Meeting Date: June
Boop, Finance Director, CPA, CGFO
Subject: Resolution accepting
the proposal of Sun Trust Bank to purchase the City’s $8.0 Million Utility System
Revenue Refunding Note, Series 2010 to refinance the City’s outstanding $8.0
Million Separate Utility System Revenue Bond Substitute Anticipation Note,
(Plantation Acquisition Project), Series 2006; Authorizing execution of a loan
agreement with said Bank to secure the repayment; providing for the payment of
such Note from the Net Revenues of the City’s Gas, Sewer and Water Systems and
Water and Sewer Capacity Charges on parity with certain outstanding utility
debt of the City all as provided in the loan agreement.
recommends accepting the proposal of Sun Trust Bank to purchase the City’s not
to exceed $8.0 Million, Utility System Revenue Refunding Note, Series 2010, authorizing
the execution and delivery of a loan agreement with said Bank, authorizing the
proper officials of the City to do any other additional things deemed necessary
or advisable in the connection with the execution of the Loan Agreement.
original $8.0 Million note issued in 2006 carried an interest rate of 3% and
was due to be paid in full October 1, 2009. During the onset of banking and
market turmoil, 2008 through 2009, Staff sought to renew the note and
negotiated a rate of 4.5% and a new due date of October 1, 2012 with the Seller.
As the banking industry and financial markets have somewhat stabilized, Staff
requested that the City’s Financial Advisor, Jeff Larson of Larson Consulting
Services, LLC (FA) work with the City’s Purchasing Manager to issue a request
for proposal (RFP) for an amount not to exceed $8.0 Million. The purpose of
the request was to obtain more favorable interest rate and repayment terms. The
current note has a bullet payment of $8.0 Million due on October 1, 2012 at
which time the Utility System would need to obtain financing. Refinancing the
note now, during this favorable market, will save the Utility millions of
dollars in interest costs.
the RFP responses and a review of multiple options, Staff worked with the FA to
successfully negotiate of a 15 year note bearing an interest rate of 3.85% with
Sun Trust Bank. Staff then directed the City’s FA to work with City Legal Counsel,
Fred Morrison, of McLin Burnsed, Bond Counsel, Mike Williams of Akerman
Senterfitt and Sun Trust Bank to finalize the agreement. Final closing of the
Note is expected on or before July 8, 2010.
1. Approve and accept the
proposal of Sun Trust Bank to purchase the City’s not to exceed $8.0 Million,
Utility System Revenue Refunding Note, Series 2010, authorizing the execution
and delivery of a loan agreement with said Bank, and authorizing the proper
officials of the City to do any other additional things deemed necessary or
advisable in the connection with the execution of the Loan Agreement. Or;
Such alternative action as the Commission may deem appropriate.
views this as a favorable time for refinancing as long term interest rates are
currently low. The current sellers note has a bullet payment of $8.0 Million
due October 1, 2012 at which time interest rates are projected to be much
higher. Refinancing the note now at a rate of 3.85% and extending the final
maturity to October 1, 2025, will save the Water and Wastewater Utilities
millions of dollars in interest costs, and help avoid any unnecessary rate
impacts to the City’s utility customers.
Date and Time: 6/25/2010 4:28 PM____
by: __Jerry Boop________
Yes_x__ No ______
Attorney Review : Yes___ No ____
Reviewed by: Dept.
Finance Dept. ___________JB____
Deputy C.M. ___________________
Account No. _________________
Project No. ___________________
WF No. ______________________
RESOLUTION NO. _______
OF THE CITY OF LEESBURG, FLORIDA ACCEPTING THE PROPOSAL OF SUNTRUST BANK TO
PURCHASE THE CITY’S NOT TO EXCEED $8.0 MILLION UTILITY SYSTEM REVENUE REFUNDING
NOTE, SERIES 2010 TO REFINANCE THE CITY’S OUTSTANDING SEPARATE UTILITY SYSTEM
REVENUE BOND SUBSTITUTE ANTICIPATION NOTE (PLANTATION ACQUISITION PROJECT),
SERIES 2006; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT WITH
SAID BANK TO SECURE THE REPAYMENT OF SAID LOAN; PROVIDING FOR THE PAYMENT OF
SUCH NOTE FROM THE NET REVENUES OF THE CITY’S GAS, SEWER AND WATER SYSTEMS AND
WATER AND SEWER CAPACITY CHARGES ON PARITY WITH CERTAIN OUTSTANDING UTILITY
DEBT OF THE CITY, ALL AS PROVIDED IN THE LOAN AGREEMENT; AUTHORIZING THE PROPER
OFFICIALS OF THE CITY TO DO ANY OTHER ADDITIONAL THINGS DEEMED NECESSARY OR
ADVISABLE IN CONNECTION WITH THE EXECUTION OF THE LOAN AGREEMENT, THE NOTE, AND
THE SECURITY THEREFOR; AUTHORIZING THE EXECUTION AND DELIVERY OF OTHER
DOCUMENTS IN CONNECTION WITH SAID LOAN; DESIGNATING THE NOTE AS “BANK
QUALIFIED;” PROVIDING FOR SEVERABILITY; AND PROVIDING AN EFFECTIVE DATE.
RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, AS FOLLOWS:
FOR THIS RESOLUTION. This Resolution is adopted pursuant to the provisions of
Chapter 166, Florida Statutes, the Florida Constitution, and other applicable
provisions of law.
It is hereby ascertained, determined and declared:
City of Leesburg, Florida (the “City”) deems it necessary, desirable and in the
best interests of the City that the City refinance its Separate Utility System
Revenue Bond Substitute Anticipation Note (Plantation Acquisition Project),
Series 2006 (the “Refunded Note”), all as more particularly described in the
Loan Agreement (as defined herein). The Refunded Note was originally issued to
acquire the Plantation water and sewer facilities (the “Plantation Project”).
to Section 2(b), Article VIII of the State Constitution, and Section 166.021,
Florida Statutes, municipalities have the governmental, corporate and
proprietary powers to enable them to conduct municipal government, perform
municipal functions, and render municipal services, and may exercise any power
for municipal purposes, except when expressly prohibited by law. The issuance
by the City of its Utility System Revenue Refunding Note, Series 2010 (the
“2010 Note”) and the execution and delivery of the Loan Agreement for the
purposes of refinancing the Refunded Note is not prohibited by law.
City‘s financial advisor, Larson Consulting Services, LLC (“Financial
Advisor”), and City staff have reviewed the proposal of SunTrust Bank (the
“Bank”) regarding a loan in an amount of not to exceed $8.0 million as provided
in the 2010 Note (the “Loan”) to the City, the proceeds of which will be applied
to refinance the Refunded Note.
2010 Note will be issued as “Additional Bonds” in accordance with the
provisions of City Resolution No. 7143 (the “Original Instrument”) and will be
secured by the Pledged Revenues as provided in Section 6 hereof and the Loan
Agreement pursuant to which the City will issue the 2010 Note to secure the
repayment of the Loan. Pursuant to the provisions of the Original Instrument
at the time of issuance of the 2010 Note as Additional Bonds pursuant to the
Original Instrument the Plantation Project will become part of the Water System
and Sewer System within the meaning of the Original Instrument.
accordance with the provisions of City Resolution 7143, it is hereby found that
all of the covenants contained in said resolution shall be fully applicable to
the 2010 Note except as otherwise provided in the Loan Agreement.
City is advised by its Financial Advisor that due to the present volatility of
the market for municipal debt, it is in the best interest of the City to issue
the 2010 Note pursuant to the Loan Agreement by negotiated sale, allowing the
City to issue the 2010 Note at the most advantageous time, rather than a
specified advertised future date, thereby allowing the City to obtain the best
possible price, interest rate and other terms for the 2010 Note and,
accordingly, the City Commission of the City hereby finds and determines that
it is in the best financial interest of the City that a negotiated sale of the
2010 Note to the Bank be authorized.
OF REFINANCING OF REFUNDED NOTE. The City hereby authorizes the refinancing of
the Refunded Note as more particularly described in the Loan Agreement.
OF COMMITMENT LETTER WITH BANK. Based on a recommendation from the City’s
selection team and the City’s Financial Advisor, the City hereby accepts the
commitment letter of the Bank dated May 13, 2010 as supplemented to
provide the City with the Loan.
OF FORM OF AND AUTHORIZATION OF LOAN AGREEMENT AND EXECUTION OF LOAN AGREEMENT
AND 2010 NOTE. The Loan and the repayment of the Loan as evidenced by the 2010
Note shall be pursuant to the terms and provisions of the Loan Agreement and
the 2010 Note. The City hereby approves the Loan Agreement in substantially
the form attached hereto as Exhibit A and authorizes the Mayor or the Mayor
Pro-Tem of the City (collectively, the “Mayor”) and the City Clerk or any
deputy or assistant City Clerk of the City (collectively, the “City Clerk”) to
execute and deliver on behalf of the City the Loan Agreement by and between the
City and the Bank substantially in the form attached hereto as Exhibit
“Loan Agreement”) and the 2010 Note in substantially the form attached to the
Loan Agreement, with such changes, insertions and additions as they may
approve, their execution thereof being evidence of such approval.
OF DEBT SERVICE ON 2010 NOTE. Pursuant to the Loan Agreement, the 2010 Note
will be secured by the Net Revenues of the City’s Gas, Sewer and Water Systems
and Water and Sewer Capacity Charges on parity with the City’s outstanding
Utility System Revenue Bonds, Series 2004 and the City’s outstanding Utility
System Revenue Bonds, Series 2007A and Taxable Utility System Revenue Bonds,
Series 2007B, all as more particularly described in the Loan Agreement.
OF OTHER DOCUMENTS TO EFFECT TRANSACTION. To the extent that other documents,
certificates, opinions, or items are needed to effect any of the transactions
referenced in this Resolution, the Loan Agreement or the 2010 Note and the
security therefore, the Mayor, the City Clerk, the City Manager, the Finance
Director and the City Attorney are hereby authorized to execute and deliver
such documents, certificates, opinions, or other items and to take such other
actions as are necessary for the full, punctual, and complete performance of
the covenants, agreements, provisions, and other terms as are contained herein
and in the documents included herein by reference.
AGENT AND REGISTRAR. The City hereby accepts the duties to serve as Registrar
and Paying Agent for the 2010 Note.
OBLIGATION. The obligation of the City to repay amounts under the Loan
Agreement and the 2010 Note are limited and special obligations, payable solely
from the sources and in the manner set forth in the Loan Agreement and shall
not be deemed a pledge of the faith and credit or taxing power of the City.
OF 2010 NOTE AS BANK QUALIFIED. The City designates the 2010 Note as a
“qualified tax-exempt obligation” within the meaning of Section 265(b)(3) of
the Internal Revenue Code of 1986, as amended (the “Code”). The City does not
reasonably anticipate that the City, any subordinate entities of the City, and
issuers of debt that issue “on behalf” of the City, will during the calendar year
2010 issue more than $30,000,000 of “tax-exempt” obligations, exclusive of
those obligations described in Section 265(b)(3)(C)(ii) of the Code.
OF PARTIAL INVALIDITY. If any one or more provisions of this Resolution, the
Loan Agreement or the 2010 Note shall for any reason be held to be illegal or
invalid, such illegality or invalidity shall not effect any other provision of
this Resolution or the 2010 Note or the Loan Agreement, but this Resolution,
the Loan Agreement and the 2010 Note shall be construed and enforced as if such
illegal or invalid provision had not been contained therein. The 2010 Note and
Loan Agreement shall be issued and this Resolution is adopted with the intent
that the laws of the State of Florida shall govern their construction.
DATE. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED AND ADOPTED this 28th day of June, 2010.
CITY OF LEESBURG, FLORIDA
as to form and correctness: