AGENDA MEMORANDUM

 

 

Meeting Date:           October 22, 2007

 

From:                          Jerry Boop, Interim Finance Director

 

Subject:                      Resolution authorizing loan agreements with Wachovia Bank, N.A. to provide three lines of credit of $5.0 million each, $15 million in total, pledging revenues to pay the loan payments (subordinate to existing bond covenants); authorizing the proper officials of the City to do any other additional things deemed necessary or advisable in connection with the loan agreements, the Bond Anticipation Note and the security therefore

 

 

Staff Recommendation:

The Financial Advisor and City Staff recommend adoption of the resolutions as presented.

 

Analysis:

In June of 2007, the City sent representatives to New York for the purpose of securing insurance and favorable ratings from prospective insurers and various rating agencies relative to the 2007 bond issue for the Electric System and Utility System and update these analysts on the City’s general financial condition.  During discussions, it was apparent there were concerns regarding liquidity if a hurricane or such other natural disaster were to occur and impact the City’s ability to generate revenues and pay for the costs of recovery.  Representations were made of the City’s intention to apply for lines of credit or credit facilities so as to bolster the City’s access to additional financial resources such as Pre FEMA reimbursement monies immediately after closing the 2007 bond issues. Three resolutions are presented for your consideration and approval. 

 

The first resolution accepts the proposal from Wachovia Bank, N.A. to provide a Bond Anticipation Note (BAN), Florida Capital Improvement Revenue Bonds, in an amount not to exceed $5.0 million in accordance with the loan agreement and providing for the payment of such (BAN) from the first proceeds of either (a)such Capital Improvement Revenue Bonds ie. Any takeout permanent bonds , or (b)  from revenues derived from the City’s Public Service Tax, Half Cent Sales Tax Revenues and Guaranteed Entitlement after payment of certain outstanding debt.  Term of the BAN or Draw down Credit Facility  is three years. At the end of three years if there are any loans outstanding (and any loans have to come back to the City Commission for approval), then they are either paid off by these revenues, paid off by the Bond Issue, or “termed out” with the Bank over a ten year period. The City retains the right to chose any of these three options.

 

 The second resolution accepts a similar Credit Facility proposal from Wachovia Bank, N.A. to provide a Bond Anticipation Note (BAN), Florida Electric System Revenue Bonds, in an amount not to exceed $5.0 million in accordance with the loan agreement and providing for the payment of such (BAN) from the first proceeds of such Electric System Bonds and from the net revenues on a junior lien basis from the City’s Electric System on a parity with the City’s Florida Municipal Power Agency Loan after payment of certain outstanding Electric System debt (Series 2004 and 2007 Electric Bonds).  Term of the BAN is three years, with similar options available to the City as under the General Fund $5Million Credit Facility. Again, any use of the Facility requires City Commission approval.

 

The third resolution accepts the proposal from Wachovia Bank, N.A. to provide a Bond Anticipation Note (BAN), Florida Utility System Revenue Bonds, in an amount not to exceed $5.0 million in accordance with the loan agreement and providing for the payment of such (BAN) from the first proceeds of such Utility System Bonds and from the net revenues on a junior lien basis from the City’s Utility System after payment of certain outstanding Utility System debt (Series 2004 and 2007 Bonds).  Term of the BAN is three years, with similar options available to the City as under the General Fund and Electric System’s $5Million Credit Facilities. Again, any use of the Credit Facility requires City Commission approval.

 

Options:

1.  Adopt the resolutions as presented; or,

2.  Such alternative action as the Commission may deem appropriate

 

 

Fiscal Impact

Closing costs are estimated at $20,000 each totaling $60,000 for all three lines of credit.  Funding for the Capital Improvement Revenue BAN will require the use of Fund Balance.  Funding for the Electric and Utility System BAN’s is available from 2007 Bond proceeds. 

 

Submission Date and Time:    10/18/2007 12:06 PM____

 

Department: ______________________

Prepared by:  ______________________                      

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                 

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________