Item No: 4.C.6.
Meeting Date: October
22, 2012
From: William
Spinelli, Finance Director, CPA
Subject: Resolution
accepting the proposal of SunTrust Bank to purchase the City’s not to exceed
$13.5 million, Electric Utility System Refunding Revenue Note, Series 2012.
Staff Recommendation:
Staff
recommends approval of the resolution accepting the proposal of SunTrust Bank
to purchase the City’s not to exceed $13.5 million, Electric Utility System
Refunding Revenue Note, Series 2012.
Analysis:
Following
a City RFP, review by City Staff and our Financial Advisor, Jeff Larson,
President, Larson Consulting Services, staff recommends acceptance of the
proposal from SunTrust Bank (STB) to refinance a portion of the City’s
Outstanding Electric Utility System Revenue Bonds, Series 2004. The proposed traditional bank loan will
replace existing bonds with maturities between 2015 and 2032. The existing average
bond interest rate of 4.97% will be replaced by a fixed bank note rate of
3.18%. Bonds maturing in 2013 and 2014
are not callable, and the bank is only willing to go out 20 years, thus the
bonds maturing in 2033 and 2034 will also not be called. The total existing 2004 debt of $24,269,178
will be reduced by the refinancing to $22,971,461, providing a savings of
$1,297,716 over the life of the loan.
Average annual savings is $65,212.
The
City is not either (1)
issuing any additional debt, or (2) extending the current final maturity date
of October 1, 2034. Estimated Present
Value Savings of 8.24% exceed the City’s minimum 3% savings levels on refunding
per its Debt Management Policy No. 1108 adopted in 2004.
Options:
1. Approve the Resolution accepting the proposal
to purchase the City’s not to exceed $13.5 million Electric Revenue Bonds,
Series 2004 and related costs, Or;
2. Such alternative action as the Commission may
deem appropriate
Fiscal Impact:
If
approved, the City will realize estimated savings of $1,297,716 over the life
of the loan agreement. These savings are
net of all expenses on this refunding.
Submission Date and Time: 10/18/2012 5:21 PM____
|
Department: ______________________ Prepared
by: ______________________ Attachments: Yes____ No ______ Advertised: ____Not Required ______ Dates: __________________________ Attorney
Review : Yes___ No ____
_________________________________ Revised 6/10/04 |
Reviewed by: Dept. Head ___WVS_____ Finance Dept. ______WVS____________ Deputy
C.M. ___________________ Submitted
by: City Manager ___________________
|
Account
No. _________________ Project
No. ___________________ WF No.
______________________ Budget ______________________ Available
_____________________ |
RESOLUTION NO. __________
A RESOLUTION OF THE CITY OF LEESBURG,
FLORIDA ACCEPTING THE PROPOSAL OF SUNTRUST BANK TO PURCHASE THE CITY'S NOT TO
EXCEED $13,500,000 ELECTRIC SYSTEM REFUNDING REVENUE NOTE, SERIES 2012 TO
REFUND ALL OF THE CITY'S OUTSTANDING ELECTRIC SYSTEM REVENUE BONDS, SERIES 2004
MATURING OCTOBER 1, 2015 THROUGH OCTOBER 1, 2029 AND THE AMORTIZATION
INSTALLMENTS OF THE OCTOBER 1, 2034 MATURITY COMING DUE OCTOBER 1, 2030,
OCTOBER 1, 2031 AND OCTOBER 1, 2032; AUTHORIZING THE EXECUTION AND DELIVERY OF
A LOAN AGREEMENT WITH SAID BANK TO SECURE THE REPAYMENT OF SAID NOTE; PROVIDING
FOR THE PAYMENT OF SUCH NOTE FROM THE NET ELECTRIC REVENUES ON PARITY WITH
CERTAIN EXISTING CITY ELECTRIC SYSTEM UTILITY DEBT, 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 DOCUMENTS IN CONNECTION WITH SAID
LOAN; PROVIDING FOR SEVERABILITY AND OTHER MATTERS IN REGARD THERETO; AND
PROVIDING AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF LEESBURG, FLORIDA, AS FOLLOWS:
AUTHORITY 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.
FINDINGS. It is hereby ascertained, determined and
declared:
The
City of Leesburg, Florida (the "City") deems it necessary, desirable
and in the best interests of the City that the City refund all of the City's
Outstanding Electric System Revenue Bonds, Series 2004 maturing October 1,
2015 through October 1, 2029 and the amortization installments of the
October 1, 2034 maturity coming due October 1, 2030, October 1,
2031 and October 1, 2032 (the "Refunded Bonds"), all as more
particularly described in the Loan Agreement (as defined herein).
Pursuant
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 Refunding Revenue Note, Series 2012 (the "2012 Note") in a principal
amount not to exceed $13,500,000 and the execution and delivery of the Loan
Agreement for the purposes of refunding the Refunded Bonds is not prohibited by
law.
On
September 11, 2012, the City issued a request for proposal to qualified
financial institutions to provide the terms and conditions under which they
would purchase the 2012 Note. Based on
the present volatility of the market for municipal debt, and in consultation
with its Financial Advisor, Larson Consulting Services, LLC, it has been determined
it is in the best interest of the City to issue the 2012 Note pursuant to the
Loan Agreement by negotiated sale, allowing the City to issue the 2012 Note at
the most advantageous time allowing the City to obtain the best interest rate
and other terms for the 2012 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 2012 Note to SunTrust Bank (the
"Bank") be authorized.
AUTHORIZATION OF REFUNDING
OF REFUNDED BONDS. The City hereby authorizes the refunding of the Refunded
Bonds as more particularly described in the Loan Agreement.
ACCEPTANCE OF COMMITMENT
LETTER WITH BANK. Based on a
recommendation from the City's Financial Advisor and in consultation with the
City staff, the City hereby accepts the commitment letter of the Bank dated
October 3, 2012 attached hereto to provide the City with the Loan.
APPROVAL OF FORM OF AND
AUTHORIZATION OF LOAN AGREEMENT AND EXECUTION OF LOAN AGREEMENT AND 2012
NOTE. The repayment of the loan as
evidenced by the 2012 Note shall be pursuant to the terms and provisions of the
Loan Agreement and the 2012 Note. The
City hereby approves the Loan Agreement by and between the City and the Bank in
substantially the form attached hereto as Exhibit A (the "Loan
Agreement") 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 and the 2012 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.
PAYMENT OF DEBT SERVICE ON
2012 NOTE. Pursuant to the Loan
Agreement, the 2012 Note will be secured by the Net Revenues of the City's
Electric System on parity with certain existing City Electric System Utility
debt, all as more particularly described in the Loan Agreement.
AUTHORIZATION OF OTHER
DOCUMENTS TO EFFECT TRANSACTION. To the
extent that other documents including but not limited to redemption notices,
certificates, escrow deposit agreements, opinions, or other items are needed to
effect any of the transactions referenced in this Resolution, the Loan
Agreement, the 2012 Note, and the security therefore, the Mayor, the Mayor
Pro-Tem, the City Clerk, the City Manager, the Finance Director, the City
Attorney, the City Financial Advisor and Bond Counsel 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.
PAYING AGENT AND
REGISTRAR. The City hereby accepts the
duties to serve as registrar and paying agent for the 2012 Note.
LIMITED
OBLIGATION. The obligation of the City
to repay amounts under the Loan Agreement and the 2012 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.
REPEAL
OF INCONSISTENT RESOLUTIONS AND ACTIONS.
All Resolutions or actions of the City in conflict herewith are hereby
superseded and repealed to the extent of such conflict.
EFFECT
OF PARTIAL INVALIDITY. If any one or
more provisions of this Resolution, the Loan Agreement, or the 2012 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, the 2012 Note or the
Loan Agreement, but this Resolution, the Loan Agreement, and the 2012 Note
shall be construed and enforced as if such illegal or invalid provision had not
been contained therein. The 2012 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.
REPEAL
OF INCONSISTENT RESOLUTIONS AND ACTIONS.
All Resolutions or acts of the City Council in conflict herewith are
hereby superseded and repealed to the extent of such conflict.
EFFECTIVE
DATE. This Resolution shall take effect
immediately upon its adoption.
PASSED,
APPROVED AND ADOPTED this 22nd day of October, 2012.
CITY OF LEESBURG, FLORIDA
[SEAL]
By:
Mayor
ATTEST:
By __________
City Clerk
Approved
as to form and correctness:
By ____________ ____
City Attorney