AGENDA MEMORANDUM

 

 

Meeting Date:           September 14, 2009

 

From:                          Jerry Boop, Finance Director, CPA, CGFO

 

Subject:                      A resolution of the City of Leesburg, Florida accepting the proposal of Branch Banking and Trust Company to purchase the City's not to exceed $1.2 Million Capital Improvement Revenue Refunding Note, Series 2009 to refinance the City's outstanding promissory note payable to Florida Municipal Power Agency (FMPA) and related costs.

 

 

Staff Recommendation:

Following a City RFP and review by City Staff and our Financial Advisor, Larson Consulting, staff recommends acceptance of the proposal from Branch Banking and Trust Company (BB&T) to purchase the City’s not to exceed $1.2 Million Capital Improvement Revenue Refunding Note.

 

Analysis:

On June 1, 2009, the City received notification from FMPA that Wachovia would not grant an extension on its credit facilities supporting the pooled loan program.  Enclosed with the notice was an accelerated payoff schedule reflecting monthly payment of principal and interest with full payment of the current principal outstanding of $1,041,000 by August 2010.  The Communications Fund has a healthy cash balance and reserve but an accelerated payoff schedule of this nature would deplete the cash in the Communications Fund and necessitate internal borrowing from other funds.  The need to refinance the FMPA loan was disclosed during the 2009-10 budget City Commission workshops.

 

On the date of the Note Agreement, drafted by the City’s Bond Counsel, Mike Williams, Akerman Senterfitt, and reviewed by staff, our Financial Advisor and City Attorney, the bank will make available to the City the loan in the principal amount of $1,005,000.00, at an interest rate of 4.13%, maturing on November 1, 2019.  The proceeds will be used solely to refinance the refunded note and to pay costs of issuing the note. 

 

This Resolution approves the Loan Agreement with BB&T, approves the sale or placement of the Capital Improvement Refunding Revenue Note to same and designates the note as a bank qualified obligation, thereby reducing the interest cost to the City.  Pursuant to the Loan Agreement, the City pledges to repay the note with Communications Enterprise Revenues and as a backup, a City covenant to budget and appropriate from legally available non ad valorem General Fund Revenues.  The City will be released from the covenant to budget and appropriate at such time as the City’s audited financial statements for the two most recent fiscal years.  The first year beginning no earlier than fiscal year ending September 30, 2009, provide evidence that the Communications Enterprise Revenues equaled at least 150% of the maximum amount of debt service on all debt secured by Communication Enterprise Revenues.  Current coverage exceeds 700%.

 

 

Options:

1.  Approve the Resolution accepting the proposal of BB&T to purchase the City’s not to exceed $1.2 Million Capital Improvement Revenue Refunding Note, Series 2009 to refinance the City's outstanding promissory note payable to Florida Municipal Power Agency (FMPA) and related costs; Or

2.  Such alternative action as the Commission may deem appropriate

 

 

Fiscal Impact

Interest and Principal Payments associated with the refinancing have been included in the fiscal year 2009-10 budget.  The interest rate included in the budget of 6% compares to the refinanced rate of 4.13% which will result in a budgetary savings.  This also releases the Electric System’s junior lien revenue pledge that has been supporting the Communications System and places the debt where it belongs in the Communications Enterprise.

 

 

Submission Date and Time:    9/10/2009 10:47 AM____

 

Department: _____Finance__________

Prepared by:  __Jerry Boop__________                     

Attachments:         Yes_X___   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head __JB____

 

Finance  Dept. ____________JB____                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________