each participant maintaining an outstanding loan balance. The Commission shall require underlying assessments at least annually following the completion of each borrower’s audited financial statements. Each consenting participant shall provide relevant and sufficient financial information, including audited financial statements, additional bonds tests, anti-dilution tests, or other compliance reports, that may be required by the rating agency to assess the pledged security or the borrower’s covenant to budget and appropriate debt payments from available non-ad valorem revenues. The cost of the annual assessments shall be a responsibility of the Commission and shall be fairly and equitably allocated among participants in accordance with established policies. Any member that has satisfied its loan obligation to the Commission may voluntarily participate in the annual underlying credit assessment on a prorated cost basis.

As a prerequisite to acquiring a loan from the Commission, the following shall apply: 1. The minimum credit quality rating for a prospective borrower’s pledged security shall be “A” or better

by a nationally recognized rating agency. 2. In evaluating a prospective borrower’s new loan request, the Board of Directors may evaluate factors

beyond the Commission’s minimum credit criteria, including but not limited to, the following: (1) the purpose and need for the requested loan, the type of financing (new or refinancing), the loan size and the maturity, (2) prior experience with the Commission’s programs, including the total number of and amount of loans outstanding, (3) the availability of credit enhancement and liquidity support, (4) any potential positive or negative effects for other participating borrowers, (5) the effect on the marketability of the Commission’s overall debt to potential investors, and (6) suitability of a particular financing structure (pooled versus standalone) for a prospective borrower. In addition, the Board of Directors may develop eligibility criteria for new loans based on an imputed, composite rating of the total outstanding loans in the Commission’s debt portfolio.

3. All prospective borrowers shall consent to an independent assessment of its credit quality by the rating

agency engaged by the Commission or another nationally recognized rating agency selected by the prospective borrower. Under certain circumstances, the Board of Directors may waive this requirement prior to the loan closing, provided the borrower covenants to have the assessment performed in connection with the Commission’s next annual participant review.

4. Any member or non-member borrower suspected of experiencing financial difficulties must consent to an

independent assessment of its credit quality by the rating agency engaged by the Commission.

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The Commission shall do all things necessary to protect member and non-member borrowers from the adverse trading values of its debt resulting from a single borrower’s distressed credit. In the event a borrower suffers credit downgrades to the extent that borrower no longer meets the Commission’s minimum credit eligibility, the Commission reserves the right to isolate that borrower’s loans from other borrowers’ loans by assigning them to a separate standalone series. Unless a participant borrower agrees to the public dissemination of the underlying credit assessment, a specific rating does not represent a public credit rating and is provided only for the benefit of the Commission in administering its financing programs.

These policies and procedures, as amended and restated, were adopted by the Board of Directors of the Sunshine State Governmental Financing Commission at a public meeting held this 29th day of June, 2001. Attachments Form of Rating Agreement for New Loans

New Loans FORM OF

RATING AGREEMENT

THIS RATING AGREEMENT (this "Agreement"), dated as of [DATE] __, 2001, by and among the SUNSHINE STATE GOVERNMENTAL FINANCING COMMISSION, a legal entity and public body corporate and politic duly created and existing under the Constitution and laws of the State of Florida (the "Commission"), and the ______________________________ (the "Borrower"),

WITNESSETH :

WHEREAS, the Commission provides financing services to a limited number of participating municipalities, counties, and other qualified public agencies, which regularly undertake capital projects requiring significant debt financing, possess similar credit worthiness and maintain high investment grade rating by nationally recognized rating agencies, and

WHEREAS, the Commission has authorized the issuance of $_________ aggregate principal amount of its Sunshine

State Governmental Financing Commission Commercial Paper Revenue Notes (Governmental Financing Program) (the “Notes”) for the purpose of making a loan to the Borrower.

WHEREAS, the Commission and the Borrower have entered into a Loan Agreement dated as of ___________ (the “Loan Agreement”) pursuant to which the Commission will lend the proceeds of the Notes to the Borrower; and

WHEREAS, the Board of Directors of the Commission amended and restated its policies and procedures on April 16, 2001, regarding the use of underlying credit assessments requiring the Borrower to undergo an annual independent assessment of its credit quality as a condition precedent to the making of additional loans by the Commission; and

WHEREAS, the Commission desires to have undertaken underlying credit assessments for all borrowers participating in its programs at least annually following the completion of each borrower’s audited financial statements; and

WHEREAS, the Commission has engaged Moody’s Investors Service for the purpose of annually assessing the credit quality of each borrower maintaining a loan balance with the Commission; and

WHEREAS, the cost of the annual assessment shall be the responsibility of the Commission, which shall be allocated

to all participating borrowers in accordance with established administrative cost allocation policies.

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NOW, THEREFORE, for and in consideration of the premises hereinafter contained, the parties hereto agree as follows:

1. The Borrower hereby consents and agrees to the Commission causing to have undertaken, at least annually, an underlying credit rating assessment of the Borrower’s security under its Loan Agreement or Loan Agreements with the Commission.

2. The Borrower hereby agrees to provide to the Commission and Moody’s Investors Service or a successor rating agency all relevant and sufficient financial information, including audited financial statements, additional bonds tests, anti-dilution tests, or other compliance reports, that may be required by the rating agency to adequately assess the pledged security, including a Borrower’s covenant to budget and appropriate debt payments from available non-ad valorem revenues, so long as any loan balance remains outstanding with the Commission.

3. The Borrower hereby agrees that a published rating by Moody’s Investors Service for the Borrower’s debt with the Commission represents a public credit rating.

4. The Borrower hereby agrees that the Commission, acting at its sole discretion and for purposes of determining a Borrower’s credit eligibility, may require an independent credit assessment by a nationally recognized rating agency prior to the closing of any additional loans.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written.

[This agreement shall be executed by the Issuer and the Borrower]

RELEVANT SECTIONS TO FORM LOAN AGREEMENT

SECTION 2.02. COVENANTS OF GOVERNMENTAL UNIT. The Governmental Unit makes the following covenants and representations as of the date first above written and such covenants shall continue in full force and effect during the Loan Term: (p) REPORTS. The Governmental Unit covenants to provide annually to the Commission, the Insurer and the Liquidity Provider audited financial statements and dilution tests as provided by Exhibit E hereof and such other reports, documents or information as the Commission may require. (r) RATINGS. The Governmental Unit covenants to do all things necessary to maintain the minimum ratings established by the Commission and assigned by Moody’s Investors Service, or its successor, to the obligations of the Governmental Unit. Further, the Governmental Unit consents to a ratings assessment of the pledged security for the Loan to be performed at least annually by Moody’s Investors Service, or its successor, on behalf of the Commission. If for any reason any such rating is reduced below the minimum rating criteria or withdrawn or if an Event of Default has occurred and is continuing, the Commission has the right without the consent of the Governmental Unit to assign this Loan Agreement to a different series of Notes and a different Liquidity Provider. Following the exercise by the Commission of such right, the Commission shall notify the Governmental Unit thereof and, thereafter, the Liquidity Provider identified in such notice shall be the “Liquidity Provider” as defined in and for all purposes of this Loan Agreement.