Item No: 4.C.7.
Meeting Date: October
accepting the proposal of SunTrust Bank to purchase the City’s not to exceed
$17,765,000, Utility System Refunding Revenue Note, Series 2012.
recommends approval of the resolution accepting the proposal of SunTrust Bank
to purchase the City’s not to exceed $17,765,000, Utility System Refunding
Revenue Note, Series 2012.
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 Utility System Revenue Bonds, Series 2004. This issue provided funding for improvements
in what is referred to as the “combined utility”, which includes water,
wastewater, and natural gas. 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 $33,456,970 will be reduced by the refinancing to $31,616,809, providing
a savings of $1,840,161 over the life of the loan. Average annual savings is $92,470.
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 8.48% exceed the City’s minimum 3% savings levels on refunding
per its Debt Management Policy No. 1108 adopted in 2004.
1. Approve the Resolution
accepting the proposal of STB to purchase the City’s not to exceed $17.765
million Utility System Revenue Bonds, Series 2004 and related costs; or
2. Such alternative action as the Commission may
approved, the City may realize estimated savings of $1,840,161 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____
Attachments: Yes____ No ______
Advertised: ____Not Required ______
Review : Yes___ No ____
Reviewed by: Dept. Head ____WVS____
Finance Dept. _________WVS_________
City Manager ___________________
RESOLUTION NO. __________
A RESOLUTION OF THE CITY OF LEESBURG, FLORIDA ACCEPTING
THE PROPOSAL OF SUNTRUST BANK TO PURCHASE THE CITY'S NOT TO EXCEED $18,500,000
UTILITY SYSTEM REFUNDING REVENUE NOTE, SERIES 2012 TO REFUND ALL OF THE CITY'S
OUTSTANDING UTILITY 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 UTILITY REVENUES AND WATER AND SEWER CAPACITY CHARGES ON
PARITY WITH CERTAIN EXISTING CITY UTILITY SYSTEM 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
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 Utility 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).
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 Refunding Revenue Note, Series 2012 (the "2012 Note") in a
principal amount not to exceed $18,500,000 and the execution and delivery of
the Loan Agreement for the purposes of refunding the Refunded Bonds is not
prohibited by law.
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.
REFUNDING OF REFUNDED BONDS. The City hereby authorizes the refunding of the
Refunded Bonds as more particularly described in the Loan Agreement.
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
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
Utility System and Water and Sewer Capacity Charges on parity with certain
existing City Utility System debt, all as more particularly described in the
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.
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.
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.
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 affect 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.
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.
DATE. This Resolution shall take effect
immediately upon its adoption.
PASSED, APPROVED AND ADOPTED this 22nd
day of October, 2012.
as to form and correctness: