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HomeMy WebLinkAboutAgenda - 06-17-2014 - 6hORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 17, 2014 Action Agenda Item No. 6 -h 1 SUBJECT: Authorization and Issuance of Up to $15,500,000 General Obligation Refunding Bonds DEPARTMENT: Finance and Administrative PUBLIC HEARING: (Y /N) No Services ATTACHMENT(S): 1. Resolution for the Sale of Up to $15,500,000 General Obligation Refunding Bonds 2. Bond Order 3. Preliminary Refunding Analysis INFORMATION CONTACT: Michael Talbert, 919 - 245 -2308 Clarence Grier, 919 - 245 -2453 Bob Jessup, 919 - 933 -9891 PURPOSE: To approve a resolution and bond order authorizing the issuance of general obligation refunding bonds in the maximum amount of $15,500,000 to refinance existing County bonds. BACKGROUND: This item represents a new round of bond refinancing designed to save the County money on debt service expenditures by taking advantage of low borrowing rates currently available to the County. As interest rates have remained very low, and with the recent upgrade to the County's bond rating, it appears it is now possible for the County to refund more of the old bonds. Current market conditions provide the County opportunity to refund the 2005B General Obligation Refunding Bonds issued in September 2005. The 2005B General Obligation Refunding Bonds were originally issued to refund /refinance the 2001 and 2003 Public Improvement General Obligation Bonds. Current estimates show potential cumulative savings to the County through this refunding of approximately $837,000. The Local Government Commission requires that any refunding provide a savings in debt service of at least 3 percent. This refunding represents a potential savings of 5.6 percent in debt service cost. The savings estimates will change as market conditions vary between now and when the refunding bonds are sold. P� The attached resolution (Attachment 1) provides authorization from the Board for the County to proceed with the refunding bond sale. As prepared by bond counsel, the resolution provides the following authorizations and approvals- 1 . Formally authorizes the sale of up to $15,500,000 in refunding bonds; 2. Formally pledges the County's taxing power to provide for payment on the bonds; 3. Approves the proposed form of the bonds themselves; 4. Authorizes staff to prepare a formal disclosure document providing information on the County to prospective bond purchasers, in a form consistent with previous County disclosure documents of a similar nature; 5. States the County's agreement to comply with the relevant provisions of federal tax law and the rules for continuing disclosure to the securities markets; and 6. Authorizes County staff to complete the process of issuing the bonds. FINANCIAL IMPACT: The financial impact of proceeding with the refunding is that the County will achieve savings of future debt service costs. The total amount of savings will be determined as the County moves closer to the issuance of the bonds. RECOMMENDATION(S): The Manager recommends that the Board adopt the attached resolution and bond order for the sale of up to $15,500,000 of general obligation refunding bonds. 3 RES- 2014 -043 Attachment 1 Resolution for the Sale of General Obligation Refunding Bonds in the Maximum Amount of $15,500,000 WHEREAS -- Orange County has previously approved the issuance of general obligation refunding bonds (called the "Bonds" in this resolution) to refinance all or a portion of the County's outstanding General Obligation Refunding Bonds, Series 2005B (called the "Prior Bonds" in this resolution). Wells Fargo Bank, National Association ( "Wells Fargo ") has submitted a proposal for the purchase of the Bonds by Wells Fargo or by a wholly -owned subsidiary of Wells Fargo (in any case, the "Purchaser "). The County has determined to accept this proposal. BE IT RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: 1. Determination To Sell Bonds -- The County will issue and sell the Bonds and use the proceeds to pay all or a portion of the outstanding balance of the Prior Bonds, along with other related costs. 2. Determination To Sell to the Purchaser - The County accepts the proposal for the purchase of the Bonds. The Bonds will be sold to the Purchaser pursuant to the terms of a proposal and a Forward Bond Purchase Agreement in substantially the forms of the drafts presented to this meeting. The Board approves the drafts presented. The Finance Director and the County Manager, or either of them, is authorized to sign and deliver the proposal and the Agreement in their respective final forms. The final forms may have such minor changes from the version presented as the signing officer may approve. The execution and delivery of the final form will be conclusive evidence of the signing officer's approval of the changes. The Agreement in its final form, however, must provide for the principal amount of the Bonds to not exceed $15,500,000, for a final maturity of the Bonds not beyond April 1, 2019 (which is the same final payment date as the Prior Bonds), and for a nominal interest rate on the Bonds not to exceed 2.50 %. The County asks the North Carolina Local Government Commission (the "LGC ") to sell the Bonds to the Purchaser at a private sale, substantially in accordance with the draft proposal, this resolution and the draft Forward Bond Purchase Agreement. 3. Pledge of Faith, Credit and Taxing Power -- The County's full faith and credit are hereby irrevocably pledged for the payment of the principal of and interest on C! the Bonds. Unless other funds are lawfully available and appropriated for timely payment of the Bonds, the County will levy and collect an annual ad valorem tax, without restriction as to rate or amount, on all locally taxable property in the County sufficient to pay the principal of and interest on the Bonds as the same become due. 4. Form of Bonds -- The Bonds will take the form of a single fully- registered bond to be designated "General Obligation Refunding Bond, Series 2015." The Bond will be fully registered as to payment of principal and interest, and will be registered initially in the name of the Purchaser. This Bond will be dated the date of its initial delivery to the Purchaser and will be numbered R -1 for identification. The Bond will be substantially in the form set out in Exhibit A, with such changes as the officers signing the Bond may approve. The delivery of the Bond to the Purchaser will be conclusive evidence of such officers' approval of the final form of the Bond. The Bond must be signed by the manual or facsimile signature of the County Manager or the Board Chair. The County's seal must be affixed to the Bond (or a facsimile of the seal printed on the Bond) and attested by the manual or facsimile signature of the Clerk to this Board. No Bond will be valid unless at least one signature appearing on the Bond is manually applied; the manual signature may be the signature of an LGC official that is required by law to appear on the Bond. 5. Bond Payment Provisions — The final aggregate principal amount of Bonds to be issued and the principal and interest payment schedule for the Bonds will be as stated in the final Forward Bond Purchase Agreement. Principal and interest on the Bonds will be payable in lawful money of the United States of America by federal reserve wire transfer (or other transfer of immediately available funds) sent to the Bondholder on the payable date. Principal of the Bonds will not be subject to prepayment or redemption in advance of the stated principal installment payment dates. 6. Disbursement of Bond Proceeds — The Board directs the Finance Officer to determine, in consultation with the LGC, the procedures for the disbursement of the proceeds of the Bonds for the payment of the Prior Bonds and other costs. 7. Finance Officer as Registrar; Payments to Registered Owners -- (a) The Finance Officer is appointed Registrar for the Bonds. As Registrar, the Finance Officer must maintain appropriate books and records of the ownership of the Bonds. (b) The County will treat the registered owner of each Bond as the person exclusively entitled to payment of principal and interest and the exercise of all rights and powers of the owner, except that the County will make all payments to the person shown as owner on the registration books at the end of the calendar day on the 15th day 2 0 (whether or not a business day) of the month preceding each payment date. (c) The Bonds will contain appropriate restrictions on the transfer of the Bonds as may be provided for in the Forward Bond Purchase Agreement and the Bonds. 8. County Officers To Complete Closing - The Board directs the Finance Officer and all other County officers and employees to take all proper steps to have the Bonds prepared and executed in accordance with their terms and to deliver the Bonds to the purchaser upon payment for the Bonds. The Board authorizes the Finance Officer to hold the executed Bonds, and any other documents authorized or permitted by this resolution, in escrow on the County's behalf until the conditions for the delivery of the Bonds and other documents have been completed to the Finance Officer's satisfaction, and thereupon to release the executed Bonds and other documents for delivery to the appropriate persons or organizations. Without limiting the generality of the foregoing, the Board specifically authorizes the Finance Officer (a) to enter into such agreements or take such other actions as that officer may deem appropriate to provide for the refunding contemplated by this resolution (such as giving notice of redemption to the existing bondholders and providing for the custody of Bond proceeds pending their application to payment of the Prior Bonds), and (b) to approve changes to any documents, agreements or closing certifications previously signed by County officers or employees, subject to the provisions of this resolution and provided that any such changes do not substantially alter the intent from that expressed in the forms originally signed. The Finance Officer's authorization of the release of any document for delivery will constitute conclusive evidence of such officer's approval of any changes. In addition, the Finance Officer is authorized to take all appropriate steps for the efficient and convenient carrying out of the County's on -going responsibilities with respect to the Bonds. This authorization includes, without limitation, contracting with third parties for reports and calculations that may be required under the Bonds, this resolution or otherwise with respect to the Bonds. 9. Covenants as to Tax Matters - The County will not take or omit to take any action the taking or omission of which will cause any portion of the Bonds to be "arbitrage bonds," within the meaning of Section 148 of the "Code" (as defined below), or a "private activity bonds" within the meaning of Code Section 141, or otherwise cause interest on the Bonds to be includable in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the County will comply with any Code provision that may require the County at any time to pay to the United States any part of the earnings derived from the investment of the proceeds of the Bonds, and the County will pay any such required rebate from its general funds. For the purposes of this resolution, "Code" means the United States Internal Revenue Code of 1986, as amended, 3 including applicable Treasury regulations. r 10. Call of Prior Bonds for Redemption - The Board directs the Finance Officer, on the County's behalf, (a) to provide notice to the holders of the Prior Bonds of the pending prepayment of those Bonds, and (b) to make a final irrevocable call for redemption of the Prior Bonds in whole or in part as the Finance Officer (after consultation with the LGC) deems beneficial to the County. The Finance Officer will make this call for redemption by the execution and delivery of an appropriate certificate in connection with the original delivery of the Bonds. All prior actions to this end are ratified. 11. Publishing Bond Order - -- The Board directs the Clerk to this Board to provide for the publication of a notice of the adoption of the Bond Order that authorizes the issuance of the Bonds. This notice must be in the form provided for in Section 159 -58 of the General Statutes, and the notice is to be published one time in a newspaper having general circulation in the County. All prior actions to this end are ratified. 12. Miscellaneous Provisions -- All County officers and employees are authorized to take all such further action as they may consider necessary or desirable in connection with the furtherance of the purposes of this resolution. All such prior actions of County representatives are ratified. Upon the absence, unavailability or refusal to act of the Chair, the County Manager or the Finance Officer, any of such officers may assume any responsibility or carry out any function assigned to another officer. In addition, the Vice Chair or any Deputy or Assistant Clerk may assume any responsibility or carry out any function assigned to the Chair or the Board Clerk, respectively, in this resolution. All other Board proceedings, or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict. This resolution takes effect immediately. 4 rA Exhibit A -- Form of Bond TRANSFER OF THIS BOND IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS BOND AND IN THE FORWARD BOND PURCHASE AGREEMENT DESCRIBED BELOW REGISTERED BOND NUMBER R -1 UNITED STATES OF AMERICA STATE OF NORTH CAROLINA ORANGE COUNTY General Obligation Refunding Bond, Series 2015 Dated Date Total Issue Amount CUSIP April 1, 2015 [$15,500,000] 684 609 XXX ORANGE COUNTY, NORTH CAROLINA (the "County "), for value received, promises to pay to Wells Fargo Municipal Capital Strategies, LLC its successors and registered assigns (the "Bondholder "), the principal sum of [FIFTEEN MILLION FIVE HUNDRED THOUSAND] DOLLARS ([$15,500,000]) with principal payable in installments as follows: Date Amount April 1, 2016 $ xxxxxxx April 1, 2017 $ xxxxxxx 5 April 1, 2018 $ xxxxxxx April 1, 2019 $ xxxxxxx together with interest on the unpaid principal from the date of this Bond until payment at the annual rate of [2.50 %], with interest payable semiannually on each April 1 and October 1, beginning October 1, 2015. The principal of this Bond may not be paid, prepaid or redeemed prior to maturity except on the dates and in the amounts set forth above. Interest will be calculated on the basis of a 360 -day year consisting of twelve 30- day months. Principal and interest are payable in lawful money of the United States of America by federal reserve wire transfer (or other transfer of immediately available funds) sent to the Bondholder on the payment date. In all events, and notwithstanding any other provisions of this Bond, (1) all payments on this Bond will be applied first to interest accrued and unpaid to the payment date and then to principal, and (2) if not sooner paid, the entire principal of and interest on this Bond will be due and payable on April 1, 2019. This Bond is issued pursuant to a Bond Order and a Bond Resolution, each adopted by the County's governing Board of Commissioners on June 17, 2014, and the Constitution and laws of the State of North Carolina, including the Local Government Bond Act. The County's full faith and credit are pledged for the payment of principal of and interest on this Bond. This Bond is fully registered as to both principal and interest. Transfer of this Bond may be registered upon books maintained for that purpose by the County's Finance Officer, who has been appointed Registrar, at Orange County Government Services Center, 200 South Cameron Street, Hillsborough NC 27278, or such successor office as the Registrar may designate in writing to the Bondholder. The Registrar will not, however, register the transfer of any portion of the Bond to any person or entity other than a bank, an insurance company or a similar financial institution unless the North Carolina Local Government Commission has previously approved the transfer. This Bond may only be transferred and held in minimum denominations of $250,000 and integral multiples of $5,000 above the minimum. Transfer of this Bond is further subject to the restrictions set forth in the Forward Bond Purchase Agreement dated July 2014, which provides for the issuance of this Bond. The Registrar will treat the registered owner of this Bond as the person exclusively entitled to payment of principal of and interest on this Bond and the exercise of all other rr. X rights and powers of the owner, except that the County will make payments to the person shown as the registered owner at the end of the calendar day on the 15th day (whether or not a business day) of the month preceding the payment date. The County intends that North Carolina law will govern the interpretation of the terms of this Bond. All acts, conditions and things required by the Constitution and laws of the State of North Carolina to happen, exist or be performed precedent to and in the issuance of this Bond have happened, exist and have been performed, and the issue of Bonds of which this Bond is one, together will all other indebtedness of the County, is within every debt and other limit prescribed by the Constitution and laws of the State of North Carolina. IN WITNESS WHEREOF, the County has caused this Bond to be signed by its County Manager, its seal to be affixed hereto and attested by the Clerk to its Board of Commissioners, and this Bond to be dated April 1, 2015. (SEAL) ATTEST: ORANGE COUNTY, NORTH CAROLINA Lsam le only - do not si,gn1 By: Lsample only - do not sign] Clerk, Board of Commissioners County Manager [[$15,500,0001 General Obligation Refunding Bond, Series 20151 10 CERTIFICATE OF LOCAL GOVERNMENT COMMISSION This Bond has been approved by the North Carolina Local Government Commission in accordance with the Local Government Bond Act. L&mple only - do not sign] T. Vance Holloman Secretary, Local Government Commission TRANSFER OF BOND Transfer of this Bond may be registered by the registered owner or its duly authorized attorney upon presentation to the Registrar, who will note the transfer in books kept by the Registrar for that purpose and in the registration blank below. Date of Re- registration Name of New Registered Owner Signature of Registrar [[$15,500,0001 General Obligation Refunding Bond, Series 20151 of Orange County, North Carolina] 11 Attachment 2 Bond Order for Refunding Bonds BOND ORDER AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION REFUNDING BONDS IN THE MAXIMUM AMOUNT OF $15,500,000 WHEREAS — Orange County has determined that refinancing a portion of the County's outstanding general obligation bonds could provide savings to the County. The County has applied to the North Carolina Local Government Commission for its approval of the issuance of County bonds to carry out such a refinancing, and the LGC has accepted the County's application. BE IT ORDERED by the Board of Commissioners of Orange County, North Carolina, as follows: 1. There are hereby ordered to be issued general obligation refunding bonds of the County to provide for the refinancing of a portion of the County's outstanding general obligation bonds, including the payment of related financing costs. In particular, the bonds to be refunded may include all or any portion of the County Outstanding General Obligation Refunding Bonds, Series 2005B. 2. The maximum aggregate principal amount of the bonds issued for such purpose will be $15,500,000. 3. Taxes will be levied in an amount sufficient to pay the principal of and interest on the bonds so issued. 4. A sworn statement of debt prepared by the County's Finance Officer has been filed with the County Clerk and is available for public inspection. 5. This Bond Order takes effect immediately. Attachment 3 12 May 30, 2014 11:31 am Prepared by DBC Finance (Finance 7.008 Orange County: GO- REF05B,REF05B) Page 1 Note: COI estimated SOURCES AND USES OF FUNDS Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Dated Date 04/01/2015 Delivery Date 04/01/2015 Sources: Bond Proceeds: Par Amount 15,160,000.00 15,160,000.00 Uses: Refunding Escrow Deposits: Cash Deposit 15,035,000.00 Delivery Date Expenses: Cost of Issuance 125,000.00 15,160,000.00 13 May 30, 2014 11:31 am Prepared by DBC Finance (Finance 7.008 Orange County: GO-REF 05B,REF05B) Page 2 SUMMARY OF REFUNDING RESULTS Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Dated Date 04/01/2015 Delivery Date 04/01/2015 Arbitrage yield 1.460000% Escrow yield Value of Negative Arbitrage Bond Par Amount 15,160,000.00 True Interest Cost 1.460000% Net Interest Cost 1.460000% Average Coupon 1.460000% Average Life 2.053 Par amount of refunded bonds 15,035,000.00 Average coupon of refunded bonds 4.566888% Average life of refunded bonds 2.103 PV of prior debt to 04/01/2015 @ 1.460000% 15,997,308.31 Net PV Savings 837,308.31 Percentage savings of refunded bonds 5.569061% Percentage savings of refunding bonds 5.523142% May 30, 2014 11:31 am Prepared by DBC Finance 14 (Finance 7.008 Orange County: GO- RFF05B,RFF05B) Page 3 SAVINGS Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Present Value Prior Refunding to 04/01/2015 Date Debt Service Debt Service Savings @ 1.4600000% 04/01/2016 5,500,900.00 5,286,336.00 214,564.00 213,262.41 04/01/2017 5,249,950.00 5,032,387.00 217,563.00 212,468.02 04/01/2018 4,839,000.00 4,621,066.00 217,934.00 209,127.14 04/01/2019 889,200.00 674,709.00 214,491.00 202,450.74 16,479,050.00 15,614,498.00 864,552.00 837,308.31 Savings Summary PV of savings from cash flow Net PV Savings 837,308.31 837,308.31 15 May 30, 2014 11:31 am Prepared by DBC Finance (Finance 7.008 Orange County: GO-REF 05B,REF05B) Page 4 SUMMARY OF BONDS REFUNDED Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Maturity Interest Par Call Call Bond Date Rate Amount Date Price General Obligation Bonds, Series 2005B, 200513: SERIALS 04/01/2016 5.250% 4,780,000.00 04/01/2015 100.000 04/01/2017 5.250% 4,780,000.00 04/01/2015 100.000 04/01/2018 4.000% 4,620,000.00 04/01/2015 100.000 04/01/2019 4.000% 855,000.00 04/01/2015 100.000 15,035,000.00 May 30, 2014 11:31 am Prepared by DBC Finance BOND SUMMARY STATISTICS Orange County, North Carolina 16 (Finance 7.008 Orange County: GO-REF 05B,REF05B) Page 5 General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Dated Date 04/01/2015 Delivery Date 04/01/2015 Last Maturity 04/01/2019 Arbitrage Yield 1.460000% True Interest Cost (TIC) 1.460000% Net Interest Cost (NIC) 1.460000% All-In TIC 1.872668% Average Coupon 1.460000% Average Life (years) 2.053 Duration of Issue (years) 2.025 Par Amount 15,160,000.00 Bond Proceeds 15,160,000.00 Total Interest 454,498.00 Net Interest 454,498.00 Total Debt Service 15,614,498.00 Maximum Annual Debt Service 5,286,336.00 Average Annual Debt Service 3,903,624.50 Underwriter's Fees (per $1000) Cost of Issuance Expense Average Takedown - 125,000.00 Other Fee Other Amounts Total Underwriter's Discount Bid Price 100.000000 Par Average Average Bond Component Value Price Coupon Life Bond 15,160,000.00 100.000 1.460% 2.053 15,160,000.00 2.053 All-In Arbitrage TIC TIC Yield Par Value 15,160,000.00 15,160,000.00 15,160,000.00 • Accrued Interest +Premium (Discount) Underwriter's Discount Cost of Issuance Expense - 125,000.00 Other Amounts Target Value 15,160,000.00 15,035,000.00 15,160,000.00 Target Date 04/01/2015 04/01/2015 04/01/2015 Yield 1.460000% 1.872668% 1.460000% May 30, 2014 11:31 am Prepared by DBC Finance 17 (Finance 7.008 Orange County: GO- RFF05B,RFF05B) Page 6 BOND PRICING Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Maturity Bond Component Date Amount Rate Yield Price Bond: 04/01/2016 5,065,000 1.460% 1.460% 100.000 04/01/2017 4,885,000 1.460% 1.460% 100.000 04/01/2018 4,545,000 1.460% 1.460% 100.000 04/01/2019 665,000 1.460% 1.460% 100.000 Dated Date Delivery Date First Coupon Par Amount Original Issue Discount Production Underwriter's Discount Purchase Price Accrued Interest Net Proceeds 15,160,000 04/01/2015 04/01/2015 10/01/2015 15,160,000.00 15,160,000.00 100.000000% 15,160,000.00 100.000000% 15,160,000.00 May 30, 2014 11:31 am Prepared by DBC Finance 18 (Finance 7.008 Orange County: GO-REF 05B,REF05B) Page 7 BOND DEBT SERVICE Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Dated Date 04/01/2015 Delivery Date 04/01/2015 Period Ending Principal Interest Debt Service Annual Debt Service 10/01/2015 110,668.00 110,668.00 04/01/2016 5,065,000 110,668.00 5,175,668.00 5,286,336 10/01/2016 73,693.50 73,693.50 04/01/2017 4,885,000 73,693.50 4,958,693.50 5,032,387 10/01/2017 38,033.00 38,033.00 04/01/2018 4,545,000 38,033.00 4,583,033.00 4,621,066 10/01/2018 4,854.50 4,854.50 04/01/2019 665,000 4,854.50 669,854.50 674,709 15,160,000 454,498.00 15,614,498.00 15,614,498 19 May 30, 2014 11:31 am Prepared by DBC Finance (Finance 7.008 Orange County: GO-REF 05B,REF05B) Page 8 ESCROW REQUIREMENTS Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 Period Principal Ending Redeemed Total 04/01/2015 15,035,000.00 15,035,000.00 15,035,000.00 15,035,000.00 of May 30, 2014 11:31 am Prepared by DBC Finance (Finance 7.008 Orange County: GO-REF 05B,REF05B) Page 9 IMPORTANT DISCLOSURES Orange County, North Carolina General Obligation Refunding Bonds, Series 2015 Refunding of Series 2005B GO Bonds Wells Fargo Indicative Forward Direct Purchase Rate as of May 30, 2014 In the event that the Materials include information related to a bank- purchased bond transaction ( "Direct Purchase "), please be advised that Direct Purchase is a product offering of Wells Fargo Bank, N.A. or a subsidiary thereof ( "Purchaser ") as purchaser /investor. Wells Fargo Securities will not participate in any manner in any Direct Purchase transaction between you and Purchaser, and Wells Fargo employees involved with a Direct Purchase transaction are not acting on behalf of or as representatives of Wells Fargo Securities. The information contained herein regarding Purchaser's Direct Purchase is being provided to you by Wells Fargo Securities only for purposes of providing you financing alternatives that may be available to you from Wells Fargo & Company and its affiliates. Information contained in this document regarding Direct Purchase is for discussion purposes only in anticipation of engaging in arm's length commercial transactions with you in which Purchaser would be acting solely as a principal to purchase securities from you or a conduit issuer, and not as a municipal advisor, financial advisor or fiduciary to you or any other person or entity regardless of whether Purchaser, or an affiliate has or is currently acting as such on a separate transaction. Additionally, Purchaser has financial and other interests that differ from your interests. Purchaser's sole role would be to purchase securities from you (or the issuer in case of a conduit transaction). Wells Fargo Securities will not have any duties or liability to any person or entity in connection with the information being provided herein. The information provided is not intended to be and should not be construed as "advice" within the meaning of Section 15B of the Securities Exchange Act of 1934.