Meeting Date: July
Boop, Finance Director, CPA, CGFO
accepting TD Bank’s proposal to purchase the City’s not to exceed $20.0 Million
Electric System Revenue Note, Series 2010 to finance Capital Improvements to
the City’s Electric System and costs of issuing the Note; Authorizing the
execution and delivery of a Loan Agreement with said Bank to secure the
repayment of said Loan;
recommends accepting TD Bank’s Proposal to purchase the City’s not to exceed
$20.0 Million Electric System Revenue Note, Series 2010 to finance Capital
Improvements and Cost of Issuance associated with the Electric System Smart
Grid/AMI Project; authorizing the proper officials of the City to do any other
additional tasks deemed necessary or advisable in connection with the execution
of the Loan Agreement.
application, award and acceptance of the Department of Energy (DOE) Grant of
$19,497,625 and State EECBG Grant of $1,240,000, the City issued an RFP to
obtain financing to fund these requirements, prior to receiving Federal and
State Grant reimbursements. The balance remaining represents the City’s share
of costs totaling $9,748,843 associated with the Electric System Smart Grid/
AMI Project. At the end of the estimated 24 month construction project period
and interest only period under the Note through October 1, 2013, the total
amount of the Note including costs and interest, is projected to be approximately
$10,047,000. Funding of up to $20.0 M was obtained in order to allow for
funding of the project as needed and provide for adequate time for the repayment
of City expenses with Grant Proceeds. At any point in time throughout the construction
project period, actual expenses for Capital Outlay may exceed the final amount
to be financed by the City. However, funds obtained through the grant
reimbursement process will be used to pay down the balance of the note throughout
the construction phase until the project is completed.
to the RFP included SunTrust Bank, BBVA/Compass Bank, Bank of America, Branch
Bank and Trust, Regions Bank and TD Bank. Analysis of the respondents shows TD
Bank’s Proposal to be the most favorable to the City with respect to funding
and interest rates. In order to obtain the greatest savings possible for the
Electric Utility, Staff chose to pursue the respondents with the most favorable
terms and drawdown capability. TD Bank’s proposal offers a floating or
variable rate based off of one month labor (London Interbank Offered Rate) that
was 1.29% as of the date of the RFP responses, and will be adjusted every month
for the first three year Interest Only period. The first three years of the
note are considered the drawdown or construction phase. At the completion of
the project, October 1, 2013, the remaining amount of the Note will be paid off
over a ten year Term Period based on the City’s selection of either a floating
or variable rate, or a fixed interest rate that will be applied to the Term Period
of 10 years ending October 1, 2023. TD Bank has included a “call provision” in
their note at the end of 7 years or on October 1, 2020. If the call provision
is exercised by the bank, the Electric Utility will be given six months to
satisfy the loan and obtain new financing by October 1, 2020. In addition, the
Electric Utility may pay off the Note without penalty at any time during the
first three years which may allow for more favorable financing terms should
market conditions allow or during a Term Period if a floating rate option is
Staff recommends accepting TD Bank’s Proposal to purchase the City’s not to
exceed $20.0 Million Electric System Revenue Note, Series 2010 to finance
Capital Improvements and related Cost of Issuance associated with the Electric
System Smart Grid/AMI Project; 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; Or
Such alternative action as the Commission may deem appropriate.
on information provided by R.W Beck’s AMI Business Case, future five year cash flows
were projected by Larson Consulting LLC comparing the incremental cost/benefit
of the Electric System with the AMI/Smart Grid improvements versus no AMI/Smart
Grid project and respective Note debt service obligations. Their projections
indicate adequate additional cash flows through the end of fiscal year 2014.
In fiscal year 2015, cash flows are projected to be deficient by $244,395 as
this is the first fiscal year that includes a mandatory principal repayment. Staff
will be monitoring the incremental cash flows monthly with our Financial
Advisor and AMI/Smart Grid Project Team associated with the project and, if
necessary, pursue other longer term financing prior to October 1, 2013 more
closely aligned with the needs of the Electric Utility and the estimated useful
life of the Smart Grid/AMI project assets. The Utility also plans to pursue
the benefit of prepaying some of the note prior to October 1, 2013 by utilizing
the projected interest rate savings due to extremely low floating rates
currently in the market versus a budgeted fixed rate of 4.00%. If necessary,
the Electric Utility will have access to available Renewal and Replacement
Funds to cover the projected shortfall of $244,395.
Date and Time: 7/22/2010 10:41 AM____
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 TD BANK, N.A. TO
PURCHASE THE CITY’S NOT TO EXCEED $20.0 MILLION ELECTRIC SYSTEM REVENUE NOTE,
SERIES 2010 TO FINANCE CAPITAL IMPROVEMENTS TO THE CITY’S ELECTRIC SYSTEM,
REIMBURSE PRIOR CITY CAPITAL EXPENDITURES, AND TO PAY COSTS OF ISSUING THE
NOTE; 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 ELECTRIC SYSTEM ON PARITY WITH CERTAIN
OUTSTANDING ELECTRIC DEBT OF THE CITY, AND FROM CERTAIN GRANT PROCEEDS 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 and its residents that the City finance the
construction or acquisition of capital improvements to the City’s Electric
System (the “Project”), all as more particularly described in the Loan
Agreement (as defined herein).
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 Electric System Revenue Note, Series 2010 (the “2010 Note”)
and the execution and delivery of the Loan Agreement for the purposes of
financing the Project is not prohibited by law.
the City’s issuance of its Request for Proposal #100312 and the receipt of
responses, the City’s financial advisor, Larson Consulting Services, LLC
(“Financial Advisor”), and City staff have reviewed the proposal of TD Bank,
N.A. (the “Bank”) regarding a loan in an amount of not to exceed $20.0 million
as provided in the 2010 Note (the “Loan”) to the City, the proceeds of which
will be applied to finance the Project.
2010 Note will be issued as “Additional Bonds” in accordance with the
provisions of City Resolution No. 7141 (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 Project will become part of the Electric System within the
meaning of the Original Instrument.
accordance with the provisions of City Resolution 7141, 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 FINANCING OF PROJECT. The City hereby authorizes the financing of the
Project 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 June 18, 2010 (as amended on
June 30, 2010) 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 (i) the Net Revenues of the City’s Electric System on parity
with the City’s outstanding Electric System Revenue Bonds, Series 2004 and the
City’s outstanding Electric System Revenue Bonds, Series 2007A and Taxable
Electric System Revenue Bonds, Series 2007B, and (ii) certain grant proceeds,
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 26th day of
CITY OF LEESBURG, FLORIDA
as to form and correctness: