Description: AGENDAHED.JPG
 

Item No:                    4.C.7.

 

Meeting Date:           October 22, 2012

 

From:                          William Spinelli

 

Subject:                      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.

 

 

 


Staff Recommendation:

Staff 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.

 

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 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.

 

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 8.48% 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 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 deem appropriate

 

 

Fiscal Impact: 

If 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____

 

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 $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 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 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).

 

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 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.

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 Utility System and Water and Sewer Capacity Charges on parity with certain existing City Utility System 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 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.

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