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FEBRUARY 26, 2008 MINUTESCITY OF VIRGINIA BEACH "COMMUNITY FOR A LIFETIME" CITY COUNCIL MAYOR MEYERA E. OBERNDORF,, At -Large VICE MAYOR LOUIS R. JONES, Bayside - District 4 WILLIAM R. DeSTEPH, At -Large HARRY E. DIEZEL, Kempsville - District 2 ROBERT M. DYER„ Centerville - District 1 BARBARA M. HENLEY Princess Anne — District 7 REBA S. McCLANAN. Rose Hall - District 3 JOHN E. UHRIN, Beach — District 6 RON A. VILLANUEVA, At -Large ROSEMARY WILSON, At -Large JAMES L. WOOD, Lynnhaven -District 5 CITY MANAGER - JAMES K. SPORE CITY ATTORNEY - LESLIE L. LILLEY CITY CLERK - RUTH HODGES FRASER, MMC CITY COUNCIL AGENDA 26 FEBRUARY 2008 CITY HALL BUILDING 2401 COURTHOUSE DRIVE VIRGINIA BEACH, VIRGINIA 23456-8005 PHONE: (757) 385-4303 FAX (757) 385-5669 E- MAIL: Ctycncl@vbgov.com I. CITY COUNCIL BRIEFING - Conference Room - 1:00 PM A. SCHOOLS CAPITAL PROJECTS — Status Report Anthony Arnold, Director, Facilities Planning and Construction II. CITY MANAGER'S BRIEFING A. GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS Patricia Philips, Director, Finance III. CITY COUNCIL COMMENTS IV. REVIEW OF AGENDA V. INFORMAL SESSION A. CALL TO ORDER — Mayor Meyera E. Oberndorf B. ROLL CALL OF CITY COUNCIL C. RECESS TO CLOSED SESSION - Conference Room - 2:00 PM VI. FORMAL SESSION - Council Chamber - 6:00 PM A. CALL TO ORDER — Mayor Meyera E. Oberndorf B. INVOCATION: Reverend Ted David Pastor, Virginia Beach United Methodist Church C. PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA D. ELECTRONIC ROLL CALL OF CITY COUNCIL E. CERTIFICATION OF CLOSED SESSION F. MINUTES 1. INFORMAL and FORMAL SESSIONS February 12, 2008 G. AGENDA FOR FORMAL SESSION H. PUBLIC HEARING 1. LYNNHAVEN and INTERNATIONAL PARKWAYS INTERSECTION IMPROVEMENTS Proposed Acquisition of Property and Easements I. CONSENT AGENDA J. ORDINANCES/RESOLUTIONS 1. Ordinance to AUTHORIZE the acquisition of property in fee simple, by agreement or condemnation, for rights-of-way re Lynnhaven and International Parkways Intersection Improvements; the acquisition of temporary and permanent easements; and, AUTHORIZE the City Manager to EXECUTE all documents pertaining thereto. 2. Resolution to EXPRESS sympathy to the City of Kirkwood, Missouri, and the families of those killed in the attack at the Kirkwood City Council meeting on February 7, 2008; and, EXTEND wishes for the complete and speedy recovery of those wounded. 3. Resolution to SUPPORT Senate Bill No. 613 with State funding through the Virginia General Assembly of an educational building at Eastern Virginia Medical School (EVMS). 4. Resolutions to REQUEST the Virginia Department of Transportation (VDOT) ACCEPT additional streets; and, ACCEPT corrections and deletions to the Road Inventory re Urban Maintenance Payments. 5. Resolution to PROVIDE for the issuance and sale of $90,000,000 General Obligation Public Improvement Bonds, Series 2008, and $90,000,000 General Obligation Public Improvement Refunding Bonds, Series 2008, re financing various public improvements, including schools, roadways, coastal projects, economic and tourism projects, building and parks and recreation projects. 6. Ordinance re the purchase of the Police's Livescan Integrated Booking System and two laptop computers: a. ACCEPT and APPROPRIATE $28,500 from Virginia Department of Criminal Justice Services b. TRANSFER $9,500 from the DEA Seized Property Special Revenue Fund to the Police Department's FY 2008-09 Operating Budget K. PLANNING 1. Application of JAMES KUEHN to authorize Enlargements of a Nonconforming Use re a room addition to the existing two-story duplex at 2214 Bayberry Street. DISTRICT 5 — LYNNHAVEN RECOMMENDATION APPROVAL 2. Application of MICHAEL H. SPENCER for a Conditional Use Permit re a home occupation (financial services office) at 4305 Bonney Road. DISTRICT 5 — LYNNHAVEN RECOMMENDATION APPROVAL 3. Application of WAWA, INC., for a Conditional Use Permit to allow gasoline sales in conjunction with a convenience store at 5476 Virginia Beach Boulevard. DISTRICT 2 — KEMPSVILLE. RECOMMENDATION APPROVAL 4. Application of NIMMO CHILDCARE & RESOURCE LEARNING CENTER, INC., for the Modification of Conditions on a Conditional Change of Zoning (approved by City Council on November 23, 1993) re childcare or educational facilities at 2244 General Booth Boulevard. DISTRICT 7 — PRINCESS ANNE RECOMMENDATION APPROVAL 5. Application of MICHAEL D. SIFEN, INC., for Modification of the Green Run Land Use Plan to change the designated land use from "future development" as required by Condition No. 10 of the Amendment (approved by City Council on July 9, 1996) re retail development at 3545 Buckner Boulevard. DISTRICT 3 — ROSE HALL RECOMMENDATION APPROVAL L. APPOINTMENTS COMMUNITY SERVICES BOARD HISTORIC REVIEW BOARD RESORT ADVISORY COMMISSION VIRGINIA BEACH COMMUNITY DEVELOPMENT CORPORATION - VBCDC M. UNFINISHED BUSINESS N. NEW BUSINESS O. ADJOURNMENT PROPOSED RESOURCE MANAGEMENT PLAN WORKSHOPS April 8 (Workshop) April 15 (Workshop) April 17 (Public Hearing) April 22 (Workshop) April 22 (Public Hearing) April 29 (Workshop) May 6 (Reconciliation Workshop) May 13 (Adoption) Council Conference Room Council Conference Room Green Run High School — 6 p.m. Council Conference Room Council Chamber — 6 p.m. Council Conference Room Council Conference Room Council Chamber — 6 p.m. ********* If you are physically disabled or visually impaired and need assistance at this meeting, please call the CITY CLERK'S OFFICE at 385-4303 * * * * * * * * * * * Agenda 02/20/08 mb/atb www.vbgov.com 1 MINUTES VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia February 26, 2008 Mayor Meyera E. Oberndorf called to order the CITY COUNCIL BRIEFING re SCHOOLS CAPITAL PROJECTS in the City Council Conference Room, City Hall, on Tuesday, February 26, 2008, at 2:00 P.M. Council Members Present: William R. "Bill" DeSteph, Harry E. Diezel, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Absent: Robert M Dyer [Attending Funeral, Entered: 2:55 P.M.] February 26, 2008 -2 - CITY COUNCIL BRIEFING SCHOOLS CAPITAL PROJECT — Status Report 1:00P.M. ITEM # 57333 Mayor Oberndorf welcomed R. Steven Herbert, Chief Development Officer serving in the stead of the City Manager, who was on a family vacation, to assist City Council. Anthony Arnold, Director — Facilities Planning and Construction — Virginia Beach Public Schools, advised John S. Kalocay, Assistant Superintendent, was in attendance. Dr. Merrill spoke with the City Manager late last week. A presentation was given to the Virginia Beach City Council approximately five (5) or six (6) weeks ago. With all the uncertainty in Richmond re the Lottery proceeds and State construction grants, it did not appear to be advisable to discuss the Schools Capital Projects, prior to issues being resolved in Richmond, which will hopefully be within the next three or four weeks. February 26, 2008 -3 - CITY MANAGER'S BRIEFING GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS 1:10 P.M. ITEM # 57334 Patricia Phillips Director of Finance discussed the proposed $90 -MILLION GENERAL OBLIGATION BOND SALE for 2008. Mrs. Phillips introduced Richard N. Dunford, Debt and Financial Services Administrator, the lead in preparing terms for the Bonds, and Loretta Brown, Executive Assistant to Mrs. Phillips. Overview — Debt Authorization Process • Starts with Capital Improvement Program — Approval each May — Includes an Ordinance Authorizing the Issuance of Bonds by City Council • Preparations for a Bond Sale — 2 or 3 years later — Financing Team — Bond Counsel, Financial Advisor, City Staff • Resolution Providing for the Sale Authorized by City Council • Advertise Sale and Market Activity • Bond Ratings • Sale of Bonds (competitive or negotiated) • Report Results to City Council • Closing The City is fortunate that the majority of the Capital Program is not debt, but is just one piece of the various financing sources. Total Debt March 11, 2008 (In MILLIONS) After Bond Sale Authorized But Outstanding Unissued GO Bonds Schools 307.2 35.5 General Government 310.2 35.7 Total General Obligation 617.4 71.2 Public Facility Revenue Bonds 362.4 - 0 - Leases 13.6 - 0 - Total Tax Supported Debt $ 993.4 $ 71.2 Revenue/Other Support: Water and Sewer 127.7 51.1 Stormwater 8.2 20.4 ARP 24.7 - 0 - Total Revenue Debt 160.6 71.5 Total Debt $ 1,154.0 $ 142.7 Mr. Dunford advised the current net debt per capita before the sale is $2200. February 26, 2008 -4 - CITY MANAGER'S BRIEFING GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS ITEM # 57334 (Continued) Debt Management Policies Rapidity of Principal Retirement Tax Sunnorted Debt Maturing Within meter the Sale Policy 5 years $362,274,201 Net Debt per Capita $2294 $2400 Ratio to Estimated Full Value 1.8% 3.5% Annual Debt Service to General Government Expenditures 7.4% 10% Debt Per Capita to Per Capita Personal Income 5.6% 6.5% Rapidity of Principal Retirement Tax Sunnorted Debt Maturing Within Amount Maturing Percentage of Total Debt Outstanding 5 years $362,274,201 36.47% 10 years 642,822,005 64.71 15 years 882,172,005 88.80 20 years 993,402,005 100.00 Virginia Beach Bond Ratings February 26, 2008 General Obligation PFRB Water & Sewer Storm Water Standard and Poor's AAA AA+ AA not rated Moody's Aal Aa3 Aa3 Aa3 Fitch Ratings AA+ AA- AA+ AA+ February 26, 2008 -5 - CITY MANAGER'S BRIEFING GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS ITEM # 57334 (Continued) Overview: Debt Management and Administration Compliance Issues — IRS • Arbitrage • Reimbursement Regulations • Tax Exempt Purposes • Recordkeeping — Securities and Exchange Commission — SEC • Continuing Disclosure • Potential Oversight • Market and Environment: Bond insurer downgrades, auction rate securities • Monitoring of Expenditures v. Bond Proceeds — Goal: Reimbursement • Debt Service — 46 issues, mostly twice a year = 76 interest payments and 44 principal payments — ARP 128 interest payments annually — Reconciliation of Debt Service Reserves, or other money held for debt service by Trustees, Escrow Agents and Paying Agents Proposed $90,000,000 "new Money" General Obligation Sale • Annual Charter Bond Sale • From Charter Authorizations: 2005 & 2006 • City and School Projects Previously Authorized • Reimbursement from Previous Capital Project Expenditures • Competitive Sale on March 11, 2008 • Level Principal Payments - $4.5 MILLION annually over 20 years Charter Authorizations Included in CIPAdoption in May of each year. February 26, 2008 Authorizations Previously Sold This Sale Remaining Authorizing 2005 $55,200,000 $17,597,407 $37,602,593 $ -0- 2006 59,800,000 -0- 52,397,407 7,402,593 2007 63,800,000 -0- -0- 63,800,000 TOTAL $90,000,000 $71,202,593 Included in CIPAdoption in May of each year. February 26, 2008 -6 - CITY MANAGER'S BRIEFING GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS ITEM # 57334 (Continued) Refunding Sale • Up to $90 -MILLION - Depends on Two Key Interest Rates - 1) Rate bonds are sold at - 2) Rate to be earned on bond proceeds escrow • Up to Six Issues as Candidates for Refunding • Potential Gross Savings of $2.5 - $3.0 -MILLION total • Annual Savings of Over $200,000 for seven (7) Years • Competitive Sale on April 22, 2008 Next Steps 1. City Council Authorizes Bond Sale(s) - New Money in March - Potential Refunding in April 2. Staff will pursue additional refundings - Public Facility Revenue Bonds (PFRB) - Water and Sewer - Stormwater City Council will be asked to authorize bond sales. February 26, 2008 -7 - CITY MANAGER'S BRIEFING RECREATION CENTER REFERENDUM ITEM # 57335 Catheryn Whitesell, Director — Management Services, discussed the status of the Recreation Center Referendum and its relationship to the tax rate. Recreation Center Referendum Provided $32.8-MILION in additional debt capacity to construct three (3) new Recreation Centers and expand one (1) other • City Council approved a Real Estate Tax increase of 3.80 to support: - Debt service - Operations - Maintenance - Seatack Recreation Center was also funded from tax rate A strong component of this Referendum was the City would continue to charge Recreation Center fees to support the operations of the Recreation Centers. Ms. Whitesell displayed a Chart depicting the Recreation Center Dedicated Real Estate Tax Revenue and Expenditures (April 2006) Changes since April 2006 • City Council lowered the dedicated tax rate from 3.80 to 3.470 which lowered capacity in line with original intent to cover operations and maintenance • Real Estate assessments are reflecting the market Ms. Whitesell displayed a Chart depicting the Recreation Center Dedicated Real Estate Tax Revenue and Expenditures (February 2008) Next Steps • Current tax rate of 3.470 appears to match anticipated cost for maintenance and operations • Continue to monitor and hold costs within expected revenues February 26, 2008 -8 - CITY COUNCIL COMMENTS 1:35 P.M. ITEM # 57336 Councilman Wood inquired re the traffic signal on Shore Drive, near Seashore State Park. Councilman Wood requested Public Works prepare a briefing. Mayor Oberndorf advised all members received a telephone call from a gentleman who has been very supportive of the First Landing State Park (formerly Seashore State Park). There is concern relative the design of the road and the traffic signal, which is perceived to do damage to the entrance of the Seashore side. Mayor Oberndorf advised Council Lady Wilson and Councilman Wood are very interested to determine if the design and signal could be adjusted, so the historically appealing entrance would not be totally obliterated. Council Lady Wilson also requested a delay in the project. Council Lady McClanan was told the State Park was not totally involved in the process concerning the traffic signal and design of the road. She asked why the Park had not been considered. A report shall be provided within a few weeks. ITEM # 57337 Councilman Uhrin and Vice Mayor Jones have been working with the retired military to create economic development opportunities. This entails identifying personnel leaving the Navy to assist in linkage with positions in the private sector and also to identi opportunities that would bring businesses to the City, which would actually support the mission of the various bases throughout the City. Vice Mayor Jones and Councilman Uhrin asked that the MILITARY ECONOMIC DEVELOPMENT ADVISORY COMMITTEE (MEDAC) be created and appointed by City Council. Vice Mayor Jones and Councilman Uhrin requested a Resolution creating MEDAC be scheduled for the City Council Session of March 4, 2008. Councilman Uhrin distributed a listing of the proposed Members for the MEDAC. This will not result in any cost to the City. The Committee would be working in conjunction with Economic Development. There are some great opportunities. Burton Station (right down from Little Creek) could be expanded to idents the needs of Little Creek and have Economic Development go to specific companies and inquire if interested in being located within a couple of miles from the command served. This concept is not to establish policy for the City. The entire focus is to bring forward economic development opportunities. This concept would be under the Development Authority. Councilman Villanueva referenced the strong Navy presence on the Committee. Councilman Villanueva has some suggested names from the Army, Coast Guard, etc. Mayor Oberndorf advised she would be able to provide some excellent names from the Coast Guard. ITEM # 57338 Council Lady Henley had suggested many times an enhanced tax exemption and some incentive for historic structures to be more palatable for owners of historically significant structures to be able to rehabilitate them. Deputy City Attorney William Macali has developed a DRAFT: Ordinance to AMEND City Code Section 35-80.1 pertaining to Real Estate Tax Exemptions and Tax Credits for Rehabilitation of historically significant structures. February 26, 2008 -9 - CITY COUNCIL COMMENTS ITEM # 57338 (Continued) This ordinance will accomplish the recommendations of the last analysis (in 1999) (Study of Financial Incentives for Historic Preservation) i.e. amending the tax exemption ordinance to make rehabilitation of historic structures easier and take full advantage of all benefits allowed by the State. At the present time, only a portion is utilized and the City requires the improvement increase the value at least twenty (20%) percent. The proposed ordinance will state: "For rehabilitated historically significant residential structures, the exemption shall be in an amount equal to the greater of the initial increase in assessed value of the structure, as determined by the real estate assessor, or an amount equal to fifty percent (50%) of the qualifying costs of the rehabilitation, as defined in subdivision (3) of subsection (b), not to exceed the amount of the assessment of the structure at any time after its rehabilitation". This Amended Ordinance will also make the process easier. The present ordinance requires the owner or the resident to appear three (3) times before the Historic Review Board. As this is cumbersome, Council Lady Henley believes no resident has taken advantage of the partial exemption from real estate taxation. Unfortunately, the Federal and State Tax Credit only apply to income producing property. All categories (including historically significant hotel or motel structures) have been included in this new exemption. The largest percentage of historic homes are owner -occupied residential. The City will be dependent on the property owners of these structures to maintain them. The last survey of historic properties was in 1994 and was not complete. The list of historic properties must be verified. The Historic Society, with Volunteers, will coordinate this project to determine if the structure is still in existence. When the structures are determined, a Workshop will be necessary to invite the owners of these properties to attend. The public needs to be aware the City values these historic structures and appreciates the citizens are willing to own and maintain these historical structures. On November 23, 1999, City Council ADOPTED: Ordinances to AMEND the City Code re historic preservation: a. Article IV, Chapter 8, ADDING Section 8-91, to establish the Virginia Beach Historical Register, setting forth standards and procedures b. Section 35-80.1 re partial exemption from real estate taxation for historically significant rehabilitated structures. In order to take advantage of this real estate exemption, the property needs to be either on the Historical Register of the locality or have an application in for inclusion in the Register. The review of the application shall be by the Director of Planning or his designee in order to assure the rehabilitation project is not compromising the historic structure. The Historical Review Board shall review the property in the beginning and determine whether said property should be listed on the Historical Register. Council Lady Henley advised the Historical Society conducted a program entitled "Community Roots" re the Virginia Beach/Jamestown 2007 400`h Commemoration Event and out of this came the Boardwalk History Fest. Community Roots is still an ongoing project. On March 9, 2008, the Historical Society will be having its Spring meeting at Beach Methodist Church, emphasizing North Beach and the Resort Area. A Briefing, ENHANCED TAX EXEMPTION FOR HISTORIC STRUCTURES, will be scheduled for the City Council Session, of March 4, 2008. The Ordinance shall be scheduled for the following City Council Session of March 11, 2008. February 26, 2008 - 10 - CITY COUNCIL COMMENTS ITEM # 57339 Council Lady Wilson referenced on October 23, 2007, City Council ADOPTED: Resolution REQUESTING the City's local General Assembly Delegation to work with Norfolk's Delegation to support legislation re prohibition of smoking in restaurants Some of the restaurant owners have contacted Council Lady Wilson and are upset the smoking ban is not moving forward. The restaurant owners have requested the City Council REAFFIRM their support. This matter was approved by the Senate, but was not approved by the House of Delegates. Mayor Oberndorf believed a Resolution would be preferable. The City Attorney was asked to DRAFT a Resolution to be presented during the Formal Session of City Council. Councilman Villanueva advised he had also been working with the Restaurant Association and suggested a Charter Amendment. Many localities promote healthy businesses. A City Seal outside the establishment indicates the facility is non-smoking. The City Attorney advised a Charter Change would have to be scheduled for next year and would entail a two-thirds vote of the General Assembly. Language would be added to give the City authority to regulate this type of activity (smoking in restaurants). ITEM # 57340 Mayor Oberndorf is working with Deputy City Attorney Rod Ingram re making the City's Animal Control facility, not only for rehabilitation but to also become "adoption friendly ". Mayor Oberndorf has also discussed this matter with other Mayors across the United States. These municipalities are also placing their emphasis on finding homes for animals. Adoption friendly facilities have special plexiglass rooms where families can become acquainted with the animals. Mayor Oberndorf advised she is urging Veterinarians to volunteer no cost inoculations to the vulnerable animals (very young puppies and the older dogs) Any additional cost and revenue streams will be determined. A Resolution shall be SCHEDULED for the City Council Session of March 4, 2008. ITEM # 57341 Mayor Oberndorf referenced discussions at the Executive Board meeting of the U.S. Conference of Mayors, that many cities are struggling re the liquidity of the municipal bonds and having to pay a higher interest rate. She was amazed not that many cities have the excellent bond rate that Virginia each has. ITEM # 57342 Councilman DeSteph advised he has been reviewing the City Policy's re Investment Partnerships for Economic Development. The Policy Report and Policy need to be revised concerning names and titles of individuals no longer with the City. Councilman DeSteph is working with the City Attorney to revise this Policy. February 26, 2008 -11 - AGENDA REVIEW SESSION 2:15 P.M ITEM # 57343 BY CONSENSUS, the following items shall compose the CONSENT AGENDA: J. ORDINANCES/RESOLUTIONS 1 Ordinance to AUTHORIZE the acquisition of property in fee simple, by agreement or condemnation, for rights-of-way re Lynnhaven and International Parkways Intersection Improvements; the acquisition of temporary and permanent easements; and, AUTHORIZE the City Manager to EXECUTE all documents pertaining thereto. 2. Resolution to EXPRESS sympathy to the City of Kirkwood, Missouri, and the families of those killed in the attack at the Kirkwood City Council meeting on February 7, 2008; and, EXTEND wishes for the complete and speedy recovery of those wounded. 3. Resolution to SUPPORT Senate Bill No. 613 with State funding through the Virginia General Assembly of an educational building at Eastern Virginia Medical School (EVMS). 4. Resolutions to REQUEST the Virginia Department of Transportation (VDOT) ACCEPT additional streets; and, ACCEPT corrections and deletions to the Road Inventory re Urban Maintenance Payments. 5. Resolution to PROVIDE for the issuance and sale of $90,000,000 General Obligation Public Improvement Bonds, Series 2008, and $90,000,000 General Obligation Public Improvement Refunding Bonds, Series 2008, re financing various public improvements, including schools, roadways, coastal projects, economic and tourism projects, building and parks and recreation projects. 6. Ordinance re the purchase of the Police's Livescan Integrated Booking System and two laptop computers: a. ACCEPT and APPROPRIATE $28,500 from Virginia Department of Criminal Justice Services b. TRANSFER $9,500 from the DEA Seized Property Special Revenue Fund to the Police Department's FY2008-09 Operating Budget February 26, 2008 - 12 - AGENDA REVIEW SESSION ITEM # 57344 4. Application of NIMMO CHILDCARE & RESOURCE LEARNING CENTER, INC., for the Modification of Conditions on a Conditional Change of Zoning (approved by City Council on November 23, 1993) re childcare or educational facilities at 2244 General Booth Boulevard DISTRICT 7 — PRINCESS ANNE This application shall be discussed during the Formal Session. Council Lady Henley advised she would be unable to support this application as it involves caring for one hundred sixty-five (165) children on less than an acre. Council Lady McClanan shared the concerns of Council Lady Henley. Councilman Villanueva also expressed concern. ITEM # 57345 BY CONSENSUS, the following items shall compose the PLANNING BY CONSENT AGENDA: K PLANNING 1. Application of JAMES KUEHN to authorize Enlargements of a Nonconforming Use re a room addition to the existing two-story duplex at 2214 Bayberry DISTRICT 5 — LYNNHAVEN 2. Application of MICHAEL H. SPENCER for a Conditional Use Permit re a home occupation financial services office) at 4305 Bonney Road DISTRICT 5 — LYNNHAVEN 3. Application of WAWA, INC., for a Conditional Use Permit to allow gasoline sales in conjunction with a convenience store at 5476 Virginia Beach Boulevard. DISTRICT 2 — KEMPSVILLE. 5. Application of MICHAEL D. SIFEN, INC., for Modification of the Green Run Land Use Plan to change the designated land use from `future development" as required by Condition No. 10 of the Amendment (approved by City Council on July 9, 1996) re retail development at 3545 Buckner Boulevard. DISTRICT 3 — ROSE HALL February 26, 2008 - 13 - ITEM # 57346 Mayor Meyera E. Oberndorf entertained a motion to permit City Council to conduct its CLOSED SESSION, pursuant to Section 2.1-3711(A), Code of Virginia, as amended, for the following purpose: PERSONNEL MATTERS: Discussion, consideration of or interviews of prospective candidates for employment, assignment, appointment, promotion, performance, demotion, salaries, disciplining or resignation of specific public officers, appointees or employees pursuant to Section 2.2-3711 (A)(1) Council Appointments: Boards, Commissions, Committees, Authorities and Agencies Performance of Council Appointees PUBLICLY -HELD PROPERTY: Discussion or consideration of the, acquisition, or of the disposition of publicly -held property, where discussion in an open meeting would adversely affect the bargaining position or negotiating strategy of the public body pursuant to Section 2.2-3711(A)(3). Acquisition/Disposition of City Property: Cape Henry Beach PUBLIC CONTRACT: Discussion of the award of a public contract involving the expenditure of public funds, and discussion of the terms or scope of such contract, where discussion in an open session would adversely affect the bargaining position or negotiating strategy of the public body, pursuant to Section 2.2-3711(A) (30) Town Center Phase IV LEGAL MATTERS: Consultation with legal counsel and briefings by staff members or consultants pertaining to actual or probable litigation, where such consultation or briefing in an open meeting would adversely affect the negotiating or litigating posture of the public body, or consultation with legal counsel employed or retained by a public body regarding specific legal matters requiring the provision of legal advice by counsel pursuant to Section 2.2-3711 (A)(7). Cape Henry Beach Upon motion by Councilman Wood, seconded by Council Lady Wilson, City Council voted to proceed into CLOSED SESSION at 2:30 P.M. February 26, 2008 - 14 - ITEM # 57346 (Continued) Voting: 11-0 Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None (Break: 2:35 P.M. — 2:38 P.M.) (Closed Session (Auditor discussion) 2:38 — 3:35 P.M. Staff back in Closed Session @ 3:35 P.M. (Dinner: 5:30 P.M. — 5:55 P.M.) February 26, 2008 - 15 - FORMALSESSION VIRGINIA BEACH CITY COUNCIL February 26, 2008 6:00 P.M. Mayor Meyera E. Oberndorf called to order the FORMAL SESSION of the VIRGINIA BEACH CITY COUNCIL in the Council Chamber, City Hall Building, on Tuesday, February 26, 2008, at 6:00 P.M. Council Members Present: Harry E. Diezel, William R. "Bill" DeSteph, Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva. Rosemary Wilson and James L. Wood Council Members Absent: None INVOCATION: Father Ted David Pastor, Virginia Beach United Methodist Church PLEDGE OFALLEGL4NCE TO THE FLAG OF THE UNITED STATES OF AMERICA Vice Mayor Jones DISCLOSED, for many years, he served on the Board of Directors of Resource Bank. Three (3) years ago, Fulton Financial Corporation ("Fulton Financial') purchased Resource Bank. On March 31, 2007, Vice Mayor Jones retired from the Board of Directors. Although, he is no longer a Board Member, he owns stock in Fulton Financial, and that stock ownership causes him to have a "personal interest" in Fulton Financial. However, due to the size of Fulton Financial and the volume of transactions it handles in any given year, Fulton Financial, or any of the banks that are owned by Fulton Financial, may have an interest in numerous matters in which Vice Mayor Jones has no personal knowledge. In order to ensure his compliance with both the letter and the spirit of the State and Local Government Conflict of Interests Act, it is his practice to thoroughly review the agenda for each meeting of City Council for the purpose of identfing any matters in which he might have an actual or potential conflict. If during his review, he identifies any matters, Vice Mayor Jones will prepare and file the appropriate disclosure letter to be recorded in the official records of City Council. Vice Mayor Jones regularly makes this disclosure. Vice Mayor Jones ' letter of April 10, 2007, is hereby made a part of the record. Council Lady Rosemary Wilson DISCLOSED her husband is a principal in the accounting firm of Goodman and Company and is directly and indirectly involved in many of Goodman and Company's transactions. However, due to the size of Goodman and Company and the volume of transactions it handles in any given year, Goodman and Company has an interest in numerous matters in which her husband is not personally involved and of which she does not have personal knowledge. In order to ensure her compliance with both the letter and the spirit of the State and Local Government Conflict of Interests Act, it is her practice to thoroughly review the agenda for each meeting of City Council for the purpose of identdying any matters in which she might have an actual or potential conflict. If during her review she identifies any matters, she will prepare and file the appropriate disclosure letter to be recorded in the official records of City Council. Council Lady Wilson regularly makes this disclosure. Council Lady Wilson's letter of January 27, 2004, is hereby made a part of the record. February 26, 2008 -16 - FORMAL SESSION VIRGINIA BEACH CITY COUNCIL (Continued) Council Lady Rosemary Wilson DISCLOSED she is a Real Estate Agent affiliated with Prudential Decker Realty. Because of the nature of Real Estate Agent affiliation, the size of Prudential, and the volume of transactions it handles in any given year, Prudential has an interest in numerous matters in which she is not personally involved and of which she does not have personal knowledge. In order to ensure her compliance with both the letter and the spirit of the State and Local Government Conflict of Interests Act, it is her practice to thoroughly review the agenda for each meeting of City Council for the purpose of identfing any matters in which she might have an actual or potential conflict. If, during her review she identifies any matters, she will prepare and file the appropriate disclosure letter to be recorded in the official records of City Council. Council Lady Wilson regularly makes this disclosure. Council Lady Wilson's letter of January 27, 2004, is hereby made a part of the record. February 26, 2008 Item V -E. CERTIFICATION OF CLOSED SESSION -17- ITEM # 57347 Upon motion by Councilman Dyer, seconded by Council Lady Wilson, City Council CERTIFIED THE CLOSED SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS. Only public business matters lawfully exempt from Open Meeting requirements by Virginia law were discussed in Closed Session to which this certification resolution applies. AND, Only such public business matters as were identified in the motion convening the Closed Session were heard, discussed or considered by Virginia Beach City Council. Voting: 11-0 Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 RESOLUTION CERTIFICATION OF CLOSED SESSION VIRGINIA BEACH CITY COUNCIL WHEREAS: The Virginia Beach City Council convened into CLOSED SESSION, pursuant to the affirmative vote recorded in ITEM #57346, Page 13, and in accordance with the provisions of The Virginia Freedom of Information Act, and, WHEREAS Section 22-3712 of the Code of Virginia requires a certification by the governing body that such Closed Session was conducted in conformity with Virginia law. NOW, THEREFORE, BE IT RESOLVED. That the Virginia Beach City Council hereby certifies that, to the best of each member's knowledge, (a) only public business matters lawfully exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to which this certification resolution applies; and, (b) only such public business matters as were identified in the motion convening this Closed Session were heard, discussed or considered by Virginia Beach City Council. uth Hodges City Clerk raser, MMC February 26, 2008 Item V -F.1 - 18 - ITEM # 57348 Upon motion by Council Lady Wilson, seconded by Councilman Dyer, City Council APPROVED the Minutes of the INFORMAL and FORMAL SESSIONS of February 12, 2008. Voting: 10-0 Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Abstaining: Ron A. Villanueva Council Members Absent: None Councilman Villanueva ABSTAINED as he was not in attendance during the City Council Session of February 12, 2008. He was delayed at the Cincinnati Airport due to heavy snow February 26, 2008 - 19 - Item V -G.2. ADOPT AGENDA FOR FORMAL SESSION ITEM # 57349 BY CONSENSUS, City Council ADOPTED: AGENDA FOR THE FORMAL SESSION February 26, 2008 - 20 - Item V -G.3. ADD-ON ITEM # 57350 Upon motion by Council Lady Wilson, seconded by Councilman Wood, , City Council ADDED TO THE AGENDA as Item 7: Resolution REAFFIRMING City Council's support of State legislation re smoking in restaurants. Voting: 11-0 Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 -21 - Item V -H. PUBLIC HEARING ITEM # 57351 Mayor Oberndorf DECLARED A PUBLIC HEARING: LYNNHAVEN and INTERNATIONAL PARKWAYS INTERSECTION IMPROVEMENTS Proposed Acquisition of Property and Easements There being no speakers, Mayor Oberndorf DECLARED THE PUBLIC HEARING CLOSED: February 26, 2008 - 22 - Item V -J. ORDINANCES/RESOLUTIONS ITEM # 57352 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council APPROVED IN ONE MOTION Ordinances/Resolutions 1, 2, 3, 4, 5, 6a/b/c and 7 (ADD-ON) of the CONSENT AGENDA. Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None Council Members William R. "Bill" DeSteph, Harry E. Diezel, and Reba S. McClanan voted a VERBAL NAY on Item 7 (ADD -OA) Resolution re smoking in restaurants February 26, 2008 - 23 - Item V -J.1. ORDINANCES/RESOLUTIONS ITEM # 57353 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Ordinance to AUTHORIZE the acquisition of property in fee simple, by agreement or condemnation, for rights-of-way re Lynnhaven and International Parkways Intersection Improvements; the acquisition of temporary and permanent easements; and, AUTHORIZE the City Manager to EXECUTE all documents pertaining thereto. Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 1 AN ORDINANCE TO AUTHORIZE 2 ACQUISITION OF PROPERTY IN FEE SIMPLE 3 FOR RIGHT-OF-WAY FOR LYNNHAVEN 4 PARKWAY/INTERNATIONAL PARKWAY 5 INTERSECTION IMPROVEMENTS CIP 2- 6 018.001 AND THE ACQUISITION OF 7 TEMPORARY AND PERMANENT 8 EASEMENTS, EITHER BY AGREEMENT OR 9 CONDEMNATION 10 11 12 WHEREAS, in the opinion of the Council of the City of Virginia Beach, Virginia, a 13 public necessity exists for the construction of this important roadway project to improve 14 transportation within the City and for other related public purposes for the preservation of 15 the safety, health, peace, good order, comfort, convenience, and for the welfare of the 16 people in the City of Virginia Beach. 17 18 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 19 VIRGINIA BEACH, VIRGINIA: 20 21 Section 1. That the City Council authorizes the acquisition by purchase or 22 condemnation pursuant to Sections 15.2-1901, et seq., Sections 33.1-91, et seq., and Title 23 25.1 of the Code of Virginia of 1950, as amended, of all that certain real property in fee 24 simple, including temporary and permanent easements (the "Property"), as shown on the 25 plans entitled "LYNNHAVEN PARKWAY/INTERNATIONAL PARKWAY INTERSECTION 26 IMPROVEMENTS 2-018.001," (the "Project") and more specifically described on the 27 acquisition plats for the Project (plats and plans collectively referred to as the "Plans"), the 28 Plans being on file in the Engineering Division, Department of Public Works, City of Virginia 29 Beach, Virginia. 30 31 Section 2. That the City Manager is hereby authorized to make or cause to be 32 made on behalf of the City of Virginia Beach, to the extent that funds are available, a 33 reasonable offer to the owners or persons having an interest in said Property. If refused, 34 the City Attorney is hereby authorized to institute proceedings to condemn said Property. 35 36 Adopted by the Council of the City of Virginia Beach, Virginia, on the 76th day of 37 February , 2008. PREPARED: 2/15/08 CA10549 R-1 V:\applications\citylawprod\cycom32\W pdocs\D028\P002\00047775.DOC APPROVED AS TO CONTENT (Imp' C• O casfn GNATURE MC tLbnks kfld :Mk DEPARTMENT APPROVED AS TO LEGAL SUFFICIENCY AND FORM ,41 CITY ATTORNE - 24 - Item V -J.2. ORDINANCES/RESOLUTIONS ITEM # 57354 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Resolution to EXPRESS sympathy to the City of Kirkwood, Missouri, and the families of those killed in the attack at the Kirkwood City Council meeting on February 7, 2008; and, EXTEND wishes for the complete and speedy recovery of those wounded. Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 RESOLUTION WIIEREAS: That Kirkwood, Missouri, was established in 1853 and today Ls a nine -square mile community with a population of 27,324. Kirkwood is located in West St Louis County and boasts high property values, quality public and private schools, safe neighborhoods and exceptional municipal services rendered by approximately two hundred andJifty employees with a budget of $45 Million. Much like the City of Virginia Beach, Kirkwood is administered by the Council -Manager form of government The City has over three hundred acres of park land, an aquatic center, ice rink, tennis courts, ball fields, outdoor amphitheater, picnic sites and playground areas as well as neighborhood parks; WHEREAS: Kirkwood is known as the "Queen of the St. Louis Suburbs", an honor proudly accepted since the late 1800's. It was the fust planned suburb west of the Mississippi River owing its very existence to the railroad From the beginning, it has been a love affair between citizens and trains as evidenced by the beautiful historic train station built in 1893, (listed on the National Register of Historic Places), and located within the heart of the city; WHEREAS: Kirkwood is a city rich in history with a progressive business attitude. Two of the primary reasons fandlies make their homes in Kirkwood are the quality and characterlsdes of the homes and the safety and comfort of the area. Each year, more and more citizens and visitors flock to Kirkwood's many tourist attractions, including Powder Valley Nature Center, The Magic House, downtown Kirkwood itself, the parks, community center and community festivals; and, WHEREAS: On Thursday, February 7, 2008, the City of Kirkwood was terrorized by a senseless and horrific crime at an open government meeting. The beauty of this City was maned the tranquility of Kirkwood was interrupted and the safety of its people was in jeopardy when a gunman with a history of acrbnony against the City leaders opened fire at a City Council meeting killing three City officials and two police officers, plus wounding others who were attending the meeting and final& the gunman himself was killed by the Police. NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council hereby expresses its deepest sympathy to the City of Kirkwood as well as to the families of City Council Members Connle Karr and Michael Lynch, City Engineer and Public Works Director Kenneth Dale; Pollee Officer Thomas F. Ballman; and, Police Sergeant William L Biggs, Jr. BE IT FURTHER RESOLVED: That the Virginia Beach City Council extends heartfelt wishes for the complete and speedy recovery of those wounded GIVEN UNDER OUR HANDS this Twenty -Sixth day of February, Two Thousand and Eight n Louis R Jones, Robert M Dyer, Council Member arbara M. Henley, Council Member E. Uhrin, Council Member 62" Q . Ron A. Villanueva, Council Member Council Member M: ra E. Oberndorf Mayor - 25 - Item V -J.3. ORDINANCES/RESOLUTIONS ITEM # 57355 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Resolution to SUPPORT Senate Bill No. 613 with State funding through the Virginia General Assembly of an educational building at Eastern Virginia Medical School (EVMS). Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 Requested by Mayor Oberndorf 1 A RESOLUTION IN SUPPORT OF FUNDING FOR AN 2 EDUCATION BUILDING AT EASTERN VIRGINIA MEDICAL 3 SCHOOL 4 5 WHEREAS, the Eastern Virginia Medical School ("EVMS") provides many 6 valuable benefits to the citizens of the City of Virginia Beach by training physicians and 7 other medical professionals and attracting much-needed medical specialists to the 8 region, by creating more than 10,500 jobs, and by boosting the Hampton Roads 9 economy annually by more than half a billion dollars; 10 11 WHEREAS, EVMS is an essential part of the medical care system in Hampton 12 Roads, and without EVMS, the region's physician shortage would increase, the costs of 13 healthcare would rise, and the region's ability to attract new businesses and retain 14 existing businesses would be significantly adversely impacted; 15 16 WHEREAS, in order to meet the growing demand for more doctors; the 17 Association of American Medical Colleges ("AAMC") has recommended that enrollment 18 at EVMS be raised by 30%, which would result in adding 130 students to the current 19 enrollment of 440 students; 20 21 WHEREAS, in order to accommodate that increase in students, EVMS will need 22 to modernize its facilities and build a new classroom building, which would be the first 23 new education building at EVMS in 30 years; 24 25 WHEREAS, the Governor has proposed a $1.6 billion dollar bond referendum 26 whereby EVMS, the Medical College of Virginia in Richmond, and a proposed medical 27 school at Virginia Tech in Roanoke would each receive $59 million dollars; 28 29 WHEREAS, if approved by the General Assembly, the Governor's proposal 30 would result in the bond referendum appearing on the November 2008 ballot; 31 32 WHEREAS, in response to concerns regarding EVMS's inclusion in the bond 33 proposal, Senator Stolle has introduced a bill (Senate Bill No. 613) that would 34 reorganize EVMS as a state agency subject to the policies, procedures, and guidelines 35 of the State Council of Higher Education for Virginia ("SCHEV"); 36 37 WHEREAS, the exclusion of EVMS from the bond referendum proceeds would 38 be unfair to the school, as well as the citizens of Virginia Beach and our region, who rely 39 on the availability of quality, accessible, and economical health care and trained medical 40 professionals from EVMS. 41 42 NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF 43 VIRGINIA BEACH, VIRGINIA: 44 45 1. That the City Council recognizes the critical importance of the continuing 46 presence of Eastern Virginia Medical School to the citizens of the City of Virginia Beach 47 and the Hampton Roads area; 48 49 2. That the improvements sought by EVMS are necessary and appropriate in 50 response to recommendations of the Association of American Medical Colleges; 51 52 3. That the City Council affirms its support of EVMS and requests that the 53 Virginia General Assembly pass a version of the $1.6 billion dollar referendum that 54 includes $59 million dollars for EVMS to construct a new education building and 55 modernize its facilities; 56 57 4. That the City Council also supports Senate Bill No. 613, which would 58 reorganize EVMS as a state agency subject to the policies, procedures, and guidelines 59 of the State Council of Higher Education for Virginia; 60 61 5. That in the event the designated proceeds from the bond issue are 62 reduced or increased, City Council supports each of the three medical schools receiving 63 the same amounts. 64 65 BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF VIRGINIA 66 BEACH, VIRGINIA: 67 68 That the City Clerk is hereby directed to transmit a copy of this resolution to each 69 member of the City's local Delegation to the General Assembly. 70 71 Adopted by the City Council of the City of Virginia Beach, Virginia, this 26th 72 day of February , 2008. APPROVED AS TO LEGAL SUFFICIENCY: ePedei.el City Attorney's Office CA10639 R-3 February 20, 2008 - 26 - Item V -J.4. ORDINANCES/RESOLUTIONS ITEM # 57356 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Resolutions to REQUEST the Virginia Department of Transportation (VDOT) ACCEPT additional streets; and, ACCEPT corrections and deletions to the Road Inventory re Urban Maintenance Payments. Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf, John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 1 A RESOLUTION REQUESTING THE VIRGINIA 2 DEPARTMENT OF TRANSPORTATION TO 3 ACCEPT ADDITIONAL STREETS FOR URBAN 4 MAINTENANCE PAYMENTS 5 6 WHEREAS, the Virginia Department of Transportation requires a City Council 7 resolution prior to accepting additional streets for urban maintenance payments; 8 9 WHEREAS, the 75.18 (Local/Collector) lane miles streets listed on Exhibit A 10 (attached) have been constructed in accordance with standards established by the 11 Virginia Department of Transportation; 12 13 WHEREAS, the City of Virginia Beach has accepted and agreed to maintain 14 these streets; and 15 16 WHEREAS, a representative from the Virginia Department of Transportation has 17 inspected and approved these streets. 18 19 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF 20 VIRGINIA BEACH, VIRGINIA: 21 22 That City Council hereby requests the Virginia Department of Transportation to 23 accept the streets listed on Exhibit A, attached hereto and incorporated by reference, 24 and to begin paying urban maintenance payments to the City of Virginia Beach based 25 on the established rate. 26 27 Adopted by the Council of the City of Virginia Beach, Virginia, on the 28 26th day of February , 2008. Approved as to Content: CA10629 R-1 February 12, 2008 Approved as to Legal Sufficiency: City Attorney's Offic 1 A RESOLUTION REQUESTING THE VIRGINIA 2 DEPARTMENT OF TRANSPORTATION TO 3 ACCEPT CORRECTIONS/DELETIONS TO THE 4 ROAD INVENTORY FOR URBAN MAINTENANCE 5 PAYMENTS 6 7 8 WHEREAS, the Virginia Department of Transportation requires a City Council 9 resolution prior to accepting corrections or deletions to the revised road inventory for 10 urban maintenance payments; 11 12 WHEREAS, City personnel have reviewed the revised road inventory prepared 13 by the Virginia Department of Transportation and have determined that some 14 inaccuracies exist; 15 16 WHEREAS, corrections to the revised road inventory have been made as shown 17 on Exhibit A (attached); resulting in a net decrease of -.40 (Local/Collector) lane miles; 18 and 19 20 WHEREAS, a representative from the Virginia Department of Transportation has 21 inspected and approved these corrections. 22 23 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF 24 VIRGINIA BEACH, VIRGINIA: 25 26 That City Council hereby requests the Virginia Department of Transportation to 27 accept the corrections listed on Exhibit A, attached hereto and incorporated by 28 reference, and to begin paying urban maintenance payments to the City of Virginia 29 Beach based on the established rate. 30 31 Adopted by the Council of the City of Virginia Beach, Virginia, on the 26th day 32 of February , 2008. 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Z H W >- o m (1) 0 w w 0x w W z 5 (7 u) U W 0 J 0 a▪ ) O) co d URBAN DIVISION CITY OF VIRGINIA BEACH MUNICIPALITY W Z W W woz z O co V N V 7 (O O 7 co O V N 0 N M 0 N O CO V co O O O O O O O O O O O O N N N N N N N N N N N N a Q O 0 ce w • O • O .- O M N O 0 N0 M W w • _ .-,-,-Z W W 0 0 0 0 0 0 0 00 0 0 o Z Z 1-Z__ z w w7w ❑ 0 H o_ z ~ w >- 1- 1- o 0 o (n o 0 0 to o o 0 0 0 CO Z CO CO CO CO V 0 co co co co co co • a 2 H W th W Li Q § LL Z ( ) cn 0 v) - (n 0 Z o 0 0 0 o O o 0 0 o O o O H f- 0 0 0 0 0 0 ▪ CO 0 0 0 0 W I-❑_ ww �`= ❑ce� 0< Oa 2 U0.03 O z 'c I- < ) O • 0 u) ri M O • w cn O W Q ._ N wJ U-8 1-0-wU O _U 0Z w❑ wO D IL O z W IY w H STREET NAME 0 w ROUTE NUMBER CLEVELAND ST VIRGINIA BEACH BL CUL-DE-SAC OVERHOLT DR S CUL-DE-SAC CENTRUY DR PARLIAMENT DR S E CUL -DE -SA E CUL-DE-SAC KEMPSVILLE RD J < • = _-J -� LL d W_ > w 2 1 O 0 0 0 0 CUL-DE-SAC ENGLEWOOD DR ENGLEWOOD CT N DEAD END PRINCESS ANNE RD ENGLEWOOD DR 0.04 N FOXBORO LD S DEAD END AUTUMN HARVEST DR CUL-DE-SAC CRESTHAVEN RD CRESTHAVEN CT CUL-DE-SAC PROVIDENCE RD SOUTH CRESTHAVEN LN CUL-DE-SAC CUL-DE-SAC FOXBORO LG N CUL-DE-SAC AUTUMN HARVEST DR LOWERY DS N- N- CO 0 0 0 CO rn rn rn rn rn 0 0 0 0 0 0 0 0 0 o 0 0 ❑ O 0 ❑ ❑ 0 0 ❑ 0 0 0 0 *COUNCIL RESOLUTION AND MAP ATTACHED 0 0 a) m d URBAN DIVISION CITY OF VIRGINIA BEACH MUNICIPALITY W w ZJ c W m LL w tog ZJ W 0 z F- W 2 2§ w —W W W > d CO OD m v o co 0 oo o o N O O O O to O O O O O o O O O O O O N N N N N N N N N N N 7 CO V M N CO 00 t!) -.. 0) to Co to O O O O O O O Cl O O O O O O O O O O O O O O O M M M M CO M M M M M M N Z 0 O H to ttiz Lij� WW ❑g O¢ v7 d w Z0� � Q � '= O o�M> M O > w�O W Q .. 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W co -cr CV CO LO CO WW ZW Ii n OO O O O coO to O O O NO O O O O O O Z C) Z W WJg w o 0 I- LL Z E - w >- 1- 1 O In O 0 CO LO CO 0 In O In V 0 CO Z M M CO CO CO CO N CO M co M M - 0 2 I -w W W _ W 0 LL Q Z En ci" 0 J CO cA 0 Z o LO 0 0 0 0 0 0 0 0 0 0 O 2 H a r- to in to co L 10 CO 10 N- CO wi- �I-w 0 _1z '�� ww 0 0Q Oco a Z V ,- co Z'0) > O QcoM 0 ,_ �O O w <. 0 Lu J c� p 1-a�U O U_ OZ LL 2 H K WO D I-1- 0 O z w - w 1— STREET NAME 0 LL ROUTE NUMBER W CUL DE SAC GREENWELL RD THORNDIKE CT W CUL-DE-SAC MILES STANDISH RD FIVE FORKS RD S CUL-DE-SAC DUNSTAN LA IREDELL CT WAKEFIELD DR DUNSTAN LA SIR RICHARD RD 0.12 N DUNSTAN LA INDEPENDENCE BL (NB) WAKEFIELD DR HAYGOOD POINT CT 0.07 E CROSSBOROUGH RD FIVE FORKS RD CUL-DE-SAC FIVE FORKS RD PICKLE BARN CT WITCHDUCK RD (NB) WITCHDUCK RD (NB) MERRIMAC LA 0.05 E SOUTHPORT CI EDWIN DR EXPRESSWAY DR N CUL-DE-SAC 0 GREENVIEW DR 0 0 0 0 0 0 0 0 N- 0 w w w w w w w W w w 0 Z w PRINCESS ANNE RD E08 I HILLINGDON CT N CUL-DE-SAC INDEPENDENCE BL (NB) E08 I INVESTORS PL *COUNCIL RESOLUTION AND MAP ATTACHED URBAN DIVISION z 0 17 up J z ww 0 CC Q O< `nw z �-� OZ'c HQ O - o�M> M t o • �� c w<.-0 O a) wJ U Q I-av7 (/)U Oz LL H c WO D LL 0 W CY CITY OF VIRGINIA BEACH MUNICIPALITY Q z 0 W jCO D 0Z W0 z C W COLLW Dog th z J W 0 H z= w w▪ w > - z W 1- STREET NAME O a0 c0 c0 7 O CO CO CO CO N N O O O O - O O 0 O 0 O O O O O O 0 O N N N N N N N N N N N • CO 0 N- 0 0 0 0 0 0 0 0 0 o 0 0 0 0 0 0 0 0 0 CO O 0 0 0 0 0 v 0 0 0 0 N CO M CO CO CO CO N M M CO CO I 0 W oW S CUL-DE-SAC N CUL DE SAC ROUTE NUMBER MULLIGAN DR TROON CHASE N CUL-DE-SAC GREENLAW DR GAINEFORD CT CUL-DE-SAC GREENLAW DR ANTLER CI 0 CUL-DE-SAC BELLSPRING DR BELSPRING CT CUL-DE-SAC GREENLAW DR CARABAO CI N CUL-DE-SAC CLEMSFORD DR CLEMSFORD CT CUL-DE-SAC GREENLAW DR 0 0 W CUL-DE-SAC WILLIMANTIC DR CUL-DE-SAC GREENLAW DR CUL-DE-SAC GREENLAW DR W CUL-DE-SAC CLIFFWOOD DR o LL -J O CO o0 IL 0 0 2 EE CO CO 0 CD 0 0 0 0 0 0 0 0 0 U.1 w w w w w w w w w w w *COUNCIL RESOLUTION AND MAP ATTACHED cc cc cc w w w w z z_ z C9 w z W 0 1- O_ z ~ W >- O m W w 0 cc LL Wco z z 5 0 v) 0 W Ka E:0 0 0) a) 0) d URBAN DIVISION CITY OF VIRGINIA BEACH MUNICIPALITY Z 0 P WW 0 ce 0< Oa Z0 •m OZ:c 1=Q_ 0) 0 ou)M> M O Q ._ N w J U Q (1)U (/)U fZ OD 2 wO D U- 0 _ 0 Z W - cc m W Z W Jg c w m LL W 20z D co (0 O CO O O CO CO (0 co O O N M O (n O O O O O d O O O O O O N N N N N N N N N N N N V CO 0 0) (0 in L() 0) V f- 00 O O O O O • co O co O N th W W co o o 0 0 o 0 © 0 0O o 0 W H Z W - 0 1- o o o N- 0 0 0 0 0 0 0 Z CO CO CO N M CO co CO co co co W 2 P w W d - LL • W 0 o 0 o 0 0 0 0 0 0 0 0 2 n_ 0 LO In L() U) (n (n V (n (0 (n in 0W o• W W 1- STREET NAME O 1- 0 LL ROUTE NUMBER W CUL DE SAC PLEASANT VALLEY RD SPINWEB AR N CUL DE SAC BOXFORD RD S CUL-DE-SAC WILLIMATIC DR 0.02 W OF ROUNDHILL DR GAINSMILL DR SCUL-DE-SAC ORCHARD HILL LA N CUL-DE-SAC ARCHDALE DR N CUL-DE-SAC ARCHDALE DR S CUL-DE-SAC ELBOW RD J 2 1- 0 0 1-Uu) U Q Y U Z Z < 0 iO LL_J W1- 1- m J 2 H > U u 0 02 Y Q J E CUL-DE-SAC ti :N D E CUL-DE-SAC ORCHARD HILL LA LILYTURF CT W CUL-DE-SAC EAGLE POINT DR LONDALE CT E CUL-DE-SAC ELBOW RD ORCHARD HILL LA W W W *COUNCIL RESOLUTION AND MAP ATTACHED 1- 1- 0 0 Y � E w z . -J 0j0Z o wOIO o_ N Q 0 N .- CO 0 V 0 CO OND a- N 0 CO CO W W Cr) d O d d O d d O o d O Z W a2 URBAN DIVISION CITY OF VIRGINIA MUNICIPALITY C.1)W CO LL togD ri W W W ZJ W U 1- w W W W- W Q a N N N N N N N N N N N N CO CO CO CO 0 0 v o • '• n LO 0 0 0 0 0 0 0 - 0 0 0 0 0 o OD 0 0 0 CO 0 0 0 0 0 U) CO N CO CO M N M CO CO CO M CO Z 0 0 o 0 0 0 0 0 0 0 0 0 0 H F- in (0 LLD (01.0 LO 'Cr 1n 1n (n CO in 0 J Z LL W W in 0Q Oo_ co Z U O z 'c O u) •ri M O W a ._O N W J c5 p w 0 0 Ucc U OZ LL 1- wO D O z W - cc m W H STREET NAME 0 LL ROUTE NUMBER E CUL-DE-SAC ORCHARD HILL LA PERIWINKLE CT E CUL-DE-SAC ARCHDALE DR RIDGEMONT CT CUL-DE-SAC BELLSPRING DR RIPPLEMEAD CT S CUL DE SAC ARCHDALE DR THORWOOD CT N CUL-DE-SAC AERIES WY KINGBIRD LA N CUL-DE-SAC AERIES WY PURPLE MARTIN LA S CUL-DE-SAC CHURCH POINT RD CHURCH POINT LA S CUL DE SAC SUNVISTA DR CHURCH POINT RD (WB) CHURCH POINT RD (WB) TIMBER RIDGE DR S CUL DE SAC AERIES WY WOOD IBIS WY COUNTRY CLUB CI ROSEMONT RD S COUNTRY CLUB CI EWELL RD WHITE ACRE LD DUNSTAN LA 0 0 0 0 0 0 0 0 W W W W LL LL LL LL LL LL LL LL 0 W = 0 Q 1- 1- • .14. a c- o 2 a z o a) < U 3 Z ` Z a O 2 H H 0 c J Z ai �O CO c W cc C J w U Z y m O E70 U Nre W W Q 0 0 cc c w w w z Z Z O Z W 0 H LL Z ~ >- 0 fn 0 cL w W 0 LL W Z 0 u) U w_ zv'�} �goz u_UFO Q OM CO 'Cr CD W cCO o O O CO N V0 N 0 0) CO d W uJ U) O d d O O O d O O d O O W ZJ gRj URBAN DIVISION CITY OF VIRGINIA MUNICIPALITY G) J co - Z OJ N N N N N N N N N N N N Q Q O 0 CC W N W m LL W togD Z CY CC W W to . 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Lo 0 V) LO 0 LO LO 0 LO LO (0 CO wZ CI >L o 0Q Oa u)w z v'- (a � Q�.0) O 0NM> M ,r) i_ c O w<._ a) W J U p I-a�U O U cc O0 H' - COI W =U' tL Z wcc cc - w 1- a) `) — 3 U a) Z J STREET NAME 0 u_ ROUTE NUMBER N CUL-DE-SAC MASEFIELD CI F08 I SHELLEY CT SHORELINE CI HOLLAND RD (NB) SHORELINE CT ADDISON ST CAMPION AV CRASHAW ST OLD LYNNE RD FRONT ROYAL RD EASTHAM RD INDEPENDENCE BL (SB) S CUL-DE-SAC ❑ ❑ 0 0 O LL CUL-DE-SAC LONGWOOD RD MAXWELL CT CUL-DE-SAC TALL OAK DR YOUNG CEDAR CT CUL-DE-SAC WOODBRIDGE TRL BIG SPRINGS PL CUL-DE-SAC WOODBRIDGE TERRACE BROOKWOOD CR CUL-DE-SAC WOODBRIDGE TERRACE BROOKWOOD PL CUL-DE-SAC WOODBRIDGE TL DOMINION CT CUL-DE-SAC MEADOWGLEN RD MEADOWGLEN CI co o) o) rn a) o) O o 0 0 0 0 0 o U LL o U LL LL U U *COUNCIL RESOLUTION AND MAP ATTACHED N a ❑ w • S) jjaZ o LLU0-O co O Q M co co - O O O,- O O co O N N- O O) d W w (/) d d O d O d O O O d d O ZJ J2 URBAN DIVISION CITY OF VIRGINIA E MUNICIPALITY N N N N N N N N N N N • Cn CO LL. W W 2oz D J Z r- O) M N L() N N M N O f- N th • O O O O O O O O M O W W O O O O O O O O O o O o ▪ W W Z U O o O co O co O O O O O O Z co co co co CO CO U) M (n CO CO CO W - = tow W — W > d Z o o O o O o O O o o O o O H H n in (n V) u) ( ti (0 O (0 (0 o 0_ WZ §� o cca Oa. (r)w ZV•to OQ� m O 0 ci) M > M ,5 O w < ._ N w J U p _U OZ LL wO LL _ O Z W -cc w 1- 0 cc LL STREET NAME ROUTE NUMBER CUL-DE-SAC INDEPENDENCE BV S F10 1 MEADOWGLEN RD N CUL-DE-SAC ARCHDALE DR MEDFORD CT CUL-DE-SAC WOODBRIDGE TRL NEWPORT CI E CUL-DE-SAC WOODBRIDGE TR NEWPORT CT N CUL-DE-SAC WOODBRIDGE TERRACE REXMORE LN N DEAD END SHOOTING STAR DR AQUAMARINE DR DEAD END SUNSTREAM PW E CUL DE SAC WOODBRIDGE TL WATERBURY PL CUL-DE-SAC WOODBRIDGE TR WOODBERRY CT LYNNHAVEN PW 0.06 W WOODBERRY CT WOODBRIDGE TL WOODBERRY CT MEADOWGLEN RD WOODBRIDGE TL CUL-DE-SAC CENTENNIAL CI CARIBOU CT o o 0 o O o O o 0 0 *COUNCIL RESOLUTION AND MAP ATTACHED W W F- 0 0 o cc cc w W w w Z Z Z W Z w o H a Z ~ w >- O m 7) 0 w w o cc itW Z u) 0 v) 0 z D U` w U2SY jg0Z 6 Li_ co Qco co N N co co 0 CD 0) 0 O t0 V O co co 0 - O "' w (I) O O O O O O O O O O O O H f9 URBAN DIVISION MUNICIPALITY z J N N N N N N N N N N N Ce W M LL W 20z Z J d' CC W N W CI O O O O w (1)fi z 0 0 N N O O O O O O O O O O O O O O Z F Z W WJ W o O 1- LL z ~ W >- 1- H O In O O O O O O O LO N O 0 M Z M co to co M M M co M (� M co w = R. w W I- W Q LL > • U_ Z a0 a CL (/) (1) U Z0 0 0 0 0 0 0 0 0 0 0 0 O H 0 - In to CO to In to to t(> to co h to P co JZ E WW o ccQ OLL cow z ,- m U �Q�.rn O 0 (ryri M >o F¢- ( O O w<._ O W J c> p i-�uU O _U cc Oz LL I� ce wO LL _ 0 Z wcc w - w 1- STREET NAME ROUTE NUMBER E CUL-DE-SAC GENESEE WY GENESEE CT S CUL-DE-SAC INDEPENDENCE BL S MOORES CREEK CT SALEM RD CENTENNIAL CI SALEM LAKES BV JESSICA LN DONNINGTON DR SHERMAN OAKS AV W CUL DE SAC MEADOW CREST WY VINLAND CI DEAD END FOREMAN TL WILDCAT LA CUL-DE-SAC HILL BREEZE RD POPLAR BREEZE CT N CUL DE SAC PRINCE WILLIAM CT SIR WILFRED PL S CUL-DE-SAC EDINBURGH DR EDINBURGH CT CUL-DE-SAC ROYAL PALM DR. WILD DUCK KY S DEAD END BONNEY RD (EB) SPRUCE ST LL LL LL N ct t0 (O (O N- 0 O O 0 O LL LL LL N DEAD END HOLLAND RD G08 I ARTHUR AV I *COUNCIL RESOLUTION AND MAP ATTACHED LL LL 0 - J Q U v Z .a 0 c 0• W z C7 c U O w Ea (n tt w Z j } o u O 0 7 O O N CO N (O c0 O V O O co O O O N- to CC) W w (/)O O O O O O O O 6 O O 6 d z WJ URBAN DIVISION CITY OF VIRGINIA MUNICIPALITY N N N N N N N N N N N N 1- 0 0 0 W mLL W tog z et W W W W N N O %-O 0 0 O M N N WCi Z W Z JW 6 6 6 O 6 O 6 6 6 6 6 6 Z Z _ _ W w - t' W 0 0 1- d Z ~ W >- 1- 0 0 0 0 0 0 0 0 0 u•) 0 0 0 m Z CO CO CO c0 co co co co co co co M (7)0 W = H w W 0 W Q' LL W 3LWL W () n J 0) - u) 0 Z 0 t() 0 0 0 O 6 O O co M O 0 H f) p in (() ' 0 C() O LoO Lo In n I -Jz ��ww 0 ce>- 0 < 0< cn w Z U - Qz.' Oap co M 0 � c O w<.- au w J C) D) W<�U O F- U)U cc 00 LL 2 wO Dw O z w cc ww 1- STREET NAME 0 u_ w ROUTE NUMBER CUL-DE-SAC S DEAD END ARTHUR AV DEAD END N CUL-DE-SAC H z S CUL-DE-SAC N CUL-DE-SAC GRANT AV WOODBURNE DR N CUL-DE-SAC HOLDER CT GOOD HOPE CHAMPLAIN LA MCKINLEY AV CUL-DE-SAC WOODBURNE DR CUL-DE-SAC NORTHGATE DR CUL-DE-SAC WOODBURNE DR CUL-DE-SAC WINDMILL DR MEADOWBRIDGE LA HOLLAND RD H 0 O Z O Q O a w zce W O Q w O Z Z Z Z ROSEMONT RD S STONESHORE RD NORTHWOOD DR TEALWOOD DR TEALWOOD DR SUMMER PL CO CO CO CO 00 CO CO 0) rn 0) 0) 0) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 *COUNCIL RESOLUTION AND MAP ATTACHED W _ Z N } D g D Z (iUQ- O 0 Q CO OcoCV CD CO 0 N - N V O O CO O) r W U) O O O O O O O O O O O O URBAN DIVISION CI MUNICIPALITY z N N N N N N N N N N N N W W Q Q 0 0 Cr W W tog z CL w CO 7 (O CO N N. N M CO O) W Z 0 0 0 0 ,- O N N 0 0 O 0 Z w Z fi J O O O O O O O O O O O O Z Z W WJg W 0 0 I— LL Z ~ W >- I- I- o 0 0 0 (, O 0 0 0 0 0 0 0 00 Z CO CO CO CO CO CO M CO CO CO CO M Q 2 w UJ ~ w w LL Q w u) LL 0 J (J) 7) 0 Z 0 W I- W W o� 0< Oa_ u)w ZU•- m �z,i-. O ouoM> M 0 � w O O w Q._ N w J U p F-a�U O UCL_ 0Z LL = wO D LL O O O O O o O O o O O o 1 (() (() (n O U) U) U) (C) M M co 0 W W 0 w Z w H STREET NAME ROUTE NUMBER UPLAND RD DAHLIA DR G09 1 UPLAND RD CUL-DE-SAC WINDMILL DR WOODENSHOE CT O) O 0 BUCKNER BL CANADIAN CT G10 I CANADIAN AR E CUL-DE-SAC CANADIAN AR G10 I CANADIAN CT 0.04 MICHAEL LA BOUVE DR PRINCESS ANNE RD O S CUL-DE-SAC G10 I RICA CT BUCKNER BL 160'N OF BUCKNER BL cc 0 U W CUL-DE-SAC DAM NECK RD LANDSTOWN CT W CUL-DE-SAC LANDSTOWN CT LANDSTOWN CT DEAD END DEAD END 0 0 x x O O o o CHARLEMAGNE DR SHORE DR CHARLEMAGNE DR CROIX DR O_ _ O 0 N 0 0 0 U 2 2 2 0 w U H a_ J 0 'Q N LL Q U 3 O H 0 J w o O0 0 (7) m J w Zami 0 E U 0) CC w zcon} 0 0 Z o LLUa0 r N U N- o v v CV - o l- a o o 1. CO m CO w W to 0 0 0 0 0 0 0 0 0 0 0 0 z J_ URBAN DIVISION C MUNICIPALITY N N N N N N N N N N N N W W F- F- 0 0 C W m LL W Dog Z cc w W W CD CC) 0 CO N r N. •V CO CA co Z 0 0 N N O O O O O O O O LU W W O O O O O O O O O O O O Z Z H Z J z W W J W 0 0 I- H Z W >- F- TY 0 0 0 LI) 0 0 0 0 0 0 0 0 03 CO M M CO CO COM M LO CO M C') 0 W Hcc c7_ 0 W w W W > W 0 fn v z0_ 0 0) CI) - cn 0 Z o 0 o co O o 0 0 0 0 0 0 O 2 F- CO (0 in 'Zr 0 0 u) Cr CO in 10 CD F CO F- 0 Wz �� 02 0Q O� coW ZU•m Oz 17. c O • D�M> M ,F > co CO O W <.2 N W J p Ha-�U O UCL_ OZ LL 0 2 F- C/) Et WO D Id- a _ O Z W cL w F- W W O N W 2 0 Q F- F- Q O 2 J O ca a) QU 8 Z �`ZD- O Q� F`- P • 0 c J W N Oo _U c • rn c N 0 Q W W 0 • F- Q W O Z Q 2 J O W QZ H H Z Q 0 LL } _U Z W Z :.=.o E ._ 7 J Q W Q O Q 0 a O Z J W W Y U W J 2 m U J U U c U) €o d fn Q' LL K S CUL DE SAC E CUL-DE-SAC S CUL-DE-SAC LYNNDALE RD N CUL-DE-SAC CUL-DE-SAC N CUL-DE-SAC W CUL-DE-SAC CUL-DE-SAC S DEAD END CUL-DE-SAC 0.03 W CLUB HOUSE RD S 2 0 tY LL SHORE DR (WB) ESTATES DR WOODSIDE LN E CUL-DE-SAC VIRGINIA BEACH BL WATERGATE LA N LYNNHAVEN RD LYNNHAVEN RD N KINGS GRANT RD LYNNHAVEN RD S ANSOL LN CLUB HOUSE RD S H02 .1 A 3 3 M M V CD CD CD CO N- N- r co O O O O O O O O O O O 2 2 2 2 2 2 2 2 2 2 2 w Uj� jj Z o LLU�O co co m d 11J WW Z Q -J 2 URBAN DIVISION B MUNICIPALITY CO N N CO (D N CO (O O O CO O O O O V M N N N CO M O d d O d O O O O d N N C N N N N N N N N N CC W W jog z cc ce w w CO(O M co CO M 0 0 7 W Z 0 M L() lC) O N e- M W W W O O O O O O O O O OO O Z Z 1-zJ Z W W J w 0 U H H Z w >- ZI— M N N M M 0 m wI_W w LIw > LL Z C cn 0 O (c') 10 (I) O 0 O 0 CO CO 0 0 M M M M M M M Z 0 0 M 0 0 0 0 0 0 0 0 0 O = 0 CO CO CO (f) (n (f) 10 to (n (0 (n 0 �LL Z > W W 0 ccQ O0_ (n W Z OU Q� m F- p 1- • 5 00 o iT) > 00 w<._ cc 5 o (,)cc a�U _U 0Z W= WO 1-1- a LO z w - ce W F- STREET NAME 0 (L ROUTE NUMBER CUL-DE-SAC CHERIE DR H08 I GILES CT LYNNHAVEN PW CUL-DE-SAC H08 I GUARDIAN LA VIKING DR NORTH MALL DR H08 I PHOENIX DR LYNNHAVEN PW BAMBERG PL H09 I CHERIE DR CUL-DE-SAC CHERIE DR H09 KIMBLETON CT W CUL-DE-SAC DAM NECK RD H10 I BRIGANDS WY DAM NECK RD H10 I ELENI CT W CUL DE SAC BRIGANDS WY H10 I SCHOONER STRAIT CT CADENCE WY GENIUS PL H13 I ENERGY DR ENERGY DR S CUL-DE-SAC H13 I GENIUS PL HAVERSHAM CS GREAT NECK RD N CUL-DE-SAC DEY COVE DR 0 W 10 Q F- 1- LL Q O 2 0 a> Q c U 2 Z a o � F` 0 0 .0 J w Oo ZU' c W 0 2' CC C L J w J O m o a) Za) C = 0� OJ U U Onaa)) cn IX J CO '1 0 0 URBAN DIVISION Z 0 J Z W W 0g a. >- 0 < OQ d co ZV•c OQ� 0) 0 o M 1 0)O w Q._O 0) w ti UU CeZ ocn� wO w 0 w re CITY OF VIRGINIA BEACH MUNICIPALITY 0 W n fn Uf��J^ D .] Z �U�O � (00 co N N co co V V co W O O O O O O O O O O — O Z W Jg W m W W 2oz � J Z U UJ ~Z_J_ W J � U H W2 R- 2 - w W — W d z ce w 1- STREET NAME N N N N N N N N N N N N M Oco M N 0 0 0 0 0 O O N N N LO O 0 0 0 0 0 0 0 O O O O O O O O O 00 O O co M M M M M M M M 7 M M 0 0 O 0 0 O 0 0 0 0 O 0 2— in L) 10 10 10 10 10 (0 10 CO 10 H W W O H 0 ROUTE NUMBER GREAT NECK RD CHAMBERLING KY DEY COVE DR CHAMBERLING KY HAVERSHAM CL DEY COVE DR FALLING LA REAGAN AV FALLING LA N CUL-DE-SAC RENNIE DR RENNIE CT J z } LAKE HAVASU DR RENNIE DR SEASHORE CV (PRIVATE) REAGAN AV SEASHORE CV N CUL DE SAC SEDGEWICK DR SEDGEWICK CT WESTMINSTER LN (WB) W CUL DE SAC SEDGEWICK DR BACK ACRES RD REAGAN AV E CUL-DE-SAC LYNNHAVEN PW LISHELLE PL CHERIE DR CHERIE DR I AUGUSTA CI CUL-DE-SAC AUGUSTA CI BOTETOURT CT 0 0 0 0 0 0 0 0 0 0 0 0 W W 1— 1-- 0 w 2 0 Q H H Q < 0 2 " J O a) rri w J W U o Y aa z ) U E7 0 u)Ce w U j Y D OZ o LLO O 0 N 0 Q 7 0 CD O(0 0 COCD O 0 w wcn — 0 0 0 d 0 d z W Jg URBAN DIVISION CITY MUNICIPALITY 0 O 00 0 0 0 0 0 0 N N N N N N N N N N N N w w O O cc W m w W Z J 2 _.. _ ct W W co co co l() M M N M 0 V N L() W Z O1.- 0 0 0 0 0 CO N 0 O O WZ w O O O O O O d O O O d O5 _J_ z W wJ� w a 0 1- z w >- 1- H o O o � O o o 0 Ln o 0 o 0 CO z CO M M N M CO M M CO M CO CO • O W 2 H w w H a W cc LI Q> LWL 0 (7)> 0) a 0 U 0 Z 0 W w O2 cc 0< u)w O z• c PQM o) O D 0 •ri • M w• <._ a) W J U p U 0Z LL H- wO Dw 0 w z w 1- STREET NAME O O o o O o O O o O O O HW 0 w 0 cc w ROUTE NUMBER LONDON BRIDGE RD LONDON BRIDGE RD CRUSADER CI CUL-DE-SAC AUGUSTA CI FINCASTLE CT CUL-DE-SAC MIRROR LAKE DR EAST WINTER PARK CT CUL-DE-SAC DECATHLON DR. MCCAULEY CT S CUL-DE-SAC LITCHFIELD WY RIDGEDALE CT E CUL-DE-SAC NESTLEBROOK TL NESTLEBROOK CT INDIAN PLANTATION DR GREYSTONE ST NESTLEBROOK TR E CUL DE SAC MILL DAM RD SHOVELLER AV W CUL-DE-SAC FIRST COLONIAL RD COLONIAL MEDICAL CT W CUL-DE-SAC CALYPSO LA MITCHELL CI 0 N - - O O O N CUL DE SAC TANGLEWOOD TL J05 I TANGLEWOOD TL S CUL DE SAC ST MARSHALL DR 1 J05 1 TIGERTAIL RD 1 0 w 2 0 Q 1- 1— < HQ vLL O • J Q U N • Z o_ o 1- D o o 0 c cc c J W O z a) O E :o z NCD U CC 0 w U N -1�JOZ UUFO N ea O) d URBAN DIVISION CITY OF VIRGINIA BEACH MUNICIPALITY OD Z O z WW Q 0 (n Zm OZ c I. < ) 1- pHA - 0 0 (01 > f 0 Q .-o a) W J O O O F_ °) d� U) O LL H -- (n W LL 0 w a) R. E.) °' (n Q _ m 0 7� Z OJ E > o 1 N V CO O CO CA N N OD CO CO CO N ( CON• N In (n O O W CO O O O O O O O O O O O O ZJ uJ c W o m LL W tog Z W LU ZJ W J � 0 1- Z Z W = I- W W - Q z cC w 1- STREET NAME 0 1- ROUTE NUMBER N N N C N N N N N N N N CO CI) CO CO CO_ CD co M M O O O C N N O 0 O O O O O O O O O O O O O O O O O O O O O O co Co M co M M co M (n M co co 0 o O o o O o o (n o oCV O MABLE LA WOLFSNARE RD HILLTOP RD N CUL-DE-SAC WOLFSNARE RD HILLTOP RD N CUL-DE-SAC HILLTOP RD EAST PIANKATANK LN S CUL-DE-SAC PINEY BARK DR BARNET CT WALLINGTON WY E CUL-DE-SAC EDMENTON DR E CUL-DE-SAC MAYBERRY DR LENOIR CT N CUL-DE-SAC LONDON BRIDGE RD MAYBERRY DR CUL-DE-SAC MAYBERRY DR MOUNT AIRY CT 0.09 S SOMERSBY LA S CUL DE SAC E CUL DE SAC WALLINGTON WY WALLINGTON WY TOWER BRIDGE LP (NB) WALLINGTON WY CUL-DE-SAC SMOKEHOUSE RD BARN STALL LA CO CO (O N O O O r T- T- T r- r -1 -, _) -, -1 -1 W W Q Q 0 0 i0 8_ Q Z .a 0 F- 2 c 0 W Z C7 c ( .CC � W O E 2 U) Ce w U2jY Dg 0Z o u_ 0I- Cl - N O 0 Co co co CV CO CO CO 0 Vo CO CO O 0 0) co co to CO N N d W W Cn O O d O O O O O O O o O Z J URBAN DIVISION CITY OF VIRGINIA MUNICIPALITY Z 0 JZ W W 0g r:C 0 Q Oa_ W Z 0 OZvc H Q o) 1- O 1 O M O • }� 0 O w < ._0 a) w J U O cn Q Z Li_ 2 co▪ (1 WO Dw 0 w ✓ � J Q 7 m o Z OJ N N N N N N N N N N N N CL W CO w Dog C) (0 0 O co co Cr) CO CV 0 0) CO O 0 V 0 0 0 N N 0 0 W W 0 0 0 0 0 0 0 0 0 0 HZJ w J -f 0 1— 0 0 o c co o o co 0 0 o co Z co co co co co co co co co co co N w,- p tow w — W LI- < n. z w 1- STREET NAME 0 0 o o O o O o O o o O I H O (0 Cn to co ( V (D v V to Cn oW W 0 1- 0 LL ROUTE NUMBER S DEAD END RENAISSANCE WY CACHET CT CUL-DE-SAC ALANTON DR BOHNHOFF CT OAK HILL CT N CUL DE SAC CATON DR W CUL-DE-SAC FIRST COLONIAL RD CHANTILLY CT REYNARD DR SNOW GOOSE LA FREMAC DR W CUL-DE-SAC HILL MEADOW DR HILL MEADOW CT N CUL-DE-SAC S CUL-DE-SAC 1 BARTHOLOMEWS CG OPENED CUL-DE-SAC NIMMO PW 1 MCCOMAS WY E CUL-DE-SAC BREEZY PINES LA S CUL DE SAC BREEZY PINES LN TARTINGERS QUAY AGECROFT RD KENWOOD DR TODDSBURY LA S DEAD END LOWER GREENS PL MCNELLY LA • LO co co 0 0 ▪ o co o Y Y Y Y Y Y Y Y Y Y Y 0 w 10 Q 1- 1- Q_ Q < 0 J D < a) Q <0 8 Z Z a O �� 1- 1D O ._ J Z N O� 0 _ Et C J _ w O U c Z r a) O 7:3 O CO IY w W Q Q O 0 W W w W Z Z Z w W 0 F- d Z ~ W >- O CO C 0 W w o cc W 0) Z u) 0 w Z j u_0CI- O M ... co N U) O) a Ll! W Z W URBAN DIVISION CITY OF VIRGINIA MUNICIPALITY N VcrO O co O N M co N O ▪ O N O O O O O O O O O O O O N N N N N N N N N N N N LU LU Q Q 0 c W CO a W togz cc IY W W N r- Lc) 0 d) N CO N 0 W Z O O O O O O OO O O r - I• - 0 O O O O O O Z HZw Z J Z W WJE W U a H Z W >- I- I- o o 0 0 0 0 LO 1 O 0 Co 0 0 pp Z co CO M co co co co co co co co co W1- W LU 2oW cc 1.1 > u_ Z (n >> (n 0 co U 0 Z o O CO 10 0 o 0 0 0 0 0 0 O H H In co v LOIn co co 10 L L 10 0 Lil 0 w N_ LI Z .- 0g 0Q Oa U Z V m OE3 g3 M O • H W O W ._ O QN W J U Q E_ac o O U_ O tL U wO Da _ o Z cc W - W H STREET NAME ROUTE NUMBER S CUL DE SAC LOWER GREENS PL UPPER GREENS PL CUL-DE-SAC ROCKING CHAIR LN WHITEWASH CT S CUL-DE-SAC BAY COLONY DR QUAIL ROOST CT N CUL-DE-SAC KILBOURNE CT W CUL-DE-SAC MARCHVIEW DR BLUE PETE RD CUL-DE-SAC DEAD END GOOSE LG W DISTRIBUTION DR 0.02 BIRDNECK RD N (SB) SOUTHERN BL ADMIRAL DEWEY RD GENERAL BOOTH BV BERKNOR DR CHICKADEE LA W DEAD END FLICKER WY S CUL-DE-SAC GALLERY AV CASSELL ST DEAD END TOLSTOY DR DUMAS CT ROSEWELL DR HEDGELAWN WY EPPINGTON DR LO o N- n a) rn o Y Y o 0 0 0 0 o O J J *COUNCIL RESOLUTION AND MAP ATTACHED u- u_ 0 .Q a °' " U 3 Za H O .c W m Z O c W Fr) ToO y E w zzcoD} -J o LLQ 0 v N O Q M ,- O) M co cv c- M N N a0 7 a0 01 r a w w') 6 6 6 6 6 6 6 6 6 6 6 ZJ Q— Jg URBAN DIVISION CITY OF VIRGINIA MUNICIPALITY N N N N N N N N N N N N cc w W LL w tozD 0 (1)0 0 O 0) N W W F O o O o O o O o O O O O W W U o 0 0 o co o O o 0 0 0 if) Z CO M CO ("•1 CO co co co co co co M W = p W W W Q Z o 0 0 o 0 o 0 0 o o 0 0 O H H u) v u) LO (0 LO CO CO LO (0 m CD D wz ��` LIJ DCLg 0< a w ZU� n) OQ O o c� • > O wQ._ a) W J U p (ceU OZ LL s H - WO LL _ 0 Z W - cc W STREET NAME 0 ROUTE NUMBER GERSHWIN DR WELLSFORD DR GUEST DR S CUL-DE-SAC BRAHMS DR MARTA CT CHAMPION CI CHAMPION CI BEAUTY WY CUL-DE-SAC X W CHAMPION CI SOUTHSIDE RD GENERAL BOOTH BL RUDEE POINT RD S DEAD END HARBOURPT WB SAN MARCOS LA BOLD RULER DR UNICORN DR GODDARD DR W CUL-DE-SAC DWYER RD 0 m w 0 CL O BOLD RULER DR BOLD RULER DR MANTANE AR BOLD RULER DR GOODARD DR PURCHASE AR S CUL DE SAC BOLD RULER DR UNICORN DR HAVILAND DR BOLD RULER DR DA VINCI DR CO M O O O O O O_ J J J J 2 2 2 2 2 2 2 2 H H Q 0 0 w m 0 Q r Q _ LL Q o 2 "J 0 -d a) nhI wCe m -J w Z o a) D E:0 0 =� O cow a f) Li -0 $ 0 tO 0 - \ 2 %-/ 73 . o &= 0 y « « $ 0 0 \ 0 0 6 J z ƒ� e/ » k\ 00 ® 0z\ k o �4�a %lco- 2� 0 R 2 $ ; ® 0 \ ® b \ \ 0 / o f 2 fk % % tZ \ ƒ k / 2 0 0 0 _ n0 7k- $ _ til $ ƒ o 0 t 7 4▪ a 0 / o f 7- u- & / Z• . a $ / / k 0 2 \ $ \ \ k r 0 0 t § 0 & % f f f a ®• z 0 1--- \ ILI Z m k $ ) 0 \ 0_ \ u 5 /Z f _ « < < _ �0 - N 6 } ? c ^ k k k } . $ $ S. _ co til �� f z 4- 5 ¥ I co o f� / y z 0 ec Lin� ul 2 0 0 z 2 o < �ƒ -e - (f) ul •,--1 co ®&•,--, _ -4, TO \ e 0%/% 000a®5 0 f?\\\t / c / J MI cc $\\° ƒ u J Q 0 ®CC \ 0 \ 7 »7 a / \ '-± f « 0 4 2 0 s k / 0 to 0 » - ¥ ƒ \ 1 --- ca / s u \ 0 0 V« « u 0 a ƒ z © _ /us ) z us I- \ c Lli z o o < 5 / z �\ — } a 0 6 / - 27 - Item V -J.5. ORDINANCES/RESOLUTIONS ITEM # 57357 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Resolution to PROVIDE for the issuance and sale of $90,000,000 General Obligation Public Improvement Bonds, Series 2008, and $90,000,000 General Obligation Public Improvement Refunding Bonds, Series 2008, re financing various public improvements, including schools, roadways, coastal projects, economic and tourism projects, building and parks and recreation projects. Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 COUNCIL VERSION - 2/14/08 RESOLUTION OF THE CITY OF VIRGINIA BEACH, VIRGINIA, PROVIDING FOR THE ISSUANCE AND SALE OF A SERIES OF GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS, SERIES 2008, HERETOFORE AUTHORIZED, IN THE MAXIMUM AMOUNT OF $90,000,000 AND A SERIES OF GENERAL OBLIGATION PUBLIC IMPROVEMENT REFUNDING BONDS SERIES 2008 IN THE MAXIMUM PRINCIPAL AMOUNT OF $90,000,000, AND PROVIDING FOR THE FORM, DETAILS AND PAYMENT THEREOF The issuance of $55,200,000 of bonds of the City of Virginia Beach, Virginia (the "City") was authorized by an ordinance adopted by the City Council of the City of Virginia Beach, Virginia (the "City Council") on May 10, 2005, without being submitted to the qualified voters of the City, to finance various public improvements, including schools, roadways, coastal projects, economic and tourism projects, building and parks and recreation projects, $17,597,407 of which bonds have been issued and sold. The issuance of $63,800,000 of bonds of the City was authorized by an ordinance adopted by the City Council on May 9, 2006, which amount was subsequently reduced to $59,800,000 by ordinance adopted on May 15, 2007, without being submitted to the qualified voters of the City, to finance various public improvements, including schools, roadways, coastal projects, economic and tourism projects, building and parks and recreation projects, none of which bonds have been issued and sold. The issuance of $63,800,000 of bonds of the City was authorized by an ordinance adopted by the City Council on May 15, 2007, without being submitted to the qualified voters of the City, to finance various public improvements, including schools, roadways, coastal projects, economic and tourism projects, building and parks and recreation projects, none of which bonds have been issued and sold. It has been recommended to the City Council by representatives of ARD Government Finance Group and Government Finance Associates, Inc. (the "Financial Advisors") that the City issue and sell a series of general obligation public improvement bonds in the maximum principal amount of $90,000,000. The City Council has determined it is in the City's best interest to issue and sell $37,602,593 of the bonds authorized on May 10, 2005; $52,397,407 of the bonds authorized on May 9, 2006; and none of the bonds authorized on May 15, 2007. The City has previously issued its $125,610,000 General Obligation Public Improvement and Refunding Bonds, Series 1998 of which $52,430,000 is outstanding (the "Series 1998 Bonds"); $48,500,000 General Obligation Public Improvement Bonds, Series 2001 (the "Series 2001 Bonds") of which $16,975,000 is outstanding; $95,000,000 General Obligation Public Improvement and Refunding Bonds, Series 2002 (the "Series 2002 Bonds") of which $44,280,000 is outstanding; $65,000,000 General Obligation Public Improvement Bonds, Series 2004A (the "Series 2004A Bonds") of which $55,250,000 is outstanding; $80,000,000 General Obligation Public Improvement Bonds, Series 2005 (the "Series 2005 Bonds") of which $72,000,000 is outstanding; and $75,000,000 General Obligation Public Improvement Bonds, Series 2007 (the "Series 2007 Bonds") of which $71,250,000 is outstanding. It has been recommended to the City Council by the Financial Advisors that the City may achieve certain debt service savings by refunding all or a portion of the Series 1998 Bonds, Series 2001 Bonds, Series 2002 Bonds, Series 2004A Bonds, Series 2005 Bonds and Series 2007 Bonds (collectively, the "Prior Bonds") through the issuance of one or more series of general obligation refunding bonds in the maximum principal amount of $90,000,000. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA: 1. Issuance of Bonds. There shall be issued, pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the City Charter (Chapter 147 of the Acts of the General Assembly of 1962, as amended) and the Public Finance Act of 1991 (Chapter 26, Title 15.2, Code of Virginia of 1950, as amended), general obligation public improvement bonds of the City in the maximum principal amount of $90,000,000 (the "Public Improvement Bonds") and general obligation refunding bonds of the City in the maximum principal amount of $90,000,000 (the "Refunding Bonds"). The proceeds of the Public Improvement Bonds will be used to provide funds to finance, in part, the costs of various public, school, road and highway, coastal, economic and tourism, building and parks and recreation improvements, as more fully described in the ordinances authorizing the Public Improvement Bonds adopted on May 10, 2005 and May 9, 2006 (collectively, the "Project"), and the costs incurred in connection with issuing the Public Improvement Bonds. The proceeds of the Refunding Bonds will be used to refund the Prior Bonds or selected maturities or portions of maturities thereof, to pay the costs of issuance of the Refunding Bonds and costs related thereto as herein authorized. 2. Bond Details. The Public Improvement Bonds shall be designated "General Obligation Public Improvement Bonds, Series 2008," or such other designation as may be determined by the City Manager, shall be in registered form, shall be dated such date as may be determined by the City Manager, shall be in denominations of $5,000 and integral multiples thereof and shall be numbered R-1 upward. Subject to Section 9, the issuance and sale of the Public Improvement Bonds are authorized on terms as shall be satisfactory to the City Manager; provided, that the Public Improvement Bonds (a) shall have a "true" or "Canadian" interest cost not to exceed 6.0% (taking into account any original issue discount or premium), (b) shall be sold to the purchaser thereof at a price not less than 99.0% of the principal amount thereof (excluding any original issue discount), (c) shall be subject to optional redemption no later than October 1, 2017 at an optional redemption price of no more than 102% of the principal amount to be redeemed plus accrued interest to the optional redemption date, and (d) shall mature annually in installments through serial maturities or mandatory sinking fund payments beginning no later than October 1, 2008, and ending no later than October 1, 2027. Principal of the Public Improvement Bonds shall be payable annually on dates determined by the City Manager. The Refunding Bonds shall be designated "General Obligation Public Improvement Refunding Bonds, Series 2008," or such other designation as may be determined by the City Manager, shall be in registered form, shall be dated such date as may be determined by the City -2- Manager, shall be in denominations of $5,000 and integral multiples thereof and shall be numbered R or RF -1 upward. The Refunding Bonds may be issued in one or more series at the same time or at different times as determined by the City Manager in consultation with the Financial Advisors. Subject to Section 9, the issuance and sale of the Refunding Bonds are authorized on terms as shall be satisfactory to the City Manager; provided, that the Refunding Bonds (a) shall have a "true" or "Canadian" interest cost not to exceed 6.0% (taking into account any original issue discount or premium), (b) shall be sold to the purchaser thereof at a price not less than 99.0% of the principal amount thereof (excluding any original issue discount), (c) shall be subject to optional redemption in accordance with the terms and conditions set forth in Section 4, and (d) shall mature annually in installments through serial maturities or mandatory sinking fund payments beginning no later than October 1, 2008 and ending no later than October 1, 2027. Principal of the Refunding Bonds shall be payable annually on dates determined by the City Manager. The Public Improvement Bonds and the Refunding Bonds may also be issued as a single series of bonds appropriately designated, if the City Manager, in consultation with the Financial Advisors, determines it to be in the best interest of the City to do so. The Public Improvement Bonds and the Refunding Bonds are referred to collectively herein as the "Bonds". Each Bond shall bear interest at such rate as shall be determined at the time of sale, calculated on the basis of a 360 -day year of twelve 30 -day months, and payable semiannually on dates determined by the City Manager. Principal shall be payable to the registered owners upon surrender of Bonds as they become due at the office of the Registrar (as hereinafter defined). Interest shall be payable by check or draft mailed to the registered owners at their addresses as they appear on the registration books kept by the Registrar on a date prior to each interest payment date that shall be determined by the City Manager (the "Record Date"). Principal, premium, if any, and interest shall be payable in lawful money of the United States of America. Initially, one Bond certificate for each maturity of the Bonds shall be issued to and registered in the name of The Depository Trust Company, New York, New York ("DTC"), or its nominee. The City has heretofore entered into a Blanket Issuer Letter of Representations relating to a book -entry system to be maintained by DTC with respect to the Bonds. "Securities Depository" shall mean DTC or any other securities depository for the Bonds appointed pursuant to this Section 2. In the event that (a) the Securities Depository determines not to continue to act as the securities depository for the Bonds by giving notice to the Registrar, and the City discharges its responsibilities hereunder, or (b) the City, in its sole discretion, determines (i) that beneficial owners of Bonds shall be able to obtain certificated Bonds or (ii) to select a new Securities Depository, then the City's Director of Finance shall, at the direction of the City, attempt to locate another qualified securities depository to serve as Securities Depository and authenticate and deliver certificated Bonds to the new Securities Depository or its nominee, or authenticate and deliver certificated Bonds to the beneficial owners or to the Securities Depository participants on behalf of beneficial owners substantially in the form provided for in Section 6; provided, that such form shall provide for interest on the Bonds to be payable (A) from the date of the Bonds if they are authenticated prior to the first interest payment date, or (B) from the interest payment date that -3- is or immediately precedes the date on which the Bonds are authenticated (unless payment of interest thereon is in default, in which case interest on such Bonds shall be payable from the date to which interest has been paid). In delivering certificated Bonds, the City's Director of Finance shall be entitled to rely on the records of the Securities Depository as to the beneficial owners or the records of the Securities Depository participants acting on behalf of beneficial owners. Such certificated Bonds will then be registrable, transferable and exchangeable as set forth in Section 8. So long as there is a Securities Depository for the Bonds, (1) it or its nominee shall be the registered owner of the Bonds, (2) notwithstanding anything to the contrary in this Resolution, determinations of persons entitled to payment of principal, premium, if any, and interest, transfers of ownership and exchanges, and receipt of notices shall be the responsibility of the Securities Depository and shall be effected pursuant to rules and procedures established by such Securities Depository, (3) the Registrar and the City shall not be responsible or liable for maintaining, supervising or reviewing the records maintained by the Securities Depository, its participants or persons acting through such participants, (4) references in this Resolution to registered owners of the Bonds shall mean such Securities Depository or its nominee and shall not mean the beneficial owners of the Bonds, and (5) in the event of any inconsistency between the provisions of this Resolution and the provisions of the above -referenced Blanket Issuer Letter of Representations, such provisions of the Blanket Issuer Letter of Representations, except to the extent set forth in this paragraph and the next preceding paragraph, shall control. 3. Refunding Provisions. The City Manager is authorized and directed to select the principal maturities of the Prior Bonds or portions of such maturities to be refunded and to cause to be called for optional redemption any such maturity or portion thereof to be redeemed prior to its stated maturity in accordance with the provisions of such bonds; provided such maturities or portions thereof selected are expected to provide a minimum savings of 2.85% on a net present value basis as determined by the Financial Advisors. In connection with the refunding herein authorized, the City Manager, if determined necessary or appropriate in consultation with the Financial Advisors, is authorized to retain the services of independent consultants to provide verification reports (the "Verification Agent") on aspects of the refunding and is further authorized to retain the services of one or more escrow agents (the "Escrow Agent") and to enter into escrow agreements with them to the extent needed to hold portions of the proceeds of Refunding Bonds and other funds as needed pending their application to refund the Prior Bonds or portions thereof selected to be refunded. 4. Redemption Provisions. (a) Optional Redemption. The Public Improvement Bonds shall be subject to redemption prior to maturity at the option of the City Manager, in whole or in part, at any time on or after dates, if any, determined by the City Manager, but no later than October 1, 2017 as set forth in Section 2 at a redemption price equal to the principal amount to be redeemed, together with any interest accrued to the date fixed for redemption, plus a redemption premium not to exceed 2% of the principal amount to be redeemed, such redemption premium to be determined by the City Manager. Refunding Bonds with a term to maturity of eleven years or less shall not be -4- subject to optional redemption before their stated maturity. Refunding Bonds with a term to maturity of more than eleven years shall be subject to optional redemption on the same terms and conditions as the Public Improvement Bonds; provided, however, the redemption date may be later in calendar year 2017 if the Refunding Bonds are issued at a later date or have a different principal repayment schedule. (b) Mandatory Sinking Fund Redemption. Any term bonds may be subject to mandatory sinking fund redemption upon terms determined by the City Manager. If so determined by the City Manager, the Bonds may provide that the City may take a credit against the mandatory sinking fund redemption obligation of any maturity of term Bonds in the amount of Bonds of the same maturity that have been optionally redeemed or surrendered for cancellation and have not been applied previously as such a credit. If the City wishes to take such a credit, on or before the 70th day next preceding any such mandatory sinking fund redemption date, the City's Director of Finance may instruct the Registrar to apply a credit against the City's mandatory sinking fund redemption obligation for any Bonds of the applicable maturity that have been optionally redeemed or surrendered for cancellation by the City and have not been previously applied as a credit against any mandatory sinking fund redemption obligation for that maturity of the Bonds. Each Bond so previously optionally redeemed or surrendered shall be credited at 100% of the principal amount thereof against the principal amount of such maturity of the Bonds required to be redeemed on such mandatory sinking fund redemption date or dates for such maturity as may be selected by the Director of Finance. (c) Selection of Bonds for Redemption. If less than all of the Bonds are called for optional redemption, the maturities of the Bonds to be redeemed shall be selected by the City's Director of Finance in such manner as may be determined to be in the best interest of the City. If less than all of a particular maturity of the Bonds are called for redemption, the Bonds within such maturity to be redeemed shall be selected by the Securities Depository pursuant to its rules and procedures or, if the book -entry system is discontinued, shall be selected by the Registrar by lot in such manner as the Registrar in its discretion may determine. In either case, (a) the portion of any Bond to be redeemed shall be in the principal amount of $5,000 or some integral multiple thereof and (b) in selecting Bonds for redemption, each Bond shall be considered as representing that number of Bonds that is obtained by dividing the principal amount of such Bond by $5,000. (d) Redemption Notices. The City shall cause notice of the call for redemption identifying the Bonds or portions thereof to be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date, to the registered owner of the Bonds. The City shall not be responsible for mailing notice of redemption to anyone other than DTC or another qualified Securities Depository or its nominee unless no qualified Securities Depository is the registered owner of the Bonds. If no qualified Securities Depository is the registered owner of the Bonds, notice of redemption shall be mailed to the registered owners of the Bonds. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unredeemed portion thereof will be issued to the registered owner upon the surrender thereof. -5- 5. Execution and Authentication. The Bonds shall be signed by the manual or facsimile signature of the Mayor or Vice -Mayor, shall be countersigned by the manual or facsimile signature of the City Clerk or Deputy Clerk, and the City's seal shall be affixed thereto or a facsimile thereof printed thereon; provided, that if both of such signatures are facsimiles, no Bond shall be valid until it has been authenticated by the manual signature of the City Treasurer, as Registrar, or an authorized officer or employee of any bank or trust company serving as successor Registrar and the date of authentication noted thereon. 6. Bond Form. The Bonds shall be in substantially the form attached to this Resolution as Exhibit A, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the officers signing the Bonds, whose approval shall be evidenced conclusively by the execution and delivery of the Bonds. 7. Pledge of Full Faith and Credit. The full faith and credit of the City are irrevocably pledged for the payment of the principal of, premium, if any, and interest on the Bonds. Unless other funds are lawfully available and appropriated for timely payment of the Bonds, the City Council shall levy and collect an annual ad valorem tax, over and above all other taxes authorized or limited by law and without limitation as to rate or amount, on all locally taxable property in the City sufficient to pay when due the principal of, premium, if any, and interest on the Bonds. 8. Registration, Transfer and Owners of Bonds. The City Treasurer is appointed paying agent and registrar for the Bonds (the "Registrar"). The City may appoint a qualified bank or trust company as successor paying agent and registrar of the Bonds. The Registrar shall maintain registration books for the registration and registration of transfers of the Bonds. Upon presentation and surrender of any Bonds at the office of the Registrar, or at its designated corporate trust office if the Registrar is a bank or trust company, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative in such form as shall be satisfactory to the Registrar, the City shall execute, and the Registrar shall authenticate, if required by Section 5, and shall deliver in exchange, a new Bond or Bonds having an equal aggregate principal amount, in authorized denominations, of the same form and maturity, bearing interest at the same rate and registered in the name as requested by the then registered owner thereof or its duly authorized attorney or legal representative. Any such transfer or exchange shall be at the expense of the City, except that the Registrar may charge the person requesting such transfer or exchange the amount of any tax or other governmental charge required to be paid with respect thereto. The Registrar shall treat the registered owner as the person or entity exclusively entitled to payment of principal, premium, if any, and interest and the exercise of all other rights and powers of the owner, except that interest payments shall be made to the person or entity shown as owner on the registration books as of the Record Date. 9. Sale of Bonds. The City Council approves the following terms of the sale of the Bonds. The Bonds shall be sold by competitive bid in a principal amount to be determined by the City Manager, in collaboration with the Financial Advisors, and subject to the limitations set forth in Sections 1 and 2, and the City Manager shall receive bids for the Bonds and award the Bonds to -6- the bidder providing the lowest "true" or "Canadian" interest cost, subject to the limitations set forth in Section 2. Following the sale of the Bonds, the City Manager shall file a certificate with the City Clerk setting forth the final terms of the Bonds. The actions of the City Manager in selling the Bonds shall be conclusive, and no further action with respect to the sale and issuance of the Bonds shall be necessary on the part of the City Council. 10. Notice of Sale; Bid Form. The City Manager, in collaboration with the Financial Advisors, is authorized and directed to take all proper steps to advertise the Bonds for sale substantially in accordance with the forms of the Official Notice of Sale and the Official Bid Form, which forms are attached as an Appendix to the draft of the Preliminary Official Statement described in Section 11 below, and which forms are approved; provided, that the City Manager, in collaboration with the Financial Advisors, may make such changes in the Official Notice of Sale and the Official Bid Form not inconsistent with this Resolution as he may consider to be in the best interest of the City. The Official Notice of Sale and the Official Bid Form for the Refunding Bonds will be virtually identical to such documents provided for the Public Improvement Bonds except for the provisions thereof relating specifically to the description of the Refunding Bonds, as to which the City Manager is authorized to change and complete in collaboration with the Financial Advisors in a manner not inconsistent with this Resolution. 11. Official Statement. A draft of a Preliminary Official Statement describing the Public Improvement Bonds, a copy of which has been provided or made available to each member of the City Council, is approved as the form of the Preliminary Official Statement by which the Public Improvement Bonds and Refunding Bonds will be offered for sale, with such completions, omissions, insertions and changes not inconsistent with this Resolution as the City Manager, in collaboration with the Financial Advisors, may consider appropriate. The Preliminary Official Statement describing the Refunding Bonds will be virtually identical to that for the Public Improvement Bonds except for the provisions thereof relating specifically to the description of the Refunding Bonds, as to which the City Manager is authorized to complete, together with such other completions, omissions, insertions and changes not inconsistent with this Resolution as the City Manager, in collaboration with the Financial Advisors, may consider appropriate. After the Bonds have been sold, the City Manager, in collaboration with the Financial Advisors, shall make such completions, omissions, insertions and changes in the Preliminary Official Statements not inconsistent with this Resolution as are necessary or desirable to complete them as final Official Statements for the appropriate series of Bonds, execution thereof by the City Manager to constitute conclusive evidence of his approval of any such completions, omissions, insertions and changes. The City shall arrange for the delivery to the purchaser of the Bonds of a reasonable number of copies of the appropriate final Official Statement by the earlier of seven business days after the related series of Bonds have been sold or the date of issuance thereof, for delivery to each potential investor requesting a copy of the Official Statement and for delivery to each person to whom such purchaser initially sells Bonds. 12. Official Statement Deemed Final. The City Manager is authorized, on behalf of the City, to deem the Preliminary Official Statement and the Official Statement in final form for the Public Improvement Bonds and for the Refunding Bonds, each to be final as of its date within the meaning of Rule 15c2-12 ("Rule 15c2-12") of the Securities and Exchange Commission (the "SEC"), except for the omission in the Preliminary Official Statement of certain pricing and other -7- information permitted to be omitted pursuant to Rule 15c2-12. The distribution of the Preliminary Official Statement and the Official Statement for such series of bonds in final form shall be conclusive evidence that each has been deemed final as of its date by the City, except for the omission in the Preliminary Official Statement of such pricing and other information permitted to be omitted pursuant to Rule 15c2-12. 13. Preparation and Delivery of Bonds. After bids have been received and the Bonds have been awarded to the winning bidder, the officers of the City are authorized and directed 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 thereof upon payment therefor. 14. Arbitrage Covenants. The City covenants that it shall not take or omit to take any action the taking or omission of which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations issued pursuant thereto (the "Code"), or otherwise cause interest on the Bonds to be includable in the gross income of the registered owners thereof under existing laws. Without limiting the generality of the foregoing, the City shall comply with any provision of law that may require the City at any time to rebate to the United States any part of the earnings derived from the investment of the gross proceeds of the Bonds, unless the City receives an opinion of nationally recognized bond counsel that such compliance is not required to prevent interest on the Bonds from being includable in the gross income of the registered owners thereof under existing law. The City shall pay any such required rebate from its legally available funds. 15. Non -Arbitrage Certificate and Elections. Such officers of the City as may be requested are authorized and directed to execute an appropriate certificate setting forth the reasonably expected use and investment of the proceeds of the Bonds in order to show that such reasonably expected use and investment will not violate the provisions of Section 148 of the Code, and any elections such officers deem desirable regarding rebate of earnings to the United States, for purposes of complying with Section 148 of the Code. Such certificate and elections shall be in such form as may be requested by bond counsel for the City. 16. Limitation on Private Use. The City covenants that it shall not permit the proceeds of the Bonds or the facilities financed or refinanced with the proceeds of the Bonds to be used in any manner that would result in (a) 5% or more of such proceeds or of the facilities financed or refinanced with such proceeds being used in a trade or business carried on by any person other than a governmental unit, as provided in Section 141(b) of the Code, (b) 5% or more of such proceeds or the facilities being financed with such proceeds being used with respect to any output facility (other than a facility for the furnishing of water), within the meaning of Section 141(b)(4) of the Code, or (c) 5% or more of such proceeds being used directly or indirectly to make or finance loans to any person other than a governmental unit, as provided in Section 141(c) of the Code; provided, that if the City receives an opinion of nationally recognized bond counsel that any such covenants need not be complied with to prevent the interest on the Bonds from being includable in the gross income for federal income tax purposes of the registered owners thereof under existing law, the City need not comply with such covenants. -8- 17. Investment Authorization. The City Council hereby authorizes the Director of Finance to direct the City Treasurer to utilize either or both of the State Non -Arbitrage Program of the Commonwealth of Virginia ("SNAP") and the Virginia Arbitrage & Investment Management Program ("AIM") in connection with the investment of the proceeds of the Public Improvement Bonds, if the City Manager and the Director of Finance determine that the utilization of either SNAP or AIM is in the best interest of the City. Additionally, the proceeds of the Refunding Bonds may be invested with SNAP, AIM or in legally permissible investments pursuant to the terms of an escrow deposit agreement with an Escrow Agent as the City Manager may determine with the advice of the Financial Advisors. The City Council acknowledges that the Treasury Board of the Commonwealth of Virginia is not, and shall not be, in any way liable to the City in connection with SNAP, except as otherwise provided in the SNAP Contract. 18. Continuing Disclosure Agreement. The Mayor, the City Manager and such officer or officers of the City as either may designate are hereby authorized and directed to execute and deliver a continuing disclosure agreement setting forth the reports and notices to be filed by the City and containing such covenants as may be necessary to assist the purchaser of the Bonds in complying with the provisions of Rule 15c2-12. Such continuing disclosure agreement shall be substantially in the form attached as an Appendix to the draft of the Preliminary Official Statement described in Section 11 above, which form is approved with such completions, omissions, insertions and changes that are not inconsistent with this Resolution. 19. Other Actions. All other actions of officers of the City and of the City Council in conformity with the purposes and intent of this Resolution and in furtherance of the issuance and sale of the Bonds are hereby ratified, approved and confirmed. The officers of the City are authorized and directed to execute and deliver all certificates and instruments and to take all such further action as may be considered necessary or desirable in connection with the issuance, sale and delivery of the Bonds. 20. Repeal of Conflicting Resolutions. All resolutions or parts of resolutions in conflict herewith are repealed. 21. Effective Date. This Resolution shall take effect immediately. Exhibit A — Form of Bonds -9- Exhibit A — Form of Bonds Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and this certificate is registered in the name of Cede & Co., or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R - REGISTERED UNITED STATES OF AMERICA COMMONWEALTH OF VIRGINIA CITY OF VIRGINIA BEACH General Obligation [Public Improvement] [Refunding] Bond Series 2008 INTEREST RATE MATURITY DATE DATED DATE CUSIP , 20 , 2008 927734 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS The City of Virginia Beach, Virginia (the "City"), for value received, promises to pay, upon surrender hereof to the registered owner hereof, or registered assigns or legal representative, the Principal Amount stated above on the Maturity Date stated above, subject to prior redemption as hereinafter provided, and promises to pay interest hereon from the Dated Date stated above on each and , beginning , 2008, at the annual Interest Rate stated above, calculated on the basis of a 360 -day year of twelve 30 -day months. Principal, premium, if any, and interest are payable in lawful money of the United States of America by the City Treasurer, who has been appointed Registrar (the "Registrar"). The City may appoint a qualified bank as successor paying agent and registrar for the bonds. Notwithstanding any other provision hereof, this bond is subject to a book -entry system maintained by The Depository Trust Company ("DTC"), and the payment of principal, premium, if any, and interest, the providing of notices and other matters shall be made as described in the City's Blanket Issuer Letter of Representations to DTC. This bond is one of an issue of $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity, and is issued pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the City Charter and the Public Finance Act of 1991. The Bonds have been authorized by ordinances adopted by the City Council of the City of Virginia Beach (the "City Council") on May 10, 2005, May 9, 2006 and May 15, 2007, and are being issued pursuant to a resolution adopted by the City Council on February , 2008 (the "Bond Resolution"), to finance various public, school, road and highway, coastal, economic and tourism, building and parks and recreation improvements and to pay costs of issuance of the Bonds. [This bond is one of an issue of $ General Obligation Public Improvement Refunding Bonds, Series 2008 (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity, and is issued pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the City Charter and the Public Finance Act of 1991. The Bonds have been authorized and are being issued by the City Council of the City of Virginia Beach (the "City Council") pursuant to a resolution adopted by the City Council on February , 2008 (the "Bond Resolution"), to refund $ of the outstanding principal balance of the City's General Obligation [Public Improvement and Refunding] Bonds, Series and to pay costs of issuance of the Bonds.] The Bonds maturing on or before , 20, are not subject to optional redemption prior to maturity. The Bonds maturing on or after , 20 , are subject to redemption prior to maturity at the option of the City on or after , 20, in whole or in part at any time (in any multiple of $5,000), upon payment of the following redemption prices (expressed as a percentage of principal amount of the Bonds to be redeemed) plus interest accrued and unpaid to the date fixed for redemption: Period During Which Redeemed (Both Dates Inclusive) Redemption Price The Bonds maturing on , 20, are required to be redeemed in part before maturity by the City on in the years and amounts set forth below, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus interest accrued and unpaid to the date fixed for redemption: Year Amount Year Amount The Bond Resolution provides for a credit against the mandatory sinking fund redemption of the Bonds maturing on , 20 in the amount of Bonds of the same maturity that have been optionally redeemed or surrendered for cancellation and have not been applied previously as such a credit. A-2 If less than all of the Bonds are called for optional redemption, the maturities of the Bonds to be redeemed shall be selected by the City's Director of Finance in such manner as may be determined to be in the best interest of the City. If less than all the Bonds of a particular maturity are called for redemption, the Bonds within such maturity to be redeemed shall be selected by DTC or any successor securities depository pursuant to its rules and procedures or, if the book entry system is discontinued, shall be selected by the Registrar by lot in such manner as the Registrar in its discretion may determine. In either case, (a) the portion of any Bond to be redeemed shall be in the principal amount of $5,000 or some integral multiple thereof and (b) in selecting Bonds for redemption, each Bond shall be considered as representing that number of Bonds that is obtained by dividing the principal amount of such Bond by $5,000. The City shall cause notice of the call for redemption identifying the Bonds or portions thereof to be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date, to DTC or its nominee as the registered owner hereof. If a portion of this bond is called for redemption, a new Bond in the principal amount of the unredeemed portion hereof will be issued to the registered owner upon surrender hereof. The full faith and credit of the City are irrevocably pledged for the payment of principal of, premium, if any, and interest on this bond. Unless other funds are lawfully available and appropriated for timely payment of this bond, the City Council shall levy and collect an annual ad valorem tax, over and above all other taxes authorized or limited by law and without limitation as to rate or amount, on all taxable property within the City sufficient to pay when due the principal of, premium, if any, and interest on this bond. The Registrar shall treat the registered owner of this bond as the person or entity exclusively entitled to payment of principal of and interest on this bond and the exercise of all other rights and powers of the owner, except that interest payments shall be made to the person or entity shown as the owner on the registration books on the first day of the month preceding each interest payment date. In the event a date for the payment of principal, redemption price, or interest on this bond is not a business day, then payment of principal, redemption price, and interest on, this bond shall be made on the next succeeding day which is a business day, and if made on such next succeeding business day, no additional interest shall accrue for the period after such payment or redemption date. All acts, conditions and things required by the Constitution and statutes of the Commonwealth of Virginia 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 with all other indebtedness of the City, is within every debt and other limit prescribed by the Constitution and statutes of the Commonwealth of Virginia. A-3 IN WITNESS WHEREOF, the City of Virginia Beach, Virginia, has caused this bond to be signed by its Mayor, to be countersigned by its Clerk, its seal to be affixed hereto, and this bond to be dated the Dated Date stated above. COUNTERSIGNED: (SEAL) Clerk, City of Virginia Beach, Virginia Mayor, City of Virginia Beach, Virginia A-4 ASSIGNMENT FOR VALUE RECEIVED the undersigned sell(s), assign(s) and transfer(s) unto: (Please print or type name and address, including postal zip code, of Transferee) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE: the within bond and all rights thereunder, hereby irrevocably constituting and appointing , Attorney, to transfer said bond on the books kept for the registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an Eligible Guarantor Institution such as a Commercial Bank, Trust Company, Securities Broker/Dealer, Credit Union or Savings Association who is a member of a medallion program approved by The Securities Transfer Association, Inc. (Signature of Registered Owner) NOTICE: The signature above must correspond with the name of the registered owner as it appears on the front of this bond in every particular, without alteration or enlargement or any change whatsoever. A-5 Requires an affirmative vote by a majority of the members of the City Council. Adopted by the City Council of the City of Virginia Beach, Virginia, this2_6_th day of February, 2008. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY: btu 161eaulf-y Department Finance Department City Attorney's Office CERTIFICATE The undersigned Clerk of the City Council of the City of Virginia Beach, Virginia (the "City Council"), certifies that: 1. A meeting of the City Council was held on February , 2008, at the time and place established and noticed by the City Council, at which the members of the City Council were present or absent as noted below. The foregoing Resolution was adopted by a majority of the members of the City Council, by a roll call vote, the ayes and nays being recorded in the minutes of the meeting as shown below: PRESENT/ABSENT: VOTE: Meyera E. Oberndorf, Mayor / _ Louis R. Jones, Vice Mayor / AYE Bill R. DeSteph X / — AYE Harry E. Diezel X / AYE Robert M. Dyer X—/ AYE Barbara M. Henley / _ AYE Reba S. McClanan x / AYE John E. Uhrin X / AYE Ronald John A. Villanueva x / AYE Rosemary Wilson x / AYE X- AYE James L. Wood / = AYE 2. The foregoing Resolution is a true and correct copy of such Resolution as adopted on February 26, 2008. The foregoing Resolution has not been repealed, revoked, rescinded or amended and is in full force and effect on the date hereof. WITNESS my signature and the seal of the City of Virginia Beach, Virginia, this st day of , 2008. Clerk, City Council of the City of Virginia Beach, Virginia (SEAL) 16935870 205182.000127 City of Virginia Beach, Virginia 2008 General Obligation Bond Sale -$90 Million Summary of 2005-2006 Charter Bond Allocation Economic Vitality Economic and Tourism 9.016 Town Center Infrastructure $1,233,017 9.141 Economic Development Investment Program 1,637,031 $2,870,048 Safe Community Buildings 3.017 Fire & Rescue Station - 1st Landing 4,482,849 3.227 Police Helicopter Replace & Hanger Expansion 2,061,817 3.365 Fire Facility Rehab & Renewal - Phase II 1,290,603 $7,835,269 Quality Physical Environment Roadways 2.021 Rural Road Improvements 1,384,638 2.089 Southeastern Parkway & Grenbelt (Partial) 3,313,720 2.115 Shore Drive Intersections 2,457,496 2.151 Sandbridge Corridor Improvements 525,786 2.165 Laskin Road - Phase II 325,881 2.168 Lesner Bridge replacement 1,733,794 2.238 Pembroke -Area Comprehensive Transportation Plan 358,532 2.285 Traffic Safety Improvements - Phase II 708,808 2.837 Various Costs Participation Projects 2,694,192 2.931 Witchduck Road - Phase I 3,500,000 $17,002,847 Coastal 8.008 Beach Replenishment 2,356,761 8.018 Outfall Improvements - 16th, 42nd, 79th Streets 3,600,000 $5,956,761 Cultural & Recreational Opportunities Buildings 3.322 Virginia Aquarium Original Exhibit Gallery Renovation 4,000,000 Parks & Recreation 4.016 District/Community Parks/Special Use Facilities 598,682 4.024 Park Playground Renovations 1,410,654 4.034 Community Recreation Certain Roof Repairs 652,521 4.073 Providence Park 1,464,005 $8,125,862 City of Virginia Beach, Virginia 2008 General Obligation Bond Sale -$90 Million Summary of 2005-2006 Charter Bond Allocation Quality Education and Lifelong Learning Schools 1.018 Newtown Road Elementary Replacement 9,588,337 1.074 Renovations & Replacements - Various 7,425,099 1.085 Alternative Educational Facility - Phase II 9,401,894 1.098 Comprehensive Long Range Facility Planning 778,334 1.099 Renovations & Replacements - Grounds Phase II 662,524 1.104 Renovations & Replacements - Reroofing Phase II 2,079,372 1.195 Student Data Management System 2,060,918 1.227 Windsor Woods Elementary School Modernization 4,867,617 1.228 Brookwood Elementary School Replacement 5,060,261 1.234 Virginia Beach Middle School Replacement 4,294,858 $46,219,214 Buildings 3.262 Tidewater Community College Expansion $1,989,999 Total $90,000,000 TS Draft 2/15/08 PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY _, 2008 NEW ISSUE Fitch Ratings: BOOK -ENTRY ONLY Moody's Investors Service: Standard & Poor's: (See "Ratings" in Section Two) DRAFT In the opinion of Bond Counsel, under current law and subject to conditions described in "Tax Exemption" in Section Two, interest on the Bonds (1) will not be included in gross income for federal income tax purposes, (2) will not be an item of tax preference for purposes of the federal alternative minimum income tax imposed on individuals and corporations, and (3) will be exempt from income taxation by the Commonwealth of Virginia. Such interest may be included in the calculation of a corporation's alternative minimum income tax, and a holder may be subject to other federal tax consequences as described in "Tax Exemption" in Section Two. CITY OF VIRGINIA BEACH, VIRGINIA $90,000,000 GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS, SERIES 2008 Dated: Date of Issuance Due: October 1, as shown on the inside cover This Official Statement has been prepared by the City of Virginia Beach, Virginia (the "City"), to provide information on the $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the "Bonds"), the security therefor, the City, the projects being financed with the proceeds of the Bonds and other relevant information. Selected information is presented on this cover page for the convenience of the reader. To make an informed decision regarding the Bonds, a prospective investor should read this Official Statement in its entirety. Security The Bonds will be general obligations of the City for the payment of which its full faith and credit will be irrevocably pledged. The City Council is authorized and required, unless other funds are lawfully available and appropriated for timely payment of the Bonds, to levy and collect on all locally taxable property in the City an annual ad valorem tax over and above all taxes authorized or limited by law and without limitation as to rate or amount sufficient to pay when due the principal of, premium, if any, and interest on the Bonds as the same respectively become due and payable. Redemption The Bonds are subject to optional redemption and mandatory sinking fund redemption as summarized on the inside cover and in "Redemption" in Section Two. Purpose The proceeds of the Bonds will be used for the purpose of providing funds for various public improvements. Interest Rates/Yields Interest Payment Dates Denominations Sale Date and Time Closing/Delivery Date Registration Bond Counsel Financial Advisors See inside cover. April 1 and October 1, commencing October 1, 2008. $5,000 or integral multiples thereof. 11:30 a.m. Eastern Time, Tuesday, March 11, 2008. On or about Tuesday, March 25, 2008. Full book -entry only; The Depository Trust Company, New York, New York. Troutman Sanders LLP, Richmond, Virginia. Government Finance Associates, Inc., New York, New York; ARD Government Finance Group, Arlington, Virginia. Official Statement Dated March _, 2008 $90,000,000 CITY OF VIRGINIA BEACH, VIRGINIA GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS SERIES 2008 Serial Bonds October 1 Principal Interest Price/ CUSP Maturi Amount Rate Yield Number 2008 $4,500,000 927734 2009 4,500,000 927734 2010 4,500,000 927734 2011 4,500,000 927734 2012 4,500,000 927734 2013 4,500,000 927734 2014 4,500,000 927734 2015 4,500,000 927734 2016 4,500,000 927734 2017 4,500,000 927734 2018 4,500,000 927734 2019 4,500,000 927734 2020 4,500,000 927734 2021 4,500,000 927734 2022 4,500,000 927734 2023 4,500,000 927734 2024 4,500,000 927734 2025 4,500,000 927734 2026 4,500,000 927734 2027 4,500,000 927734 Optional Redemption Summary of Redemption Provisions The Bonds maturing on and after October 1, 2018 are subject to redemption at the option of the City, in whole or in part, on any date on or after October 1, 2017 at the redemption price of 100% of the principal amount of the Bonds to be redeemed, plus interest accrued to the redemption date. See "Redemption" in Section Two. CITY OF VIRGINIA BEACH THE CITY COUNCIL* Meyera E. Obemdorf, Mayor Louis R. Jones, Vice Mayor Bill R. DeSteph Harry E. Diezel Robert M. Dyer Barbara M. Henley Reba S. McClanan John E. Uhrin Ronald John A. Villanueva Rosemary Wilson James L. Wood CERTAIN CITY OFFICIALS James K. Spore, City Manager Leslie L. Lilley, City Attorney Ruth Fraser, City Clerk Patricia A. Philips, Director of Finance John T. Atkinson, City Treasurer BOND COUNSEL Troutman Sanders LLP Troutman Sanders Building 1001 Haxall Point Richmond, Virginia 23219 FINANCIAL ADVISORS Government Finance Associates, Inc. 590 Madison Avenue, 21st Floor New York, New York 10022 ARD Government Finance Group 1601 N. Kent Street, Suite 800 Arlington, Virginia 22209 *See "Elected Officials" in Section Three. The Bonds will be exempt from registration under the Securities Act of 1933, as amended. As obligations of a political subdivision of the Commonwealth of Virginia, the Bonds will also be exempt from registration under the securities laws of Virginia. No dealer, broker, salesman, or other person has been authorized by the City to give any information to or make any representations with respect to the City, or the Bonds issued thereby, other than those contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. All quotations from and summaries and explanations of provisions of law and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or matters of opinion, and not as representations of fact. The information and expression of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implications that there has been no change in the affairs of the City since the respective dates as of which information is given herein. TABLE OF CONTENTS SECTION ONE: INTRODUCTION 1 The City 1 The Bonds 1 Security for the Bonds 1 Use of Proceeds 2 Redemption 2 Tax Exemption 2 Bond Comsel 2 Financial Advisors 2 Auditors 2 Ratings 3 Investment Policies and Practices 3 Official Statement 3 Continuing Disclosure 3 Additional Information 3 SECTION TWO: THE BONDS 4 General Description of the Bonds 4 Redemption 4 Book -Entry System 5 Authorization and Purpose of the Bonds 5 Security for and Sources of Payment for the Bonds 5 Estimated Sources and Uses of Funds 6 Litigation 7 Legal Matters 7 Tax Exemption 8 Opinion of Bond Counsel 8 Ratings 9 Sale at Competitive Bidding 10 Certificates of City Officials 10 Legality of the Bonds for Investment 10 Continuing Disclosure 11 iv SECTION THREE: CERTAIN INFORMATION CONCERNING THE CITY OF VIRGINIA BEACH, VIRGINIA 12 Introduction 12 Certain Elected Officials 12 School Board 13 Elected Officials 13 Certain City Council Appointees and Administrative Staff Members 14 Appointed Officials 15 Governmental Services and Facilities 15 General Overview of Governmental Organization and Selected Functions 18 Functional Departments 18 Economic and Demographic Factors 23 Business and Industry 29 Retail Sales 32 Tourism and Conventions 32 Military 33 Medical Facilities 36 Agribusiness 36 Education 36 SECTION FOUR: CITY INDEBTEDNESS AND CAPITAL PLAN 39 Limitations on Incurrence of Debt 39 Debt Management Policies 39 Outstanding Debt and Long-Term Obligations 41 Authorized but Unissued Bonds 42 Water and Sewer System Debt 45 Storm Water Utility System Debt 45 Agricultural Reserve Program 45 Tax Increment Financing 46 Assets Acquired and Financed Under Capital Leases 47 Other Long-Term Obligations 47 Impacts of Future Economic Development and Transportation Legislation on City Debt 48 Overlapping Debt 49 Short-Term Borrowing 49 Debt History 49 Payment Record 50 Comprehensive Plan 50 Capital Improvement Program 51 Prior Year CIPs - Actual Capital Project Expenditures 53 SECTION FIVE: FINANCIAL INFORMATION 54 Basis of Accounting and Accounting Structure 54 City of Virginia Beach Development Authority 54 Hampton Roads Transportation District Commission 55 City Financial Statements 55 Investment Policies and Practices 56 Certificate of Achievement 56 Budgetary Process 57 Operating Budget - Fiscal Year 2008 58 General Government Revenues 61 General Fund 61 Operating Data 62 General Fund Operations 66 The Water and Sewer System 69 Typical Water and Sewer Bills 71 Operating Results-Water and Sewer System 71 Water Service Contracts 74 Water and Sewer Capital Improvement Program 74 v Insurance 75 Commitments and Contingencies 75 Retirement and Pension Plans 76 Employee Relations and Collective Bargaining 77 SECTION SIX: MISCELLANEOUS 78 Delivery 78 Official Statement 78 Appendix A — Audited Financial Statements for the Fiscal Year Ended June 30, 2007 Appendix B — Form of Bond Counsel Opinion Appendix C — Form of Continuing Disclosure Agreement Appendix D — Information Regarding The Depository Trust Company and its Book -Entry System Appendix E — Notice of Sale and Bid Form vi CITY OF VIRGINIA BEACH, VIRGINIA $90,000,000 GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS, SERIES 2008 SECTION ONE: INTRODUCTION The purpose of this Official Statement, including the cover page and Appendices, is to furnish information in connection with the sale by the City of Virginia Beach, Virginia (the "City" or "Virginia Beach"), of its $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the "Bonds"), dated the date of their delivery, to be issued in accordance with a resolution adopted by the City Council of the City of Virginia Beach (the "City Council") on [February 26, 2008] (the "Resolution"). This information speaks as of its date and is not intended to indicate future or continuing trends in the financial or economic position of the City. The following material is qualified in its entirety by the detailed information and fmancial statements appearing elsewhere in this Official Statement, reference to which is hereby made for all purposes. The City The issuer of the Bonds is the City of Virginia Beach, which is located in the southeastern portion of the Commonwealth of Virginia (the "Commonwealth"). Virginia Beach is the most populous city in the Commonwealth, with a population of 425,257 according to the 2000 U.S. Census and an estimated population in 2007 of 433,033 according to the Weldon Cooper Center of the University of Virginia. Additional information concerning the City can be found in Sections Two, Three, Four and Five. The audited financial statements for the City for the Fiscal Year ended June 30, 2007, are set forth in Appendix A hereto. The Bonds The Bonds consist of $90,000,000 General Obligation Public Improvement Bonds, Series 2008, dated the date of their delivery, maturing annually on October 1 from 2008 through 2027. The Bonds will be held by The Depository Trust Company ("DTC"), or its nominee, as securities depository with respect to the Bonds. Interest on the Bonds will be payable on each April 1 and October 1, commencing October 1, 2008, until maturity. As long as the Bonds are held by DTC or its nominee, interest will be paid to Cede & Co., as nominee of DTC, in same day funds on each interest payment date. The Bonds are subject to redemption at the option of the City upon the terms provided in the Resolution. For further information regarding the Bonds, the book -entry system for the registration and transfer of the Bonds and the optional redemption provisions of the Bonds, see Section Two. Security for the Bonds The Bonds will be general obligations of the City to which the full faith and credit of the City will be pledged for payment. For further information regarding the security for the Bonds, see "Security and Sources of Payment for the Bonds" in Section Two. Use of Proceeds Proceeds of the Bonds will be used for the purpose of providing funds for various public improvements and paying a portion of the costs of issuance of the Bonds. See "Authorization and Purpose of the Bonds" in Section Two for a more complete description of the authorization and purpose of the Bonds. Redemption The Bonds maturing on and after October 1, 2018 will be subject to redemption beginning October 1, 2017, in whole or in part at any time, at the option of the City upon payment of 100% of the principal amount thereof to be redeemed plus interest accrued to the redemption date. See "Redemption" in Section Two for a more complete description of the redemption provisions of the Bonds. Tax Exemption Under current law, interest on the Bonds will be exempt or excludable from income taxation by the Commonwealth of Virginia and the United States of America. See "Tax Exemption" in Section Two for a more complete description of the significant elements of the federal and state income tax status of interest on the Bonds. Bond Counsel Troutman Sanders LLP, Richmond, Virginia, serves as Bond Counsel to the City in connection with the issuance of the Bonds. The opinion of Bond Counsel will be dated and given on, and will speak only as of, the date of issuance and delivery of the Bonds. The proposed form of Bond Counsel's opinion is attached as Appendix B. The scope of engagement of Bond Counsel does not extend to passing upon or assuming responsibility for the accuracy or adequacy of any statements made in this Official Statement other than matters expressly set forth in the opinion of Bond Counsel. Bond Counsel makes no representation that it has independently verified the same. Financial Advisors Government Finance Associates, Inc. and ARD Government Finance Group serve as independent financial advisors to the City in connection with the issuance of the Bonds. The financial advisors' fee for services rendered with respect to the sale of the Bonds is not contingent upon the issuance and delivery of the Bonds. Auditors The City's financial statements for the Fiscal Year ended June 30, 2007 are attached as Appendix A to this Official Statement and have been audited by the independent public accounting firm of Cherry, Bekaert & Holland, L.L.P. These fmancial statements, together with the related Notes to Financial Statements, are intended to provide a broad overview of the fmancial position and operating results of the City's governmental activities, business -type activities and major funds. Such financial statements have been included in reliance upon the report of Cherry, Bekaert & Holland, L.L.P., who will not be reviewing any matters in connection with the issuance of the Bonds. 2 Ratings The City has applied for ratings from Fitch Ratings, One State Street Plaza, New York, New York 10004, Moody's Investors Service, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, and Standard & Poor's Public Finance Ratings, 55 Water Street, New York, New York 10041, as shown on the front cover. See "Ratings" in Section Two for a more complete description of the ratings. Investment Policies and Practices The City, as a political subdivision of the Commonwealth, is limited to investments permitted by Section 2.2-4500 et seq. of the Code of Virginia of 1950, as amended. In addition, various bond resolutions further restrict the types of allowable investments. The City's investment practices are generally described in footnote 7 of the City's financial statements, attached as Appendix A. More detail on the City's investment practices is provided in Section Five. Official Statement This Official Statement has been approved and authorized by the City for use in connection with the sale of the Bonds. Its purpose is to supply information to prospective buyers of the Bonds. Financial and other information contained in this Official Statement has been prepared by the City from its records, except where other sources are noted. The information is not intended to indicate future or continuing trends in the financial or economic position of the City. Continuing Disclosure The City has agreed to execute a Continuing Disclosure Agreement at closing to assist the successful bidder in complying with the provisions of Rule 15c2-12 (the "Rule 15c2-12"), promulgated by the Securities and Exchange Commission (the "SEC") and as in effect on the date hereof, by providing annual fmancial information and material event notices required by Rule 15c2-12. See "Continuing Disclosure" in Section Two and see the proposed form of the Continuing Disclosure Agreement attached as Appendix C. Additional Information Any questions concerning the contents of this Official Statement should be directed to the following: Department of Finance, Municipal Center, Virginia Beach, Virginia, 23456 (757) 385-4681; or the City's financial advisors, Government Finance Associates, Inc. (212) 521-4090, or ARD Government Finance Group (703) 807-5700. 3 SECTION TWO: THE BONDS General Description of the Bonds The Bonds will be issued in the aggregate principal amount of $90,000,000, will be dated the date of their issuance and delivery, and will mature on October 1 from 2008 through 2027, as shown on the inside cover page. The Bonds will be registered as to principal and interest in the name of Cede & Co., as nominee for DTC, or otherwise as hereinafter described. Beneficial ownership interests in the Bonds will be available only in book -entry form. Beneficial Owners (as hereinafter defined) will not receive physical bond certificates representing their interests in the Bonds purchased. So long as DTC or its nominee is the registered owner of the Bonds, references in this Official Statement to the owners of the Bonds shall mean DTC or its nominee and shall not mean the Beneficial Owners. The Resolution contains provisions applicable to periods when DTC or its nominee is not the registered owner. As long as the Bonds are held by DTC or its nominee, interest will be paid to Cede & Co., as nominee of DTC, in same day funds on each interest payment date. Interest on the Bonds will be payable on October 1, 2008, and on each April 1 and October 1 thereafter until maturity by check or draft mailed to the registered owners at their addresses as they appear on the registration books on the March 15 and September 15 immediately preceding each interest payment date. If such interest payment date is not a business day, such payment will be made on the next succeeding business day with the same effect as if made on the interest payment date, and no additional interest will accrue. The registration books are kept by the City Treasurer, who has been appointed paying agent and registrar (the "Registrar"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. Redemption Optional Redemption. The Bonds maturing on or before October 1, 2017, are not subject to redemption prior to maturity. The Bonds maturing on or after October 1, 2018, are subject to redemption beginning October 1, 2017, in whole or in part (in any multiple of $5,000) at any time, at the option of the City, upon payment of 100% of the principal amount of the Bonds to be redeemed plus interest accrued and unpaid to the date fixed for redemption. Selection of Bonds for Redemption. If less than all of the Bonds are called for optional redemption, the maturities of the Bonds to be redeemed shall be selected by the City's Director of Finance in such manner as may be determined to be in the best interest of the City. If less than all of the Bonds of a particular maturity are called for redemption, DTC or any successor securities depository will select the Bonds to be redeemed pursuant to its rules and procedures or, if the book -entry system is discontinued, the Bonds to be redeemed will be selected by the Registrar by lot in such manner as the Registrar in its discretion may determine. In either case, each portion of the $5,000 principal amount is counted as one Bond for such purpose. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unredeemed portion shall be issued to the registered owner upon the surrender thereof. Notice of Redemption. The City will cause notice of the call for redemption identifying the Bonds or portions thereof to be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date, to the registered owner thereof. The City shall not be responsible for mailing notice of redemption to anyone other than DTC or another qualified securities depository or its nominee unless no qualified securities depository is the registered owner of the Bonds. If no qualified securities depository is the registered owner of the Bonds, notice of redemption shall be mailed to the registered owners of the Bonds. 4 Book -Entry System A description of DTC, of procedures and record keeping on beneficial ownership interests in the Bonds, payment of interest and other payments on the Bonds to DTC Participants (as hereinafter defined) or to Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Bonds and other transactions by and between DTC, DTC Participants and Beneficial Owners is attached as Appendix D and is based on information furnished by DTC. Authorization and Purpose of the Bonds The Bonds were authorized by ordinances adopted by the City Council on May 10, 2005, May 9, 2006 and May 15, 2007, and by the Resolution adopted on 1February 26, 2008.] The Bonds will be issued pursuant to the Resolution and the Constitution and statutes of the Commonwealth, including the Charter of the City of Virginia Beach (Chapter 147, Acts of Assembly of 1962, as amended) and the Public Finance Act of 1991 (Chapter 26, Title 15.2, Code of Virginia of 1950, as amended) (the "Act"). Of the aggregate principal amount of the Bonds, $37,602,593 represents a portion of $55,200,000 of bonds that were authorized by an ordinance adopted by the City Council on May 10, 2005, without being submitted to the qualified voters of the City (the "2005 Charter Bonds"), to provide funds, together with other funds that may be available, for the various public improvements, including schools, roadways, economic and tourism and building projects. After this sale, the City will have no authorized but unissued balance of 2005 Charter Bonds. Of the aggregate principal amount of the Bonds, $52,397,407 represents a portion of $63,800,000 of bonds that were authorized by an ordinance adopted by the City Council on May 9, 2006, and subsequently reduced to $59,800,000 by an ordinance adopted by the City Council on May 15, 2007 without being submitted to the qualified voters of the City (the "2006 Charter Bonds"), to provide funds, together with other funds that may be available, for the various public improvements, including schools, roadways, economic and tourism and building projects. After this sale, the City will have an authorized but unissued balance of $7,402,593 remaining from the 2006 Charter Bonds. None of the aggregate principal amount of the Bonds will represent a portion of $63,800,000 of bonds that were authorized by an ordinance adopted by the City Council on May 15, 2007, without being submitted to the qualified voters of the City (the "2007 Charter Bonds"), to provide funds, together with other funds that may be available, for the various public improvements, including schools, roadways, coastal, economic and tourism, building and parks and recreation projects. After this sale, the City will have an authorized but unissued balance of $63,800,000 remaining from the 2007 Charter Bonds. Proceeds of the Bonds will be used for the purpose of providing funds for various public improvements and paying a portion of the costs of issuance related to the Bonds. Security for and Sources of Payment for the Bonds Pledge of Full Faith and Credit. The Bonds will be general obligations of the City, and the full faith and credit of the City are irrevocably pledged to payment of principal of and interest on the Bonds. The Resolution provides that the City Council will, in each year while any of the Bonds are outstanding, levy and collect an ad valorem tax, over and above all other taxes authorized or limited by law and without limitation as to the rate or amount, upon all property in the City subject to local taxation, sufficient to pay the principal of and interest on the Bonds as the same shall come due, unless other funds are lawfully available and appropriated for timely payment of the Bonds. 5 Bondholders' Remedies in the Event of Default. Section 15.2-2659 of the Virginia Code provides that upon affidavit filed with the Governor of Virginia by or on behalf of any owner of a general obligation bond, or by any paying agent therefor, in default as to payment of principal or interest, the Governor shall immediately conduct a summary investigation. If it is established to the Governor's satisfaction that payment of the bond or interest thereon is in default, the Governor shall order the State Comptroller to withhold all funds appropriated and payable by the Commonwealth to the political subdivision so in default and apply the amount so withheld to payment of the defaulted principal and interest. Section 15.2-2659 also provides for notice to the registered owners of such bonds of the default and the availability of withheld funds. The State Comptroller advises that to date no order to withhold funds pursuant to Section 15.1-227.61 or Section 15.1-225, the predecessor provisions of 15.2-2659, has ever been issued. Although Section 15.2-2659 has not been approved by a Virginia Court, the Attorney General of Virginia has ruled that appropriated funds may be withheld by the Commonwealth pursuant to its predecessor section. In the Fiscal Year ending June 30, 2007, the Commonwealth provided $128,791,428 to the City, not including its discretely presented component units, of which $84,662,663 was deposited in the City's General Fund. Neither the Bonds nor the proceedings with respect thereto specifically provide any remedies to Bondholders if the City defaults in the payment of principal of or interest thereon, nor do they contain any provision for the appointment of a trustee to enforce the interest of the Bondholders upon the occurrence of such a default. Upon any default in the payment of principal or interest, a Bondholder could, among other things, seek to obtain from an appropriate court a writ of mandamus requiring the City Council to levy and collect taxes as described above. The mandamus remedy, however, may be impracticable and difficult to enforce. Furthermore, the right to enforce payment of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and similar laws and equitable principles, which may limit the specific enforcement of certain remedies. Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code") permits a municipality such as the City, if insolvent or otherwise unable to pay its debts as they become due, to file a voluntary petition for the adjustment of debts provided that such municipality is "specifically authorized, in its capacity as a municipality or by name, to be a debtor...." Bankruptcy Code, Section 109(c)(2). Current Virginia statutes do not expressly authorize the City or municipalities generally to file for bankruptcy under Chapter 9. Chapter 9 does not authorize the filing of involuntary petitions against municipalities such as the City. Bankruptcy proceedings by the City could have adverse effects on Bondholders including (a) delay in the enforcement of their remedies, (b) subordination of their claims to claims of those supplying goods and services to the City after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings, and (c) imposition without their consent of a reorganization plan reducing or delaying payment of the Bonds. The Bankruptcy Code contains provisions intended to ensure that, in any reorganization plan not accepted by at least a majority of a class of creditors such as the holders of general obligation bonds, such creditors will have the benefit of their original claims or the "indubitable equivalent." The effect of these and other provisions of the Bankruptcy Code cannot be predicted and may be significantly affected by judicial interpretations. Estimated Sources and Uses of Funds follows: The proceeds of the Bonds, exclusive of other available funds of the City, are to be used as 6 Sources of Funds: Par Amount of Bonds $90,000,000 Net Original Issue Premium Total Sources of Funds $ Uses of Funds: Project Costs $ Underwriter's Compensation Total Uses of Funds $ Litigation Concerning the Bonds. According to the City Attorney, there is no litigation of any kind now pending or, to the best of his information, knowledge and belief, threatened against the City to restrain or enjoin the issuance or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Bonds are issued or affecting the ability of the City to levy or collect ad valorem taxes without limitation as to rate or amount for the payment of the principal of or interest on the Bonds. General Fund. The City is a named defendant in various litigation matters filed by parties concerning alleged personal injuries, property damage and other causes of action which are being vigorously defended by the City. In the opinion of the City Attorney, none of the pending litigation, if decided adversely to the City, would materially affect the City's fmancial position. Water and Sewer Enterprise Fund. The City has prevailed in all litigation concerning the Lake Gaston Water Supply Project, which became operational in January, 1998. On March 31, 2004, the Federal Energy Regulatory Commission ("FERC") issued a new, 40 -year license for Lake Gaston. Legal Matters Certain legal matters relating to the authorization and validity of the Bonds will be subject to the approving opinion of Troutman Sanders LLP, Richmond, Virginia, as Bond Counsel, which will be furnished at the expense of the City upon delivery of the Bonds, in substantially the form set forth as Appendix B. Bond Counsel's opinion will be limited to matters relating to authorization and validity of the Bonds and to the tax-exempt status of interest thereon as described below in the section "Tax Exemption." Bond Counsel has not been engaged to investigate the fmancial resources of the City or its ability to provide for payment of the Bonds. Bond Counsel's opinion will make no statement as to such matters or as to the accuracy or completeness of this Oficial Statement or any other information that may have been relied on by anyone in making the decision to purchase Bonds. 7 Tax Exemption Opinion of Bond Counsel. The scope of engagement of Bond Counsel does not extend to passing upon or assuming responsibility for the accuracy or adequacy of any statements made in this Official Statement other than matters expressly set forth in Bond Counsel's opinion, and Bond Counsel makes no representation that it has independently verified the same. The opinion of Bond Counsel will be dated and given on, and will speak only as of, the date of issuance and delivery of the Bonds. In the opinion of Bond Counsel, under current law, interest on the Bonds, including OID, as described in "Original Issue Discount" below, (a) will not be included in gross income for federal income tax purposes, (b) will not be an item of tax preference for purposes of the federal alternative minimum income tax imposed on individuals and corporations; however, with respect to corporations (as defined for federal income tax purposes) subject to the alternative minimum income tax, such interest is taken into account in determining adjusted current earnings for purposes of computing such tax, and (c) will be exempt from income taxation by the Commonwealth. No other opinion is expressed by Bond Counsel regarding the tax consequences of the ownership of or the receipt or accrual of interest on the Bonds. Bond Counsel's opinion will be given in reliance upon certifications by representatives of the City as to certain facts relevant to both the opinion and the requirements of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable regulations thereunder, and is subject to the condition that there is compliance subsequent to the issuance of the Bonds with all requirements of the Code that must be satisfied in order for interest thereon to remain excludable from gross income for federal income tax purposes. The City has covenanted to comply with the current provisions of the Code regarding, among other matters, the use, expenditure and investment of the proceeds of the Bonds and the timely payment to the United States of any arbitrage rebate amounts with respect to the Bonds. Failure by the City to comply with such covenants, among other things, could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to their date of issue. Original Issue Premium. Bonds purchased, whether upon issuance or otherwise, for an amount (excluding any amount attributable to accrued interest) in excess of their principal amount will be treated for federal income tax purposes as having amortizable bond premium. A holder's basis in such a Bond must be reduced by the amount of premium which accrues while such Bond is held by the holder. No deduction for such amount will be allowed, but it generally will offset interest on the Bonds while so held. Prospective purchasers of such Bonds should consult their own tax advisors as to the calculation, accrual and treatment of amortizable bond premium and the state and local tax consequences of holding such Bonds. Original Issue Discount. The initial public offering prices of the Bonds maturing in the years through (the "OID Bonds") will be less than their stated principal amounts. In the opinion of Bond Counsel, under current law, the difference between the stated principal amount and the initial offering price of each maturity of OID Bonds to the public (excluding bond houses and brokers) at which a substantial amount of such maturity of such Bonds is sold will constitute original issue discount ("OID"). The offering prices set forth on the inside cover of this Official Statement for the OID Bonds are expected to be the initial offering prices to the public at which a substantial amount of each maturity OID Bonds are sold. Under the Code, for purposes of determining a holder's adjusted basis in an OID Bond, OID treated as having accrued while the holder holds the Bond will be added to the holder's basis. OID will accrue on a constant yield -to -maturity method. The adjusted basis will be used to determine taxable gain or loss upon the sale or other disposition (including redemption or payment at maturity) of an OID Bond. 8 Prospective purchasers of OID Bonds should consult their own tax advisors as to the calculation of accrued OID and the state and local tax consequences of owning or disposing of such Bonds. Other Tax Matters. In addition to the matters addressed above, prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including without limitation financial institutions, property and casualty insurance companies, S corporations, foreign corporations subject to the branch profits tax, recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to the applicability and impact of such consequences. Prospective purchasers of the Bonds also should consult their own tax advisors as to the status of interest on the Bonds under the tax laws of any state other than Virginia. From time to time, there are legislative proposals in the Congress of the United States and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds. An example of such litigation is the case of Davis v. Kentucky Department of Revenue, 197 S.W.3d 557 (2006), the oral argument for which was heard by the U.S. Supreme Court on November 5, 2007 with a decision expected to be rendered in the spring of 2008, challenging Kentucky's taxation of bonds issued by other states and their political subdivisions differently than it taxes bonds issued by Kentucky and its political subdivisions. Virginia law currently has a similar disparity in the tax treatment of interest on bonds issued by the Commonwealth and the interest on bonds issued by other states. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the value or marketability of the Bonds would be impacted thereby. Ratings Fitch Ratings, One State Street Plaza, New York, New York 10004, Moody's Investors Service, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, and Standard & Poor's Public Finance Ratings, 55 Water Street, New York, New York 10041, have given the Bonds the ratings of "" "" and "" respectively. The City requested that the Bonds be rated and furnished certain information to Fitch, Moody's and Standard & Poor's, including certain information that may not be included in this Official Statement. Fitch issues ratings ranging from AAA to D to designate the relative investment qualities of bonds. Moody's issues ratings ranging from Aaa to C to designate the relative investment qualities of bonds. Standard & Poor's issues ratings ranging from AAA to D to designate the relative investment qualities of bonds. Reference should be made to the individual rating agency for a fuller description of the meaning of the rating assigned by such rating agency. These ratings are not a recommendation to buy, sell or hold 9 the Bonds. The ratings are subject to review and change or withdrawal at any time if, in the judgment of the respective rating agency, circumstances so warrant. There is no assurance that any such ratings will continue for any period of time or that they will not be revised or withdrawn. A downward revision or withdrawal of a rating may have an adverse effect on the market price of the Bonds. Sale at Competitive Bidding The Bonds will be offered for sale at competitive bidding at 11:30 a.m., Eastern Time, on Tuesday, March 11, 2008. After the Bonds have been awarded to the winning bidder, the City will issue an Official Statement in final form to be dated March 11, 2008. The City will deem the Official Statement fmal as of its date, and the Official Statement in fmal form will include, among other things, the identity of the winning bidder, the expected selling compensation to the winning bidder and other information on the interest rates and offering prices or yields, all as provided by the winning bidder. A copy of the Official Notice of Sale and a copy of the Official Bid Form are attached to this Preliminary Official Statement as Appendix E. Certificates of City Officials Concurrently with the delivery of the Bonds, the City will furnish to the successful bidder (a) a certificate dated the date of delivery of the Bonds, signed by the appropriate City officials and stating that no litigation of any kind is then pending or, to the best of their information, knowledge and belief, threatened against the City to restrain or enjoin the issuance or delivery of the Bonds or the levy or collection of ad valorem taxes, over and above all other taxes authorized or limited by law and without limitation as to rate or amount on all locally taxable property within the City sufficient to pay when due the principal of or interest on the Bonds, or in any manner questioning the proceedings and authority under which the Bonds are issued, and (b) a certificate dated the date of delivery of the Bonds, stating that the descriptions and statements in this Official Statement (except in Appendix D, in the section above entitled "Tax Exemption," in the section above entitled "Litigation," and in the information as to prices/yields and CUSIP numbers on the inside cover page), on the date of this Official Statement and on the date of delivery of the Bonds, were and are true and correct in all material respects, did not and do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such descriptions and statements, in light of the circumstances under which they were made, not misleading, and that no material adverse change has occurred in the financial condition of the City between the date of this Official Statement and the date of delivery of the Bonds other than as contemplated in this Official Statement. Such certificate will also state, however, that such City officials did not independently verify the information indicated in this Official Statement as having been obtained or derived from sources other than the City and its officers, but that they have no reason to believe that such information is not accurate. The City Attorney also will furnish to the successful bidder concurrently with the delivery of the Bonds a certificate dated the date of delivery of the Bonds, stating that the statements in the section above entitled "Litigation" on the date of this Official Statement and on the date of delivery of the Bonds were and are true and correct in all material respects and did not and do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such statements, in light of the circumstances under which they were made, not misleading. Legality of the Bonds for Investment The Act provides that bonds issued by the City under the Act are obligations in which public officers and bodies of the Commonwealth, counties, cities and towns and municipal subdivisions of the 10 Commonwealth, insurance companies and associations, savings banks, savings institutions, savings and loan associations, trust companies, beneficial and benevolent associations, administrators, guardians, executors, trustees and other fiduciaries in the Commonwealth may properly and legally invest funds under their control. Continuing Disclosure To assist the winning bidder in complying with the provisions of Rule 15c2-12, the City has agreed to execute a continuing disclosure agreement to provide certain annual fmancial information and material event notices required by Rule 15c2-12 (collectively, "Continuing Disclosure"). A form of that agreement is attached as Appendix C. As set forth in Appendix C, such undertaking requires the City to provide only limited information at specified times and does not require it to disclose all information that may affect the value of the Bonds. The City may choose to make additional information available from time to time, but has no obligation to do so. The City has never failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12 to provide certain annual financial information and material event notices. The City is required to file its annual Continuing Disclosure with or for the benefit of each nationally recognized municipal securities information repository ("NRMSIR") and with any state information depository ("SID") created in Virginia. No SID has been created for Virginia. The City is required to file any material event notice with (1) each NRMSIR or the Municipal Securities Rulemaking Board and (2) any Virginia SID. As described more fully in Appendix C, any Bondholder may take steps to enforce the obligation of the City to provide Continuing Disclosure, but any failure by the City under its obligation will not result in an event of default under the Bonds. Investors and other interested parties may contact any NRMSIR for additional information concerning its services. The City makes no representation as to the scope of the services provided to the secondary market by any NRMSIR or as to the costs for the provision of such services by any NRMSIR. As indicated in Appendix C, the City is permitted to make filings solely through the Texas Municipal Advisory Council (the "MAC") as provided at www.disclosureusa.org unless the SEC withdraws the interpretive advice in its letter to the MAC dated September 7, 2004. 11 SECTION THREE: CERTAIN INFORMATION CONCERNING THE CITY OF VIRGINIA BEACH, VIRGINIA Introduction The present City of Virginia Beach, Virginia was formed on January 1, 1963, by the merger of Princess Anne County and the former smaller City of Virginia Beach. This merger created one of the largest cities in the Commonwealth of Virginia with an area of 310 square miles and 38 miles of shore- line on the Atlantic Ocean and the Chesapeake Bay. The City covers the entire eastern border of Virginia south of the Delmarva Peninsula and includes all of the area from the Chesapeake Bay to the North Carolina border. The City has the largest population of any city in Virginia with a population of 425,257 according to the 2000 U.S. Census and an estimated population in 2007 of 433,033 according to the Weldon Cooper Center of the University of Virginia. As a city on the eastern seaboard, Virginia Beach has always been known as a resort community. The strength of the City's economy, however, lies in its diversification. Construction/real estate, light industry, "high-tech" services, wholesale and retail sales, agriculture, four major military bases, and resort and convention trade are the major aspects of the economy. The City encourages and supports this diversification. Virginia Beach is an independent, full-service city with sole local governmental taxing power within its boundaries. It derives its governing authority from its City Charter granted by the General Assembly of the Commonwealth of Virginia. The governing body of the City is the City Council, which formulates policies for the administration of the City. The current City Charter provides for a Council - Manager form of government. There is no overlapping debt or taxing powers with other political subdivisions. The water and sewage systems are operated on a self-supporting basis. The Executive Offices are located at the Municipal Center, Virginia Beach, Virginia 23456 (757) 385-4242. The telephone number for the Finance Department is (757) 385-4681. Certain Elected Officials The City operates under the Council -Manager form of government as established by its City Charter. There is an 11 -member City Council vested with local legislative powers. Each member of the City Council is elected on an "at large" basis; however, seven seats must be filled by individuals who reside in the seven residence districts of the City. The City Charter was amended in 1995 to provide that the City's seven boroughs would be replaced by these approximately equally populated residence districts. There is no district residency requirement for the remaining four seats. The Mayor is elected by the voters and occupies one of these four seats. The City Council elects a Vice -Mayor from among its members. All members of the City Council are elected for four-year terms. The City Manager is the administrative head of the municipal government and carries out the policies of the City Council. The City Manager is appointed by the City Council and serves at the pleasure of the City Council. The City Council also appoints members to certain boards, commissions, and authorities as it deems necessary to the operation of the City. 12 School Board The School Board is made up of 11 members. Seven seats must be filled on the School Board by individuals who reside in the seven respective residence districts of the City but each of the eleven elected School Board members are elected by the voters of the City at large. The School Board members serve four-year terms. The School Board exercises all of the powers conferred and performs all of the duties imposed upon them by general law. Elected Officials Meyera E. Oberndorf Mayor Civic leader, former school teacher and radio broadcaster. Elected to City Council in 1976. Re- elected in 1980 and 1984. First elected Mayor on July 1, 1988, re-elected in 1992, 1996, 2000 and 2004. Bachelor of Science degree in Elementary Education from Old Dominion University. Louis R Jones, Vice Mayor Owner and operator of Hollomon-Brown Funeral Homes, Inc. Elected to City Council in 1982 and served as Mayor from 1982 to 1984. Re-elected to City Council m 1990, 1994, 1998, 2002 and 2006. Served as Vice Mayor November, 2002 to 2004, 2004-2006, and now serving 2006-2008. Bachelor of Science degree in Business Administration from The College of William and Mary, Norfolk Division (now Old Dominion University). Hany E. Diezel, Councilman Former Fire Chief of Virginia Beach, retiring in 1997 after 23 years of service. Appointed to City Council December 17, 2002, and elected to a four-year term in 2004. Attended Randolph -Macon College and American University. Associate of Arts and Sciences degree from Tidewater Community College. Robert M Dyer, Councilman Administrative Dean and Associate Professor, School of Government, at Regent University. Elected to City Council in 2004. Bachelor of Science degree in Physical Therapy from Saint Louis University, Master of Public Administration degree from Fairleigh Dickinson University and a Ph.D. in Organizational Leadership from Regent University. John E. Uhrin, Councilman Since 1991, Director of Operations for Burlage Management, currently overseeing the operation of six hotels. Elected to City Council in 2006. He attained his Bachelor's Degree in Business Administration with a concentration in Marketing and Finance from Old Dominion University. Reba S. McClanan, Councilwoman Civic leader and former school teacher. Employed in the Virginia Beach Public School System from 1964 to 1968. Elected to City Council in 1980 and re-elected in 1984 and 1988. Served as Vice Mayor from 1984 to 1986. Won election to City Council in 1996 and 1998, each for a two-year term due to redistricting. Won re-election in 2000 and 2004. Bachelor of Science degree from Berea College and a Master of Science degree from Virginia Polytechnic Institute and State University. 13 Barbara M Henley, Councilwoman Co-owner of the Henley Farm. Served on City Council 1978-1990, during which time she served two years as Vice Mayor. Again served on City Council from 1994-2002. Elected to City Council in 2006. Bachelor of Science degree in Elementary Education from Old Dominion University and a Masters in Urban Studies from Old Dominion University. Bill R. DeSteph, Councilman President and Chief Executive Officer of DeSteph Enterprises. Retired U.S. Naval Officer. Elected to City Council in 2006. Bachelor of Science degree from the University of Maryland. Ronald John A. Villanueva, Councilman Executive Vice President and Partner of SEK Solutions LLC. Elected to City Council in 2002 and re-elected in 2006. Bachelor of Arts degree in Political Science with a Minor in Professional and Technical Writing from Old Dominion University. Rosemary Wilson, Councilwoman Realtor and former Virginia Beach school teacher and School Board member. Elected to City Council in 2000 and re-elected in 2004. Bachelor of Science degree in Education from Old Dominion University. James L. Wood, Councilman Vice President of J D & W, Inc., a commercial general contracting firm. Elected to City Council in 2002 and re-elected in 2006. Bachelor of Science degree from Washington and Lee University. Certain City Council Appointees and Administrative Staff Members The City Manager is responsible for planning, organizing, directing, and coordinating all activities of the City. The City Manager is also responsible for appointing and discharging all City employees and officers, though responsibilities may be delegated to subordinates. A major responsibility of the City Manager is the preparation of the annual City Operating Budget and Capital Improvement Program. The City Attorney has management, charge, and control of all legal business of the City. The City Attorney is chief legal advisor to the City Council, the City Manager, and all City departments and agencies. It is the duty of the City Attorney to advise the City Council concerning the legality of actions by the City and to represent the City in all matters affecting its interest. It is the responsibility of the Real Estate Assessor's Office annually to appraise all real property in the City. In addition, this office administers the Land Use Assessment Program for qualifying farm and forest lands and processes the Tax Relief for the Elderly and Disabled Program for qualifying senior citizens and disabled persons. The City Clerk's Office is responsible for recording and maintaining all legislative documents and actions of the City Council; preparing and monitoring the legislative budgets; and compiling annual financial disclosures for City Council and members of City Boards and Commissions. The City Clerk's Office also serves as liaison for all Sister City activities. 14 Appointed Officials James K Spore, City Manager City Manager since November 25, 1991. Previously served as City Manager of Garland, Texas (1985 to 1991), and Burnsville, Minnesota (1981 to 1985). Also served as the Director of Community Development for the City of Lakewood, Colorado (1976 to 1981), and the City of Elgin, Illinois (1970 to 1976). Master of Public Administration degree, University of Colorado, Boulder; and Bachelor and Master of Urban Planning degrees, University of lllinois, Urbana. Leslie L. Lilley, City Attorney City Attorney since October 31, 1989. Previously Assistant City Attorney for the City from 1987 to 1989. Employed as associate with the law firm of Taylor, Walker & Adams, P.C., from 1983 to 1987. Served as Assistant Commonwealth's Attorney for the City from 1979 to 1983. Served as Assistant to the City Manager for Intergovernmental Relations from 1974 to 1976. Served as Budget Officer for the City from 1972 to 1974. Bachelor of Science degree in Business Administration from University of Richmond, Virginia (1971), Master of Business Administration degree from The College of William and Mary (1972), and a Juris Doctor degree from T. C. Williams School of Law, University of Richmond, Virginia (1978). Ruth Fraser, City Clerk City Clerk since January 1, 1979. Master Municipal Clerk, Bachelor of Arts degree in Administration from Potomac State College of West Virginia University. David L. Hansen, Chief of Finance and Technology Chief of Finance and Technology since April 3, 2006. Previously Chief Financial Officer and Resource Manager for the U.S. Army's Training and Doctrine Command at Fort Monroe. Held positions as CEO, commanding officer and district engineer of the Army Corps of Engineers Norfolk district. Director of Public Works for Fort Eustis and Fort Story. Senior trainer at the Army's National Training Center. Battalion commander in the 1' Cavalry Division and executive officer to the Director of the Army budget at the Pentagon. Bachelor of Science degree in Business Administration and Accounting from the University of Central Florida. Master in Business Administration and Contracting from the Florida Institute of Technology. Master of Science degree in Strategic Studies and Logistics from the Industrial College of the Armed Forces. Patricia A. Philips, Director of Finance Director of Finance since April 16, 1992. Previously served as Director of the Office of Research and Strategic Analysis from 1975 to 1992. Also served as a public accountant for Coopers and Lybrand from 1970 through 1975. Bachelor of Science degree in Business Administration, Magna Cum Laude, Old Dominion University. Master in Business Administration degree, Old Dominion University. Certified Public Accountant since 1972. Governmental Services and Facilities The City provides general governmental services for its citizens including police and fire protection, emergency medical services, collection and disposal of refuse, water and sewer services, parks and recreation, libraries/culture, and maintenance of streets and highways. Other services provided by the 15 City, which services are partially funded by the Commonwealth, include public education in grades kindergarten through twelfth, and certain technical and special education, mental health assistance, health and social services, agricultural services, and judicial activities. The City's main municipal complex includes eight general administrative buildings, a school administration building, a public safety building, a city jail and a judicial complex. In close proximity are a City garage complex, a highway maintenance facility, a public utilities operational maintenance facility, a waste management facility and a farmer's produce market. There are four police precincts, one Law Enforcement Training Academy, 19 fire stations, one fire/emergency medical services training center, one central library together with eight area libraries and two satellite library facilities, 203 developed city parks, and 90 elementary and secondary schools located throughout the City. Some of the other major facilities provided by the City include a convention center, the Virginia Aquarium and Marine Science Center, six recreational centers, a tennis complex, five municipal golf courses, a 6,000 seat multipurpose sports stadium and an amphitheater, which books approximately 40 entertainment events per year. The City provides a comprehensive range of public services characteristic of its position as the most populous city in the Commonwealth. 16 General Overview of Governmental Organization and Selected Functions Over the last sixteen years, the City government structure has evolved to respond to the challenges of increased demand for quality service, infrastructure needs, potential reductions in state and federal funding and a slowdown in population and revenue growth. In 1991, a Management Leadership Team ("MLT") was established to assist the City Manager with identifying and resolving organizational issues. The MLT continues to evolve to meet the changing needs of the community and the organization. The MLT includes the City Manager, the Chief Operating Officer, the Chief of Staff, the Chief Development Officer and the Chief of Finance and Technology. The MLT oversees the integration and alignment of the organization toward City Council's vision and annual goals. In 1995, the City created Strategic Issue Teams to focus on City Council's vision and direction. Six business areas were identified: Economic Vitality, Safe Community, Quality Physical Environment, Quality Education for Lifelong Learning, Cultural and Recreational Opportunities and Family and Youth Opportunities. A seventh area was identified by City Council in 2002 and named Quality Organization. These Strategic Issue Teams focus on the government organization as a quality -driven service provider delivering cost-effective services. As a result of the planning by the Strategic Issue Teams, "Community for a Lifetime: A Strategy to Achieve City Council's Vision for the Future" was published in August 1998 and outlined the organization's long-range goals. In October 2002, City Staff developed a "3 -Year Plan" entitled "From Vision to Reality." This plan brings together the strategic direction and City Council's annual priorities. In 2004, staff updated the original strategies based on City Council direction. In April 1999, the City was recognized for its efforts by receiving the Medallion Award from the 1998 U.S. Senate Productivity and Quality Award in the public sector category for the Commonwealth. In 2000, the City was rated one of the five best -managed cities in the nation in a Syracuse University/Governing Magazine research study. The Reason Public Policy Institute ranked the City the eighth most efficiently run largest city in the nation (2001). In 2003, USA Weekend named the City the best place to live. In 2004, the National Policy Research Council ranked the City fourth for the quality of local government, 13th for public safety, 16th for business climate and 20th for health and welfare in its "America's Best Cities and States" report. In 2006, Money Magazine ranked the city as "Among the ten best big cities in America". Functional Departments The Department of Agriculture provides educational and resource services in agriculture, home economics, money management, 4-H, and community resource development. The department has three major divisions. The Virginia Beach Cooperative Extension Office offers educational programs and technical information on agriculture, horticulture, and money management. The Agriculture Reserve Program (ARP) is a land preservation program. The goal of the ARP is to promote and enhance agriculture as an important local industry that is part of a diverse local economy by purchasing development rights over a resource base of farmland. The Farmer's Market provides a venue for the sale of goods and products of local farmers and craftsmen and for the provision of rural heritage activities. The Department of Audit Services. On December 11, 2007, City Council adopted an ordinance to recognize the Department of Audit Services as a Council -appointed Office. The purpose of this reorganization is to create more independence in the overseeing of the audit of financial information. The Council -appointed auditor will have all the duties of the former position and will report under a new organizational structure. Among the auditor's duties will be to conduct financial and performance audits 18 of City departments, offices, boards, activities, agencies, programs and systems. Those audits will focus on efficiencies and the adequacy of internal controls, and all audits will be conducted in accordance with Government Auditing Standards. The City Auditor also will operate a fraud, waste and abuse hotline and will oversee and coordinate investigations of suspected fraudulent activity. A Council -appointed Audit Committee consisting of Council members, a citizen Certified Public Accountant, and two other citizen members with a background in finance, accounting, and/or auditing will review the Auditor's audit schedule and audit reports, which will then be forwarded to City Council and be made available for public inspection. City Council has solicited applications for the position of City Auditor, and the transition to a City Council -appointed Auditor will occur upon the selection of the new appointee, which will likely occur on or before April 1, 2008. The function of the Department of Communications and Information Technology is the processing and electronic storage of information used in the daily business of the City. The department collects, organizes and disseminates information to all City departments, City agencies, and the public school system. It also provides consulting services in related areas to municipal users to assist them in formulating goals, objectives and long-range plans. The department manages school and City video production services and facilities and provides information to the community on municipal government and the public school system through daily cablecasting of programs on the City's Municipal Cable Access Television Station, Channels 47 and 48. The department's services center around eleven main operational areas — applications support, system support, operations support, telecommunications, video services, emergency communications, geo-spatial information services, information security and privacy, public information, City/school printing, and mail and business center. The Convention and Visitors Bureau coordinates the advertising and promotion of tourist activities and is responsible for bringing meetings, conferences, and conventions of large groups to Virginia Beach. The department operates a Visitor Information Center and opened the first phase of the new Virginia Beach Convention Center in August 2005 and the final phase in January 2008. Approximately 2.7 million tourists and conventioneers visited Virginia Beach in calendar year 2006, spending an estimated $857 million and generating over $73.2 million in tax revenues. The Economic Development Department promotes and encourages the economic growth and diversity of the City. The department works with the City of Virginia Beach Development Authority to attract business and industry to the City and to develop sites for new or expanding businesses in the City's Business/Industrial Parks. Recent accolades include: One of the nation's 10 best cities to get a job. (Forbes Magazine, 2006), Sixth best big city in America. (Money Magazine, 2006), and Top Ten Economic Development Organizations in North America. (Site Selection Magazine, 2005). The Department of Emergency Medical Services coordinates the pre -hospital emergency care provided by the 10 volunteer Rescue Squads and three substations. In Fiscal Year 2007, it answered 37,820 calls for medical assistance. This care includes rapid, safe response to the scene, proper treatment of the victim and prompt transfer to a hospital. The department also provides all rescue squad training and coordinates the use of specialized resources including EMS Special Operations, police, fire, hospital personnel, dispatchers and the Nightingale Air Ambulance to deal with medical emergencies in the City. Approximately 723 volunteers along with 38 career EMS providers were active with the rescue squads in Fiscal Year 2007. The Department of Finance oversees the financial affairs of the City and ensures the financial integrity of City operations. Departmental services include: payment of all City bills; maintenance of accounting records; payment of all City employees and administration of employee benefits; provision of insurance and operation of the self-insurance program; maintenance of the City's fixed assets inventory; 19 procurement of all equipment, materials and services for all city agencies; and coordination and administration of the City's long-term debt program. The City's Fire Department, which is responsible for both fire prevention and fire suppression, handled over 27,000 fire and rescue incidents in Fiscal Year 2007. The City's firefighters respond to fire, medical and other emergency events from the City's 19 fire and rescue stations. In addition, volunteer personnel with proper training from the City's fire training center provide manpower contributions to a variety of department customer service areas. There are 409 volunteers active with our Citizen Emergency Response Team (CERT) and 40 volunteers who serve as firefighters, support technicians and administrative personnel. The Office of the General Registrar, pursuant to provisions in the Code of Virginia, is responsible for providing an accessible and fair means by which City residents can register and vote in general and special elections and primaries. The number of registered voters was approximately 262,562 as of January 27, 2008. The Department of Housing and Neighborhood Preservation provides a variety of housing and neighborhood improvement services, including enforcement of the building maintenance code and property maintenance codes, provision of financial assistance to home owners for housing rehabilitation, provision of financial assistance to eligible renters, and provision of information and recreational services for youth and adults in identified neighborhoods. The Department of Human Resources is responsible for developing and managing the City's human resource programs to ensure quality, efficiency and diversity. The department provides services in applicant counseling, recruitment, testing, equal employment opportunity monitoring, volunteer referrals, policy interpretations, benefits, grievance procedures, disciplinary action, career counseling, professional development, compensation, employee safety, occupational health services, and provides staff support to the Human Rights Commission. The Department of Human Services was created by merging the Department of Mental Health/Mental Retardation/Substance Abuse Services, the Department of Social Services, Pendleton Child Service Center, and the Juvenile Detention Center. The department continues to carry out the missions of the former departments including: providing MH/MR/SA services to children, adults, and the elderly, in order to improve quality of live and ensure community safety. Additionally, the department provides a range of child welfare services including child protective services, foster care, and employment services. The department is responsible for providing secure detention services for children before the juvenile and domestic relations court, and the department provides prevention orientation services to young children identified by the school system as being in need of early intervention services. The department is also responsible for Community Corrections/Pretrial Services which provides probation services and pretrial monitoring for adults who have been charged or convicted of misdemeanors or non- violent felonies. The Juvenile Probation Office provides support services to the Juvenile and Domestic Relations District Court. The office provides probation supervision, intake services, and parole services for juveniles. It provides court support by processing petitions and preparing social background investigations. The Department of Management Services develops and oversees the City Biennial Operating Budget and Six -Year Capital Improvement Program. The department provides assistance and direction to other City departments for any budget amendments for issues that arise during the year. The department also provides multi-year forecasting of revenues and expenditures, coordinates grant review, monitors 20 performance measurement data, evaluates City programs and services, and assists departments in management issues, as assigned. The Department of Museums operates the Virginia Aquarium and Marine Science Center, the Francis Land House, the Adam Thoroughgood House and the Lynnhaven House. The department coordinates projects and initiatives for the preservation of the City's historic resources and administers the Virginia Beach Historical Register. The Virginia Aquarium and Marine Science Center first opened in 1986 and was expanded to three times its original size in 1996. In Fiscal Year 2007, the 120,000 square foot facility had attendance of 643,491 visitors. The Aquarium takes visitors on a journey of water through Virginia's marine environment by way of interactive exhibits and 800,000 gallons of aquariums that feature sharks, river otters, harbor seals and sea turtles. The Aquarium also offers a larger than life experience in its 3D IMAX® Theater. A $14.7 million renovation project is currently underway at the Aquarium. The purpose of the Francis Land House is to collect, preserve and present historically accurate material reflecting life in eighteenth century Princess Anne County. The House is open year-round for tours and educational programming. In Fiscal Year 2006, 11,649 people visited the Francis Land House. The Adam Thoroughgood House provides year-round tours and programs related to Adam Thoroughgood, a founding father of Virginia Beach, and early life in colonial Virginia. Approximately 9,778 visitors attended tours and programs at the Thoroughgood house in Fiscal Year 2006. Through public tours and programs, the Lynnhaven House presents life on a rural farm in 18t -century Princess Anne County. During tours, visitors learn about the Thelaball family who lived in the house during the 1700's. The department began operating Lynnhaven House on May 24th of 2006. The department also provides oversight for three other City owned properties, which are operated by private non-profit organizations: the Old Coast Guard Station, the Ferry Plantation House and the DeWitt Cottage, which houses the Atlantic Wildfowl Heritage Museum. The Virginia Beach Arts and Humanities Commission serves in an advisory capacity to City Council on matters relating to cultural activities. The Commission administers public funds to arts organizations and monitors grants to assure fiscal responsibility. The Department of Parks and Recreation provides a wide range of high-quality, year-round leisure programs that are responsive to the physical, mental, recreational and cultural needs of the citizens of Virginia Beach. In Fiscal Year 2007, the Parks and Recreation Special Revenue Fund, which includes the Parks Bureau and the Recreation Division, generated $11.71 million in fees and charges. The Golf Course Special Revenue Fund generated approximately $2.49 million in revenue in Fiscal Year 2007. The Parks Bureau, in conjunction with the department's Design and Development Division, plans, acquires, constructs and maintains parks, playgrounds, public beaches, golf courses and open spaces. There are 203 developed City parks, 182 of these are classified as neighborhood parks, 12 are classified as community parks, 5 are classified as metro parks, 2 are classified as signature parks, and 2 are classified as linear parks. The Recreation Division has responsibilities in the following areas: providing recreation and leisure services to adults, senior citizens and youths; providing all disabled citizens the opportunity to receive the benefits of recreation and leisure in the least restrictive environment; operating six recreation centers located throughout the City; and operating Before School and After School programs. The Golf Course Division oversees the management of five municipally -owned golf courses, three of which are operated by the division. The Department of Planning and Community Development provides policy and operational planning support in the areas of transportation, land use, zoning, and environmental protection and management. The department is responsible for maintaining a long-range Comprehensive Plan, which provides guidance for the physical development of the City. The department reviews subdivision plans, site plans, and land management plans and prepares the monthly Planning Commission Agenda. Its Development Services Division provides customer -oriented management of plan review, utility, right -of - 21 way, moving and hauling permit issuance and surety administration. The Environmental Management Division coordinates many of the City's environmental programs and serves as a point of contact for information and liaison with the community on environmental issues. The department, through its Permits and Inspections Division, ensures compliance with City and/or state building code standards by the inspection of all construction in the City; and through its Zoning Enforcement Office ensures compliance with City zoning regulations. The department also supplies staff support to the Chesapeake Bay Board, the Wetlands Board, the Historic Review Board, Hampton Roads Transit, the Board of Zoning Appeals, and the Bayfront Advisory Committee. The Police Department is composed of four major units: Administration, Support, Operations and Investigative Divisions. The department operates through four precincts located throughout the City. Virginia Beach's crime rate for 2007 was 32.3 crimes per 1,000 residents, down from 32.7 in 2006. The violent crime rate in 2007 was 2.5 crimes per 1,000 residents. According to the FBI's Crime in the United States 2006, the City's violent crime rate is the lowest among cities with populations of 235,000 or more. The City continues to be rated as one of the safest communities of its size in the country. The Department of Public Health is responsible for promoting the best possible state of health for all Virginia Beach citizens. The department assumes primary responsibilities for providing protective, curative, and environmental health services when not otherwise provided by the private sector. The department offers services and clinics in the areas of pediatrics, dentistry, family planning, immunizations, home nursing, maternity, chest x-rays, venereal disease, health education, and environmental health. The Department of Public Libraries manages eight area libraries and a 95,000 square foot Central Library. It operates a bookmobile, provides support for homebound and disabled citizens and serves as a subregional library for the blind and visually handicapped. A municipal reference library and a public law library complete its service capacity. The department is concluding work on a $24 million capital investment program. The Great Neck Area Library was renovated and reopened in May 2003. The Princess Anne and Oceanfront Area Libraries were opened in October 2003 and October 2004, respectively. The Windsor Woods Area Library reopened in January 2006 following extensive interior renovations, and a new Bayside Area Library opened in November 2005. Renovation of the Central Library was completed in 2005. Interior renovations for the Kempsville Area Library are currently in the design stage with construction anticipated to begin in the fall of 2008 with completion anticipated during the lst quarter of 2009. The department is working with Tidewater Community College Virginia Beach Campus to plan a "Lifelong Learning Center," a 120,000 square foot facility that would be jointly operated by the College and the department. The joint -use library is included in the Governor's proposed plan to issue bonds for higher education construction projects. For the bond program to proceed the General Assembly would have to support it during its session early this year and then voters would need to approve it in a Nov. 4, 2008 referendum. The total current square footage of the library system is approximately 206,405. The Department of Public Utilities provides water and sanitary sewer services to City residents. As of June 30, 2007, the department had installed and continues to maintain more than 3,031 miles of water and sanitary sewer lines as well as operating and maintaining 401 sanitary sewer pumping stations, nine water pumping stations (including Lake Gaston), 12 water storage facilities with 27.75 million gallons of water capacity, and 7,819 fire hydrants. The department coordinates the engineering and administration of the development of raw water supplies for the City and oversees the City's water conservation programs. The Department of Public Works oversees the design and construction of new City structures and transportation systems, maintains a large portion of the City's infrastructure (e.g., roadways, bridges, 22 storm water systems, beaches, traffic control devices, City -owned buildings and City -owned motorized equipment), and provides for collection, recycling and disposal of solid waste. The administration of the storm water management utility is also included as a responsibility of the department. The Office of Volunteer Resources coordinates the use of over 21,000 volunteers throughout City Departments. Economic and Demographic Factors Population. Based on the April 2000 census conducted by the U.S. Census Bureau, the population of the City of Virginia Beach was 425,257. This census confirmed Virginia Beach as the most populous city in the Commonwealth and the 346 largest city in the United States. The following table presents population figures for selected years. Year 1960 1970 1980 1990 2000 2007 POPULATION AND RATE OF CHANGE VIRGINIA BEACH AND THE UNITED STATES SELECTED YEARS Virginia Beach Rate of Change United States Rate of Change 85,200 172,106 262,199 393,089 425,257 433,033 N/A 102.00% 52.35 49.92 8.18 1.83 179,323,175 203,302,031 226,542,199 248,709,873 281,421,906 301,621,157 Source: Weldon Cooper Center, University of Virginia, and the U.S. Census Bureau (2007) FIVE MOST POPULOUS CITIES IN VIRGINIA C Virginia Beach Norfolk Chesapeake Richmond Newport News 2000 Population 425,257 234,403 199,184 197,790 180,150 2006 Population 2007 Population 431,820 234,219 215,271 193,882 181,840 433,033 235,987 216,568 195,300 182,478 N/A 13.37% 11.43 9.79 13.15 7.18 Source: U.S. Census Bureau (2000) and Weldon Cooper Center, University of Virginia (2006 and 2007) Income. Presented below are tables on median household income, distribution of household income, per capita income, total personal income and median household effective buying income. Median household income is defined as total income divided by total households. Per capita income is total personal income divided by the area's residential population. Total personal income is a measurement of the area's total income from all sources. Effective buying income is a measurement of disposable income or after-tax income. 23 MEDIAN HOUSEHOLD INCOME 2006 Median Household Income Commonwealth Virginia Beach of Virginia United States $61,333 $56,277 $48,451 Source: Census Bureau's 2006 American Community Survey DISTRIBUTION OF HOUSEHOLD INCOME 2006 Under $25,000 Over $200,000 Commonwealth Virginia Beach of Virginia United States 13.4% 20.2% 25.3% 3.1 5.0 3.4 Source: Census Bureau's 2006 American Community Survey PER CAPITA INCOME 1980 1990 2000 2001 2002 2003 2004 2005 Virginia Beach $10,397 $20,896 $30,117 $31,167 $32,352 $34,064 $36,177 $37,839 Norfolk 8,820 15,048 26,848 24,870 25,563 26,935 28,611 30,528 Chesapeake 9,016 17,464 26,849 28,322 29,738 31,049 32,507 33,302 Newport News 9,185 16,850 21,913 23,767 24,584 25,372 26,782 28,436 Commonwealth of Virginia 9,922 20,527 31,087 32,505 33,013 34,014 36,160 37,503 United States 10,030 19,572 29,845 30,574 30,810 31,463 33,090 34,471 Source: U.S. Department of Commerce, Bureau of Economic Analysis. Most recent information available as of January 2007. As set forth in the table above, the City's per capita income has surpassed the Commonwealth of Virginia's per capita income for three consecutive years, which had previously not occurred since 1992. The City's 2005 per capita income ranks 14' among 106 Virginia localities for which the Bureau of Economic Analysis computes income. Virginia Beach's per capita income figure is 9.77% higher than the United States figure and has steadily climbed higher than the U.S. for five consecutive years. TOTAL PERSONAL INCOME (In Millions) 1980 1990 2000 2001 2002 2003 2004 2005 Virginia Beach $ 2,865 $8,214 $12,842 $ 13,331 $ 13,934 $ 14,850 $15,890 $16,537 Commonwealth of Virginia 54,457 127,129 220,845 233,770 240,534 251,139 270,522 283,685 Virginia Beach as a percent of state 5.3% 6.5% 5.8% 5.7% 5.8% 5.9% 5.9% 5.8% Source: U.S. Department of Commerce, Bureau of Economic Analysis. Most recent information available as of January 2007. 24 The following tables show median household effective buying income for the City, the Hampton Roads Metropolitan Statistical Area ("MSA"), the Commonwealth and the United States for the last ten calendar years, followed by comparative tables showing Virginia Beach as a percentage of the various regions. December 31 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME Virginia Beach Hampton Roads MSA Commonwealth of Virginia United States $39,654 $32,194 $36,802 $34,618 40,509 33,509 37,740 35,377 41,994 34,942 39,709 37,233 43,911 36,248 41,810 39,129 43,311 36,207 41,095 38,365 42,163 37,935 41,169 38,035 42,838 38,496 41,979 38,201 43,736 39,702 42,991 39,324 45,410 41,618 44,680 40,529 47,317 41,706 46,028 41,255 Virginia Beach December 31 As a Percent of U.S. 1997 114.55% 1998 114.51 1999 112.79 2000 112.22 2001 112.89 2002 110.85 2003 112.14 2004 111.22 2005 112.04 2006 114.69 December 31 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Hampton Roads MSA Commonwealth As a Percent of U.S. As a Percent of U.S. 95.08% 94.72 93.85 92.64 94.38 99.74 100.77 100.96 102.67 101.09 106.31% 106.68 106.65 106.85 107.12 108.24 109.89 109.33 110.24 111.57 Virginia Beach Virginia Beach as a Percent of MSA as a Percent of Commonwealth 120.48% 120.89 120.18 121.14 119.62 111.15 111.28 110.16 109.11 113.45 Source: Sales & Marketing Management (1997 - 2004) and Demographics USA (2005-2006). 25 107.75% 107.34 105.75 105.03 105.39 102.41 102.05 101.73 101.63 102.80 Housing and Construction. The information in the following tables is presented to illustrate various housing characteristics for the City. As of January 1, 2007, the total estimated number of dwelling units in the City was 165,676, excluding military housing. Single-family units represented 58 percent of this total. Selected data regarding the distribution of all dwelling units is as follows: DWELLING UNITS BY TYPE of 2007 2006 Units 2007 Units Units by Tyne Single Family 95,463 95,977 58% Multi -family Complex 28,941 29,339 18 Townhouse 19,639 19,640 12 Low Rise Condominium 16,206 16,844 10 Duplex 1,593 1,557 1 High Rise Condo/Co-op 2.134 2.319 1 Total 163,976 165,676 100% Note: Does not include Military Combined Units. Source: City Real Estate Assessor. In the 2007 calendar year, the City issued 31,577 permits valued at $752 million. The following table presents a further breakdown on certain building permits by type. NUMBER OF CERTAIN BUILDING PERMITS ISSUED AND VALUE (1) Calendar Year Residential (2) Commercial Industrial Other Total Value 1998 1,553 1,111 32 19,597 $466,077,774 1999 1,305 1,100 32 16,737 455,353,722 2000 1,753 1,024 9 14,948 530,576,046 2001 2,218 1,096 7 14,858 667,406,046 2002 2,522 982 2 16,277 699,990,772 2003 2,215 920 3 18,679 543,934,601 2004 2,543 1,267 10 19,328 635,848,544 2005 1,903 1,001 4 20,708 705,262,350 2006 1,382 1,414 3 20,007 817,683,741 2007 989 1,495 6 16,218 671,839,566 (`) Represents building and mechanical permits only. Does not include electrical, plumbing, gas and other types of permits. (2) One residential building permit does not necessarily equal one residential unit; in many instances one permit is for multiple residential units. Source: City Department of Planning and Community Development, Division of Permits and Inspections. The following table presents annual new construction as reported by the City Assessor. The total value of new construction in the City for 2007 was $732,890,197, which represents a 6.3% increase over 2006. 26 NEW CONSTRUCTION: NUMBER OF UNITS AND ESTIMATED VALUE (1) Residential Construction Calendar Number of Residential Year Units Addition 1997 1,632 2,598 1998 1,686 1,962 1999 2,099 2,250 2000 2,155 2,505 2001 1,882 2,204 2002 2,341 2,326 2003 2,456 2,614 2004 1,732 3,020 2005 1,905 2,625 2006 1,905 3,016 2007 Total Estimated Value $212,920,072 232,955,469 258,072,199 296,029,009 92,303,983 397,786,699 396,157,100 371,913,666 452,700,606 537,922,864 538,962,775 Commercial Construction (2) Number of Permits 175 172 175 169 187 154 186 164 149 256 (I) Building/structures only (excludes land) (2) Represents general commercial, hotel, industrial and office, including additions. Source: Office of Real Estate Assessor — Annual Report 27 Estimated Value $ 72,009,669 111,506,678 65,364,859 87,046,925 298,642,448 136,360,828 92,494,544 128,395,480 176,806,665 151,479,530 193,927,422 Total Estimated Value $284,929,741 344,462,147 323,437,058 383,075,934 390,946,431 534,147,527 488,651,644 500,309,146 629,561,271 689,402,394 732,890,197 Employment. Employers in the City, excluding military, provided jobs for 179,304 persons through the second quarter of calendar year 2007. The following table presents the number of establishments, employment, and quarterly gross wages for the second quarter of calendar year 2007. CITY OF VIRGINIA BEACH NUMBER OF ESTABLISHMENTS, EMPLOYMENT AND QUARTERLY GROSS WAGES QUARTER ENDED JUNE 30, 2007 (NON-MILITARY) Industry Group Private Agriculture, Forestry, Fishing and Mining Construction Manufacturing Transportation, Communications and Utilities Wholesale and Retail Trade Financial, Insurance and Real Estate Information Services Total Private (1) Public State Government Local Govemment Federal Government Total Public TOTAL Number of Average Emp. Establishments For Quarter 19 1,566 220 223 1,964 1,422 148 5,552 11,114 31 50 52 133 55 12,640 6,291 2,138 30,092 14,396 4,003 80,784 150,399 1,909 20,806 6,190 28.905 179,304 Quarterly Gross Wanes, $ 326,971 128,409,672 55,859,939 18,590,556 212,096,216 163,995,078 40,582,757 601,060,980 1,220,922,169 15,197,901 197,676,736 81,965,025 294.839.662 $1,515,761,831 (l) Immaterial amounts have been suppressed in certain industry sub -categories, which are included in the total amounts. Average Weekly Wages Per Employee $ 457 781 683 669 542 876 780 571 624 612 732 1,020 785 $ 650 Source: Virginia Employment Commission, Economic Information Services Division, ES -202 Report. Based upon most current and available information. The following table is a breakdown of employment by sector in the City. EMPLOYMENT BY SECTOR AS A PERCENTAGE OF TOTAL QUARTER ENDED JUNE 30, 2007 Services Wholesale and Retail Trade Government(» Financial, Insurance and Real Estate Construction Manufacturing Information Transportation, Communications Agriculture, Forestry, Fishing and Mining Total (I) Excludes active duty military personnel stationed at bases located in the City. Source: Virginia Employment Commission, Economic Information Services Division. 28 45.05% 16.78 16.12 8.03 7.05 3.51 2.23 1.19 0.03 100.00% As illustrated in the table below, the unemployment rate for the City has, for the most part, been consistently lower than the rates for the Hampton Roads MSA, the Commonwealth and the United States. ANNUAL AVERAGE UNEMPLOYMENT RATES 2000 2001 2002 2003 2004 2005 2006 2007(2) Virginia Beach 2.2% 2.9% 3.7% 3.8% 3.6% 3.4% 2.9% 2.8% Hampton Roads MSA (1) 2.5 3.3 4.2 4.3 4.2 4.0 3.3 3.2 Commonwealth 2.3 3.2 4.2 4.1 3.7 5.1 3.0 3.0 United States 4.0 4.7 5.8 6.0 5.5 5.5 4.6 4.5 (1) MSA includes the Virginia Cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg, and the Virginia Counties of GIoucester, Isle of Wight, James City, Mathews and York. Also includes Currituck County, North Carolina. (2) Reported for the month of November 2007. Source: U.S. Department of Labor, Bureau of Labor Statistics, and Virginia Employment Commission. Business and Industry The City has five major concentrations of office, industrial and commercial property - Airport Industrial Park, Greenwich/Witchduck Corridor, Central Business District/Pembroke area, Oceana West Corporate Park/Lynnhaven Corridor, and Corporate Landing Business Park. Airport Industrial Park. The park encompasses 250 acres with four million square feet of light industrial and office space. National and international manufacturing, warehousing and distribution operations are located here. Greenwich/Witchduck Corridor. The Greenwich/Witchduck corridor currently contains 1.3 million square feet of low and mid -rise suburban office space in business parks, including Interstate Corporate Center, Corporate Woods and Commerce Park that house corporate headquarters and business operations of many types. The Corridor currently contains 1.9 million square feet of light industrial space and facilities housing regional warehousing and distribution operations. Central Business District/Pembroke Area. The CBD encompasses 500 acres and 2.1 million square feet of low and high-rise office space in business parks including Town Center, Pembroke Office Park, Corporate Center and Convergence Center. The Town Center of Virginia Beach is a new urban "Main Street" style development located within the core of the City's Central Business District. The project spans 25 acres and, when completed, will include 850,000 square feet of Class A office space, 750,000 square feet of upscale retail, fine dining, a business class hotel, a luxury hotel with high-rise condominiums, a performing arts center, a central park, and apartments. The entire area is serviced by free structured parking. The corporate citizens in the area include numerous financial, information processing, law and professional service firms. Phases I and II, as described below, are complete. Phase I included the construction of a 21 -story, 254,000 square -foot Class "A" office tower, two- story and five -story self-contained office/retail buildings, totaling approximately 93,000 square feet, a 176 -room, business -class Hilton Garden Inn Hotel, a two story Towne Bank, and a 1,284 -space parking garage. 29 Phase II included the construction of four additional blocks of property containing 341 residential luxury apartments in the Cosmopolitan building, 232,500 square feet of retail and office space, and two parking garages with a total of 1,430 parking spaces. The Phase III Development Agreement between the Virginia Beach Development Authority and the Town Center Associates, LLC was approved in September 2005, and a modification to the agreement was approved in June 2006. Phase III includes a 37 -story, 236—room Westin Hotel and 119 luxury condominiums which opened in December 2007, 36,500 square feet of retail space, a structured parking garage with 735 public parking spaces and 212 private parking spaces, the 84,000 square -foot, 1,200 seat Sandler Center for the Performing Arts which opened in November 2007 and a 5 -story 90,000 sq. ft. building consisting of Class A office and retail space. The Westin Virginia Beach Town Center Hotel and Residences is the tallest building in the Commonwealth at 500 feet to the tip of its architectural spire. Spinoff projects due to the success of the Town Center include Pembroke Mall expansion and redevelopment, a major site development to the west of the Town Center, the Citiview mixed project on Bonney Road, and Convergence Center III. Ocean West Corporate Park/Lynnhaven Corridor. The park encompasses 1,100 acres and currently contains 1.76 million square feet of low and mid -rise suburban office space and 5.5 million square feet of light industrial space. 195 acres are presently available for development. Corporate citizens in Oceana West and adjacent business parks, including Reflections, Sabre, Lynnhaven Industrial Area, Oceana East and Taylor Farms Industrial Park, comprise a wide variety of domestic and foreign firms, including corporate headquarters and manufacturing, warehousing and distribution operations. Corporate Landing Business Park. The park encompasses over 325 acres and is owned and operated by the City of Virginia Beach Development Authority. 125 acres are presently available for headquarters, professional services, research and development, office buildings, retail and two conference centers. Corporate citizens include world headquarters, regional offices, and high-tech manufacturing. This master -planned, multi -faceted park contains 38 acres of lakes, jogging trails, green space and recreational opportunities. Throughout Virginia Beach there are many additional smaller nodes of office and commercial activity including Little Neck, Oceanfront, Birdneck/Laskin Road, First Colonial and Kempsville. 30 CITY OF VIRGINIA BEACH MAJOR PRIVATE EMPLOYERS AS OF JUNE 30, 2007 Firm Lynnhaven Mall AMERIGROUP Corp GEICO Navy Exchange Service Command (NEXCOM) Stihl, Incorporated Sentara Virginia Beach General Hospital Hall Auto Group Cox Communications Christian Broadcasting Network Farm Fresh Corporate Office Checkered Flag Motor Car Company Sentara Hospital Bayside HSBC Household Recovery Services Alltel Communications United Parcel Service The Virginian -Pilot Production Plant LifeNet Health Company Science Applications International Corporation M&G Electronics Corporation Verizon The Penrod Company Am Sec LLC (SAIC) NCO Financial Regent University Company Securitas Security Services USA Inc. National Leisure Group/The Vacation Store Avis / Budget Company The Breeden Company, Inc. Applied Marine Technology, Inc. Electronic Systems, Inc. S.B. Ballard Construction Co. Type of Business Retail Trade HMO Provider of Medicaid Insurance Corporate Headquarters for Navy Exchange System Manufacturer of Portable Outdoor Power Equipment Medical Services Source: Department of Economic Development. Automotive Dealer Cable Television and Communications Ministry Education and Communications Corporate offices for Farm Fresh Automotive Dealer Medical Services Financial Recovery Services Communications Small Parcel Shipper Print Media Nonprofit, full-service organ donation agency Defense, Research and Engineering Manufacturer of Wiring Harness Sets Telecommunications Importer and Distributor of Plywood Engineering and Computer Services Collection Agency Graduate and MBA program Armed and unarmed security services Travel services Rent A Car Systems Customer Service Real estate developer and management company Supplier/professional and technical services System integration, hardware sales, web design General contractors 31 Number of Employees 2,600 2,100 2,000 1,888 1,863 1,704 1,300 1,200 1,000 1,000 709 639 575 550 540 539 503 500 500 500 500 500 500 460 457 450 442 420 400 400 400 Retail Sales The table presented below is a summary of the City's taxable retail sales; it does not include sales which are exempt from tax. Specifically exempt from the sales tax under Sections 58.1-600 et seq. of the Virginia Retail Sales and Use Tax Act are sales of alcoholic beverages in government stores, sales of certain motor vehicles, trailers and semitrailers, mobile homes, and travel trailers, and sales of certain motor vehicle fuels. Also, the figures do not include the significant amount of non-taxable sales on military bases in the City. As shown in the table, taxable retail sales have increased by an average of approximately 49% over the last ten years. TAXABLE RETAIL SALES Calendar Year Taxable Retail Sales 1997 $3,172,382,057 1998 3,343,769,258 1999 3,446,988,609 2000 3,655,862,619 2001 3,683,752,990 2002 3,903,205,018 2003 4,090,073,466 2004 4,437,864,910 2005 4,183,908,609 2006) 4,726,601,202 2007(2) 3,751,306,773 Source: Virginia Department of Taxation. (1) In 2006 the Virginia Department of Taxation changed its methodology for calculating taxable retail sales. Years prior to 2006 were not adjusted. (2) Through the third quarter of 2007. Tourism and Conventions In calendar year 2006, tourism results continued to reflect a strong industry performance. Over 2.8 million visitors arrived in the City in 2006, resulting in an increase in spending of 7.2% over 2005. Visitor expenditures generated $75.6 million in direct City revenue. Hotel occupancy remained steady in 2006 at 61.3%. The synergy of the Atlantic Avenue Beautification project, the hurricane protection project, the public safety efforts and entertainment programs have allowed hotel revenues to increase by 81.6% from 1996 to 2006. Other key projects such as the 19th Street Corridor, Rudee Loop Development, an Entertainment District and major Headquarter Hotels such as the 31st Street project are intended to continue the forward momentum of the tourism industry. The Convention Marketing and Sports Marketing Divisions continued to exceed booking goals, with fiscal year 2006 bookings totaling 192 future bookings extending through 2012. These bookings represent a total of over 175,000 room nights with an economic impact of approximately $144 million in direct spending. Over 60% of this business will use space at the new Convention Center for some or all of their meeting needs. The tourism industry created over 11,000 jobs in the City to serve the many visitors during the peak and shoulder season; approximately 80% of these visitors are repeat customers. In calendar year 2007 visitor inquiries exceeded the 3 million mark for the first time. Early indications show another year of strong industry performance. Strategic product development such as the 32 Rock'N'Roll Half Marathon, the Redskin Beach Blitz, and the Culinary Tourism Week helped to further Council's goal of a year-round resort destination. A complete report for tourism 2007 is prepared by Old Dominion University in April. The City completed the construction of its new Convention Center as scheduled in January 2007. The $206 million 516,000 square foot facility includes the following: 150,000 square foot Exhibition Hall, 31,000 square foot ballroom, 29,000 square feet of meeting space and 2,230 parking spaces. This is three times the size of the former convention center. The new Convention Center is located on the same site as the City's former facility. In the Convention Center's first year of operation 413 events were hosted, with 477,782 attendees and direct spending of $49 million. The City and the City of Virginia Beach Development Authority entered into a public/private investment partnership for a Hilton Resort Hotel and Conference Center and a public parking complex at 31st Street on the oceanfront. The hotel, which opened in the spring of 2005, is a 22 -story luxury hotel with 300 rooms. An adjacent public parking garage contains 970 spaces. The parking facility was fmanced with public facility revenue bonds. Tourism and convention activity generate tax revenue for the City, particularly in the form of a hotel room and meal tax and a restaurant tax, as illustrated in the table below. As shown in the table, since Fiscal Year 2002, hotel room and meal tax and restaurant tax receipts have increased by an average of approximately 8.78% per year. HOTEL ROOM AND MEAL TAX AND RESTAURANT TAX RECEIPTS FISCAL YEARS 1997 THROUGH 2007 Fiscal Year Total Tax Receipts 1997 $30,512,485 1998 32,475,690 1999 33,740,422 2000 35,712,011 2001 37,114,658 2002 45,631,284(1) 2003 52,046,894 2004 57,248,370 2005 60,741,520 2006 66,007,760 2007 69,359,924 (1) The meal tax was increased from four and one-half to five and one-half percent, effective July 1, 2001, and the hotel room tax was increased from five and one-half percent to eight percent, effective November 1, 2001. Source: City Director of Finance. Military The military bases in Virginia Beach have an annual payroll of $1.5 billion for over 27,299 armed services and civilian workers. Oceana Naval Air Station and Oceana Naval Air Station Dam Neck Annex. Oceana Naval Air Station ("NAS Oceana") is the United States Navy's largest East Coast "Master Jet Base." NAS Oceana is home to some 304 aircraft with 18 squadrons of F/A-18 Homets and Super Homets 33 fighter/attack aircraft and one DC -9 Skytrain II squadron. NAS Oceana is the largest employer in Virginia Beach with a $1.3 billion economic impact which has 8,548 active duty personnel and 2,206 civilian employees and a gross payroll estimate of over $761 million. NAS Oceana Dam Neck Annex's primary mission is to provide training in the operation and employment of combat direction and control systems. Dam Neck Annex provides the highest quality, most up-to-date training in aviation maintenance, administration and management, survival, evasion, resistance and escape training and conventional weapons training. Dam Neck Annex has an estimated annual payroll of $416 million for 4,088 active duty personnel and 1,490 civilians. The combined Oceana Air Station and Dam Neck Annex is the largest employer in the City with a combined estimated payroll of over $1.18 billion for over 16,332 military and civilian employees. The contracts, goods and services generated by the combined bases are estimated to be $400 million, making Oceana an economic engine of over $1.5 billion. The federal Base Realignment and Closure ("BRAC") Commission was formed pursuant to Public Law 101-510 to conduct an independent review of the recommendations and analysis of the Secretary of Defense and provide the President of the United States with its recommendations on the timely closure and realignment of military installations in the United States. Although the 2005 decision of the BRAC Commission recommending realignment of NAS Oceana by relocating the Master Jet Base to Cecil Field in Jacksonville, Florida is moot, the City of Virginia Beach remains committed to the Air Installations Compatible Use Zones (AICUZ) program it implemented in an effort to keep Virginia Beach as the home of the Navy's East Coast Master Jet Base. That program includes the following elements: • Land Use Component o The Accident Potential Zone 1 (APZ-1)/Clear Zone Ordinance, prohibiting all new development in APZ-land the Clear Zone that is deemed incompatible with military operations arising out of NAS Oceana. The Ordinance prevented an estimated 909 new dwelling units and 417 new incompatible business units from being constructed in APZ-1 and Clear Zones. o The AICUZ Overlay Ordinance, which establishes a policy limiting discretionary development (i.e., development requiring specific approval of the City Council through a rezoning or conditional use permit) in Oceana's AICUZ. While the original Ordinance applied only in Noise Zones of greater than 70 dB DNL (day -night weighted average sound level), the Ordinance was amended on January 8, 2007 to include Noise Zones of 65-70 dB DNL as well. o Restrictions limiting residential density in the Interfacility Traffic Area (ITA), the land generally underlying the flight path between NAS Oceana and NALF Fentress and an area of special concern to the Navy, to one dwelling unit per 20 acres of developable property. o A Memorandum of Understanding between the City and NAS Oceana that formally establishes, for the first time, a process and set of principles by which the Navy and City jointly review discretionary development applications at an early stage early in order to determine and report to the Planning Commission and City Council whether the applications meet the requirements of the City's AICUZ Overlay Ordinance. • Acquisition Component o The APZ-1/Clear Zone Use and Acquisition Plan, pursuant to which the City purchases property from willing sellers in the APZ-1 and Clear Zones in cases in which owners 34 have lost development rights under the APZ-1/Clear Zone Ordinance. While primarily used to acquire residential properties, the Plan also allows the City to purchase commercial property deemed incompatible with military operations arising out of NAS Oceana or to acquire property of owners whose business plans were frustrated by the APZ-1/Clear Zone Ordinance. To date, the City has acquired or has agreements to acquire approximately $24.2 million of property in APZ-1 and Clear Zones, comprising a reduction of 173 dwelling units and 12 commercial uses from those areas. o Purchase of property on which the right to develop an incompatible use has vested under Virginia law. o The Interfacility Traffic Area Property Acquisition Plan, under which the City purchases property in the ITA from willing sellers. The City has acquired approximately 105 acres of property in the ITA and expended approximately $3.4 million in furtherance of the ITA Acquisition program. • Roll -Back Component o Implemented the Oceana Land Use Conformity Program to identify and facilitate the development of compatible uses in APZ-1. Under this program the City gives zoning, tax and other financial incentives and grants to business owners who relocate into the affected zones. These incentives include the waiver or reduction of business license and real estate taxes and certain development -related fees. They also include funds to pay for the cost of moving operations. The program also provides similar incentives for businesses and other organizations with incompatible uses within APZ-1 to relocate to areas outside of APZ-1. • Virginia Beach officials plan to continue implementation of these programs until the City has purchased all incompatible use property in APZ-1 and the Clear Zone. The Commonwealth's Role • Using grant money, the Commonwealth matches funds appropriated by the City to support implementation of the acquisition component of the City's program. The City uses these funds to purchase property or, in some cases, development rights in the APZ-1 and Clear Zones to limit incompatible development in these areas (e.g., residential development). The City can potentially resell this property to new owners who plan to develop the property for compatible uses, such as agricultural or light industrial uses. In such cases, the City would return any State funds used for the original purchase. Little Creek Naval Amphibious Base. The Little Creek Naval Amphibious Base, the largest base of its kind in the world, is the major operating base for the amphibious forces of the U.S. Atlantic Fleet. Little Creek's mission is to provide continuously improving support and services to operating forces and shore commands. Little Creek has 9,564 active duty personnel and 2,772 civilian employees with an annual payroll of $623 million. Fort Story Army Base. Fort Story is an Army base established as a coast artillery post in 1917. Fort Story is now a substation of Fort Eustis located in Newport News, Virginia. Fort Story is home to the 1 lth Transportation Battalion and is also utilized by Navy and Marine tenants as a periodic training site. The Coast Guard also maintains a presence at the base. Fort Story has 1,120 active duty military employees and 400 civilian employees and an annual payroll of $93.5 million. Source: Public Affairs Officers at each Military Base. 35 Medical Facilities Medical facilities in the City have expanded over the last few years. One of the premier hospitals in the region, Sentara Virginia Beach General, underwent major renovations to improve services to its patients. The 274 -bed acute-care facility features trauma services 24/7, a heart center, stroke center, cancer center, and many other health care services. Sentara Bayside Hospital is a 158 -bed acute care facility with a state-of-the-art critical care unit. Sentara plans a third acute-care hospital in the new health care campus in southern Virginia Beach. This new center presently has 24/7 emergency care and a cancer center along with medical office buildings. Bon Secours Health Systems, Inc. opened a health center in the City in the summer of 2007. Bon Secours' vision includes an 80,000 square foot ambulatory care building and a healthcare center anchored by a 90 -bed hospital. In addition, there are 19 emergency centers for medical assistance throughout the City. Approximately 1,500 doctors utilize the medical facilities in the City and 500 dentists practice in the City. Agribusiness In 2007, the economic impact of the agricultural community was $102.7 million, based on product valued at $32.1 million. Both total value of agricultural products and economic impact increased by 17% over 2006. There are approximately 140 farms in the City with approximately 29,000 acres of land under cultivation. For 2007 higher crop prices had a positive impact on farm income and overall livestock production and income was relatively stable. Education Available within the City is a wide variety of educational facilities and programs, including public elementary, junior and senior high schools, private and parochial schools, and eight higher educational facilities. In terms of public enrollment, the City's public school system is the largest city school system in the Commonwealth. PUBLIC EDUCATION FACILITIES/PROGRAMS June 30, 2007 55 Elementary Schools 13 Middle Schools 11 Senior High Schools 1 Technical and Career Education Center 1 Center for Effective Learning 1 Virginia Beach Central Academy 1 Old Donation Center for the Gifted and Talented 1 Adult Leaming Center 1 Open Campus High School 1 Kemps Landing Magnet School 1 International Baccalaureate Magnet Center (1) 1 Ocean Lakes High School Math/Science Center (2) 1 Advanced Technology Center 1 Juvenile Detention Center (I) Located in Princess Anne High School. (2) Located in Ocean Lakes High School. Source: Business Services Office, Virginia Beach Public Schools. 36 Public Schools. The City's public school March 31 average daily membership totaled 71,452 for the 2006-2007 school year, a slight decrease of 2.06 percent over the previous year. Summarized below are the March 31 average daily membership and annual percentage change for the school year 1997-1998 to school year 2006-2007. PUBLIC SCHOOLS STUDENT POPULATION SCHOOL YEARS 1997-1998 TO 2006-2007 School Year Number of Students Percent Change 1997-98 76,805 N/A 1998-99 76,949 .19 1999-00 76,773 (.23) 2000-01 76,065 (.92) 2001-02 75,518 (.72) 2002-03 75,436 (.11) 2003-04 75,151 (.38) 2004-05 74,091 (1.41) 2005-06 72,953 (1.98) 2006-07 71,452 (2.06) Source: Business Services Office, Virginia Beach Public Schools. Private and Parochial Schools. There are 23 private and parochial schools in the City. Approximately 6,600 students are enrolled in these schools. Higher Education. Virginia Beach's higher educational resources include the Virginia Beach Higher Education Center (a partnership of Old Dominion and Norfolk State Universities), Virginia Wesleyan College, Tidewater Community College, and Regent University. Virginia Beach is home to branch campuses of George Washington University, the University of Virginia, Virginia Polytechnic Institute and State University and St. Leo's College. Tidewater Community College ("TCC'), with total enrollment of more than 37,000, is a division of the Virginia Community College System. The Virginia Beach campus has an enrollment of approximately 20,000. This two-year college offers general, occupational -technical, and university parallel -college transfer education, representing the largest post -secondary institution in the region. TCC is a resource for business and industry to gain technical employees, as well as expertise for training and retraining programs for current employees. TCC has plans for expansion to include several new academic buildings, including a new science center. Virginia Wesleyan College is a four-year liberal arts private college located on the Virginia Beach/Norfolk boundary line. It has an enrollment of approximately 1,450 students. Regent University has an enrollment of approximately 4,300 with graduate schools of Business Administration, Education, Law, Public Policy, Divinity, Psychology and Counseling, the College of Communications and The Center for Leadership Studies. The Virginia Beach Higher Education Center is a joint venture among the City, Old Dominion University and Norfolk State University. The City donated 36 acres of land for an 84,000 square foot undergraduate center. The center opened in the fall of 1999 and has an enrollment of approximately 2,210 students enrolled in the spring 2008 semester with a capacity of 5,000. 37 The Advanced Technology Center is a joint venture between Tidewater Community College, the Virginia Beach Public Schools and the City to provide technical training for high school and college students pursuing positions in fields such as telecommunications, information technology, engineering technology, modeling and simulation, marine engineering and design, computer aided drafting and design, and marketing. In addition, the Center provides space for existing and new businesses to enhance the skills of their employees. The Center has a state-of-the-art theater for conferences, meetings and training sessions. The $23 million center is the first of its kind in the Commonwealth and received state funding of $10 million with the City providing the remaining funds. 38 SECTION FOUR: CITY INDEBTEDNESS AND CAPITAL PLAN Limitations on Incurrence of Debt Pursuant to the Constitution of Virginia (the "Constitution") and the Public Finance Act of 1991, Chapter 26, Title 15.2, Code of Virginia of 1950, as amended, a city in Virginia is authorized to issue bonds and notes secured by a pledge of its full faith and credit and unlimited taxing power. The Constitution and the Public Finance Act of 1991 also limit the indebtedness which may be incurred by cities to 10 percent of the assessed valuation of real estate subject to local taxation. There is no requirement in the Constitution or the Code of Virginia that the issuance of general obligation bonds of the City be subject to approval of the qualified voters of the City at referendum. As of June 30, 2007, the total assessed value of real property in the City was $46,667,282,975 which translates into a debt limit of $4,666,728,298. The City's net obligations subject to debt limitations as of June 30, 2007, totaled $596,810,346 and represented 12.79% of this limit. The City Charter further limits the City's power to create debt. It provides that no bonds or notes (other than refunding bonds, revenue anticipation notes, revenue bonds, and other obligations excluded from the City's debt limit under Section 10(a) of Article VII of the Constitution) shall be issued until their issuance has been authorized by a majority of the qualified voters of the City voting in an election on the question. The City Charter further provides, however, that the City Council may authorize bonds or notes without an election in any calendar year in such amounts as shall not increase the total indebtedness of the City, as determined in the manner set forth in Section 10(a) of Article VII of the Constitution, by more than $10,000,000 above the amount of such indebtedness at the beginning of such calendar year. For purposes of computing the annual limitation on the amount of bonds or other obligations that may be issued without an election, authorized and unissued bonds or other obligations which could have been issued without an election on December 31 in the year they were authorized may be issued in a subsequent year without affecting the annual limitation for such subsequent year. In addition, refunding bonds shall not be included for purposes of determining the amount of bonds or other obligations that may be issued without an election in any calendar year. Contractual obligations of the City other than bonds and notes are not included with the annual limitations described herein. Debt Management Policies The City has developed a series of Debt Management Policies to provide a functional tool for debt management and capital planning. The policies reiterate the City's commitment to principles such as rapid principal retirement, maintaining sufficient working capital to avoid the use of short-term borrowing for operating purposes, and the use of self-supporting or revenue -supported debt where appropriate. The policies also establish the following "target" levels for these key debt ratios: Overall Net Debt To Estimated Full Market Value. This ratio indicates the relationship between the City's debt and the taxable value of property in the City. It is an important indicator of the City's ability to repay its tax -supported debt, since property taxes are a major revenue source. A small ratio indicates that the City will be better able to withstand economic downturns. It is the City's policy that the computed value of this ratio should not exceed 3.5 percent of estimated full market value. 39 Overall Net Debt Per Capita. This ratio indicates the per capita debt burden and is a general indication of the City's debt burden. A smaller ratio indicates a lighter burden. It is the City's policy that the computed value of this ratio should not exceed $2,400 per capita. Debt Per Capita To Per Capita Personal Income. This ratio is a measure of the capacity of citizens to finance tax -supported debt. A low ratio means that taxes required to repay debt represent a smaller portion of the average citizen's income. It is the City's policy that debt per capita should not exceed 6.5 percent of per capita income. Annual Debt Service To General Government Expenditures. This ratio measures the City's ability to repay debt without hampering other City services. A small ratio indicates a lesser burden on the City's operating budget. This computation presently has a guideline of 10 percent. In addition, the City staff monitors the Assessed Value Per Capita. This ratio reflects the strength of the City's tax base and the City's ability to finance tax -supported debt. The table below entitled Key Debt Ratios includes this debt -load indicator. The City's debt load targets are evaluated periodically and are appropriately adjusted over time, taking into account the City's prospective debt issuances and the expectations and comparative standards of both the nationally recognized rating agencies and the financial community. While the City's general obligation debt load may exceed the City's debt load targets from time to time, the City anticipates that its actual debt load ratios generally will fall within the City's debt load targets over time. KEY DEBT RATIOS Fiscal Year Ended June 30 March 1 2002 2003 2004 2005 2006 2007 2008 Overall Net Debt and Lease Obligations (I) $609,472,861 $607,274,940 $787,242,654 $821,103,331 $839,670,584 $952,514,042 $993,402,005 Net Debt Per Capita (2) $1,428 $1,418 $1,814 $1,894 $1,944 $2,200 $2,294 Ratio to Estimated - Full 2.5% 2.3% 2.8% 2.6% 2.2% 2.0% 1.8% Value (3) Ratio of Per Capita Debt to Per Capita Income (4) 4.4% 4.2% 5.0% 5.0% N/A N/A N/A Ratio of Annual Debt Service to General Government Expenditures 7.7% 7.9% 7.9% 8.0% 8.0% 7.5% 7.4%(5) Ratio of Assessed Value Per Capita $56,447 $62,360 $65,109 $73,607 $89,405 $107,768 $125,854 (1) Includes bonded debt and other long term obligations charged to the General Fund. Does not include debt charged to the Water and Sewer or Storm Water Enterprise Funds. (2) Population estimates are by the Weldon -Cooper Center for Public Service. (3) Real property is assessed at 100 percent of fair market value. (4) Per capita income figures from U.S. Department of Connnerce/Bureau of Economic Analysis for years subsequent to 2005 are not available. (5) Estimated, based on Fiscal year 2008 Budget. (6) Includes current issue, Series 2008 General Obligation Bonds. Source: City Financial Statements. 40 Outstanding Debt and Long -Term Obligations Information on the City's indebtedness is presented in the following tables. Included is information on net and overlapping tax -supported debt, rapidity of principal retirement, selected debt service schedules, and information on capital lease obligations. OVERALL NET DEBT AND OTHER LONG-TERM OBLIGATIONS As of March 1, 2008 General Obligation Bonds (1) $529,763,142 Public Facility Revenue Bonds (2) 362,355,000 Water and Sewer Revenue Bonds (3) 127,745,052 Storm Water Revenue Bonds (4) 8,205,000 Capital Leases/COP's/Other Long -Term Obligations (5) 7,705,000 Agriculture Reserve Program Installment Purchase Agreements (6) 24,730,932 Virginia Beach Development Authority -Other Long -Term Obligations (7) 5,985,000 $1,066,489,126 Plus: 2008 General Obligation Public Improvement Bonds 90,000,000 Less: Water and Sewer Revenue Bonds (3) $127,745,052 General Obligation Bonds for Stormwater Purposes (8) 2,406,137 Storm Water Revenue Bonds (4) 8,205,000 Agriculture Reserve Program Installment Purchase Agreements (6) 24,730,932 163,087,121 Overall Net Debt and Long -Term Obligations $ 993,402,005 (1) Includes $2,406,137 in general obligation debt for storm water purposes. (2) Includes 2002A & B Public Facility Revenue Bonds, 2003A Public Facility Revenue Bonds, 2005A & B Public Facility Revenue Bonds, and 2007A & B Public Facility Revenue Bonds issued through the Virginia Beach Development Authority as limited obligations of the Authority, payable solely from payments made by the City. These obligations are described in the section "Other Long -Term Obligations" herein. (3) Water and sewer revenue bonds are not secured by a pledge of the City's full faith and credit and unlimited taxing power. These bonds are secured solely by the net revenues of the water and sewer system. (4) Storm water revenue bonds are not secured by a pledge of the City's full faith and credit and unlimited taxing power. These bonds are secured solely by the net revenues of the storm water utility system. (5) A full description of the Capital Leases and Certificates of Participation can be found in the subsection "Assets Acquired and Financed Under Capital Leases" herein. Payments on Certificates of Participation are subject to annual appropriation by City Council. Obligations of the City which do not meet the bonded or capital lease criteria are categorized as "Other Long -Term Obligations and are described in the section "Other Long -Term Obligations" herein. (6) Represents installment purchase agreements which are general obligations of the City. Interest and principal payments are paid from a dedicated portion of real estate taxes. Principal payments will be made from maturing zero coupon Treasury securities purchased from the dedicated portion of real estate taxes. These obligations are described in the section "Agricultural Program" herein. (7) Represents other long-term obligations of the City which do not meet the bonded or capital lease criteria, and are debt of the Virginia Beach Development Authority. These obligations are described in the section "Other Long -Term Obligations" herein. (8) General obligation bonds issued for storm water purposes; debt service on these bonds is paid from revenues of the storm water system, even though such bonds are secured solely by the full faith and credit of the City and subject to the constitutional debt limit. Source: City Department of Finance. 41 Authorized but Unissued Bonds After issuance of the Bonds, the City will have authorized but unissued $71,202,593 of general obligation bonds and $71,536,106 of revenue bonds, as shown below: Puraose Authorization Amount Security Year Manner Public Improvement $ 7,402,593 General Obligation 2006 Council Public Improvement 63,800,000 General Obligation 2007 Council Water and Sewer 13,344,201 Revenues 2005 Council Water and Sewer 18,950,465 Revenues 2006 Council Water and Sewer 18,793,000 Revenues 2007 Council Storm Water Utility 5,028,440 Revenues 1998 Council Storm Water Utility 5,300,000 Revenues 1999 Council Storm Water Utility 3,900,000 Revenues 2000 Council Storm Water Utility 200,000 Revenues 2001 Council Storm Water Utility 580,000 Revenues 2003 Council Storm Water Utility 510,000 Revenues 2004 Council Storm Water Utility 2,420,000 Revenues 2005 Council Storm Water Utility 2,510,000 Revenues 2006 Council Source: City Department of Finance. 42 OBLIGATION DEBT SERVICE a 0'g A Q 4Wco t a d ' g g - w a w a a 3 E. 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N Cp N 1() 04 0 0 0 4) 11) t` n Cr) O 1C) N 1O C) n O O K) .= to O O 8-8'- '9 $ 705,108,619.27 $177,751,614.3 $527,357,004.90 1• 8 0) 0) 0) 42.00 $178,100,614.14 M O N 10 CA 00 C) O e- N M '7 tO O t. C0 0) O e- N M < 41 CO 8- CO -- 00 N N N N N N N N N 1` OD 0) O e' N Ch et 6 CO t; W CO O ,- N Ch N 47 CO r` 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ 04 04 N 04 04 N 01 04 04 N N N N N N N 01 N N 04 N 0 0 ou O 00 a 8 C: O .- 0 0 O 0 a 177 ea e. yC Vi 7 0 w O .0 m M_ so O 64 7 U Source: City Department of Finance. 0101 NONO0000 h 0 ON'0'0 01.0+00000000 N0 en 101 . 000 N rM Nr0 O 0O MO ONO O C, CV N� Ch N.49 0M.900 CO n .90000100 en O9 en.r, I N Q N.re O� O CO. eh r r O 00 Va N01Q10 0100 e+1 O M N 0' N 010 C�1r00 N M 10 0 P 0 M 0, 0. •. T r 10 01 N 01 Nr. -911. 00 Q t IN 0Q r 1/1 O C91.. N Q N 010 0:M 0 O N ti ti O 00 OM1 CO. O n 0 b b en N N< N V1 y r r r ' M N 00 O co 01 NNS O N.000r- Yn 1109. CC000S O V0, N M A 0000' .00^0CMOM IOC Vi00 CSN M 01NM00Q0' 0h0 Mfg ^0^0100 N F 00^0, M 1,? 1%v,e $ 0.9 r 000 0 w b en 0 Vi 00 CO 10 0 N N 00 Cr co. 0 N N N co' 10 en D: Z (L] 0 MOI 000001 1O 01010 1101 ANN n a [ice 10 I n. T l N 01 co 0 en 00 co. 10 Q m. en r N Q N. co 01 N N 0110Q 00 VD 01 n N MNr 0 4, Q M M M N N N N r 0011 F on ovv ca No 41 0. SSS 0000000000001 10n S7.t000'001110r1 N 0101 00S 000cgi 00CD 00001 N N 0 01 1` 10 0 H1 N 01 N en Cr N N V1 V1 N Y1 N NI N Q 0 10 •-+ 0 0 01 M b 0 00 0, N N r 01 00 N— N 0 r r 01 0.1. 01 10 r N N N M 10 00 00 10 .+ 00 N N Q 0 Mc avQ D: N en .: 010 N er 1 .Q.� en N C� 0 0 0 0 N N N N Q N coQ Q Q Q N r 0, V) H y 1 0 0 0 0 0. 0 0 S 0 0 0 S S 0 0. S 0 S S . . . . 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O 000000000 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 OJ O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0110 0 O O O O O O O O O O O O O O O O O O 01 O O N 101 N N N N N N h N N V, N h N V, N N V, N O yQQ��?Q7Q? «<Q<R of e<Q0 y y 0 tn.h N 9. 0 N N N 0 N N O r 00 S 10C 1 1001 S 0 0 0 0Q, M00nT 010 O0N000 NM Nn n 0 On oi 01 O N 010 0 0 Q M N 0 M 00 01 9r00091.9991. c�QON of en et 01 en 0 en r Q D\ N Den OI 0.0 01 0^� h 01 Q Q 01 en 0 M N 10Q 01 10 M N r r MM C` 101000 Q 0M 010N N e` 0NM O t �O NN M en MMMM Nr01 Net. re [-QrO 0 ^ h^ M ri r O P W n N Q M N r 001 r y y y 00000000000000000000 0 00000000000000000000 0 0000000000000000000000 0. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 h V1 Cr 00 x1000101 O 01 01010 11 01 V1 r, O NQ Q 0001011010010100101000110 e` Q N er. so N et a 10 10 0 01 00 00 r 10 10 M 0; N 01 en NNNch- r 000/00/0 r r0MNOCN ‘K NO' 00 N r N C4 N N N N Cl N r 1 D 0 0 N 0 01 01 0 ON 0 0 0 N N N N N 10 N 10 r 10 �--i 01 -- N. 0 00 N en MN r 0111 10 N 0 .0. 10Q N y 0000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N 0 0 0 0 0 N N V10 Nei un 0101 .-. M n N N N r N O O Q Q Q N N C1 OS 11111141, N a0 0 Co 0 0 0 r 0 0 0 O N 0 N N O N h . . N e0+100R 00000101 001 Nn NO -01000.01.01-.01 V ^ e11 10 Q M V' M 0 l 1 — 00 00 No, 00 10 r M 00 00 01 N Inc 10 N 0 M N 0 0 M N 01 01 N N N e` O r Nsfen.O_ N 000010e0.01011g000100 h 1N -1 000v Mr X0+00 01a N 01 0'0001.- 1101 0011 epi 0, Vi N r DOM r 01 C1 0 0 Net N Q Q M M N N N r r r r V) 010100000 O v,.Q.01 010000000000 Q O O N O N N O N N 01 O es — O_ M 00 M N N N O N N 01 N N (-4 n O N 0100Q N 0 N M 01010 0100-0 M N en...9 0 N 10 MR 0000000 010010 0100. 000w N O C1M 10001 en 01 Ni;01 [� Ni 0• 010 01 0 CNI▪ 0.90e0a10a0000N'09. 0101"1Ch 001 O Q 01 0' 01 N M S 0, 00 t N Q M N • --+ r GS N N r r r ...•• r 0vv00000en nO.oe 0 0000S0000 O 0.5 N 000 O 01 (7.; n.N 001 0 0 0 0 0 0 0 p 0 0 S O O MI Q 00 0.0 N 01 re. 0 0 0 0 0 0 0 0 0 0 OCV Oet N '00101 ON 01 0100 0100000 oco N N 000 01 en N 0101 01011111 Q 0001-141 0n00 e` n 00 T VS en 0 CZ en 9, en 01 eh r.: t` e+1 01 Q Q Q Q M M M N N N N OS y N 01 O 00 0 01 0 r y $177,751,614.37 $52757,004.90 0001 O r N MQ 0101/000/ O r NMQ 01 01100 .� O ON N N N N N N N N 0 r 00 0' O -.0 A v. 01 10 n 00 O, O ^ N en O 01 1p r= 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N el N N C4 N N N N N N N N N Source: City Department of Finance. RAPIDITY OF PRINCIPAL RETIREMENT ALL GENERAL OBLIGATION BONDS(1) (2) March 1, 2008 RAPIDITY OF PRINCIPAL RETIREMENT ALL OVERALL NET DEBT AND OTHER LONG-TERM OBLIGATIONS March 1, 2008 Percentage of Maturing Amount Maturing Amount Total Debt Within Maturing Percentage Within Maturing Outstanding 5 years $242,800,822 45.83% 5 years $362,274,201 36.47% 10 years 400,003,142 75.51 10 years 642,822,005 64.71 15 years 496,263,142 93.68 15 years 882,172,005 88.80 20 years 529,763,142 100.00 20 years 993,402,005 100.00 () Includes general obligation bonds additionally secured by storm water utility revenues which are serviced annually from those revenues. Does not include capital leases, Certificates of Participation or other non -general obligation indebtedness. (2) Includes new issue of $90,000,000 General Obligation Bonds Series 2008. Water and Sewer System Debt Pursuant to Article VII, Sec. 10(a)(3) of the Constitution of Virginia, the City has issued water and sewer revenue bonds which are secured solely by the net revenues of the water and sewer system. As of March 1, 2008, $127,745,052 of these bonds were outstanding. Storm Water Utility System Debt The City has issued two types of securities to finance capital improvements to its storm water utility system: (1) Prior to 1995, the City issued general obligation public improvement bonds that were not secured by a pledge of the net revenues of the storm water utility system. As of March 1, 2008, $2,406,137 of these bonds were outstanding. (2) Pursuant to Article VII, Sec. 10(a)(3) of the Constitution of Virginia, the City has issued storm water utility revenue bonds which are secured solely by the net revenues of the storm water utility system. As of March 1, 2008, $8,205,000 of these bonds were outstanding. It is the City's policy to service all debt issued for storm water purposes by revenues from the storm water utility system. Agricultural Reserve Program On May 9, 1995, City Council adopted an ordinance establishing the Agricultural Reserve Program ("ARP"). The primary purpose of the ordinance is to promote and encourage the preservation of farmland in the rural southern portion of the City. Through ARP, the City acquires development rights in designated areas within the southern portion of the City through the purchase of agricultural land preservation easements. Landowners who meet certain eligibility criteria may sell an easement to the City while holding fee simple title to the land and continuing to farm. The City acquires these development rights by executing installment purchase agreements with the landowners. 45 These agreements provide for the payment of the principal balance of the agreement in a single installment due approximately twenty-five years after execution of the agreement. Interest on the unpaid principal balance is payable semi-annually. On May 9, 1995, the City Council originally dedicated a one and one-half cent increase in the real estate tax to finance the program; on May 11, 2004, the City Council reduced this amount to one cent; and on May 9, 2006, the City Council further reduced this amount to 9/10ths of one cent. These obligations constitute indebtedness within the meaning of Article VII, Section 10 of the Virginia Constitution and will be general obligations of the City, pledging the full faith and credit and unlimited taxing power of the City. By policy, interest and principal payments will be paid from a dedicated portion of real estate taxes. Principal payments will be made from maturing zero coupon Treasury securities purchased from the dedicated portion of real estate taxes. As of March 1, 2008, 64 installment purchase agreements totaling 7,261 acres at a total purchase price of $24,730,932 have been executed. City Council has approved 3 additional applications totaling approximately 329 acres with a total approved purchase price of $3,427,120. These are expected to close in the next few months. Ten additional applications totaling 680 acres are being processed by the City, valued at approximately $8,160,960. Tax Increment Financing The City is one of the first localities in the Commonwealth to use Tax Increment Financing ("TIF") as a means of fmancing certain capital projects, usually involving one or more private or public partners. Tax Increment Financing is authorized under Sections 58.1-3245 through 58.1-3245.5 of the Code of Virginia, originally enacted in 1988. The City has established TIF districts to fund its share of three investment partnerships: the Lynnhaven Mall Expansion, the Sandbridge Beach Restoration Program and the Town Center of Virginia Beach. Lynnhaven Mall Expansion: The area of the City around Lynnhaven Mall was established as a T1F district by ordinance approved by City Council on June 9, 1998. The expansion of one of the largest shopping malls in Virginia accommodated several upscale stores, a new entertainment complex and a themed restaurant. The City is committing $11.5 million in future real estate taxes for a parking facility and related improvements to leverage an approximately $100 million in additional private investment. The expansion increased the mall by 200,000 square feet, which is equivalent to one-third its original size. The City benefits from increased retail, restaurant, admission and business license and property taxes. As of June 30, 2007, $10,649,820 has been collected in the Lynnhaven Mall TIF Special Revenue Fund. Under the agreement with the developer, the City will provide certain TIF revenues to the developer, if available, but is not responsible for the issuance of any debt. Sandbridge Beach Restoration Program: The Sandbridge area of the City was established as a TIF district by ordinance approved by City Council on December 1, 1998. An important real estate and aesthetic asset to the City, this area has long battled sand erosion. The City continues to pursue a multi - front strategy of funding sand replenishment, including seeking federal funds, using local funds, and establishing a Special Service District. The use of TIF is another method to ensure stability to this area and to ensure that the primary beneficiaries of the program fund the bulk of the improvements. As of June 30, 2007, $28,848,431 in TIF revenues have been collected for sand replenishment, of which $17.8 million was declared excess and returned to the General Fund in FY06 and FY07. The Town Center of Virginia Beach: The southem part of the Pembroke area of the City was established as a TIF district by ordinance approved by City Council on November 23, 1999. The district is called Central Business District -South. When fully developed, the 31 -acre core area will feature 46 "Class -A" high-rise office space, upscale retail space, a hotel, restaurants and upscale residential apartments, all within a `village green" park setting. The Town Center is supported by free public parking in several enclosed parking garages set within the center. The City has committed approximately $16 million to provide the public infrastructure and over $68 million to pay for the parking garages and other public components. In addition, the City has funded $35 million of the $46.7 million Performing Arts Center. The City's investment leverages over $300 million of private sector investment. The City benefits from increased personal property, retail, admissions, restaurant, utility and business license taxes. The Virginia Beach Development Authority ("VBDA") issued on June 14, 2002 its $23,855,000 Revenue bonds (taxable and tax-exempt) to acquire a public parking garage in Town Center. On September 9, 2003, the VBDA issued $165,000,000 Public Facility Revenue Bonds, with a portion of the proceeds being used for the construction of two parking garages in Town Center. On May 1, 2005, VBDA issued $103,900,000 of Public Facility Revenue Bonds to fund various City projects and VEDA initiatives. On June 30, 2007, the VBDA issued an additional $100,865,000 of Public Facility Revenue Bonds (taxable and tax-exempt) to fund various City projects and VBDA initiatives. It is expected that real estate tax revenues generated in the Town Center TIF District, along with certain other tax revenues, will be sufficient to pay the debt service on these VBDA bond issues. If such revenues are insufficient, the City may impose an increased real estate tax in the special tax district at Town Center to recover any shortfall. The tax increment revenues and special taxes are not pledged to the payment of the VBDA bonds. As of June 30, 2007, $11,621,461 in TIF revenues have been collected in the Town Center Special Revenue Fund. See the section entitled "Other Long -Term Obligations" below. Assets Acquired and Financed Under Capital Leases Non -water and sewer capital assets consisting of various small equipment are capital assets acquired under capital leases on which the City, as of June 30, 2006, had principal outstanding of $4,711. In addition, as of March 1, 2008, the City had outstanding $5,155,000 Refunding Certificates of Participation, Series of 1993. The City has issued Certificates of Participation to finance and refmance the acquisition of real property to expand the City's Municipal Center Complex and to construct a Judicial Center Complex. These leases contain non -appropriation clauses and therefore are not considered debt for purposes of calculating obligations subject to the constitutional debt limit. The estimated scheduled capital lease payments on non -water and sewer lease obligations for the Fiscal Years ending June 30 are as follows: Capital Certificates of Lease Participation Total 2008 $ 278,370 $ 278,370 2009 2,720,600 2,720,600 2010 2,716,415 2,716,415 Source: City Department of Finance. Other Long -Term Obligations On February 24, 1998, the City of Virginia Beach Development Authority issued $9,800,000 Lease Revenue Bonds payable solely from certain rental payments made by the City under an operating lease. The obligation of the City to make rental payments is subject to annual General Fund appropriations by the City Council. The maximum annual rent payment under the lease is $862,212. The Lease Revenue Bonds financed the costs of acquiring and constructing a Social Services Building to be 47 used by the City to house its Social Services Department. Principal outstanding on this agreement as of March 1, 2008, is $5,985,000. On June 14, 2002, the City of Virginia Beach Development Authority issued its $20,815,000 Public Facility Revenue Bonds, Series 2002A, and its $3,040,000 Taxable Public Facility Revenue Bonds, Series 2002B, to finance the acquisition of a public parking facility and land for a public plaza in the Town Center development. These bonds are limited obligations of the Authority, payable solely from certain payments made by the City pursuant to a Support Agreement between the Authority and the City. The obligation of the City to make such payments is subject to appropriation by the City Council of funds sufficient for such purpose. Principal outstanding on these bonds as of March 1, 2008, is $23,565,000. On September 24, 2003, on June 7, 2005, and on June 26, 2007, the Authority issued the public facility revenue bonds for various capital improvements in the City. These improvements included the Convention Center Replacement, the Virginia Aquarium and Marine Science Museum parking, the Pavilion Theater Replacement, Open Space Site Acquisition programs, 31st Street Parking Garage and two parking garages at the Town Center, among other projects. The aggregate cost of the projects is estimated to be approximately $438.5 million with the City currently fmancing approximately $368.4 million of these costs through the Authority's issuance of these public facility revenue bonds. Again, the security for these bonds is a Support Agreement between the City and the Authority in which the City will make certain payments to the Authority that will be sufficient to pay debt service on these bonds. Principal outstanding on these bonds as of March 1, 2008, is $338,790,000. On January 14, 2004, the City executed an installment purchase agreement with Williams Farm LLLP for the acquisition of the Williams Farm property as part of the City's open space program. The purchase price was $5 million with a down payment of $750,000 at the time of settlement. The remaining balance, $4,250,000, is payable in equal semi-annual installments of $212,500 on each June 1 and December 1, beginning June 1, 2004, and ending December 1, 2013. The outstanding principal balance as of March 1, 2008, is $2,550,000. Impacts of Future Economic Development and Transportation Legislation on City Debt The City, over a number of years, has been developing a strategy for the development and redevelopment of certain areas in the City that will be a critical element of the City's future economic vitality. Targeted areas include the further development of the oceanfront to complement the recently completed convention center, including, for example, a convention center hotel and entertainment venues. Other targeted development involves public investment in transportation initiatives in the City that will also likely require additional debt. The use of public-private partnerships is a critical piece in this potential development. One vehicle for this debt could include the creation of Community Development Authorities (known as "CDAs") which would issue the debt. Such debt might be payable from special taxes levied in the development, special assessments levied in the development, voluntary contributions from the City or other interested parties, or revenues generated in an overlaying TIF District, as described above. In any case the public portion of these yet unnamed projects could involve additional debt not yet identified in the City's Capital Improvement Program. Additionally, in 2007 the Virginia General Assembly adopted a state-wide transportation plan to alleviate overcrowded roads throughout the Commonwealth. For the Hampton Roads area, the regional transportation plan included the creation of a Hampton Roads Transportation Authority ("HRTA") to impose and collect certain tolls and fees for the issuance of debt for six major transportation projects in the area. The cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg, and the counties of Isle of Wight, James City, and York are voting members of the HRTA. The HRTA is authorized to undertake the following projects in Hampton Roads: 48 the Third Crossing (Phase I- widening I-664 from Bowers Hill to Hampton and Phase II- a bridge -tunnel running between the Monitor -Merrimac Memorial Bridge Tunnel and I-564 in Norfolk; a connector traversing Craney Island, running between the above bridge -tunnel and the Western Freeway); the Southeastern Parkway/ Dominion Boulevard; the Midtown Tunnel/ Martin Luther King Freeway Extension; U.S. Route 460; Widening I-64 (on the Peninsula) to Route 199; and Widening I-64 (on the Southside, including the High -Rise Bridge) from Battlefield Boulevard to Bowers Hill. At its August 10, 2007 meeting, the HRTA approved the imposition of the following fees and taxes as outlined in HB 3202: • A $10 Vehicle Registration Fee • A 1% Initial Vehicle Registration Fee • A $10 Vehicle Safety Inspection Fee • A 5% Sales and Use Tax on Automotive Repairs • A $0.40/$100 of Value Grantor's Tax on Real Estate Sales • A 2% Motor Vehicle Fuels Tax • A 2% Local Rental Car Tax Due to the public response to the HRTA fees and taxes, on October 17, 2007 the Legislative Committee of the HRTA recommended eliminating the $10 Vehicle Inspection Fee, the 5% tax on automobile repairs, the grantor's tax of 40 cents per $100 of assessed value, and the $10 annual registration fee. The HRTA forwarded this recommendation to the General Assembly for consideration during the current session. While HB 3202 permitted the HRTA to begin collecting the fees and taxes on January 1, 2008, as a result of public comments, the HRTA voted to defer the impositions of these fees and taxes until April 1, 2008 to afford the General Assembly the opportunity to respond to public sentiment. The nature and scope of any project to be undertaken by the HRTA is expected to be based upon one or more traffic and revenue control studies which the HRTA proposes to undertake in the future. Accordingly, debt, if any, issued by the HRTA is not expected for several years. The extent to which any debt issued by the HRTA could potentially impact debt of the City is yet to be determined, although the amount of debt that the HRTA will issue could be substantial. Overlapping Debt The City is autonomous from any county, town, or other political subdivision. Currently, there are no overlapping jurisdictions with debt outstanding for which City residents are liable. Short -Term Borrowing The City does not borrow on a short-term basis for working capital purposes. The City's policy is to maintain the General Fund balance at a level that provides sufficient cash flow for working capital purposes. Debt History The City has never defaulted on its general obligation bonds, water and sewer system bonds, storm water utility bonds or capital lease obligations. 49 Payment Record The City has never defaulted in the payment of either principal of or interest on any indebtedness. Comprehensive Plan The City's most recent Comprehensive Plan was adopted on December 2, 2003. Among some of the key planning policies embodied in this Plan are urban and rural growth management strategies, including the Green Line concept, economic development opportunities, transportation and other public facility improvements, care of the environment, housing, historic resource management, neighborhood preservation and community aesthetics. By adopting these key provisions of the Comprehensive Plan, the City has committed itself to advancing sound planning policies that ensure a fair and workable balance between the supply of public service delivery systems and the demand placed on those systems by existing and future land uses. The comprehensive planning policies of the City are designed to achieve enhanced and manageable land development and redevelopment within defined Strategic Growth Areas ("SGA") (north of the Green Line and the Princess Anne area, formerly called the Transition Area). The development of urban infrastructure is focused on serving future growth creating higher quality land uses, thereby expanding the City's taxable revenue base without compromising the level of service provided by the public infrastructure. Another complementary strategy provided by the Green Line and other related comprehensive planning policies is to check sprawling development. By preventing future sprawl through the designation of SGAs for appropriate urban development, the City avoids net negative fiscal impacts for related capital and operating expenses that are too often linked to such development patterns. The land use planning guidance provided by the Comprehensive Plan along with the strong public demand to live and work in Virginia Beach can continue the value of growth in Virginia Beach into the foreseeable future. In addition to adequate capacity for growth in the northern section of the City, the City's land use policies provide reasonable levels of rurally compatible growth in the southern part of the City. Special amendments to the Comprehensive Plan, adopted in 2005, reinforce the City's support for the military as an integral part of the community. In addition, the Rural Preservation element of the Comprehensive Plan and the Agricultural Reserve Program, adopted by City Council in 1995, are major tools to promote the preservation of farmland and the rural way of life. The Comprehensive Plan is a dynamic instrument and City Council periodically reviews, enhances and amends the Plan when appropriate. A number of specific area planning documents have been adopted by City Council and added to the Comprehensive Plan by reference. These include the Shore Drive Corridor, the Laskin Road Corridor, the Princess Anne Corridor and a refinement of the planning policies affecting the Transition Area. Since 1971, the City Council has periodically revised and adopted the City's Master Transportation Plan, as needed, to address, in a comprehensive fashion, the need for an efficient, cost- effective and multimodal transportation system. This policy document, which is a component of the Comprehensive Plan, describes the characteristics and establishes transportation planning policies for Virginia Beach. The Plan also provides planning guidance for bikeways, scenic easements, and other similar features related to the City's major roadway system. Decisions affecting the implementation of land use and transportation policies are based, in large measure, upon the guidance provided in the City's Comprehensive Plan and Master Transportation Plan. 50 Capital Improvement Program The City's six-year Capital Improvement Program ("CIP") provides for improvements to the City's public facilities, along with the means of financing these improvements. The first year of the program constitutes the capital budget for the current fiscal year; the remaining years serve as a planning guide. The CIP time table coincides with that of the Operating Budget, and both are presented to City Council in early Spring. The approved CIP is the result of a process that balances the need for public facilities against the fiscal capability for the City to provide for these needs. It is the City's policy to fund individual capital projects of less than $250,000 through General Fund appropriations (pay-as-you-go fmancing). Fiscal Years 2007-2012 On May 15, 2007, City Council adopted the Fiscal Year 2007-2012 CIP. The new program funding for six years totaled $1,175,399,801, a 4.6% increase over the original FY2007-2012 CIP approved by City Council on May 9, 2006. The resources allocated for City improvements over the six- year period are increasing by 9.0%, for schools by 1.9%, and for Utilities by 0.8%. Approved Approved Percent FY 2007-12 FY 2007-12 Change (May 9, 2006) (May 15, 2007) City General Improvements $ 571,754,302 $ 615,285,256 9.0% School Improvement 358,285,722 365,162,822 1.9 Utilities Improvements 193,476,723 194,951,723 0.8 $1,123,516,747 $1,175,399,801 4.6% Within the six-year program the FY2008 Capital budget of $203,514,641 approved by City Council on May 15th is a decrease from FY2007 by 16.9%. Rising construction costs have delayed or eliminated some projects in the program period. Funding for some projects previously funded in the six- year CIP has been shifted to other projects. The School program cost increases have delayed or changed the scope in several projects. Utilities projects show relatively constant funding as the water and sewer and storm water programs all benefited from rate increases approved by City Council in May 2005. The additional funds have allowed construction of water and sewer projects in the early years of the program, allowing reduction in the later years. The water and sewer rehabilitation projects are being addressed through water and sewer rate increases, as shown on the table below: Water and Sanitary Sewer Rate Increases FY FY FY FY FY FY Rate/Charge 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Water service availability charge $3.75 $4.10 $4.10 $4.10 $4.10 $4.10 per meter (charge for 5/8" meter shown) Water usage rate per 1,000 gallons $3.65 $3.70 $3.80 $3.95 $4.10 $4.10 (last reduced July 1999 & remained $3.55 until FY 2005-2006) Sanitary sewer monthly charge (for $15.92 $16.88 $17.72 $18.61 $19.54 $19.54 51 a single family residence shown) Source: City Department of Public Utilities The storm water program is designed to meet the standards of the Clean Water Act and improve the quality of the City's lakes and waterways. To fund these needs, City Council approved a three -phased fee increase in the storm water fee effective July 1, 2005. The daily fee was $0.161 effective July 1, 2005, is $0.171 effective July 1, 2006, and will be $0.181 effective July 1, 2008. This equates to an annual increase of $3.65 per year for three years and is expected to generate $13.6 million over the six- year CIP period. In addition, the Fiscal Year 2008 CIP authorizes storm water revenue bonds in the maximum amount of $2.5 million to improve and expand the storm water system. A breakdown of sources and uses for the City's six-year program is provided on the following two tables. The sources of funding for the six-year program are as follows: Amended Capital Budget Year 1 Year 2 Years Type of Financing FY 2006-07 FY 2007-08 3 thru 6 Total Local Revenue $ 37,377,406 $37,861,320 $164,904,993 $240,143,719 State Revenue 40,857,148 36,785,354 149,976,664 227,619,166 Federal Revenue 250,000 0 0 250,000 Other Revenue 3,997,779 3,104,786 8,893,700 15,996,265 Bonds/Lease Purchase 70,177,777 63,433,991 244,586,257 378,198,025 Utility Bonds 21,460,465 18,793,000 66,018,000 106,271,465 Fund Balance 57,476,124 29,558,602 36,547,064 123,581,790 Utility Fund Revenue 13,245,149 13,977,588 56,116,634 83,339,371 Total Financing - All Sources $244,841,848 $203,514,641 $727,043,312 $1,175,399,801 52 A summary of the project uses for the six-year program are as follows: Proiect Class Economic Vitality Safe Community Quality Physical Environment Cultural and Recreational Opportunities Quality Education and Lifelong Learning Family and Youth Opportunities Quality Organization Total Capital Improvement Program Amended Year 1 FY 2006-07 $ 29,631,870 14,872,139 108,170,191 16,728,275 69,874,373 700,000 4,865,000 $244,841,848 Capital Budget Year 2 Years FY 2007-08 3 thru 6 $ 20,399,821 7,912,840 98,638,025 Total $ 68,070,804 $ 118,102,495 37,974,082 60,759,061 329,651,361 536,459,577 12,430,240 50,955,149 80,113,664 62,768,715 0 1,365,000 $203,514,641 239,829,267 372,472,355 0 700,000 562,649 6,792,649 $727,043,312 81,175,399,801 Prior Year C1Ps - Actual Capital Project Expenditures The following table presents a summary of actual capital project expenditures by category for Fiscal Years 2006 and 2007. The expenditures for each year represent numerous funding sources (bonds, general appropriations, fund balances, retained earnings, state and federal sources, etc.) and unspent funds from various prior year capital budgets. ACTUAL CAPITAL PROJECT EXPENDITURES Category FY 2005-06 FY 2006-07 General Governmental $168,972,194 $185,284,480 Schools 41,825,039 74,751,244 Public Utilities 20,732,573 17,835,285 Storm Water Utilities 10,136,331 5,588,068 TOTAL $241,666,137 $283,459,077 Source: City Department of Finance. 53 SECTION FIVE: FINANCIAL INFORMATION Basis of Accounting and Accounting Structure All of the City's and School Board Component Unit Governmental Funds, Expendable Trust Funds, and Agency Funds (assets and liabilities) are reported under the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become susceptible to accrual (i.e., measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers property taxes as available if they are collected within 45 days after year end. Expenditures are recognized in the accounting period in which the corresponding liabilities are incurred, if measurable (except for unmatured interest on general long- term debt which is recognized when due and paid). criteria. The following is a list of the major revenue sources which meet the "susceptible to accrual" General Property Taxes General Sales Tax Utility Taxes Hotel Taxes Restaurant Taxes Interest on Deposits and Investments Revenue from Commonwealth Revenue from Federal Government Amusement Taxes All City and School Board Component Unit Proprietary Funds are reported under the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Unbilled Water and Sewer Enterprise Fund accounts receivable for utility services provided through June 30 are included in the financial statements. The City operates on a July 1 through June 30 Fiscal Year. City of Virginia Beach Development Authority The Virginia Beach Development Authority initially was established for the purposes of attracting new industries and the expansion of existing industries. Over time, the Authority's powers have been expanded and now include the power to undertake fmancings for the City. In addition, the Authority is authorized to issue industrial development bonds after approval by the City Council and to purchase land to improve and sell for development. These bonds do not constitute indebtedness of the City but are secured solely by revenues from the organization on whose behalf the bonds were issued. The Authority's Commissioners are appointed by City Council. The City does not have legal title to any of the Authority's assets, nor does it have a right to the Authority's surpluses. However, in accordance with Governmental Accounting Standards Board Statement 14, the Authority has been discretely presented in Appendix A. In February 2003, City Council approved a change to the loan amount and terms governing the City's loan to the Authority. Under this restructuring, the City extinguished the Authority's obligation to pay the existing accrued interest on this loan. The remaining principal, $6.2 million as of February 2003, was restructured into two non-interest bearing notes. Note one in the amount of $4.8 million will be payable from the net proceeds of a sale or ground lease of 31s` Street Property. Note two in the amount of $1.4 million will be secured by remaining parcels at Corporate Landing and Oceana West, payable from 20% of net proceeds from land sales. Remaining proceeds will be used to fund infrastructure and 54 strategic land acquisitions. No additional debt may be issued by the Authority without prior approval of the City Council. Hampton Roads Transportation District Commission The City's financial statements include its share of the operating cost of the regional mass transit operations of the Hampton Roads Transportation District Commission. For Fiscal Year 2007, the City's share of aforementioned operating cost was $2,593,716. City Financial Statements On July 1, 2001, the City adopted the Governmental Accounting Standards Board ("GASB") Statement No. 34, "Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments." This statement, known as the Reporting Model, provides for the most significant change in fmancial reporting for state and local governments for over twenty years. The basic financial statements include both government -wide (based upon the City as a whole) and fund fmancial statements. While the previous model emphasized fund types (the total of all funds of a particular type), in the new reporting model the focus is on either the City as a whole or major individual funds (within the fund fmancial statements). Both the government -wide and fund financial statements (within the basic financial statements), categorize primary activities as either governmental or business -type. In the government -wide Statement of Net Assets, both the governmental and business -type activities columns are presented on a consolidated basis by column and are reflected on a full accrual, and economic resources basis, which incorporates long-term assets and receivables as well as long-term debt and obligations. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The program revenues must be directly associated with the function (public safety, public works, etc.) or a business -type activity. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. The City does not allocate indirect expenses. funds: Fund fmancial statements are provided for governmental funds, proprietary funds, and fiduciary Major governmental funds are: The General Fund is the City's primary operating fund. It accounts for all fmancial resources of the City, except those required to be accounted for in another fund. Revenues are derived primarily from property and other local taxes, state and federal distributions, licenses, permits, charges for service, and interest income. A significant part of the General Fund's revenues is used principally to finance the operations of the City of Virginia Beach School Board. The Capital Projects Fund is used to account for the fmancial resources for the acquisition or construction of major capital facilities within the City. Major proprietary funds are: 55 The Water and Sewer Fund provides water service and sanitary sewer waste collection and transmission services to Virginia Beach citizens and accounts for operations that are fmanced in a manner similar to private business enterprises. The Storm Water Fund accounts for the activities of the Storm Water Utility which charges a fee for operational and capital needs for Storm Water management in the City. Additionally, the City reports the following fund types: Special Revenue Funds account for revenue derived from specific sources that are restricted by legal and regulatory provisions to fmance specific activities. Internal Service Funds account for the financing of goods and services provided to other departments and agencies of the City or to other governmental units on a cost reimbursement basis. Fiduciary Funds are used to account for assets held by the city in a trustee capacity or as an agent for individuals, private organizations and other governmental units. Investment Policies and Practices The City of Virginia Beach, as a political subdivision of the Commonwealth, is limited to investments permitted by the Code of Virginia of 1950, as amended. In addition, various bond resolutions and a City Council adopted investment policy further restrict the types of allowable investment activities. The City's investment practices are generally described in footnote 7 of the City's financial statements, included in Appendix A hereto. The City Treasurer is responsible for the investment of City funds. The City Treasurer invests the City's funds using internal active management, with external trustees and trust funds taking possession of applicable investments. Within the state permitted guidelines and the adopted investment policy, the City Treasurer limits the City's investments to the State Treasurer's Local Government Investment Pool, collateralized certificates of deposit, repurchase agreements, prime quality commercial paper, and prime quality "fed eligible" bankers' acceptances. The City does not invest in "derivative" securities, utilize reverse repurchase agreements, nor otherwise leverage its investment portfolio. The City matches the maturity of its investments to cash flow needs to assure cash availability as necessary. Certificate of Achievement The Government Finance Officers Association of the United States and Canada ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report ("CAFR") for Fiscal Year 2006. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report that substantially conforms to the high standards for financial reporting as promulgated by the GFOA. The City has submitted the application and associated documentation for Fiscal Year 2007. A Certificate of Achievement is valid for one year only. The City has been awarded a Certificate of Achievement (called a Certificate of Conformance prior to 1985) for its Comprehensive Annual Financial Report for 27 of the past 28 years. 56 The City was also awarded the Certificate of Achievement for Distinguished Budget Presentation from the GFOA for its Fiscal Year 2006 budget. The City also received this award for 20 of the last 22 years. Budgetary Process The City Charter requires the City Manager to submit a balanced, proposed operating budget to the City Council at least 90 days before the beginning of each fiscal year which begins July 1. Each department of the City prepares its own budget request for review by the City Manager. The City Council is required to hold a public hearing on the budget at which time all interested persons have the opportunity to comment. If the proposed operating budget is not legally adopted by the City Council by June 1, the operating budget submitted by the City Manager will have full force and effect as if it had been adopted by the City Council. The School budget is prepared by the School Board, transmitted to the City Manager for review, and then submitted to the City Council for consideration as part of the City's general operating budget. Of the General Fund revenues estimated to be generated from the real estate, personal property, general sales, utility, cellular telephone, business license taxes, and cable television franchise fees, 51.3 percent is allocated to the School Board to fund the local share of the School Board's operating budget, local debt service costs and pay-as-you-go capital improvements. The remaining 48.7 percent of such revenues are allocated to the City. If the School Board determines that additional funding is needed, the School Board Chairman makes a formal written request to the City Council, and the School Board holds a public hearing on the issue. The City Manager is authorized to transfer appropriations up to a maximum of $100,000. Transfers in excess of $100,000 require City Council approval. Transfers between $25,000 to $100,000 are reported to City Council on a monthly basis. Additional appropriations must be offset by additional estimated revenues and/or a transfer from the proper undesignated fund balance and require a public hearing if the amount of the additional appropriation exceeds one percent of the total revenue in the approved budget. Unexpended appropriations (except for the Capital Projects, Grant, and Grants Consolidated Funds) lapse and are closed to the proper fund balance at the end of each fiscal year. The appropriation for the subsequent fiscal year is increased by the amount necessary to satisfy the outstanding encumbrances at June 30 of each fiscal year. In the instance of schools, if at the end of the fiscal year, the actual revenues generated from the revenues designated for schools exceed the revenues that were estimated, the amount of excess revenues are shared by the City and the School Board in the same proportion that estimated revenues were shared, provided, however, that such excess revenues will only be shared after the necessary resources for the Fund Balance Reserve Policy have been determined and fulfilled. Conversely, if revenues fall below the estimates, the School Board will be expected to reduce expenditures up to 51.3 percent of the anticipated shortfall. The operating budget includes a portion of the funding for the Capital Improvement Program ("CIP"). General appropriations used to fmance capital projects are shown both in the operating budget and in the CIP. The Department of Management Services annually prepares a six-year CIP. Because activities of capital projects often go beyond a fiscal year period, the accounting, encumbering, and controlling of the funds are based upon the length of project activities. Similarly, federal and state grants in the Grants and Grants Consolidated Funds are budgeted separately from the operating budget because these revenues do not necessarily coincide with the City's fiscal year. 57 Each capital lease obligation has a non -appropriation clause which generally states that each fiscal year's lease payments are subject to City Council approval. These capital lease appropriations are offset by an equal amount of estimated revenue (other financing sources), and are functionally budgeted in the General Debt Service Fund. Operating Budget - Fiscal Year 2008 On March 28, 2006, the City Manager presented to City Council the biennial Resource Management Plan for Fiscal Years 2007 and 2008. This was the first time the City Manager had presented a formal biennial budget providing City Council with the opportunity to make planning decisions for the next two fiscal years. City Council adopted the Resource Management Plan on May 9, 2006, thereby adopting the Fiscal Year 2007 budget and approving the Fiscal Year 2008 budget for planning purposes. On March 27, 2007, the City Manager presented to City Council proposed updates to the Fiscal Year 2008 budget. City Council adopted the Fiscal Year 2008 budget on May 15, 2007. The approved budget for Fiscal Year 2008 of $1,721,976,371 represents a 4.8% increase over the Fiscal Year 2007 adjusted budget. Highlights of the Fiscal Year 2008 budget are listed below: • The City has experienced continued growth in real estate assessment value, which lead City Council to reduce the real estate tax rate by 10 cents in order to reduce the tax burden on residents. This resulted in a rate of $0.89 per $100 of assessed value. Despite the rate decrease, real estate tax revenue is projected to increase by 6.4%. • There is an increase of 72.7 City positions and a reduction of 46.1 School positions for Fiscal Year 2008. • The budget includes a 1.5% general salary increase and a 2.0% merit increase for eligible City employees, and a 3.75% increase in compensation for School's instructional employees and a 5% increase for non -instructional employees. • The City expanded the Tax Relief for the Elderly and Disabled Program by raising the salary ceiling to $62,000, which will result in $14 million of tax relief annually. • Additional funding is included for the opening of the Sandler Center for the Performing Arts and a new school in the Bayside area. • An additional allocation of $5 million is included to address the City and School healthcare liability (GASB 45). Both City and Schools increased the health care contribution for employees from $5,225 to $5,750, effective January 1, 2008. • Due to increased electrical costs, an additional $3.7 million is included for City and School operations. 58 Cateeories City Operations School Operations Capital Projects Debt Service ADOPTED FISCAL YEAR 2008 OPERATING BUDGET FY 2006-07 Adiusted $ 680,725,530 773,944,304 64,729,327 124,202,936 FY 2007-08 Approved (Mav 9, 2006) $ 721,159,869 816,531,802 60,486,357 136,717,773 FY 2007-08 Amended % Increase from (Mav 15, 2007) $ 719,291,231 806,403,408 61,851,186 134,430,546 FY 2007 Adiusted 5.7% 4.2 -4.4 8.2 $1,643,602,097 $1,734,895,801 $1,721,976,371 4.8% 59 SUMMARY OF ADJUSTED AND ADOPTED BUDGETS Three Most Recent Fiscal Years REVENUES General Property Taxes Revenue from Commonwealth Other Local Taxes Charges for Services Revenue from the Federal Govt Use of Money & Property Miscellaneous Revenue Specific Fund Reserves Permits, Fees, & Licenses Fines & Forfeitures Non -Revenue Receipts Total Revenues APPROPRIATIONS Education General Govemment Debt Service Human Services Public Works Police Public Utilities Fire Capital Projects Parks & Recreation Reserve for Contingencies(» Libraries Total Appropriations FY 2006 Adjusted Budget $ 509,351,315 445,028,880 240,233,617 143,584,120 109,801,688 9,176,288 16,337,767 15,889,853 5,839,293 5,092,414 4,007,750 $1,504,342,985 FY 2007 Adopted Budget $ 591,227,841 483,053,667 249,970,187 151,018,253 106,881,122 13,238,896 16,213,561 13,317,952 5,198,181 5,608,205 3,788,043 FY 2008 Adopted Budget $ 631,752,868 500,845,889 255,282,750 158,044,134 111,028,405 16,778,606 14,416,081 18,546,426 5,215,634 6,023,855 4,041,723 FY 2008 % of Total Change FY 2007 to FY 2008 36.69% 6.85% 29.09 3.68 14.82 2.13 9.18 4.65 6.45 3.88 0.97 26.74 0.84 -11.09 1.08 39.26 0.30 0.34 0.35 7.41 0.23 6.70 $1,639,515,908 $1,721,976,371 100.00% $ 705,740,599 202,346,009 121,422,484 94,688,159 88,412,012 74,499,647 65,019,988 37,553,655 53,473,701 37,340,113 8,141,753 15,704,865 $1,504,342,985 $ 779,249,046 214,446,295 124,202,936 101,243,424 93,762,079 79,084,177 67,414,416 39,303,087 60,068,227 39,206,672 25,040,156 16,495,393 $ 807,382,492 234,460,497 134,430,546 104,657,106 92,491,126 79,472,947 67,314,489 39,427,263 61,851,186 40,294,664 43,673,883 16,520,172 46.89% 3.61% 13.62 9.33 7.81 8.23 6.08 3.37 5.37 -1.36 4.62 0.49 3.91 -0.15 2.29 0.32 3.59 2.97 2.34 2.78 2.54 74.42 0.96 0.15 $1,639,515,908 $1,721,976,371 100.00% (1) For FY 2007, reflects undistributed merit and cost -of --living salary increases for City employees. For FY 2008, reflects two years of undistributed merit and cost -of -living salary increases due to the biennial budget. Source: City Department of Finance. 60 General Government Revenues In Fiscal Year 2007, tax revenues accounted for 54.7 percent of general governmental revenue, State assistance 31.1 percent, federal sources 7.6 percent, and other sources 6.6 percent. Source The following table shows the City's Fiscal Year 2006-2007 actual revenues by source. General Governmental Revenues Fiscal Year 2006-2007 Revenues by Source(I) FY 2006 FY 2007 Increase (Decrease) from 2006 Amount Percent Amount Percent Amount Percent (millions) of Total (millions) of Total (millions) Change Local Sources: General Property Tax $ 526.9 37.5% $ 586.3 38.2% $59.4 46.2% Other Local Taxes 249.9 17.8 252.5 16.5 2.6 2.0 Permits, Privilege Fees, and 5.1 0.4 5.4 0.4 0.3 0.2 Regulatory Licenses Fines and Forfeitures 5.8 0.4 5.7 0.4 -0.1 -0.1 From Use of Money and 20.6 1.5 23.6 1.5 3.0 2.3 Property Charges for Services 45.3 3.2 53.6 3.5 8.3 6.4 Miscellaneous 10.4 0.7 12.3 0.8 1.9 1.5 From Other Local 1.0 0.1 0.5 0.0 -0.5 -0.4 Governments Total Local 865.0 61.6 939.9 61.3 74.9 58.2 From Commonwealth 429.8 30.6 477.0 31.1 47.2 36.7 From Federal Government 109.7 7.8 116.3 7.6 6.6 5.1 Total Revenues $1,404.5 100.0% $1,533,2 100 0% 5128.7 100.0% (1) Includes General, Special Revenues and Debt Service Funds. Source: City Department of Finance. General Fund In accordance with the general practice of governmental units, the City records its transactions under various funds. The largest, the General Fund, is that from which all general costs of City government are paid and to which taxes and other revenues, not specifically directed by law or administrative action to be deposited in special revenue funds, are recorded. Examples of special revenue funds are the School Operating Fund, the School Grants Fund, and the Grants Consolidated Fund. The General Fund is comprised of revenue derived from ad valorem taxes, other local taxes, licenses, fees, permits, certain revenue from the federal and state governments, interest earned on invested cash balances, and other revenues. General Fund disbursements include the costs of general City government, transfers to the School Operating Fund for local share of school costs, and transfers to the Debt Service Funds to pay principal and interest on the City's general obligation bonds for other than water and sewer purposes. 61 Operating Data Ad valorem property taxes contributed 58.7 percent of the City's General Fund revenues in Fiscal Year 2006. The City levies an ad valorem tax on the assessed value of real and personal property located within the City. Other local taxes contributed 25.3 percent of the City's General Fund revenues in Fiscal Year 2006. These include: (1) a one percent local sales tax (collected by the state and remitted to the City); (2) a tax on consumer utility bills of 20 percent each for gas, electric, water, and telephone on bills up to $15 per month for residential classes and 15 percent on the first $625 per month and 5 percent on the amount between $625 and $2,000 for industrial and commercial classes; (3) a cigarette tax of 50 cents per pack; (4) property transfer recordation taxes; (5) an automobile license fee; (6) various business, professional and occupational taxes; (7) a eight percent hotel room tax; (8) a restaurant meal tax of five and one-half percent; (9) an amusement tax of 10 percent on gross admissions for certain events; and (10) a flat rate of $1.00 added to hotel room charges to fund the Tourism Advertising Program or improvements at Sandbridge. The following table shows the City's principal tax revenues by source for each of the last ten fiscal years. Growth in real property taxes and total tax revenues have averaged 7.2% and 6.5%, respectively, annually over the past ten years. PRINCIPAL TAX REVENUES BY SOURCE FISCAL YEARS 1998 THROUGH 2007 Real Personal General Restaurant Total Fiscal Property Property Sales Utility Meal Other Assessed Year Taxes Taxes Tax Tax Tax Taxes Value 1998 $239,138,118 $75,579,525 $35,049,804 $29,334,345 $22,046,548 $58,680,182 $459,828,522 1999 249,878,165 76,016,201 37,004,115 30,594,776 23,157,204 61,927,958 478,578,419 2000 263,916,207 90,545,837 38,212,293 32,094,368 24,436,808 64,175,064 513,380,577 2001 276,515,023 90,791,185 39,712,323 34,080,325 25,320,531 68,188,931 534,608,318 2002 293,591,325 96,878,086 40,619,190 41,755,840 31,887,442 73,883,628 578,615,511 2003 319,261,524 97,182,499 41,782,279 43,407,182 34,377,007 79,458,536 615,469,027 2004 347,360,112 106,726,610 46,328,049 45,778,363 38,144,787 92,406,133 676,744,054 2005 382,632,555 114,024,492 49,315,425 47,105,890 41,565,553 98,135,551 732,779,466 2006 397,431,699 129,482,648 51,391,606 47,778,078 45,025,727 105,702,298 776,812,056 2007 462,221,198 124,098,407 53,962,203 46,357,954 46,743,465 105,393,161 838,776,388 (1) Includes penalty & interest ($10 minimum) on delinquent collections. Source: City Department of Finance. An annual ad valorem tax is levied by the City on the assessed value of real property subject to taxation within the City as of July 1. The City assesses real property at 100 percent of its fair market value (with the exception of public service properties which are assessed by the State Corporation Commission). Real property taxes are due on December 5 and June 5 of the fiscal year in which they are levied. A penalty of ten percent of the tax owed or $10, whichever is greater, along with interest of 8.0 percent for the first year, is assessed on delinquent taxes. Subsequent year's interest penalty rates are set by the City Council and are currently 7.0 percent. A portion of tangible personal property located within the City is also assessed an annual ad valorem tax. The assessed value of personal property is 100 percent of appraised value. Personal property taxes are due June 5, and delinquent payments are subject to the same penalties as described above for real property. 62 Fiscal Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 The following table sets forth the assessed value of all taxable property in the City for the last ten fiscal years. Tax-exempt properties owned by federal and state governments, churches, and schools, among others, aggregating approximately $4,961,084,810 for Fiscal Year 2007, are not included in the table. The assessed value of real property in the City at June 30, 2007, was $50,455,204,051 (includes public service real property). Real Property Assessed Value (1) $19,068,899,073 19,880,386,330 20,997,405,999 22,085,451,417 23,365,285,988 25,949,245,358 27,513,988,726 31,281,844,464 38,379,012,758 46,122,142,394 HISTORICAL ASSESSED VALUE FISCAL YEARS 1998 THROUGH 2007 Public Percentage Personal Percentage Service Percentage Percentage Change Property Change Property Change Total Change From Assessed From Assessed Froin Assessed From Prior Year Value Prior Year Value (21 Prior Year Value Prior Year 4.59% $1,975,719,516 6.86% $630,802,210 1.12% $21,675,420,799 4.69% 4.26% 2,162,086,075 9.43% 656,859,261 4.13% 22,699,331,666 4.72% 5.62% 2,723,557,700 25.97% 677,545,782 3.15% 24,398,509,481 7.49% 5.18% 2,847,992,931 4.57% 705,956,994 4.19% 25,639,401,342 5.09% 5.79% 3,049,294,683 7.07% 731,786,118 3.66% 27,146,366,789 5.88% 11.06% 3,188,056,285 4.55% 753,259,714 2.93% 29,890,561,357 10.11% 6.03% 3,478,701,901 9.12% 743,170,991 -1.34% 31,735,861,618 6.17% 13.69% 3,606,778,780 3.68% 624,562,746 -15.96% 35,513,185,990 11.90% 22.69% 3,710,964,218 2.89% 530,465,288 -15.07% 42,620,442,264 20.01% 20.18% 3,787,921,076 2.07% 545,140,581 2.77% 50,455,204,051 18.38% (1) Real property is assessed at 100 percent of fair market value. (2) Includes both real estate and personal property assessment. All public service property is taxed at the real estate tax rate except for vehicles. Note: For FY 2008, the Real Estate Assessor has recorded the FY 2008 Land Book as of July 1, 2007, at $54,931,862,351. This is a projected increase of 19.3% over the actual FY 2007 assessed value. Source: City Department of Finance. The City is required to levy taxes on the assessed value of real and personal property without limit as to the rate or amount to the extent necessary to pay principal of and interest on its general obligation bonds. The General Assembly is currently considering a bill that would authorize a homestead exemption in Virginia. As currently drafted, the proposed homestead exemption act would authorize localities to exempt up to 20% of a home's value from real estate taxes. Because it would require a change to the state constitution, if the General Assembly adopts and the Governor signs the bill, the matter then would be presented to the voters of the Commonwealth for approval. If the voters approve the change, localities will have the ability to provide homestead exemptions as early as July of 2009. It is unclear at this point whether the General Assembly will pass any such legislation, whether the voters of the Commonwealth will authorize the constitutional amendment, and what impact such an amendment would have on the City. The following table sets forth the City's tax rates and tax levies on real property for Fiscal Years 1998 through 2008. 63 Fiscal Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 (1) PROPERTY TAX RATES AND CHANGE IN TAX LEVY FISCAL YEARS 1998 THROUGH 2008 Tax Rate on Real Property (1) $1.220 1.220 1.220 1.220 1.220 1.220 1.220 1.196 1.024 0.990 0.890 Tax rate per $100 of assessed value. Source: City Department of Finance. Real Property Tax Levy $236,751,484 246,389,536 264,436,560 280,963,485 305,058,532 327,953,650 341,740,132 378,178,905 393,544,291 461,816,439 495,556,140 Percentage Annual Change in Tax Levy 4.36% 4.07% 7.32% 6.25% 8.58% 7.51% 4.20% 10.66% 4.06% 17.35% 7.30% The following table sets forth information concerning the City's real property tax collection rate for each of its ten most recent fiscal years. REAL PROPERTY TAX COLLECTION RATE FISCAL YEARS 1998 THROUGH 2007 Total (Net) Current Current Taxes Percentage Delinquent Year Receivable Collected Collected Collections 1998 $236,751,484 $232,875,842 98.4% $4,245,849 1999 246,389,536 241,376,374 98.0 2,174,533 2000 264,436,560 259,883,741 98.3 6,516,069 2001 280,963,485 275,592,151 98.1 4,857,709 2002 305,058,432 299,331,985 98.1 6,806,446 2003 327,953,650 321,069,574 97.9 7,067,764 2004 341,740,132 341,071,848 99.8 9,568,857 2005 378,178,905 376,837,511 99.6 10,272,681 2006 412,206,130 405,093,036 98.3 12,820,511 2007 461,816,439 457,871,619 99.1 11,979,311 (1) Includes a 10% penalty ($10 minimum) on delinquent collections. Source: City Department of Finance. 64 Total Collections (11 $237,121,691 243,550,907 266,399,810 280,449,860 306,138,431 328,137,338 350,640,705 387,110,192 417,913,547 469,850,930 Total Collections Current Levy 100.2% 98.8 100.7 99.8 100.4 100.1 102.6 102.4 101.4 101.7 TWENTY-FIVE PRINCIPAL TAXPAYERS FISCAL YEAR ENDED JUNE 30, 2007 Taxpayer Lynnhaven Mall LLC Virginia Electric & Power Company Armada-Hoffler LLC Ramon W. Breeden, Jr. E. C. & A. F. Ruffin & B. L. Thompson Pembroke Square Associates Atlantic Shores Cooperative, etc. Verizon Virginia, Inc. F. Wayne McLeskey, Jr. Tidewater Oxford Ltd., Partnership Thomas J. Jr. & Joan N. Lyons Sandler Development at Towne, etc Kemp River Corner Associates Lake Gem II, LLC Westminister-Canterbury of Hampton Roads Christian Broadcasting Network, Inc. Gordon Potter, D. Potter & J. Potter Watergate Treehouse Associates, LP Marina Shores Associates One Ltd., Partnership 2700 International Parkway Corporation Windsor Lake Apartments, LLC Occidental Development Ltd. Virginia Natural Gas Wal Mart Real Estate Business Trust CLPF Town Square LP Total Note: Business Shopping Mall Utility Office/Retail/Vacant Land Apartments/Shopping Center Real Estate Shopping Mall Real Estate Utility Real Estate Real Estate Hotels Condominiums/Vacant Land Shopping Center Shopping Center/Fast-Food Real Estate Broadcasting Shopping Center Apartments Real Estate Shopping Center Real Estate Apartments Utility Retail Stores Apartments Includes certain personal property taxed at real property rates as provided in the Cod Source: City Assessor and Commissioner of the Revenue. 65 Real Property Assessed Value $303,052,414 254,441,676 232,069,617 213,319,441 198,279,618 177,861,445 138,355,440 136,466,710 127,301,797 126,559,200 124,720,183 123,743,711 118,822,809 110,826,587 98,930,833 97,074,546 83,707,791 79,782,601 73,814,326 70,497,747 63,457,104 57,876,900 49,997,807 43,630,036 43,508,700 $3,148,099,039 e of Virginia. General Fund Operations The following table compares City General Fund revenues, expenditures, and changes in Fund Balance for Fiscal Years 2003 through 2007. 2003 2004 2005 2006 2007 REVENUES: General Property Taxes $411,578,936 $447,173,507 $486,618,030 $513,727,723 $569,218,769 Other Local Taxes 192,979,404 216,264,857 229,207,846 242,379,819 245,092,246 Permits, Privilege Fees and 4,251,659 5,226,392 5,050,051 5,834,259 5,400,602 Regulatory Licenses Fines and Forfeitures 3,993,054 4,705,366 5,108,116 5,126,218 5,231,164 From Use of Money and Property 2,799,279 3,067,666 5,220,353 11,557,859 15,392,536 Charges for Services 6,017,372 7,053,878 9,528,158 10,744,770 14,557,284 Miscellaneous 5,344,161 4,924,829 5,986,477 6,055,748 7,689,190 From Other Local Governments 119,132 118,166 128,291 412,252 482,343 From Commonwealth 53,660,705 54,448,903 73,421,413 79,398,545 84,662,663 From Federal Government 18,176,252 18.554.945 22,848,309 23.370.611 22.470,454 Total Revenues $698,919,954 $761,538,509 $843,117,044 5898 607,804 $970.197,251 EXPENDITURES Operating: Legislative $ 1,002,617 $ 969,139 $ 1,071,326 $ 1,139,038 $ 1,200,362 Executive 2,085,428 2,080,615 2,348,873 2,326,096 3,577,193 Law 3,039,608 3,081,811 3,250,441 3,668,542 3,561,072 Finance 15,260,977 15,301,485 16,055,188 16,604,300 16,312,033 Human Resources 5,296,544 5,345,747 6,181,109 7,188,192 7,821,314 Judicial 10,345,616 11,265,837 10,468,272 11,861,215 13,873,307 Health 2,577,238 2,822,446 2,849,083 2,933,999 3,116,338 Human Services 31,071,036 30,366,714 72,032,421 76,353,098 80,665,878 Police 61,863,493 66,657,302 69,990,282 72,883,231 79,195,791 Public Works 56,492,756 58,303,898 73,835,573 76,175,624 79,729,849 Parks and Recreation 12,050,143 12,221,200 12,901,812 Library 12,293,223 13,635,946 15,952,096 16,694,255 15,554,135 Planning 8,331,725 8,886,510 9,710,292 9,843,203 9,770,085 Agriculture 957,944 895,995 919,342 883,104 916,359 Economic Development 2,070,931 1,798,044 1,840,570 1,900,804 2,530,958 Convention and Visitor 5,745,431 6,222,175 6,898,156 9,086,052 8,532,360 Development General Services 25,325,418 27,362,418 - Boards and Commissions 8,133,689 9,147,880 10,475,249 16,511,003 19,924,128 Fire 29,966,861 32,042,734 34,732,240 36,086,307 39,220,757 Museums 547,141 585,320 667,785 837,528 1,609,478 Management Services 1,401,867 1,412,190 3,059,944 3,363,527 3,493,535 Communications and Information 2,306,533 2,485,999 2,356,182 2,532,903 18,265,979 Technology Emergency Medical Services 2,829,632 3,130,963 5,458,223 6,406,814 6,615,642 Housing and Neighborhood Preservation 1,486,132 1.579,788 1.566.915 1,656,445 1.424,249 Total Expenditures $290,431,840 $305.380,956 8363,769,705 8389,156.480 $429,812,614 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES $408,488,144 $456,157,553 8479,347,339 8509.451,324 8540,384,637 Source: City Department of Finance 66 GENERAL FUND COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE FISCAL YEAR ENDED JUNE 30 OTHER FINANCING SOURCES (USES): Proceeds From Capital Leases Operating Transfers in Operating Transfers out Total Other Financing Sources (Uses) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING FUND BALANCE—JULY Residual Equity Transfers Non-exchange Transactions, GASB 33 Expendable Trust Funds, GASB 34 2003 2004 327,792 (410,885,356) $(410,557,564) $ (2,069.450) 5104,579,894 $ 618,407 (438.600,114) $(437,98L707) $18,175,846 2005 2006 $ 2,313,193 (466,270.400) $(463,957,207) $ 15.390,132 $102,510,444 $ 124,011,450 $ 9,996,873 (486,203,907) (476,207.034) $ 33,244.290 $139,401,582 2007 $ 9,531,367 (546,713,003) (537,181,636) $ 3,203,001 5173,136,835 ADJUSTED FUND BALANCE— 5104,579,894 $102,510,444 $ 124,011,450 5139,401,582 $173,136,835 JULY 1 FUND BALANCE—JUNE 30 $102,510,444 1120.686.290 $ 139,401,582 5172,645,872 5176,339,836 Note: The beginning General Fund balance has been restated as a result of the Mental Health and Mental Retardation Fund being combined with the General Fund, effective July 1, 2004. Note: The entire General Fund balance is not available for appropriation because of outstanding interfund and interagency loans, prepaid items, encumbrances, and designations for school capital projects. An analysis of the General Fund balance is as follows: Fund Balance —June 30, 2007 Reserved For: Encumbrances Advances to Other Funds Loans Unreserved, Designated For, reported in: Encumbrances General Fund for School Capital Projects and Other General Fund for Future Programs General Fund for Capital Projects Net Balance Available for Appropriation - July 1, 2007 Source: City Department of Finance. 67 $176,339,836 5 6,466,689 6,525,570 14,690,129 19,867,675 25,393,638 72,943,701 $103,396,135 At the end of Fiscal Year 2007, the General Fund Balance was $176,339,836. This balance represents an increase of $3,693,964 from the previous year. The table below presents a comparison of the City's General Fund balance for Fiscal Years 2003 through 2007. General Fund Balance: Reserved for: Advance to Other Funds Loans Federal Arbitrage Rebate Liability Unreserved: Encumbrances Designated for School Capital Projects -Textbooks and other Designated for Capital Projects Designated for Future Programs Undesignated Totals Source: City Department of Finance 2003 2004 $ 290,000 $ 290,000 8,044,272 7,929,429 354,606 $ 3,697,762 14,817,264 2,386,742 9,884,460 63,035,338 $102,510,444 $ 3,280,063 20,026,602 8,243,900 7,916,811 72,999,485 $120,686,290 2005 2006 2007 $ 290,000 $ 290,000 $ - 6,762,123 6,325,475 6,466,689 $ 3,279,481 17,225,004 4,829,031 10,456,269 96,559,674 $139,401,582 $ 5,832,895 17,203,669 9,875,976 9,734,213 123,383,644 $172,645,872 $ 6,525,570 14,690,129 25,393,638 19,867,675 103,396,135 $176.339,836 The City has maintained a sizable General Fund balance in each of the past ten fiscal years as summarized in the tables below: GENERAL FUND BALANCE AS PERCENT OF GENERAL FUND REVENUES FISCAL YEARS 1998 THROUGH 2007 Fiscal Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: City Department of Finance Fund Balance June 30 $ 97,700,155 94,3 76,230 95,125,135 95,445,728 104,579,894 102,510,444 120,686,290 139,401,582 172,645,872 176,339,836 68 General Fund Balance As Percent of General Fund Revenues 18.62% 16.91 15.72 15.21 15.73 14.70 15.85 16.53 19.21 18.18 UNDESIGNATED GENERAL FUND BALANCE AS PERCENT OF OPERATING GENERAL FUND EXPENDITURES* FISCAL YEARS 1998 THROUGH 2007 Undesignated Undesignated General Fund Balance Fiscal Fund Balance As Percent of General Year June 30 Fund Expenditures 1998 $62,056,015 13.13% 1999 56,184,299 11.02 2000 54,803,920 10.27 2001 62,326,911 11.15 2002 59,459,248 10.09 2003 63,035,338 10.09 2004 72,999,485 11.01 2005 96,559,674 13.04 2006 123,383,644 15.74 2007 103,396,135 11.94 * Operating Expenditures are net of Capital Project and Dedicated Tax Transfers Source: City Department of Finance The Water and Sewer System The Department of Public Utilities operates the City owned Water Utility and the Sanitary Sewer Utility. The mission of the Department is "to provide public water, including water for fire protection, and public sanitary sewer service to the urban areas of Virginia Beach." The goals are "to provide quality public service at reasonable costs and to plan, build, operate and maintain its facilities to meet community needs, environmental responsibilities and regulatory requirements." The physical property of the City water system as of June 30, 2007, included approximately 1,459 miles of transmission and distribution mains, 7,819 fire hydrants, 12 water storage facilities, and nine pumping stations (including Lake Gaston). The City water system is fully metered, with tap sizes ranging from 3 to 12 inches. As of June 30, 2007, the water system had approximately 130,647 connections, representing a .4% increase over the number reported in 2006, and a customer base of approximately 431,135 people. The City Sanitary Sewer System includes collector lines, force mains and pump stations, which are used to collect and transport wastewater to the treatment facilities operated by the Hampton Roads Sanitation District ("HRSD"), the regional treatment agency. Virginia Beach citizens receiving sanitary sewer pay the City a fee for collection and transport of wastewater and HRSD a fee for treatment of the wastewater. The City's Sanitary Sewer System consists of 401 sewer pump stations and over 1,572 miles of pipeline ranging in size from 4 inches to 36 inches in diameter. As of June 30, 2007, the number of City sewer connections was 128,220, representing a 0.5% increase over the number reported in 2006. The HRSD, established in 1940, provides wastewater treatment services for 17 cities and counties in southeastern Virginia. The HRSD operates nine major treatment facilities in Hampton Roads and four small rural treatment facilities on the Middle Peninsula, with a total treatment capacity of 231 million gallons per day ("MGD"). Two HRSD plants are located in the City. The Chesapeake -Elizabeth Plant, in operation since 1968, has an operating capacity of 24 MGD, with average annual flow estimated at 18 MGD. The 69 Atlantic Plant has an operating capacity of 36 MGD and average annual flow estimated at 30 MGD. The HRSD has a service population of about 1.6 million. HRSD reports that it is meeting all its discharge permit requirements established by the U.S. Environmental Protection Agency and the Virginia Department of Environmental Quality. The Water Utility and Sanitary Sewer Systems are operated and maintained in good working order including repairing, rebuilding, or replacing of equipment and structures when required. In addition, the City has developed an ongoing training program to develop a staff of personnel in sufficient numbers to promote safe and technically competent operation of the water and sewer utility. The estimated depreciated value of the water and sewage property, plant and equipment was $795,205,672 as of June 30, 2007, including land and air rights. Millions of Gallons of Water Storage Miles of Water Lines Miles of Sewer Lines Number of Water Pump Stations Number of Sewer Pump Stations Number of Water Connections Number of Sewer Connections Total Value of Utility Plant in Service (1) Includes Lake Gaston (2) Excludes depreciation 2003 2004 2005 2006 2007 30.25 1,427 1,526 10 389 127,534 125,436 $669,706,287 27.75 1,432 1,535 9 391 128,718 126,302 $695,138,993 27.75 1,443 1,546 9 393 129,376 126,908 $734,563,619 27.75 1,456 1,569 9 400 130,005 127,578 $753,216,513 27.75 1,459 1,572 9 401 130,647 128,220 $773,215,156 Source: City Department of Public Utilities. The City's water and sewer system is operated on a self-sustaining basis, with rates and charges adjusted when necessary to assure a stream of revenues adequate to cover the costs of operations and maintenance of the system and debt service on all water and sewer system bonds. Revenues from water and sewer charges are reserved solely for the payment of water and sewer fund obligations and have not been used for any non -water or non -sewer related purpose. Water and sewer charges are maintained at a level sufficient to pay all water and sewer operating expenses and debt service. On July 1, 2005, the first of a five-year series of increases in the water and sewer charges took effect. Council adopted these series of increases on May 2005 in response to recommendations made in a January 2005 Cost of Service Study prepared by a water and sewer utility consultant. Historical water commodity rates and sanitary sewer charges for a single family residence and their effective dates are outlined below: 70 Effective Date July 1, 1983 August 1, 1987 October 1, 1987 July 1,1988 July 1, 1989 July 1, 1990 October 1, 1990 July 1, 1991 July 1, 1992 July 1, 1993 July 1, 1994 July 1, 1999 July 1, 2001 July 1, 2002 July 1, 2003 July 1, 2005 July 1, 2006 July 1, 2007 Typical Water and Sewer Bills Water Commodity Rate (Der 1,000 gallons) $1.62 1.81 1.99 2.18 2.51 2.69 2.77 2.96 3.11 3.38 3.65 3.55 3.55 3.55 3.55 3.65 3.70 3.80 Sanitary Sewer Service Charge Single Family Residence (Der month) $ 9.46 9.46 9.46 9.46 9.46 9.46 9.65 10.58 11.38 11.38 11.38 11.38 12.29 13.27 14.34 15.92 16.88 17.72 Under the City's current rate structure, a single family residence consuming 6,000 gallons for 30 days would receive a bill as follows: Water Usage; 6 x $3.70 per 1,000 gallons Minimum Service Availability Charge Total Water Sanitary Sewer Service Total Water and Sanitary Sewer Monthly Billing Current Rates $22.80 4.10 526.90 17.72 $44.62 In addition, the HRSD would charge the same residence $15.88 for wastewater treatment of 6,000 gallons during the same time period. The last HRSD rate increase was in Fiscal Year 2008. Operating Results -Water and Sewer System The City Council fixes water and sanitary sewer rates and charges such that estimated income generated by such rates and charges will cover operating expenses and debt service relating to the water and sewer system. Funds and accounts relating to the Department of Public Utilities are kept separate from other funds and accounts of the City. The Department of Public Utilities has financed the construction and acquisition of water and sewer facilities through federal and Commonwealth grant proceeds, pay-as-you-go funding and the issuance of City general obligation water and sewer bonds, double barrel water and sewer bonds (secured both by water and sewer revenues and the City's general obligation pledge) and water and sewer revenue bonds. 71 The Department is required by the City's bond resolutions, among other provisions, to establish rates sufficient to cover operations and maintenance and debt service on the general obligation water and sewer bonds and the water and sewer revenue bonds. Certain general obligation bonds issued prior to 1977 for water and sewer purposes are not subject to such covenant. It is, however, City Council policy to pay debt service on those general obligation bonds issued for the water and sewer purposes from revenues of the Water and Sewer Enterprise Fund, and to set water and sewer rates accordingly. In 2002, City Council approved a set of debt management policies for the water and sewer enterprise fund to assist in making short and long-term decisions regarding the water and sewer system. The policies incorporate three essential areas of debt management: liquidity, debt service coverage and pay-as-you-go funding. For liquidity, the water and sewer enterprise fund will pursue the goal of retaining working capital equal to 80% to 100% of one year's operating expenses. For debt service coverage, the goal is 1.5x coverage of water and sewer revenue bonds and 1.2x coverage of all debt service for the water and sewer enterprise fund. For pay-as-you-go funding, the goal of the water and sewer enterprise fund is to contribute approximately 25% of the annual capital program from non-borrowed funds. The water and sewer enterprise fund is in compliance with each of these debt management policies. The table on the following page presents the operating results of the Water and Sewer Enterprise Fund, exclusive of depreciation, as used in computing coverage of debt service, for Fiscal Year 2003 through Fiscal Year 2007. Coverage of debt service on the water and sewer revenue bonds and the general obligation bonds issued for water and sewer purposes is shown separately from the coverage of debt service on all bonds issued for water and sewer purposes. 72 SYSTEM OPERATING REVENUES, EXPENSES AND COVERAGE (in thousands of dollars) 2003 2004 2005 2006 2007 Operating Revenues Service Charges $32,703 $35,558 $35,341 $40,120 $43,140 Water Usage 40,456 41,420 41,169 43,176 44,071 Miscellaneous 1,095 711 680 688 814 Total Operating Revenues $74,254 $77,689 $77,190 $83.984 $88,025 Operating Expenses Water Treatment (Services) $26,080 $23,171 $23,229 $24,976 $25,194 Water Distribution 6,835 6,726 7,523 7,452 7,683 Sewer Collection 9,313 9,455 10,783 10,493 11,283 Administration & 11,148 11,792 12,762 13,325 14,698 Engineering Customer Services 7,376 8,710 9.198 8,794 8.864 Total Operating Expenses 860.752 $59,854 863.,495 $65,040 $67,722 Net Operating Income $13,502 $17,835 $13,695 $18.944 $20.303 Non -Operating Income Interest $1,747 $1,290 $1,809 $3,427 $5,290 Water Resource Recovery Fee 4,552 4,831 3,481 3,899 3,465 Sewer Connection Fees 1,913 2,067 1,644 1,657 1,762 Sale of Salvage(') 16 26 - - Norfolk WaterTrue-Up 4.671 (1,595) 797 Total Non -Operating Income $8,228 $12,885 $6,934 $7,388 $11,314 Income Available For Debt Service $21,730 830,720 $20,629 $26,332 $31,617 Annual Debt Service Water and Sewer Revenue Bonds $10,123 $10,020 $10,008 $8,006 $11,329 Total Water and Sewer Debt Service 13,690 13,702 10,991 $8,493 $11,329 Coverage of Debt Service on Water and Sewer Revenue Bonds 2.15x 3.07x 2.06x 3.29x 2.79x Coverage of Debt Service on All Debt Supported by Water and Sewer Revenues 1.59x 2.24x 1.88x 3.10x 2.79x (1) Excludes sale of salvage starting in 2005. Source: Department of Finance and Department of Public Utilities. The City's water and sewer activities are operated on an enterprise fund accounting basis, Fiscal Year 2007 operating revenues were $88,024,834. This represents a 4.8% increase over Fiscal Year 2006. The Water and Sewer Enterprise Fund had an increase in Net Assets of $9,268,245 at the end of Fiscal Year 2007. 73 Water Service Contracts Until the Lake Gaston Pipeline Project was completed in late 1997, the City had no independent water supply and obtained water from the City of Norfolk under a Water Sales Contract and a Water Service Contract. The Lake Gaston Pipeline Project was placed into formal operations on January 1, 1998. On that date, the City terminated the Water Sales Contract with Norfolk except for certain provisions that survived until June 30, 1999. The Water Services Contract, which obligates Norfolk to receive, treat, and deliver Lake Gaston water to the City, runs through the year 2030. In essence, the City has contracted for water system facilities and services related to the storage, transmission and treatment of Lake Gaston water. The facilities are owned by Norfolk, but dedicated to serving the City through the life of the Water Service Contract. Those facilities include: 1. Raw water storage (lakes); 2. Raw water pumping stations and transmission lines; 3. Water treatment plant capacity; and 4. Treated water storage, pumping and transmission. In accordance with the Water Services Contract, Norfolk develops projected rates applicable to the City for treated water service on a biennial basis based upon a cost of service study prepared by an independent consulting firm. Under the utility basis "cost of service" methodology, which follows traditional utility ratemaking standards, the City pays its allocable share of operations and maintenance expense, cost of the facilities dedicated to service the City, and services provided by Norfolk, including a reasonable rate of return on facilities dedicated to serving the City. For Fiscal Year 2008, the average effective projected rate to the City for delivery of bulk treated water was $1.89 per 1,000 gallons. On July 1, 2008, that effective rate will change to $1.91 per 1,000 gallons. At the end of the second fiscal year in each biennial period, Norfolk's independent consultant completes and submits to the City a schedule of rates and annual billings applicable to the previous two fiscal years reflecting an allocation of cost of service based on actual costs incurred by the Norfolk water system. This allocation of actual costs resulted in a payable amount to Norfolk of approximately $1.2 million to be paid during Fiscal Year 2009. Water and Sewer Capital Improvement Program The Department of Public Utilities annually prepares the portion of the City's Capital Improvement Plan concerning the improvement and extension of the Water and Sewer System. According to the City's Fiscal Year 2008-2012 CIP, water and sewer utility projects in the amount of $236,334,133 account for 23 percent of overall City capital spending anticipated during the period of Fiscal Years 2008 to 2012. Future funding for the water and sewer program totals $142,759,465, of which $103,761,465 is to be financed with water and sewer revenue bonds. The water and sewer portion of the CIP includes 127 projects. The following table presents the financing sources expected to meet the six-year capital plan for water and sewer. 74 WATER AND SEWER SYSTEM CAPITAL IMPROVEMENT PROGRAM Fiscal Year 2008 To Fiscal Year 2012 Financing Plan Total Estimated Previously Utility Costs Authorized Water $ 59,785,086 $27,739,817 Sewer 176.549,047 65.834,851 Total $236,314,133 $93,574,668 Balance To Be Funded $ 32,045,269 110.714.196 $142,759,465 Source: Adopted Capital Improvement Program for Fiscal Years 2008-2012. Insurance Sources of Balance To Be Funded Water and Water and Sewer Revenue Sewer Fund Bonds (Pay -as -You -Go) $ 23,000,000 80,761,465 $103,761,465 $10,550,269 28,447,731 $38,998,000 The City utilizes a combination of commercial insurance and self-insurance to protect its assets, including employees, money and securities, and buildings and equipment. City buildings and their contents are covered by an all risk property insurance program which is written with a $100,000 per occurrence deductible. Other types of property insurance are written with deductibles ranging from $5,000 to $50,000 and include coverage for such items as computer equipment, heavy contractor's type equipment, fine arts and valuable papers. All City employees are bonded for $1,000,000. The City is primarily self-insured for the first $2,000,000 of any automobile liability, commercial general liability, public officials' liability and police professional liability claims. The City has $10,000,000 of commercial insurance coverage above this self-insured retention on these lines of risks. The City is also primarily self-insured for workers' compensation and carries commercial insurance in excess of any claims totaling $500,000 in any single occurrence. The City's Risk Management Fund had a cash balance of $15,832,167 as of July 1, 2007, which amount is expected to be sufficient for expected draw -downs during the course of the current fiscal year. An actuarial study conducted by the firm of Marsh & McLennan Companies determined that the fund balance of this fund as of July 1, 2007 should be $17,812,729, which represents the discounted liability for current claims against the City. Commitments and Contingencies The City participates in a number of federal and state grants, entitlements, and shared revenues programs. These programs are subject to program compliance audits by the applicable federal or state agency or its representatives. Furthermore, the U.S. Congress passed legislation called the "Single Audit Act Amendment of 1996" which required most governmental recipients of federal assistance to have an annual independent organization -wide financial and compliance audit. The results thereof are incorporated in the audited financial statements for the City for the Fiscal Year ended June 30, 2007. The amounts, if any, of expenditures which may be disallowed by these audits cannot be determined at this time although the City expects such amounts, if any, to be immaterial. 75 Retirement and Pension Plans The City has elected to participate in the Virginia Retirement System ("VRS"), and substantially all of the full-time salaried general government and school employees are covered by a retirement plan, group term life insurance, and disability and death benefits. Prior to January 1, 1978, employees contributed five percent of their annual salary. There is presently no employee contribution; the City pays the entire cost. If there are insufficient funds to meet the vested benefits of the employees, the City is liable. The VRS maintains separate accounts for each participating locality based on contributions made by the locality and the benefits paid to former employees. The City's contributions are actuarially determined by the VRS every two years at rates that provide for both normal and accrued funding liability. The VRS basis calculation method is an entry age normal cost calculation with 30 year amortization of the unfunded accrued liability. The entry age normal cost method is designed to produce normal costs over the working lifetime of the participating employees and to permit the amortization of any unfunded liability over a period of years. The unfunded liability arises because normal costs based on the current benefit formula have not been paid throughout the working lifetime of current employees. The value of the unpaid normal costs, adjusted for actuarial gains and losses, constitutes the unfunded liability. The last actuarially computed liability was determined as of June 30, 2005, and included amounts for general government and school nonprofessional employees. Total liability as of June 30, 2006, both funded and unfunded, follows: General Government Employees School Nonprofessional Employees Total Actuarial Value of Assets $851,058,564 120,152,277 8971,210,841 Unfunded Actuarial (Overfunded) Accrued $223,008,182 12,309,609 $235,317,791 Actuarial Accrued $1,074,066,746 132,461,886 $1,206,528,632 The unfunded accrued liabilities of $12,309,609 (School Board) and $223,008,182 are being amortized over 30 years according to a schedule prescribed by the VRS. In Fiscal Year 2006-2007 the City's contribution rate as determined by VRS from its actuarial report was increased from 15.32% to 17.28%. The rate increase was based on an analysis and assumptions of member data, an increase in the number of employees retiring and losses due to the market turndown over the last three fiscal years. The City has always made the required contribution to VRS in accordance with the Code of Virginia. In 2004, the Government Accounting Standards Board adopted two statements, GASB Statements 43 and 45, that established uniform financial reporting and accounting standards for other post -employment benefits offered to retirees. These statements require the City to recognize in its government wide financial statements, a liability for post -employment benefits offered to its retirees who meet certain eligibility requirements. The City will be required to comply with these new these statements beginning with Fiscal Year 2008. In order to address the requirements of these statements, a joint committee was formed and comprised of members of the City and School Board. The goal of this committee is to ensure that the City and School Board are prepared to comply with these new requirements. 76 Beginning June 30, 2008, the City will be required to recognize its obligations to retirees for health insurance. Both the City and the School Board have worked to identify the calculations for Fiscal Year 2008 as follows: ($ Millions) Unfunded 4.0% Funded 7.5% City Schools Total City Schools Total Actuarial Accrued Liability $119.9 $100.1 $220.0 $84.7 $72.3 $157.0 Annual Required Contribution 12.3 10.9 23.2 10.3 9.2 19.5 Expected 2008 Costs 5.3 5.3 10.6 5.3 5.3 10.6 Cash Flow Increase 0.0 0.0 0.0 5.0 3.9 8.9 As noted in the table above, the City is projected to have an incremental annual cost of $5.0 million, and the School Board is projected to have an additional incremental annual cost of $3.9 million, for a total of $8.9 million annually. These amounts represent decreases from earlier estimates as a result of changes in health plan benefits that have reduced overall costs. The City and the School Board each established a reserve of $3.0 million and $4.5 million, respectively, as of June 30, 2007 in the fund balance to cover part of this additional incremental annual cost. In addition, the 2008 Operating Budget contains additional funding to meet the June 30, 2008 annual required contribution. Staff is working to develop a long-term funding policy recommendation to City Council to address this obligation. Employee Relations and Collective Bargaining There were 6,228 full-time City employees and approximately 10,635 School Board employees as of June 30, 2007. Some employees are members of unions or trade or professional associations. The City, however, does not, and cannot under Virginia law, bargain collectively with any of its employees. The Virginia General Assembly has rejected several recent legislative proposals to authorize public employees to engage in collective bargaining. Public employees of Virginia or of any county, city, or town in Virginia do not have a legal right to strike. Any such employee who engages in any organized strike or willfully refuses to perform his/her duties shall, according to Virginia law, be deemed to have terminated his/her employment. Re-employment of any such employee requires court approval. 77 SECTION SIX: MISCELLANEOUS Delivery The Bonds are offered for delivery when, as and if issued, subject to the approval of validity by Bond Counsel and to certain other conditions referred to herein. It is expected that the Bonds will be available for delivery at the expense of the City through the facilities of DTC on or about March 25, 2008. Official Statement This Official Statement has been approved and authorized by the City for use in connection with the sale of the Bonds. Its purpose is to supply information to prospective buyers of the Bonds. Financial and other information contained in this Official Statement has been prepared by the City from its records, except where other sources are noted. The information is not intended to indicate future or continuing trends in the financial or economic position of the City. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holder of the Bonds. All quotations from and summaries and explanations of laws contained in this Official Statement do not purport to be complete, and reference is made to said laws for full and complete statements of their provisions. Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are intended as such and not representations of fact. No representation is made that any of the estimates will be realized. The attached Appendices are an integral part of this Official Statement and must be read together with the balance of this Official Statement. The delivery of the Preliminary Official Statement has been duly authorized by the City Council. The City has deemed this Preliminary Official Statement fmal as of its date within the meaning of Rule 15c2-12, except for the omission of certain pricing and other information permitted to be omitted pursuant to Rule 15c2-12. 1692504v5 CITY OF VIRGINIA BEACH, VIRGINIA By: City Manager 78 APPENDIX A AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 APPENDIX B FORM OF BOND COUNSEL OPINION [PROPOSED FORM OF BOND COUNSEL OPINION] TROUTMAN SANDERS LLP ATTORNEYS A T L A W A LIMITED LIABILITY PARTNERSHIP TROUTMAN SANDERS BUILDING 1001 HAXALL POINT RICHMOND, VIRGINIA 23219 www.troutmansanders.com TELEPHONE: 804-897-1200 FACSIMILE: 804-697-1339 March 2008 City of Virginia Beach, Virginia 2401 Courthouse Drive Virginia Beach, Virginia 23456 City of Virginia Beach, Virginia $90,000,000 General Obligation Public Improvement Bonds Series 2008 We have acted as bond counsel to the City of Virginia Beach, Virginia (the "City") in connection with the issuance by the City of its $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the `Bonds"), dated March _ , 2008. We have examined the applicable law and certified copies of such proceedings and other papers, including Ordinances adopted by the City Council of the City of Virginia Beach, Virginia (the "City Council") on May 10, 2005, May 9, 2006 and May 15, 2007 (together, the "Ordinances"), and a Resolution adopted by the City Council on February 2008 (the "Bond Resolution"), as we have deemed necessary to render this opinion. We have also examined the form of the Bonds. The Bonds recite that they are authorized and issued pursuant to the Ordinances, the Bond Resolution, the City Charter (Chapter 147, Acts of Assembly of 1962, as amended) and the Public Finance Act of 1991 (Chapter 26, Title 15.2, Code of Virginia of 1950, as amended). The proceeds of the Bonds are being used to finance (1) various public, school, road, highway, coastal, economic and tourism, building and parks and recreation improvements in the City and (2) the costs of the issuance of the Bonds. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion that, under existing law: (1) The City is a political subdivision of the Commonwealth of Virginia (the "Commonwealth"), and has all necessary power and authority to enter into and perform its obligations under the Ordinances, the Bond Resolution and the Bonds. (2) The Bonds have been duly authorized and issued in accordance with the Constitution and statutes of the Commonwealth, including the City Charter and the Public Finance Act of 1991, and constitute valid and legally binding general obligations of the City, for the payment of which B-1 the City's full faith and credit have been irrevocably pledged. The City is authorized and required, unless other funds are lawfully available and appropriated for timely payment of the Bonds, to levy and collect annually on all locally taxable property in the City an ad valorem tax over and above all the taxes authorized or limited by law, sufficient to pay the principal of, redemption premium, if any, and interest on the Bonds when due. (3) All proceedings for the issuance of the Bonds have been held and adopted in due time, form and manner as required by the laws of the Commonwealth. (4) Interest on the Bonds (including any original issue discount properly allocable to an owner of a Bond) is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes). The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. (5) Interest on the Bonds is exempt from income taxation by the Commonwealth. The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting creditors' rights generally, heretofore or hereafter enacted, and by equitable principles, whether considered at law or in equity. Our services as bond counsel to the City have been limited to a review of the legal proceedings required for the authorization of the Bonds and to rendering the opinions set forth above. We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement dated March 13, 2008 relating to the Bonds. Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, Troutman Sanders LLP B-2 APPENDIX C FORM OF CONTINUING DISCLOSURE AGREEMENT FORM OF CONTINUING DISCLOSURE AGREEMENT This CONTINUING DISCLOSURE AGREEMENT dated as of March 2008 (the "Disclosure Agreement"), is executed and delivered by the City of Virginia Beach, Virginia (the "City"), in connection with the issuance by the City of its $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the `Bonds"). The City hereby covenants and agrees as follows: Section 1. Purpose. This Disclosure Agreement is being executed and delivered by the City for the benefit of the holders of the Bonds and in order to assist the purchasers of the Bonds in complying with the provisions of Section (b)(5)(i) of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission (the "SEC") by providing certain annual financial information and material event notices required by the Rule (collectively, "Continuing Disclosure"). Section 2. Annual Disclosure. (a) The City shall provide annually certain financial information and operating data in accordance with the provisions of Section (bX5Xi) of the Rule as follows: (i) audited financial statements of the City, prepared in accordance with generally accepted accounting principles; and (ii) the operating data with respect to the City of the type described in the subsection of Section Five of the City's Official Statement dated March _, 2008, entitled "Operating Data." If the fmancial statements filed pursuant to Section 2(a)(i) are not audited, the City shall file such statements as audited when available. (b) The City shall provide annually the financial information and operating data described in subsection (a) above (collectively, the "Annual Disclosure") within 180 days after the end of the City's fiscal year, commencing with the City's fiscal year ending June 30, 2008, to each nationally recognized municipal securities information repository ("NRMSIR") and to the appropriate state information depository, if any then exists ("SID"). (c) Any Annual Disclosure may be included by specific reference to other documents previously provided to each NRMSIR and to the SID or filed with the SEC; provided, that any final official statement incorporated by reference must be available from the Municipal Securities Rulemaking Board (the "MSRB"). (d) The City shall provide in a timely manner to each NRMSIR or the MSRB and to the SID notice specifying any failure of the City to provide the Annual Disclosure by the date specified. Section 3. Event Disclosure. The City shall provide in a timely manner to each NRMSIR or the MSRB and to the SID notice of the occurrence of any of the following events with respect to the Bonds, if material: (a) principal and interest payment delinquencies; (b) non-payment related defaults; (c) unscheduled draws on debt service reserves reflecting financial difficulties; (d) unscheduled draws on any credit enhancement reflecting fmancial difficulties; (e) substitution of credit or liquidity providers, or their failure to perform; C-1 (f) (g) (h) (i) (j) (k) adverse tax opinions or events affecting the tax-exempt status of the Bonds; modifications to rights of holders of the Bonds; bond calls; defeasance of all or any portion of the Bonds; release, substitution, or sale of property securing repayment of the Bonds; and rating changes. Section 4. Termination. The obligations of the City will terminate upon the redemption, defeasance (within the meaning of the Rule) or payment in full of all the Bonds. Section 5. Amendment. The City may modify its obligations hereunder without the consent of Bondholders, provided that this Disclosure Agreement as so modified complies with the Rule as it exists at the time of modification. The City shall within a reasonable time thereafter send to each NRMSIR and the SID a description of such modification(s). Section 6. Defaults. (a) If the City fails to comply with any covenant or obligation regarding Continuing Disclosure specified in this Disclosure Agreement, any holder (within the meaning of the Rule) of Bonds then outstanding may, by notice to the City, proceed to protect and enforce its rights and the rights of the holders by an action for specific performance of the City's covenant to provide the Continuing Disclosure. (b) Notwithstanding anything herein to the contrary, any failure of the City to comply with any obligation regarding Continuing Disclosure specified in this Disclosure Agreement (i) shall not be deemed to constitute an event of default under the Bonds or the resolution providing for the issuance of the Bonds and (ii) shall not give rise to any right or remedy other than that described in Section 6(a) above. Section 7. Alternative Filing Method. Any filing under this Disclosure Agreement may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC") as provided at www.disclosureusa.org, unless the SEC withdraws the interpretive advice in its letter to the MAC dated September 7, 2004. Section 8. Additional Disclosure. The City may from time to time disclose certain information and data in addition to the Continuing Disclosure. Notwithstanding anything herein to the contrary, the City shall not incur any obligation to continue to provide, or to update, such additional information or data. Section 9. Counterparts. This Disclosure Agreement may be executed in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10. Governing Law. This Disclosure Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Virginia. CITY OF VIRGINIA BEACH, VIRGINIA By City Manager, City of Virginia Beach, Virginia C-2 APPENDIX D INFORMATION REGARDING THE DEPOSITORY TRUST COMPANY AND ITS BOOK -ENTRY SYSTEM INFORMATION REGARDING THE DEPOSITORY TRUST COMPANY AND ITS BOOK -ENTRY SYSTEM The description which follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Bonds, payments of principal of, premium, if any, and interest on the Bonds to The Depository Trust Company, New York, New York ("DTC"), its nominee, Participants or Beneficial Owners (each as hereinafter defined), confirmation and transfer of beneficial ownership interests in the Bonds and other bond -related transactions by and between DTC, Participants and Beneficial Owners is based solely on information furnished by DTC. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully -registered securities registered in the name of Cede & Co., DTC's partnership nominee, or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation ("NSCC," "FICC" and "EMCC," also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (the `Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. D-1 To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal of, premium, if any, and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City on the payable date in accordance with the Direct Participants' respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Direct or Indirect Participant and not of DTC (nor its nominee) or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates will be printed and delivered. The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. D-2 THE CITY HAS NO RESPONSIBILITY OR OBLIGATION TO THE DIRECT OR INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (A) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT OR INDIRECT PARTICIPANT; (B) THE PAYMENT BY ANY DIRECT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS; (C) THE DELIVERY OR TIMELINESS OF DELIVERY BY ANY DIRECT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO BONDHOLDERS; OR (D) ANY OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE & CO., AS BONDHOLDER, INCLUDING THE EFFECTIVENESS OF ANY ACTION TAKEN PURSUANT TO AN OMNIBUS PROXY. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references in this Official Statement to the Owners of the Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners, and Cede & Co. will be treated as the only holder of Bonds for all purposes under the Resolution. The City may enter into amendments to the agreement with DTC or successor agreements with a successor securities depository relating to the book -entry system to be maintained with respect to the Bonds without the consent of Beneficial Owners or Bondholders. D-3 APPENDIX E NOTICE OF SALE AND OFFICIAL BID FORM OFFICIAL NOTICE OF SALE CITY OF VIRGINIA BEACH, VIRGINIA $90,000,000 GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS, SERIES 2008 Electronic bids only will be received by the City of Virginia Beach, Virginia (the "City"), in accordance with this Official Notice of Sale until 11:30 a.m., Local Time, on Tuesday, March 11, 2008 (the "Date of Sale"). In the case of a malfunction in submitting an electronic bid, facsimile bids will be allowed, as more fully described below. Immediately thereafter, the bids will be publicly announced, and the City Manager will act upon the bids by 2:00 p.m., Local Time. Bid Submission Solely as an accommodation to bidders, electronic bids via BIDCOMP/PARITY (the "Electronic Bidding System") will be accepted in accordance with this Official Notice of Sale. The City is using BIDCOMP/PARITY as a communication mechanism to conduct the electronic bidding for the sale of $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the `Bonds"), as described herein. To the extent any instructions or directions set forth in BIDCOMP/PARITY conflict with this Official Notice of Sale, the terms of this Official Notice of Sale shall control. Each bidder submitting an electronic bid agrees (i) that it is solely responsible for all arrangements with BIDCOMP/PARITY, (ii) that BIDCOMP/PARITY is not acting as the agent of the City, and (iii) that the City is not responsible for ensuring or verifying bidder compliance with any of the procedures of BIDCOMP/PARITY. The City assumes no responsibility for, and each bidder expressly assumes the risks of and responsibility for, any incomplete, inaccurate or untimely bid submitted by such bidder through BIDCOMP/PARITY. Each bidder shall be solely responsible for making necessary arrangements to access the Electronic Bidding System for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of Sale. Neither the City nor the Electronic Bidding System shall have any duty or obligation to provide or assure such access to any bidder, and neither the City nor BIDCOMP/PARITY shall be responsible for proper operation of, or have any liability for, any delays or interruptions of, or any damages caused by, BIDCOMP/PARITY. For further information about BIDCOMP/PARITY, potential bidders may contact BIDCOMP/PARITY at 1359 Broadway, 2nd Floor, New York, New York 10018, telephone (212) 849-5021. In the event of a malfunction of the Electronic Bidding System, facsimile transmission bids will be accepted up to 11:30 a.m., Local Time, on the Date of Sale. Bidders choosing to submit bids in the case of a malfunction by facsimile transmission shall use the following telecopier numbers for such transmission: (757) 385- 4302 or (757) 385-4135 (Attention: Patricia A. Phillips). Transmissions received after the deadline shall be rejected. It is the responsibility of the bidder to ensure that the bid is legible, that the bid is received not later than 11:30 a.m., Local Time, and that the bid is sent to one of the telecopier numbers set forth above. Illegible transmissions shall be rejected. The City's financial advisors (Government Finance Associates, Inc. and ARD Government Finance Group, collectively the "Financial Advisors") will verify receipt of each bid submitted through facsimile transmission by contacting each bidder by telephone once the bid has been received. The City's Financial Advisors will in no instance correct, alter or in any way change bids submitted through facsimile transmission. Neither the City nor its Financial Advisors will be responsible for bids submitted by facsimile transmission not received in accordance with the provisions of this Official Notice of Sale. Bidders electing to submit bids via facsimile transmission will bear full and complete responsibility for the transmission of such bid. Each bid must be unconditional. E-1 Principal Redemption The Bonds will be general obligation bonds of the City, dated the date of delivery (the "Dated Date"), and will mature serially or be subject to mandatory sinking fund redemptions on October 1 in the years and amounts shown below. Due October 1 Amount Due October 1 Amount 2008 $4,500,000 2018 $4,500,000 2009 4,500,000 2019 4,500,000 2010 4,500,000 2020 4,500,000 2011 4,500,000 2021 4,500,000 2012 4,500,000 2022 4,500,000 2013 4,500,000 2023 4,500,000 2014 4,500,000 2024 4,500,000 2015 4,500,000 2025 4,500,000 2016 4,500,000 2026 4,500,000 2017 4,500,000 2027 4,500,000 Serial Bonds, Term Bonds and Mandatory Sinking Fund Redemptions Bidders may provide in the bid form for all of the Bonds to be issued as serial Bonds or may designate consecutive annual principal amounts of the Bonds to be combined into not more than two Term Bonds. In the event that a bidder chooses to specify a Term Bond, each such Term Bond shall be subject to mandatory sinking fund redemption commencing on October 1 of the first year which has been combined to form such Term Bond and continuing on October 1 in each year thereafter until the stated maturity of such Term Bond. The amount redeemed in any year shall be equal to the principal amount for such year set forth in the amortization schedule above. Bonds to be redeemed in any year by mandatory sinking fund redemption shall be redeemed at par and shall be selected by lot from among the maturities of the Term Bond being redeemed. The City shall be entitled to reduce its mandatory sinking fund redemption obligation in any year with respect to Term Bonds of any maturity by the principal amount of such Term Bonds theretofore optionally redeemed by the City. Description of the Bonds; Book -Entry Only System The Bonds will be issued by means of a book -entry system with no distribution of physical Bond certificates made to the public. One Bond certificate for each maturity will be issued to The Depository Trust Company, New York, New York ("DTC"), or its nominee, and immobilized in its custody. The book -entry system will evidence beneficial ownership of the Bonds in principal amounts of $5,000 or multiples thereof, with transfers of beneficial ownership effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. Bond certificates registered in the name of Cede & Co. will be deposited with DTC. Interest on the Bonds will be paid semiannually on April 1 and October 1, beginning October 1, 2008, and principal on the Bonds will be paid annually on October 1, beginning October 1, 2008, to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility of such participants and other nominees of beneficial owners. The City will not be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be prepared, executed and delivered. The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that case, either a successor depository will be selected by the City or Bond certificates will be prepared, executed and delivered. E-2 Optional Redemption The Bonds that mature on or before October 1, 2017, are not subject to optional redemption prior to their stated maturities. The Bonds that mature on and after October 1, 2018, will be subject to redemption beginning October 1, 2017, in whole or in part at any time, at the option of the City, upon payment of the par amount of principal so redeemed plus interest accrued and unpaid to the redemption date. Selection of Bonds for Redemption; Notice of Redemption If less than all of the Bonds are called for optional redemption, the Bonds to be redeemed shall be selected by the City's Director of Finance in such manner as may be determined to be in the best interest of the City. If less than all of the Bonds of a particular maturity are called for redemption, DTC or any successor securities depository will select the Bonds to be redeemed pursuant to its rules and procedures or, if the book -entry system is discontinued, the Bonds to be redeemed will be selected by the City Treasurer, who has been appointed registrar (the "Registrar"), by lot in such manner as the Registrar in its discretion may determine. In either case, each portion of the $5,000 principal amount is counted as one Bond for such purpose. The City will cause notice of the call for redemption identifying the Bonds or portions thereof to be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date, to the registered owner thereof. The City shall not be responsible for mailing notice of redemption to anyone other than DTC or another qualified securities depository or its nominee unless no qualified securities depository is the registered owner of the Bonds. If no qualified securities depository is the registered owner of the Bonds, notice of redemption shall be mailed to the registered owners of the Bonds. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unredeemed portion shall be issued to the registered owner upon the surrender thereof. Security The Bonds will be general obligations of the City, secured by a pledge of the City's full faith and credit and unlimited taxing power. Use of Bond Proceeds As described in more detail in the City's Preliminary Official Statement, dated , 2008, the Bonds are being issued for the purpose of providing funds for various public improvements and to pay the costs of issuance related to the Bonds. Bidding Rules; Award of Bonds Bidders may only bid to purchase all of the Bonds. Bidders are invited to name the rate or rates of interest per annum which the Bonds are to bear in multiples of one -twentieth (1/20th) or one-eighth (1/8th) of one percent. All Bonds maturing on the same date must bear interest at the same rate. Any number of rates may be named provided that (a) the highest rate of interest may not exceed the lowest rate of interest by more than 3 percentage points, and (b) the highest rate of interest stated for any maturity may not exceed 6.0% per annum, but in no event shall the "true" interest cost exceed 5.5%. No bid for less than 99% of par plus accrued interest (computed on the basis of a 360 -day year and twelve 30 -day months) shall be considered. The City reserves the right to reject any or all bids (regardless of the interest rate bid), to reject any bid not complying with this Official Notice of Sale and, so far as permitted by law, to waive any irregularity or informality with respect to any bid or the bidding process. As promptly as reasonably possible after the bids are received, the City will notify the bidder to whom the Bonds will be awarded, if and when such award is made. Such bidder, upon such notice, shall advise the City of the initial reoffering prices or yields to the public of each maturity of the Bonds (the "Initial Reoffering Prices or Yields") and details regarding the anticipated use of a municipal bond insurance policy, if any, in connection with the Bonds. The successful bidder must reasonably expect to sell to the public 10% or more in par amount of the Bonds from each maturity at the Initial Reoffering Prices or Yields. All bids will remain firm for a period of no less than three hours after the time specified for the opening of bids. An award of the Bonds, if made, will be made E-3 by the City within such three hour period or, with the express consent of the bidders, such longer time period as deemed necessary. Unless all bids are rejected, the Bonds will be awarded to the bidder complying with the terms of this Official Notice of Sale and submitting a bid which provides the lowest "true" interest cost to the City. True interest cost shall be determined for each bid by doubling the semiannual interest rate, compounded semiannually, necessary to discount the debt service payments from the payment dates to the Dated Date and to the bid price, such bid price excluding interest accrued to the date of settlement. If more than one bid offers the same lowest true interest cost, the successful bid will be selected by the City Manager by lot. The City reserves the right to reject any or all bids and to waive any irregularity or informality with respect to any bid. Bids for the Bonds shall not be conditioned upon obtaining insurance or any other credit enhancement. If a bidder proposes to obtain a policy of municipal bond insurance or any other credit enhancement, any such purchase of insurance or commitment therefor shall be at the sole option and expense of the bidder, and the bidder must pay any increased costs of issuance of the Bonds as a result of such insurance or commitment. Any failure by the bidder to obtain such a policy of insurance shall not in any way relieve such bidder of its contractual obligations arising from the acceptance of its bid for the purchase of the Bonds. Good Faith Deposit Each bid must be accompanied by a certified or cashier's check for $900,000 drawn upon an incorporated bank or trust company authorized to transact business in the Commonwealth of Virginia or in the City of New York and payable unconditionally to the order of the City of Virginia Beach, Virginia, to secure the City against any loss resulting from the failure of the successful bidder to comply with the terms of its bid. The check of the successful bidder will be deposited and credited toward the purchase price, and no interest will be allowed thereon to accrue to the benefit of the successful bidder. The proceeds of the check will be retained by the City as liquidated damages in case the successful bidder fails to accept delivery of and pay for the Bonds. Checks of unsuccessful bidders will be returned promptly upon award of the Bonds. Bidders must also clearly indicate to whom the check should be returned in the event of an unsuccessful bid. In lieu of the check described above, the deposit may be in the form of a Financial Surety Bond in the amount of $900,000 payable to the City. The Financial Surety Bond must be from an insurance company acceptable to the City and licensed to issue such a bond in the Commonwealth of Virginia, and such Financial Surety Bond must be submitted to the City prior to the opening of the bids and must be in a form acceptable to the City. The Financial Surety Bond must identify each bidder whose deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder utilizing a Financial Surety Bond, then such successful bidder is required to submit its deposit to the City in the form of a cashier's or certified check or wire transfer not later than 11:30 a.m., Local Time, on the next business day following the award. If such deposit is not received by such time, the Financial Surety Bond may be drawn by the City to satisfy the deposit requirement. Bidders submitting an electronic or facsimile bid must deliver the good faith check (or, in lieu thereof, a Financial Surety Bond) by 11:30 a.m., Local Time, on March 11, 2008, to Patricia A. Phillips, Director of Finance, Virginia Beach Municipal Center, City Hall Building, Room 220, Virginia Beach, Virginia 23456. Delivery of the Bonds The Bonds will be delivered at the expense of the City in New York, New York, through the facilities of DTC on or about March 25, 2008. Concurrently with the delivery of the Bonds, the City will furnish to the successful bidder without cost (a) a certificate dated the date of delivery of the Bonds, signed by the appropriate City officials and stating that no litigation of any kind is then pending or, to the best of their information, knowledge and belief, threatened against the City to restrain or enjoin the issuance or delivery of the Bonds or the levy or collection of ad valorem taxes and (b) certificates dated the date of delivery of the Bonds, stating that the descriptions and statements in the Official Statement (except in the sections entitled "Book -Entry System" and "Tax Exemption" and in the cohimns "Price/ Yield" and "CUSIP No." on the inside cover), on the date of the Official Statement and on the date of delivery of the E-4 I I Bonds, were and are true and correct in all material respects, did not and do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such descriptions and statements, in light of the circumstances under which they were made, not misleading. Such certificates will also state, however, that such City officials did not independently verify the information indicated in the Official Statement as having been obtained or derived from sources other than the City and its officers but they have no reason to believe that such information is not accurate. Certificate of Winning Bidder The successful bidder must, by facsimile transmission or overnight delivery received by the City within 24 hours after receipt of the bids for the Bonds, furnish the following information to the City to complete the Official Statement in final form, as described below: A. The offering prices for the Bonds (expressed as the price or yield per maturity, exclusive of any accrued interest). B. Selling compensation (aggregate total anticipated compensation to the underwriters expressed in dollars, based on the expectation that all Bonds are sold at the prices or yields described in Subpart A above). C. The identity of the underwriters if the successful bidder is a part of a group or syndicate. D. Any other material information necessary to complete the Official Statement in final form but not known to the City. Prior to the delivery of the Bonds, the successful bidder shall furnish to the City a certificate in form acceptable to bond counsel, to the effect that the successful bidder has made a bona fide public offering of the Bonds at the initial public offering prices set forth in such certificate, that the successful bidder has complied with Rule G- 37 of the Municipal Securities Rulemaking Board (the "MSRB") with respect to the City and that a substantial amount of the Bonds of each maturity were sold to the public (excluding bond houses, brokers and other intermediaries) at such initial public offering prices. Such certificate shall state that (1) it is made on the best knowledge, information and belief of the successful bidder and (2) 10% or more in par amount of the Bonds of each maturity was reasonable expected to be sold on the Date of Sale to the public at the initial public offering price (such amount being sufficient to establish the sale of a substantial amount of the Bonds). CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for failure or refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in accordance with the terms of its bid. The City will assume responsibility for the expense of the initial printing of CUSIP numbers; provided, however, that the City assumes no responsibility for any CUSIP Service Bureau or other charges that may be imposed for the assignment of such numbers. All expenses in connection with the assignment of CUSIP numbers shall be paid by the successful bidder. It shall be the obligation of the successful bidder to furnish to DTC an underwriter questionnaire and to the City the CUSIP numbers for the Bonds within two business days following the date of award. Official Statement The City will furnish the successful bidder at the expense of the City up to 500 copies of the final Official Statement by the earlier of the closing date and seven business days from the date of the award of the Bonds, as specified in Rule 15c2-12 (the "Rule") of the Securities and Exchange Commission (the "SEC") and the rules of the MSRB provided that minor delays in furnishing such final Official Statement will not be a basis for failure to pay for and accept delivery of the Bonds. Additional copies will be made available at the successful bidder's request and expense. The City assumes no responsibility or obligation for the distribution or delivery of the Official Statement to anyone other than the successful bidder. E-5 The successful bidder, by executing the Official Bid Form, agrees to provide one copy of the Official Statement to at least one Nationally Recognized Municipal Securities Information Repository ("NRMSIR") within the meaning of the Rule upon receipt of the Official Statement from the City and two copies of the Official Statement (with any required forms) to the MSRB or its designee no later than ten business days following the Date of Sale. The successful bidder shall notify the City as soon as practicable of (1) the date which is the end of the underwriting period (such "underwriting period" is described in the Rule), and (2) the date of filing the Official Statement with a NRMSIR and MSRB or its designee. If the Bonds are awarded to a syndicate, the City will designate the senior managing underwriter of the syndicate as its agent for purposes of distributing copies of the Official Statement to each participating underwriter. Any underwriter executing and delivering a bid form with respect to the Bonds agrees thereby that if its bid is accepted it shall accept such designation and shall enter into a contractual relationship with all participating underwriters for the purposes of assuring the receipt and distribution by each such participating underwriter of the Official Statement, unless another firm is so designated by the syndicate in writing and approved by the City. Legal Opinion The approving opinion of Troutman Sanders LLP, Richmond, Virginia, with respect to the Bonds will be furnished to the successful bidder at the expense of the City and will state that the Bonds constitute valid and legally binding obligations of the City and that its Council is authorized and required by law, unless other funds are lawfully available and appropriated for timely payment of the Bonds, to levy and collect an annual ad valorem tax, over and above all other taxes authorized or limited by law and without limitation as to rate or amount, on all locally taxable property in the City sufficient to pay the principal of and interest on the Bonds as the same become due. Federal and State Securities Laws No action has been taken to qualify the Bonds under the federal and Commonwealth securities laws. Tax Exemption The Official Statement relating to the Bonds contains a discussion of the effect of the Internal Revenue Code of 1986, as amended, on the exclusion from gross income of interest on the Bonds and a discussion of the opinion of Troutman Sanders LLP insofar as it concerns such exclusion. Continuing Disclosure To assist the successful bidder in complying with the Rule, the City will agree, pursuant to the Continuing Disclosure Agreement, to provide certain annual financial information and operating data and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement for the Bonds and will also be set forth in the final Official Statement for the Bonds (See Appendix C of the Preliminary Official Statement dated , 2008). Change of Date and Time for Receipt of Bids The City expects to take bids on the Bonds on March 11, 2008. However, the City reserves the right to postpone the date and time established for the receipt of bids. Any such postponement will be announced by the Thomson Municipal Newswire, or any other such service. If the receipt of bids is postponed, any alternative date for receipt of bids will be announced via the Thomson Municipal Newswire, or any other such service. Any bidder must submit a bid for the purchase of the Bonds on such alternative sale date in conformity with the provisions of this Official Notice of Sale, except for any changes announced via the TM3 newswire, or any other such service, as described therein. E-6 Additional Information For further information relating to the Bonds and the City, reference is made to the City's Preliminary Official Statement. The City has deemed the Preliminary Official Statement to be final as of its date within the meaning of the Rule, except for the omission of certain pricing and other information permitted to be omitted pursuant to the Rule. The Official Bid Form and the Preliminary Official Statement may be obtained from the City's Financial Advisors, Government Finance Associates, Inc. (telephone 212-521-4090) and ARD Government Finance Group (telephone 703-807-5700). Dated: , 2008 CITY OF VIRGINIA BEACH, VIRGINIA By: James K. Spore City Manager E-7 OFFICIAL BID FORM Electronic bids (or facsimile bids as provided in the Official Notice of Sale) must be submitted by 11:30 am, Local Time. To: City Manager March 11, 2008 Office of the City Manager Virginia Beach, Virginia 23456 On behalf of the fiiin(s) listed below and pursuant to the terms and conditions listed in the City's Official Notice of Sale, we offer to purchase the $90,000,000 General Obligation Public Improvement Bonds, Series 2008 (the "Bonds"), of the City of Virginia Beach, Virginia, dated the date of delivery. This offer is made for all of the Bonds and for not less than all, maturing on October 1 in the years shown below. The schedule of maturities and interest rates upon which this bid is based are as follows: Maturity Amount 2008 $4,500,000 2009 4,500,000 2010 4,500,000 2011 4,500,000 2012 4,500,000 2013 4,500,000 2014 4,500,000 2015 4,500,000 2016 4,500,000 2017 4,500,000 Rate Maturity Amount 2018 $4,500,000 2019 4,500,000 2020 4,500,000 2021 4,500,000 2022 4,500,000 2023 4,500,000 2024 4,500,000 2025 4,500,000 2026 4,500,000 2027 4,500,000 (CROSS OUT THE SERIAL BOND MATURITIES BEING BID AS TERM BONDS.) Term Bonds (Optional - No More Than Two Term Bonds) First Year of Mandatory Year of Maturity Total Principal Amounts Rate Redemption Rate (LEAVE BLANK IF NO TERM BONDS ARE SPECIFIED) We will pay $ , which is not less than $89,100,000 or not less than 99% of par (representing a discount or premium of $ ), and will accept delivery of the Bonds by means of a book -entry system at The Depository Trust Company, New York, New York. Please indicate the appropriate choice: We have posted a surety bond in the amount of $900,000. If awarded the bid, we will deliver to the City $900,000 in good faith money by 11:30 a.m., Local Time, on the next business day immediately following the date of award, or the City will draw upon the surety bond and apply it in accordance with the Official Notice of Sale against any loss resulting from the successful bidder failing to comply with the terms of this bid. We enclose (or previously delivered) a certified or cashier's check for $900,000 drawn upon an incorporated bank or trust company as detailed in the Official Notice of Sale and payable unconditionally to the order of the City of Virginia Beach, Virginia, which is to be applied in accordance with the Official Notice of Sale against any loss resulting from the successful bidder failing to comply with the terms of this bid. The good faith money will be deposited and credited on the purchase price, and no interest will be credited on the good faith money to the successful bidder. The good faith money will be retained by the City as liquidated damages in case the successful bidder fails to accept delivery of and pay for the Bonds. Any checks of unsuccessful bidders will be returned promptly upon award of the Bonds. The undersigned hereby acknowledges receipt and review of the Preliminary Official Statement referred to in the Official Notice of Sale. Respectfully submitted, (Name of Bidding Finn) (Authorized Signature) (Name & Phone Number of Contact Person) The good faith check has been returned and receipt thereof is duly acknowledged. NO ADDITION OR ALTERATION, EXCEPT AS PROVIDED ABOVE, SHOULD BE MADE TO THIS BID. (NOTE - The following is stated for information only and is not part of this bid: The true interest cost of this bid, calculated in accordance with the Official Notice of Sale, is % (to six decimal places). A list of the members of our syndicate is attached.) E-8 - 28 - Item V-J.6a/b. ORDINANCES/RESOLUTIONS ITEM # 57358 Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Ordinance re the purchase of the Police's Livescan Integrated Booking System and two laptop computers: a. ACCEPT and APPROPRIATE $28,500 from Virginia Department of Criminal Justice Services b. TRANSFER $9,500 from the DEA Seized Property Special Revenue Fund to the Police Department's FY 2008-09 Operating Budget Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 1 AN ORDINANCE TO ACCEPT AND APPROPRIATE $28,500 2 FROM THE VIRGINIA DEPARTMENT OF CRIMINAL 3 JUSTICE SERVICES AND TRANSFER $9,500 FROM THE 4 DEA SEIZED PROPERTY SPECIAL REVENUE FUND TO 5 THE POLICE DEPARTMENT'S FY 2007-08 OPERATING 6 BUDGET FOR THE PURCHASE OF A LIVESCAN 7 INTEGRATED BOOKING SYSTEM AND TWO LAPTOP 8 COMPUTERS 9 10 BE IT ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, 11 VIRGINIA: 12 13 1. That $28,500 is hereby accepted from the Virginia Department of Criminal 14 Justice and appropriated to the Police Department's FY 2007-08 Operating Budget for the 15 purchase of a Livescan Integrated Booking System and two laptop computers with federal 16 revenue increased accordingly. 17 18 2. That $9,500 is hereby transferred from the DEA Seized Property Special 19 Revenue Fund to the Police Department's Operating Budget for the purposes of providing 20 the City match for this grant. 21 22 Adopted the by the Council of the City of Virginia Beach, Virginia, 7ti1-11 day of 23 February 2008. APPROVED AS TO CONTENT: 4 Management Services CA10632 R-1 February 13, 2008 APPROVED AS TO LEGAL SUFFICIENCY: Attorney's Office COMMONWEALTH H o f VIRGINIA Leonard G Cooke Director L)C'pai-li'neiel Of C niniiial ,J11,5'/lC'C' SC'T'ViCC'S December 26, 2007 Mr. James K. Spore City Manager City of Virginia Beach 2401 Courthouse Drive Virginia Beach, VA 23456 Title: Collection of Evidence Project Dear Mr. Spore: 202 N Ninth Street Richmond, Virginia 23219 (804) 786-4000 FAX (804) 371-8981 TDD (804) 386-8732 I am pleased to advise you that grant number 08-135369AD06 for the above -referenced grant program has been approved in the amount of $28,500 in Federal Funds and $9,500 in Matching Funds for a total award of $38,000. Enclosed you will find a Statement of Grant Award and a Statement of Grant Award Special Conditions. To indicate your acceptance of the award and conditions, please sign the award acceptance and return it to Janice Waddy, Grants Administrator, at the Department of Criminal Justice Services (DCJS). Please review the conditions carefully; as some require action on your part before we will disburse grant funds. Also, enclosed are the Post Award Instructions and Reporting Requirements. Please refer to and read this information carefully as it contains details on processing financial and progress reports, as well as requesting awarded funds. Remember all financial and progress reports, budget amendment requests and request for funds must be processed through our Grants Management Online Information System (GMIS). We appreciate your interest in this grant program and will be happy to assist you in any way we can to assure your project's success. If you have any questions, please call Kathi Lee at (804) 786-4303. Yours very truly, Leonard G. Cooke Enclosures cc: Mr. Dan W. Clanton, Forensics Supervisor Ms. Patricia A. Phillips, Finance Director Ka -hi Lee, DCJS Criminal ,lusher; See vice tlt Ird - Connnrtbae an Training - Advisory Committee on JllVealle Jur;ba: Advisory Cunmllttea: to C,wrt Appointed Special Advocale and CI ul it r:n's Justice Ara Prru;rnms Privates Security SerVICOS Advisory Board - ('.aminal ,lustice Inlunn;etion SYsk>ms Conimiliee - 29 - Item V -J.7. ORDINANCES/RESOLUTIONS ITEM # 57359 ADD-ON Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council ADOPTED: Resolution REAFFIRMING City Council's support of State legislation re smoking in restaurants. Voting: 8-3 (By Consent) Council Members Voting Aye: Robert M Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: William R. "Bill" DeSteph, Harry E. Diezel and Reba S. McClanan Council Members Absent: None February 26, 2008 1 A RESOLUTION REAFFIRMING CITY COUNCIL'S 2 SUPPORT FOR STATE LEGISLATION REGARDING 3 SMOKING IN RESTAURANTS 4 5 WHEREAS, City Council included in its 2008 Community Legislative Agenda a 6 request for legislation that either prohibits smoking in restaurants statewide or that 7 enables localities to prohibit smoking in restaurants by local ordinance; 8 9 WHEREAS, on October 23, 2007, City Council adopted a resolution urging the 10 City's delegation to the General Assembly to work with the City of Norfolk's General 11 Assembly delegation to sponsor and/or support such legislation; 12 13 WHEREAS, legislation on this matter was approved by the Senate but was not 14 approved by the House of Delegates; 15 16 WHEREAS, last week, the Virginia Beach Restaurant Association purchased a 17 full-page advertisement in the Virginian -Pilot in which the association requested that this 18 legislation be revived; and 19 20 WHEREAS, City Council supports efforts to revive the legislation. 21 22 NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF 23 VIRGINIA BEACH, VIRGINIA: 24 25 That the City's delegation to the General Assembly is hereby requested to take 26 all steps necessary to revive legislation that would either prohibit smoking in restaurants 27 statewide or that would enable the City to adopt a local prohibition on smoking in 28 restaurants. 29 30 BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF VIRGINIA 31 BEACH, VIRGINIA: 32 33 That the City Clerk is hereby directed to transmit a copy of this resolution to each 34 member of the City's local Delegation to the General Assembly. 35 36 Adopted by the City Council of the City of Virginia Beach, Virginia, this 26th day 37 of February, 2008. APPROVED AS TO LEGAL SUFFICIENCY: City Attorney's Office CA10647 R-2 February 26, 2008 - 30 - K. PLANNING ITEM # 57360 1. JAMES KUEHN NONCONFORMING USE 2. MICHAEL H. SPENCER CONDITINAL USE PERMIT 3. WAWA, INC. CONDITIONAL USE PERMIT 4. NIMMO CHILDCARE & RESOURCE LEARNING CENTER, INC. 5. MICHAEL D. SIFEN, INC. MODIFICATION OF CONDITIONS Conditional Change of Zoning (approved 11/23/1993) MODIFICATION OF THE GREEN RUN LAND US PLAN (Approved 7/9/1996) February 26, 2008 -31 - Item K. ITEM # 57361 PLANNING Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council APPROVED in ONE MOTION Items 1, 2, 3 AND 5 of the PLANNING BY CONSENT AGENDA: Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 - 32 - Item K.1. ITEM # 57362 PLANNING Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council, ADOPTED application of JAMES KUEHN to authorize Enlargements of a Nonconforming Use re a room addition to the existing two-story duplex at 2214 Bayberry Street; Resolution AUTHORIZING the Enlargement of a Nonconforming Use on Property located at 2214 Bayberry Street, DISRICT 5 - L YNNHA VEN The following conditions shall be required: 1. The proposed addition shall substantially conform to the submitted marked -up physical survey of Lot 121, Cape Story by the Sea, Plat No.1, prepared by Lee S. Rood, P.C. Land Surveyors, and dated January 16, 1992. Said plans have been exhibited to the Virginia Beach City Council and are on file in the Virginia Beach Planning Department. 2. The proposed addition shall substantially conform to the submitted elevations entitled "Proposed 1 Story Frame Addition Crawl Space Foundation" prepared by Fentress Home Design, and dated June 3, 2007. Said plans have been exhibited to the Virginia Beach City Council and are on file in the Virginia Beach Planning Department. 3. Exterior colors of the building addition shall match the colors and style of the existing building. Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 1 A RESOLUTION AUTHORIZING THE ENLARGEMENT OF 2 A NONCONFORMING USE ON PROPERTY LOCATED AT 3 2214 BAYBERRY STREET, LYNNHAVEN DISTRICT 4 WHEREAS, James Kuehn (hereinafter the "Applicant"), has made application to 5 the City Council for authorization to enlarge a nonconforming use with a room addition 6 to a duplex structure on a certain lot or parcel of land having the address of 2214 7 Bayberry Street, in the R-7.5 Zoning District; and 8 9 WHEREAS, the said use is nonconforming, as the parcel contains a duplex, 10 which is not presently allowed in the R-7.5 Zoning District but was constructed when the 11 parcel was zoned to permit duplexes; and 12 13 WHEREAS, pursuant to Section 105 of the City Zoning Ordinance, the 14 enlargement of a nonconforming use is unlawful in the absence of a resolution of the 15 City Council authorizing such action upon a finding that the proposed use, as enlarged, 16 will be equally appropriate or more appropriate to the zoning district than is the existing 17 use; 18 19 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF 20 VIRGINIA BEACH, VIRGINIA: 21 22 That the City Council hereby finds that the proposed use, as enlarged, will be 23 equally appropriate to the district as is the existing use. 24 25 BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF VIRGINIA 26 BEACH, VIRGINIA: 27 28 That the enlargement of the duplex dwelling is hereby authorized, upon the 29 following conditions: 30 31 1. The proposed addition shall substantially conform to the submitted marked -up 32 Physical Survey of Lot 121, Cape Story by the Sea, Plat No. 1, prepared by Lee 33 S. Rood, P.C. Land Surveyors, and dated January 16, 1992. Said plans have 34 been exhibited to the Virginia Beach City Council and are on file in the Virginia 35 Beach Planning Department. 36 37 2. The proposed addition shall substantially conform to the submitted elevations 38 entitled "Proposed 1 Story Frame Addition Crawl Space Foundation", prepared 39 by Fentress Home Design, and dated June 3, 2007. Said plans have been 40 exhibited to the Virginia Beach City Council and are on file in the Virginia Beach 41 Planning Department. 42 43 3. Exterior colors of the building addition shall match the colors and style of the 44 existing building. 45 46 Adopted by the Council of the City of Virginia Beach, Virginia, on the day of 47 February, 2008. APPROVED AS TO CONTENT: #.4 (its ."ori' t- . artment CA10643/R-1/ "•ruary 14, 2008 APPROVED AS TO LEGAL SUFFICIENCY: • City Attorney's Office - 33 - Item K.2. ITEM # 57363 PLANNING Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council, ADOPTED Ordinance upon application of MICHAEL H. SPENCER for a Conditional Use Permit: ORDINANCE UPON APPLICATION OF MICHAEL H. SPENCER FOR A CONDITIONAL USE PERMIT FOR A HOME OCCUPATION (FINANCIAL SERVICES) R020834255 BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA Ordinance upon application of Michael H. Spencer for a Conditional Use Permit for a home occupation (nancial services) on property located at 4305 Bonney Road (GPIN 1477838199). DISTRICT 5 — LYNNHAVEN The following conditions shall be required 1. There shall be no more than one additional employee on the site. Parking for the employee shall be met on site. 2. The applicant shall not have more than one customer on the site at any time. Appointments shall be scheduled so there is no overlap of customers on the site. All parking for customers shall be met on the site. 3. Hours of operation are limited to Monday through Friday, 9:00 A.M. to 6:00 P.M 4. Signage is limited to one (1) sign, non -illuminated, not to exceed one (1) square foot in area, mounted flat against the wall of the residence. This Ordinance shall be effective in accordance with Section 107 (j of the Zoning Ordinance. Adopted by the Council of the City of Virginia Beach, Virginia, on the Twenty-sixth of February Two Thousand Eight Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 - 34 - Item K.3. ITEM # 57364 PLANNING Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council, ADOPTED an Ordinance upon application of WAWA, INC. for a Conditional Use Permit to allow gasoline sales in conjunction with a convenience store at 5476 Virginia Beach Boulevard: ORDINANCE UPON APPLICATION OF WAWA, INC. FOR A CONDITIONAL USE PERMIT FOR GASOLINE SALES IN CONJUNCTION WITHA CONVENIENCE STORE R020834256 BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA Ordinance upon application of Wawa, Inc. for a Conditional Use Permit for gasoline sales in conjunction with a convenience store on property located at 5476 Virginia Beach Boulevard (GPIN 1467482294). DISTRICT 2 — KEMPSVILLE. The following conditions shall be required: 1. The site shall be developed substantially in accordance with the submitted plan entitled, "Conceptual Site Layout & Landscape Plan of Wawa, Virginia Beach Boulevard and Davis Street, Virginia Beach, VA", prepared by MSA, P.C., and dated November 1, 2007. It should be noted that no landscaping was actually depicted on this plan and that all applicable landscaping requirements of the City's Zoning Ordinance and other City ordinances shall be depicted on the final site plan. Said plan has been exhibited to the City of Virginia Beach City Council and is on file in the City of Virginia Beach Planning Department. 2. When the building and canopy are constructed, they shall be in substantial conformance with the elevations entitled, "Proposed Exterior Elevations, Virginia Beach Boulevard and Davis Street, Virginia Beach, VA, " prepared by BSW International, dated October 30, 2007, which has been exhibited to the City of Virginia Beach City Council and is on file in the City of Virginia Beach Planning Department. Final elevations shall be submitted to the Planning Department for review and approval prior to or concurrent with the site plan review. 3. Signage for the proposed use shall be limited to one (1) freestanding sign and building mounted sign as depicted on the elevation drawings described in Condition 2. All signs must meet all requirements of the City Zoning Ordinance. In addition, the freestanding sign shall not exceed eight (8) feet in height. No signage in excess of a total of four (4) square feet of the entire glass area of the exterior wall shall be permitted on the window area. With the exception of traffic control signs and those allowed by this condition, there shall be no other signs, neon signs or neon accents installed on any wall area of the exterior of the building, canopy, canopy supports, light poles or any other portion of the site. 4. A Lighting Plan and/or Photometric Diagram Plan shall be submitted during detailed site plan review. Said plan shall include the location of all pole -mounted and building mounted lighting fixtures, and the listing of lamp type, wattage and type of fixture. Lighting shall overlap and be uniform throughout the parking area. All lighting on the site shall be consistent with those standards recommended by the Illumination Engineering Society of North America. February 26, 2008 - 35 - Item K.3. ITEM # 57364 (Continued) PLANNING 5. Canopy lighting shall be recessed and not spill over onto adjacent properties and right-of- ways. 6. The dumpster areas shall be enclosed with a solid wall to match the building and landscaping, in accordance with Section 245(e) of the City Zoning Ordinance. 7. No outdoor vending machines and / or display of merchandise shall be allowed; however, one (1) standard ice -storage box shall be allowed, located as far to the right (east) as possible along the front of the building. 8. Pedestrian walkway(s) to the convenience store shall be provided from any required sidewalks in the public right-of-ways in accordance with Section 246(d) of the City Zoning Ordinance. 9. Bicycle racks shall be provided near the entrance of the store. 10. A Category I landscape screen shall be installed adjacent to the parcel to the north (GPIN 14674854480000) and along the eastern property line of parcel to the west (GPIN 14674833280000). This Ordinance shall be effective in accordance with Section 107 g) of the Zoning Ordinance. Adopted by the Council of the City of Virginia Beach, Virginia, on the Twenty-sixth of February Two Thousand Eight Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 - 36 - Item K.4. ITEM # 57365 PLANNING Ann Kaplan, Co-owner — Nimmo Childcare and Resource Learning Center, Inc. Nimmo Childcare is a different type of day care center and after school enrichment program. The facility is located in a residential setting. The home is 4,800 square feet. The infant day care building is 4,800 square feet and has been expanded to modify four (4) specific child care facilities: 1500 square feet are dedicated to Infants and Toddlers. When reaching 19 months these children are moved to another room until they become 2-'/2 years of age. Then the children move upstairs. There are four (4) rooms upstairs: 2-1/2 year old, 3 year old and a 4-%2 to Kindergarten age. The "after schoolers" have a unique building which is another residence. The homework room is located in the Formal Living Room/Den with a computer station and library. The entire upstairs is for games, television, bingo, music, active play and arts and crafts. The third, fourth and fifth graders are brought downstairs if they desire their own play space (the former garage) with an area outside also to play. The applicant has also worked with Public Works / Traffic Engineering staff to develop a "safe traffic program", and has proffered that "the daycare and before/after school program drop-off and pick-up shall be scheduled in a manner to limit traffic entering the site to no more than 35 trips within any one hour timeframe." The applicant has stated and proffered their commitment to educate the staff and parents on the importance of the program to ensure safe ingress and egress of the property Upon motion by Council Lady Henley, seconded by Councilman Villanueva, City Council, DEFERRED INDEFINITELY an Ordinance upon application of NIMMO CHILDCARE and RESOURCE LEARNING CENTER, INC., for the Modification of Conditions on a Conditional Change of Zoning (approved by City Council on November 23, 1993) re childcare or educational facilities at 2244 General Booth Boulevard. ORDINANCE UPON APPLICATION OF NIMMO CHILDCARE & RESOURCE LEARNING CENTER, INC. FOR THE MODIFICATION OF CONDITIONS FOR A REQUEST APPROVED BY CITY COUNCIL ON NOVEMBER 23, 1993 (DONALD G. PRATT) Ordinance upon application of Nimmo ChildCare & Resource Learning Center, Inc. for the Modification of Conditions for a request approved by City Council on November 23, 1993 (Donald G. Pratt). Property is located at 2244 General Booth Boulevard (GPIN 2414066572). DISTRICT 7 — PRINCESS ANNE. This DEFERRAL will allow for the application to provide of additional information, a definitive professional site plan, a much improved traffic flow, requirements for staff specific information re staff ratios to children and maximum number of children delineated as well as rendering and details of the building with a business model. The City staff will assist. Jack Whitney, Director of Planning, advised the applicant applied and received a Building Permit, but the permit is at the applicant's "risk". This permit is not activated until approval by City Council to allow the modification of conditions. The Building Permit includes all the code provisions for the operation of the day care facility. February 26, 2008 - 37 - Item K.4. ITEM # 57365 (Continued) PLANNING Voting: 11-0 Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent.• None February 26, 2008 - 38 - Item K.5. ITEM # 57366 PLANNING Upon motion by Vice Mayor Jones, seconded by Councilman Dyer, City Council, ADOPTED an Ordinance upon application of MICHAEL D. SIFEN, INC., for Modification of the Green Run Land Use Plan to change the designated land use from `future development" as required by Condition No. 10 of the Amendment (approved by City Council on July 9, 1996) re retail development ORDINANCE UPON APPLICATION OF MICHAEL D. SIFEN, INC. FOR MODIFICATION OF THE GREEN RUN LAND USE PLAN TO CHANGE THE DESIGNATED LAND USE FROM "FUTURE DEVELOPMENT" BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA Ordinance upon application of Michael D. Sifen, Inc. for Modification of the Green Run Land Use Plan to change the designated land use from "future development" as required by Condition 10 of the Amendment approved by City Council on July 9, 1996. Property is located at 3545 Buckner Boulevard (GPIN 1485360023). DISTRICT 3 — ROSE HALL The following condition shall be required: 1. An agreement encompassing proffers shall be recorded with the Clerk of the Circuit Court and is hereby made a part of the record. This Ordinance shall be effective in accordance with Section 107 (f) of the Zoning Ordinance. Adopted by the Council of the City of Virginia Beach, Virginia, on the Twenty-sixth of February Two Thousand Eight Voting: 11-0 (By Consent) Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26, 2008 In Reply Refer To Our File No. DF -6913 TO: Leslie L. LiIley FROM: B. Kay Wilson RE: CITY OF VIRGINIA BEACH INTER -OFFICE CORRESPONDENCE DATE: February 14, 2008 DEPT: City Attorney DEPT: City Attorney Conditional Zoning Application; Michael D. Sifen, Inc. The above -referenced conditional zoning application is scheduled to be heard by the City Council on February 26, 2008. I have reviewed the subject proffer agreement, dated September 28, 2007 and have determined it to be legally sufficient and in proper legal form. A copy of the agreement is attached. Please feel free to call me if you have any questions or wish to discuss this matter further. BKW/bm Enclosure cc: Kat -en Hassen PREPARED BY: SYKES. POURDON. A11£RN & LEVY. P.C. MICHAEL D. SIFEN, INC., a Virginia corporation PRINCESS ANNE OP, L.L.C., a Virginia limited liability company TO (PROFFERED COVENANTS, RESTRICTIONS AND CONDITIONS) CITY OF VIRGINIA BEACH, a municipal corporation of the Commonwealth of Virginia THIS AGREEMENT, made this 28th day of September, 2007, by and between MICHAEL D. SIFEN, INC., a Virginia corporation, Grantor, party of the first part; PRINCESS ANNE OP, L.L.C., a Virginia limited liability company, Grantor, party of the second part; and THE CITY OF VIRGINIA BEACH, a municipal corporation of the Commonwealth of Virginia, Grantee, party of the third part. WITNESSETH: WHEREAS, the party of the second part is the owner of a parcel of property located in the Princess Anne District of the City of Virginia Beach, containing approximately 1.45 acres of land which is more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference. Said parcel is herein referred to as the "Property"; and WHEREAS, the party of the first part is the contract purchaser of the parcel described in Exhibit "A" and has initiated a conditional amendment to the Zoning Map of the City of Virginia Beach, Virginia, by petition addressed to the Grantee so as to amend the PDH -1 Land Use Plan and the Commercial Designation applicable to the Property with a B -1A Commercial Designation; and WHEREAS, the Grantee's policy is to provide only for the orderly development of • land for various purposes through zoning and other land development legislation; and GPIN: 1485-36-0023 Prepared By: R. Edward Bourdon, Jr., Esquire Sykes, Bourdon, Ahern & Levy, P.C. 281 Independence Boulevard Pembroke One, Fifth Floor Virginia Beach, Virginia 23462 PREPARED BY: SY[CES. BOURDON, al AHERN & LEVY, P.0 WHEREAS, the Grantors acknowledge that competing and sometimes incompatible uses conflict and that in order to permit differing uses on and in the area of the Property and at the same time to recognize the effects of change, and the need for various types of uses, certain reasonable conditions governing the use of the Property for the protection of the community that are not generally applicable to land similarly zoned are needed to cope with the situation to which Grantors' application gives rise; and WHEREAS, the Grantors have voluntarily proffered, in writing, in advance of and prior to the public hearing before the Grantee, as a part of the proposed modification to the PDH -i Land Use Plan applicable to the Property in addition to the regulations provided for the PDH -i and B-iA Zoning Districts by the existing overall Zoning Ordinance, the following reasonable conditions related to the physical development, operation, and use of the Property to be adopted as a part of said amendment to the Zoning Map relative and applicable to the Property, which has a reasonable relation to the rezoning and the need for which is generated by the rezoning. NOW, THEREFORE, the Grantors, for themselves, their successors, personal representatives, assigns, grantee, and other successors in title or interest, voluntarily and without any requirement by or exaction from the Grantee or its governing body and without any element of compulsion or quid pro quo for zoning, rezoning, site plan, building permit, or subdivision approval, hereby make the following declaration of conditions and restrictions which shall restrict and govern the physical development, operation, and use of the Property and hereby covenants and agrees that this declaration shall constitute covenants running with the Property, which shall be binding upon the Property and upon all parties and persons claiming under or through the Grantors, their successors, personal representatives, assigns, grantee, and other successors in interest or title: 1. When the Property is developed, in order to achieve a coordinated design and development on the site in terms of vehicular circulation, parking, landscape buffering and building orientation, the "PRELIMINARY LAYOUT — BUCKNER RETAIL GPIN 1485- 36-0023 3545 BUCKNER BOULEVARD VIRGINIA BEACH, VIRGINIA", dated 09/27/07, prepared by Martin Engineering, which has been exhibited to the Virginia Beach City Council and is on file with the Virginia Beach Department of Planning ("Layout Plan") shall be substantially adhered to. 2 PREPARED BY: 1133 SYICtS. $OURDON. SE AIHERN & LEVY. P.C. 2. When the Property is developed, the architectural design, building materials and colors of the "Proposed 1 -Story Retail" building will be substantially as depicted on the exhibit entitled "NEW RETAIL SHOPPING CENTER, BUCKNER RETAIL, VIRGINIA BEACH, VIRGINIA", prepared by Covington, Hendrix, Anderson, architects, dated Sept. 28, 2007, which has been exhibited to the Virginia Beach City Council and is on file with the Virginia Beach Department of Planning ("Elevation"). 3. When the Property is developed, all lighting on the site shall be consistent with those standards recommended by the Tilumination Engineering Society of North America (IESNA). A photometric lighting plan indicating the number and types of lighting will be submitted as part of the formal site plan submission for review by the Planning Department to determine consistency with Crime Prevention Through Environmental Design (CPTED) principles and practices. Lighting shall be installed and operated as shown on the approved plan. All lighting shall be directed inward and downward within the site. 4. Further conditions may be required by the Grantee during detailed Site Plan review and administration of applicable City Codes by all cognizant City agencies and departments to meet all applicable City Code requirements. The above conditions, having been proffered by the Grantors and allowed and accepted by the Grantee as part of the amendment to the Zoning Ordinance, shall continue in full force and effect until a subsequent amendment changes the zoning of the Property and specifically repeals such conditions. Such conditions shall continue despite a subsequent amendment to the Zoning Ordinance even if the subsequent amendment is part of a comprehensive implementation of a new or substantially revised Zoning Ordinance until specifically repealed. The conditions, however, may be repealed, amended, or varied by written instrument recorded in the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia, and executed by the record owner of the Property at the time of recordation of such instrument, provided that said instrument is consented to by the Grantee in writing as evidenced by a certified copy of an ordinance or a resolution adopted by the governing body of the Grantee, after a public hearing before the Grantee which was advertised pursuant to the provisions of Section 15.2-2204 of the Code of Virginia, 1950, as amended. Said ordinance or resolution shall be recorded along with said instrument as conclusive evidence of such consent, and if not so recorded, said instrument shall be void. 3 Grantors covenant and agree that: (i) The Zoning Administrator of the City of Virginia Beach, Virginia, shall be vested with all necessary authority, on behalf of the governing body of the City of Virginia Beach, Virginia, to administer and enforce the foregoing conditions and restrictions, including the authority (a) to order, in writing, that any noncompliance with such conditions be remedied; and (b) to bring legal action or suit to insure compliance with such conditions, including mandatory or prohibitory injunction, abatement, damages, or other appropriate action, suit, or proceeding; (2) The failure to meet all conditions and restrictions shall constitute cause to deny the issuance of any of the required building or occupancy permits as may be appropriate; (3) If aggrieved by any decision of the Zoning Administrator, made pursuant to these provisions, Kempshire shall petition the governing body for the review thereof prior to instituting proceedings in court; and (4) The Zoning Map may show by an appropriate symbol on the map the existence of conditions attaching to the zoning of the Property, and the ordinances and the conditions may be made readily available and accessible for public inspection in the office of the Zoning Administrator and in the Planning Department, and they shall be recorded in the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia, and indexed in the name of the Grantors and the Grantee. PREPARED BY: SYKES, $OURDON, ARPRN & LEVY, P.C. WITNESS the following signature and seal: Grantor: Michael D. Sifen, Inc., a Virginia corporation By: Donald R. Smith, Vice Pres' Bent STATE OF VIRGINIA CITY OF VIRGINIA BEACH, to -wit: VP (SEAL) The foregoing instrument was acknowledged before me this 28th day of September, 2007, by Donald R. Smith, Vice President of Michael D. Sifen, Inc., a Virginia corporation, Grantor. Ac )/27) My Commission Expires: August 31, 2010 Notary Registration No.: 192628 PREPARED BY: W3 Sys. BOIRDON. all AHERN & LEVY. P.C. Notary Public WITNESS the following signature and seal: Grantor: Princess Anne OP, L.L.C., a Virginia limited liability company B�/ By: !�f (SEAL) Title: /L ivt tact - STATE OF PuvisyI Lr a-.'1 t G- -C- COUNTY OF Cun— b la Ad , to -wit: t J The foregoing instruxnt was acknowledged before OV DVLA ba , 2007, by KKO6 /4- V EoY-him k5; -- of $ -of Princess Anne OP, L.L.C., a Virginia limited liability company, My Commission Expires: Notary Registration No.: 04D me this / L/ day of mom, Grantor. Notary Public COMMONWEALTH OF PENNSYLVANIA Nidal Seal Michele A. Gilden, Notary Public renn Twp., Cumberland County My Commission Expires July 2, 2009 Member, Pennsylvania Association of Notaries 6 EXHIBIT "A" All that certain lot, piece or parcel of land, with any improvements thereon and the appurtenances thereunto belonging, lying, situate and being in the City of Virginia Beach, Virginia, and known, numbered and designated as "PARCEL H-iD", as shown on that certain plat entitled, "SUBDIVISION PLAT OF PARCEL H -1A GREEN RUN", which plat is duly recorded in the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia, in Map Book 280, at Pages 78 thru 79. GPIN: 1485-36-0023 Amendment_PDHPIan/Sifen/BucknerBlvdRetail/Proffer PREPARED BY: SYK£S. BOURDON. AHERN & LEVY. P.C. 7 - 40 - Item V -L.2. APPOINTMENTS ITEM #57368 Upon NOMINATION by Vice Mayor Jones, City Council APPOINTED: Barbara Ferguson Unexpired term through 10/31/09 HISTORIC REVIEW BOARD BY CONSENSUS, City Council RESCHEDULED the following APPOINTMENTS: February 26, 2008 -40 - Item V -L.2. APPOINTMENTS ITEM #57368 Upon NOMINATION by Vice Mayor Jones, City Council APPOINTED: Barbara Ferguson Unexpired term through 10/31/09 HISTORIC REVIEW BOARD Voting: 11-0 Council Members Voting Aye: William R. "Bill" DeSteph, Harry E. Diezel, Robert M Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Reba S. McClanan, Mayor Meyera E. Oberndorf John E. Uhrin, Ron A. Villanueva, Rosemary Wilson and James L. Wood Council Members Voting Nay: None Council Members Absent: None February 26 2008 Item V -O. ADJOURNMENT -41 - ITEM # 57369 Mayor Meyera E. Oberndorf DECLARED the City Council Meeting ADJOURNED at 7:10 P.M. Beverly O. Hooks, CMC Chief Deputy City Clerk uth Hod: es Fraser, MMC Meyera . Oberndorf City Clerk Mayor City of Virginia Beach Virginia February 26, 2008 Page 1 of 2 Amanda F. Barnes From: Ruth H. Fraser Sent: Monday, March 03, 2008 10:17 AM To: Amanda F. Barnes Subject: FW: Update on Signal Light at First Landing State Park Follow Up Flag: Follow up Flag Status: Yellow Please scan into minutes of February 26 AND cross reference to SHORE DRIVE TRAFFIC SIGNAL Ruth Hodges Fraser, MMC City Clerk Mayor's Liaison - Sister Cities Passport Agent City of Virginia Beach Office: (757) 385-4303 Fax: (757) 385-5669 Direct Dial: (757) 385-8343 From: Dave Hansen Sent: Friday, February 29, 2008 5:04 PM To: Meyera Oberndorf; Rosemary C. Wilson; Jim Wood Cc: James Spore; Les L. Lilley; Ruth H. Fraser; Steve Herbert; Susie Walston; Judy Faro Subject: Update on Signal Light at First Landing State Park `. [ayor Oberndorf, Council Members Wilson and Wood, ollowing Tuesday's meeting and your concern as to the particulars of the signal replacement project on Shore Drive at :he First Landing State Park, we wanted to provide the following update before breaking for the weekend. Please let me I, now if you have further questions. We have reviewed the Shore Drive Design Guidelines and they are non specific with regard to traffic signal poles. The issue may not be the type and color of the pole itself, but the number and location of the poles and the necessary oundations. Below is a quick project summary: 1 he Shore Drive/ First Landing Park intersection has a span -wire signal that is in need of approximately $50,000 of maintenance work. Although this work would keep the signal functioning for a few years, the shifting signal pole oundations will require the signal poles and foundations to be replaced. 'ublic Works currently has in stock signal poles and mast arms that are the same design and color (black) as the signal 'oles that were recently installed with the Shore Drive Demonstration Project. The thinking was, the Shore Drive ',dvisory Cmte approved the black poles on the Shore Drive Demonstration Project, and the poles for the First Landing ark entrance match, therefore the SDAC would not have an issue with the design and color of the signal poles. By using our in -stock poles, the signal could be upgraded to a pole and mast arm signal with upgraded camera detection. In addition, pedestrian improvements are planned. ->/16/2008 Page 2 of 2 The estimate cost of the signal improvements using the existing poles and design is approximately $75,000. The design e fort is being accomplished in-house by PW/Engineering however at this time we have put a hold on further effort. B. cause the pole and mast arm signal system would be a fix that would have a longer service life, it was decided to move f...eword. V. hile PW/Engineering was recently at the intersection reviewing the design, Fred Hazelwood (First Landing State Park) came to the intersection and began to inquire about the signal light replacement project. PW/Engineering representatives e \plained the project to Mr. Hazelwood. The new signal poles are in black to match the rest of new signals along Shore I!rive corridor. Traffic Engineering's design provides an upgrade to the signal with new crosswalk markings and c,.)untdown pedestrian signals for pedestrians to safely cross Shore Drive at this intersection. Of concern to Mr. I (azelwood was the positioning of the center pole and foundation and the impact to the entrance to the park as well as z.,:sthetics. It is also believed Mr. Hazelwood's preference is probably for a four pole configuration. There may not be enough ROW to accommodate that configuration and the expense might be as much as $250K. lark Johnson, PW PE, and I have spoken with Mr. Hazelwood and as he is leaving town for two weeks we have put all f_irther action on hold. During this lull the PW team is looking at alternatives within our current right-of-way. Once we understand Mr. Hazelwood's concerns we can determine what direction the project should take. Will keep you informed once the dialog resumes. VR Dave Dave Hansen hief of Finance & Technology city of Virginia Beach 757-385-4242 -/16/2008