The Finance Team recommends adoption of the resolutions authorizing and approving the issuance of not exceeding (1) the $21,500,000 Subordinate Capital Improvement Bonds, Series 2008 (that would pay off the BAN) and (2) the Bond Anticipation Note(“BAN”) of up to $7,500,000, Series 2008 and accompanying Interlocal Agreement between the 27/441 CRA and the City.
The resolution of the Strand Case by the Supreme Court allows for the use of Tax Increment Revenues from the Community Redevelopment Agency of the U.S. Highway 441 & 27 Area (CRA). The City wishes to continue to relocate underground certain overhead electrical distribution lines and make other improvements to the City’s electric transmission system within the CRA and have these projects paid by the CRA’s TIF revenues established by the City Commission approximately three years ago, with the earlier undergrounding paid for out of Electric Utility System revenues . Due to the nature and timing of the project being done in concert with FDOT’s work on these major State Roads, and the delays imposed on the City by the Strand Case, it is essential that the City have immediate access to funding for the project.
The City is seeking initial interim financing through a Bond Anticipation Note (BAN) with Sun-Trust in an amount not to exceed $7,500,000 , Series 2008, pledging Half Cent Sales Tax Revenue, Guaranteed Entitlement Revenue and the Public Service Taxes that are available after making debt service payments on the City’s existing Series 1999 and 2004 bonds. The Bank has been asked to also approve, as needed, a second Series 2009 BAN not to exceed $7,500,000 in case the bond markets do not provide a satisfactory environment for the intended long term CRA TIF bond financing, now estimated for summer 2009. The second bond Resolution, or “take-out” Resolution is required by Florida Statutes on any BAN financing, and is a standard Bank credit requirement and has been set at a not to exceed level well above what is expected to be the final bond sizing.
Staff is requesting the Commission to consider and approve an Interlocal Agreement (Agreement) between the City and the CRA. The purpose of the Agreement is to facilitate the transfer of CRA funds to the City for debt service attributable to the BAN. The Agreement will accommodate the short term needs of the CRA and allow time for the Finance Team to construct the best long term financing for the CRA expected in Summer 2009, but subject to market conditions.
Bonds are anticipated to be sold separately in 2009 (or latest 2010) as a traditional Tax Increment Financing (“TIF”) CRA issue paying off the Series 2008 $7,500,000 BAN (and Series 2009 BAN of up to $7,500,000 if needed) transferring the debt obligation from the General Fund to the CRA. The maximum amount of annual debt service (MADS) on the long term bond issue will not exceed $1,200,000. The CRA has recognized revenue in excess of $1,200,000 for the last two years and is expecting the same results for the 2008-09 fiscal year. Furthermore, annual incremental income is expected to increase until the CRA expires September 30, 2036. As discussed previously with the Commission and the City’s Financial Advisor in November 2008, any additional TIF revenues above the $1,200,000 level can be used in the future either on a pay-as-you-go basis for eligible CRA projects, or bonded in the future subject to CRA and Commission approval.
The Series 2008 BAN or note of up to $7,500,000 will be issued as “Bank Qualified” meaning that it meets the definition of a “qualified tax exempt obligation” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, subject to Bond Counsel. Bank Qualified status enables the BAN purchaser to deduct certain costs of purchasing the BAN which helps the City and its Financial Advisor negotiate a lower interest rate.
1. Approve the issuance of a Series 2008 BAN of up to $7,500,000, carrying a maximum final maturity of Five Years from issuance date , and a maximum BAN interest rate of 7%, delegating authority to the City Manager to execute the Bank Commitment and negotiate any other terms subject to the delegation parameters, and up to $21,500,000 Subordinate Capital Improvement Bonds, Series 2008, and accompanying Interlocal Agreement; or
2. Such alternative action as the Commission may deem appropriate
Annual Debt Service will be paid from Tax Increment Revenues.
Prepared by: ______________________
Attachments: Yes____ No ______
Advertised: ____Not Required ______
Attorney Review : Yes___ No ____
Reviewed by: Dept. Head ________
Finance Dept. __________JB______
Deputy C.M. ___________________
City Manager ___________________
Account No. _________________
Project No. ___________________
WF No. ______________________