Agenda Item 7F - Ordinance 15-14-14 BondsCITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: ORDINANCE NO. 15-14-14
AN ORDINANCE OF THE CITY OF ATLANTIC BEACH, FLORIDA
SUPPLEMENTING ORDINANCE NO. 15-95-7 ENACTED BY THE
CITY COMMISSION ON NOVEMBER 13, 1995, AS AMENDED
AND SUPPLEMENTED (THE "ORIGINAL ORDINANCE");
AUTHORIZING THE ISSUANCE OF THE CITY OF ATLANTIC
BEACH, FLORIDA, UTILITIES SYSTEM REVENUE REFUNDING
BOND, SERIES 2014, IN THE AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $14,000,000 TO REFUND THE
CITY'S OUTSTANDING UTILITIES SYSTEM REVENUE
REFUNDING BONDS, SERIES 2004, UTILITIES SYSTEM
REVENUE BONDS, SERIES 2010A-1 AND UTILITIES SYSTEM
REVENUE REFUNDING BONDS, SERIES 2010B; APPROVING A
FORM OF LOAN AGREEMENT AND AUTHORIZING EXECUTION
AND DELIVERY OF THE LOAN AGREEMENT AND OTHER
ACTION IN CONNECTION WITH THE DELIVERY OF SUCH
BOND; PROVIDING FOR SALE OF THE BOND BY RESOLUTION
FOLLOWING SOLICITATION OF COMPETITIVE PROPOSALS
FROM COMMERCIAL BANKS AND NEGOTIATIONS WITH THE
SUCCESSFUL BIDDER; PLEDGING THE CITY'S PLEDGED
REVENUES DESCRIBED IN THE ORIGINAL ORDINANCE; AND
PROVIDING AN EFFECTIVE DATE.
SUBMITTED BY: Nelson VanLiere, City Manager
DATE: June 13, 2014
AGENDA ITEM# 7F
JULY 14,2014
BACKGROUND: At the April14, 2014 Regular City Commission Meeting, the City
Manager reported that he had been working with the City's Financial Advisor, Dunlap &
Associates, Inc., and Bond Counsel, Lewis, Longman and Walker, P.A., regarding
refinancing the City's outstanding Utility Bonds to save the City debt costs in the Utility and
Stormwater Funds. A Request for Proposals, RFP 14-07, was issued and proposals were
submitted by four financial institutions. The Financial Advisor's recommendation and
Summary of Responses is attached.
The estimated present value savings to the City at the lowest rate proposed of 2.33% is
$1,423,950 or an annual debt service savings of approximately $145,000 through loan payoff
in 2025. The outstanding balance of the bonds to be refinanced is approximately $14 million.
The interest rates on these bonds are variable from 3.625% to 4.500% on the Series 2004 and
fixed of3.590% and 3.68% on the Series 2010A-1 and Series 2010B, respectively.
The City may only incur debt by ordinance, per the City's Charter. Subject and pursuant to
the provisions of this Ordinance, the City is authorized to incur a Loan and to issue the Bonds
in evidence, thereof, upon substantially the terms of the Loan Agreement attached hereto as
Exhibit A, as such terms may be modified by resolution adopted at the time of closing of the
Bonds. All of the terms and covenants contained in the Loan Agreement are incorporated
herein by reference. The Bond Ordinance and Loan Agreement, upon the funding of the
Loan and the issuance of the Bonds, shall constitute a contract between the City and the
Lender.
RECOMMENDATION:
ATTACHMENTS:
AGENDA IT EM II 7f
JU LY 14,2014
Approve Ordinance No . 15-14-14 and authori ze the Mayor
to sign all re lated documents.
Ordinance No. 15-14-14 with Loan Agr eement,
Recommendation from Dunlap and Associates, Jnc.
Summary of Re sponses and Exhibit
.
REVIEWED BY CITY MANAGER: ::7t //a_, p{'(h L
ORDINANCE NO. 15-14-14
AN ORDINANCE OF THE CITY OF ATLANTIC BEACH, FLORIDA
SUPPLEMENTING ORDINANCE NO. 15-95-7 ENACTED BY THE
CITY COMMISSION ON NOVEMBER 13, 1995, AS AMENDED
AND SUPPLEMENTED (THE "ORIGINAL ORDINANCE");
AUTHORIZING THE ISSUANCE OF THE CITY OF ATLANTIC
BEACH, FLORIDA, UTILITIES SYSTEM REVENUE REFUNDING
BOND, SERIES 2014, IN THE AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $14,000,000 TO REFUND THE
CITY'S OUTSTANDING UTILITIES SYSTEM REVENUE
REFUNDING BONDS, SERIES 2004, UTILITIES SYSTEM
REVENUE BONDS, SERIES 2010A-1 AND UTILITIES SYSTEM
REVENUE REFUNDING BONDS, SERIES 20 lOB; APPROVING A
FORM OF LOAN AGREEMENT AND AUTHORIZING EXECUTION
AND DELNERY OF THE LOAN AGREEMENT AND OTHER
ACTION IN CONNECTION WITH THE DELNERY OF SUCH
BOND; PROVIDING FOR SALE OF THE BOND BY RESOLUTION
FOLLOWING SOLICITATION OF COMPETITNE PROPOSALS
FROM COMMERCIAL BANKS AND NEGOTIATIONS WITH THE
SUCCESSFUL BIDDER; PLEDGING THE CITY'S PLEDGED
REVENUES DESCRIBED IN THE ORIGINAL ORDINANCE; AND
PROVIDING AN EFFECTNE DATE.
AGENDA ITEM# 7F
JULY 14,2014
WHEREAS, the City Commission of the City of Atlantic Beach, Florida (the
"City") has determined that it will achieve debt service savings by refunding the
Refunded Bonds as herein defined;
NOW THEREFORE, BE IT ENACTED BY THE CITY COMMISSION ON
BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA:
Section 1. AUTHORITY FOR THIS ORDINANCE. This Ordinance is enacted
pursuant to the provisions of the Act, as defined in the Loan Agreement, a form of
which is attached hereto as Exhibit A.
Section 2. DEFINITIONS. All terms m this Ordinance shall have the
meanings as defined in the Loan Agreement.
Section 3. REFUNDING AUTHORIZED. There is hereby authorized the
refunding of the City's outstanding Utilities System Revenue Refunding Bonds Series
2004, Utilities System Revenue Bonds, Series 20 lOA-1, and Utilities System Revenue
Refunding Bonds, Series 2010B (the "Refunded Bonds"), in order to achieve debt
service savings.
Section 4. AUTHORIZATION OF LOAN AND BOND. Subject and pursuant
to the provisions of this Ordinance, the City is authorized to incur a Loan and to issue
the Bond as security therefore, upon substantially the terms of the Loan Agreement
attached hereto as Exhibit A, as such terms may be modified by resolution adopted at
the time of sale of the Bond. All of the terms and covenants contained in the Loan
Agreement are incorporated herein by reference. This Ordinance and the Loan
Agreement, upon the funding of the Loan and the issuance of the Bond to the Lender,
shall constitute a contract between the City and the Lender.
00350267-1
Section 5. SALE OF BOND.
AGENDA ITEM# 7F
JULY 14,2014
(A) Findings. It is hereby found, determined and declared, that in
accordance with the provisions of Part III, Chapter 218, Florida Statutes, a negotiated
sale of the Bond to a bank to evidence a commercial loan is in the best interest of the
City because solicitation of competitive proposals from banks is likely to achieve the
lowest cost for the Refunding.
(B) The City has solicited proposals for purchase of the Bond from
banks. Following evaluation of the responses received and negotiation with the bank
offering the proposal most advantageous to the City, the City is hereby authorized to
complete the transaction by resolution specifying the terms of the Bond, including but
not limited to interest rate, interest payment dates, maturity dates and amounts, and
terms of prepayment, and making such modifications to the terms of the Loan
Agreement as may be then approved by such resolution of the City Commission.
Section 6. NECESSARY ACTION. The Mayor, the City Manager and the City
Clerk are authorized and directed to execute and deliver the Loan Agreement and the
Bond pursuant to the resolution described in Section 5 hereof without further
authority from the City Commission. The Mayor, City Manager and City Clerk are
designated as the agents of the City in connection with the issuance and delivery of
the Bond and are authorized and empowered to take all actions and steps to execute
and deliver any and all instruments, documents or contracts on behalf of the City
which are necessary or desirable in connection with the execution and delivery of the
Loan Agreement and the Bond, and which are not inconsistent with the terms and
provisions of this Ordinance and the Loan Agreement.
Section 7. EFFECTIVE DATE. This Ordinance shall take effect immediately
upon its enactment.
00350267-1
2
AGENDA ITEM# 7F
JULY 14,2014
PASSED AND ADOPTED on first reading by the City Commission of the City of
Atlantic Beach, Florida at a regular meeting duly called and held this __ day of
____ ,2014.
PASSED AND ADOPTED on second and final reading by the City Commission
of the City of Atlantic Beach, Florida at a regular meeting duly called and held this
__ day of , 2014.
Approved as to form, sufficiency
and correctness:
Richard Komando,
City Attorney
ATIEST:
Donna L. Bartle,
City Clerk
00350267-1
CITY OF ATLANTIC BEACH, FLORIDA
Carolyn Woods,
Mayor, Presiding Officer
3
Exhibit A -Loan Agreement
00350267-1
EXHIBIT
TO
ORDINANCE
4
AGENDA ITEM# 7F
JULY 14,2014
00350267-1
LOAN AGREEMENT
between
CITY OF ATLANTIC BEACH, FLORIDA
and
Dated as of ______ , 2014
$ ____ _
UTILITIES SYSTEM REVENUE REFUNDING BOND
SERIES 2014
DRAFT
JUNE 11,2014
AGENDA ITEM# 7F
illLY 14,2014
LOAN AGREEMENT
AGENDA ITEM# 7F
JULY 14,2014
THIS LOAN AGREEMENT (this "Agreement"), dated as of _____ _
2014, by and between the CITY OF ATLANTIC BEACH, FLORIDA (the "City"), a
municipal corporation under the laws of the State of Florida, and
____________ (the "Lender"),
WITNESSETH:
WHEREAS, the City has, by adoption of Ordinance No. (the
"Ordinance") on , 2014, authorized the refunding of the City's
outstanding Utilities System Revenue Refunding Bonds, Series 2004, Utilities System
Revenue Bonds, Series 2010A-1 and Utilities System Revenue Refunding Bonds,
Series 2010B (the "Refunded Bonds") by a loan (the "Loan") from the Lender and the
issuance of the Bond in the principal amount of $ __ to the Lender to secure the
Loan; and
WHEREAS, the City has, by Resolution No. __ , adopted on June_, 2014
(the "Resolution") determined to obtain the Loan from the Lender and to issue the
Bond to secure the Loan;
NOW THEREFORE, in consideration of the premises and the respective
representations and covenants herein contained, the parties hereto agree as follows:
Section 1. Definitions. The following terms in this Agreement shall have the
following meanings, unless the text otherwise expressly requires:
"Act" means Chapter 166, Florida Statutes, the Original Ordinance and other
applicable provisions of law.
"Bond Ordinance" shall mean the Ordinance, as supplemented by the
Resolution.
"Bond" means the City's $ Utilities System Revenue Refunding
Bond, Series 2014, issued to the Lender as a single Bond in the principal amount of
$ as security for the Loan.
"City" means the City of Atlantic Beach, Florida
"Code" means the Internal Revenue Code of 1986, as amended.
"County" means Duval County, a political subdivision of the State of Florida.
"Loan" means the loan agreed to be made to the City by the Lender pursuant to
Section 3 below.
"Original Ordinance" shall mean Ordinance No. 15-95-7 enacted by the City
Commission on November 13, 1995, as amended and supplemented. Except as
00350267-1
AGENDA ITEM# 7F
JULY 14,2014
otherwise provided herein, all capitalized terms used and/ or defined in the Original
Ordinance shall have the same meanings in this Agreement.
"Refunded Bonds" shall mean the City's outstanding Utilities System Revenue
Refunding Bonds, Series 2004, Utilities System Revenue Refunding Bonds, Series
2010A-1, and Utilities System Revenue Refunding Bonds, Series 2010B.
Section 2. Findings. It is hereby found, determined and declared by the
City that:
A. The refunding of the Refunded Bonds will further the purposes of
the Act and will reduce the borrowing costs of the City.
B. The City now owns, operates and maintains the System and
receives Pledged Revenues each year which are not presently pledged for payment of
any debt, except the Refunded Bonds and the Subordinated Bonds, as defined in the
Original Ordinance, and are legally available to pay the Bond. Such Pledged
Revenues will be sufficient to pay all principal of and interest on the Bond when due
and to make all required payments under the Original Ordinance and the Bond
Ordinance.
Section 3. Loan. The Lender agrees to make a Loan to the City for the
purpose of refunding the Refunded Bonds. The Loan shall be evidenced by the Bond,
containing the terms in the Bond Ordinance and this Agreement, which shall be
substantially in the form provided in the Resolution.
Section 4. Terms and Covenants of Prior Ordinances Apply. All of the
terms and covenants of Section 6.08 and Article III and Article V, except Section 5.04
thereof relating to continuing disclosure, of the Original Ordinance, are incorporated
by reference herein and shall apply to the Loan and the Bond for the benefit of the
Lender as fully as if set out herein. Upon compliance with the requirements of the
Original Ordinance for the issuance of Additional Parity Bonds, the Bond shall be
Additional Parity Bonds for all purposes of the Original Ordinance.
Section 5. Prepayment. The Bond shall be prepayable before maturity as
provided in the Resolution.
Section 6. Application of Loan Proceeds. All proceeds received from the
Loan shall be either (1) deposited on the date of receipt with the Paying Agent for the
Refunded Bonds, in an amount sufficient to pay the redemption price for the
Refunded Bonds on the earliest practicable date of redemption, to be held uninvested
by the Paying Agent until the redemption date, or (2) deposited in an irrevocable
escrow account with an escrow agent, in a sufficient amount which, when invested to
the redemption date for the Refunded Bonds, will be sufficient to pay the redemption
price of the Refunded Bonds on the redemption date, all to be accomplished in a
manner such that the lien on the Pledged Revenues securing payment of the
Refunded Bonds will be defeased in accordance with the Original Ordinance. The
Lender shall not have a lien on the money so deposited as provided in this Section.
00350267-1
2
AGENDA ITEM# 7F
JULY 14, 2014
Section 7. Waiver of Jury Trial. WITH RESPECT TO ANY SUIT OR ACTION
BETWEEN THE CITY AND THE LENDER RELATING TO THE LOAN, OR THIS LOAN
AGREEMENT, THE CITY AND THE LENDER EACH EXPRESSLY WAIVES ANY RIGHT
TO A JURY TRIAL, AND AGREES THAT THE EXCLUSIVE VENUE FOR ANY SUCH
SUIT OR ACTION SHALL BE DUVAL COUNTY, FLORIDA.
Section 8. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when hand delivered
or mailed by registered or certified mail, postage prepaid, to the parties at the
following addresses:
As to the City:
As to the Lender:
Notice Addresses
Nelson VanLiere
City Manager
City of Atlantic Beach
800 Seminole Road
Atlantic Beach, Florida 32233-5445
(904) 247-5807
Any of the above parties may, by notice in writing given to the others, designate
any further or different addresses to which subsequent notices, certificates or other
communications shall be sent. Communication to the Lender via telecopier shall be
confirmed by delivery of a hard copy thereof to the Lender not later than two (2)
Business Days after such communication by telecopier.
Section 9. Qualified Tax-Exempt Obligation. The City hereby represents
and finds that it reasonably anticipates not more than $30,000,000 of tax-exempt
obligations (other than certain private activity bonds) will be issued by the City and its
subordinate governmental entities in calendar year 2014. The City hereby directs its
Mayor, or the Acting City Manager, or their delegates, to recertify these
representations upon issuance of the Bond, and the Bond is hereby designated as
"qualified tax-exempt obligation" under Section 265(b)(3) of the Code.
Section 10. No Recourse. No recourse shall be had for the payment of the
principal of and interest on the Bond or for any claim based on the Bond or on this
Agreement, against any present or former member or officer of the City Commission or
any person executing the Bond.
Section 11. Amendments, Changes and Modifications. This Agreement may
be amended by written agreement of the City and the Lender.
Section 12. Binding Effect. To the extent provided herein, this Agreement
shall be binding upon the City and the Lender and shall inure to the benefit of the
City and the Lender and their respective successors and assigns.
00350267-1
3
AGENDA ITEM# 7F
JULY 14, 2014
Section 13. Severability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
Section 14. Execution in Counterparts. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an original
and all of which shall constitute but one and the same instrument.
Section 15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
00350267-1
4
AGENDA ITEM# 7F
JULY 14,2014
IN WITNESS WHEREOF, the City and the Lender have executed and delivered
this Loan Agreement as of , 2014.
(SEAL)
AITEST:
By: __________________________ _
Donna L. Bartle, City Clerk
00350267-1
5
CITY OF ATLANTIC BEACH,
FLORIDA
By: __________________________ _
Carolyn Woods, Mayor
[LENDER]
By: __________________________ __
Its:
D A
Dunlop &
Associates
Dunlap & Associates, Inc .
June I 6, 2014
Mr. Nelson Van Licrc
City Manager
City of Atlantic Beach
800 Seminole Road
Atlantic Beach, FL 32233
Financia l Consultants
Subject: City of Atlantic Beach, Florida
Dear Nelson,
Utilities System Revenue Refunding Bond, Series 2014
Letter of Recommendation
A GENDA ITEM II 7F
J ULY 14 ,2014
Dun lap & Associates, Inc. ha s reviewed the proposals submitted by the Bank of America, J .P. Morgan
Chase Bank, Sun Trust and TD Bank. (See attached Summary of Responses)
As yo u will note , TD Bank's Op ti on I provided the lowest rate of2.33% for the Utilities Sys tem Revenue
Refunding Bond , Seri es 20 I 4 ("20 I 4 Bond"), based on a fonnula that uses the I 0 year Libor Swap Rate
as a benclunark . The I 0 year Libor Swap rate is a variab le rate which changes depending on market
condi ti ons, therefore th e 2.33 % interest rate may vary up until the tim e the rate is set. The pre sent value
savings to the City at the 2.33% rate is $1 ,423,950 or 9.57% of refunded bonds .
We recommend that the City accept TO Ba nk's Opt ion 1, ba sed on the fa ct that TD Bank offers the
lowest rate. lf approved , the 2014 Bond is scheduled to close on August 1 8, 2014 .
Please feel free to ca U with any que stions. We appreciate the opportunity to be of service to the City of
Atlantic Beach, Florida.
Sincerely,
1146 Keyes Avenue Winter Park, Florida 32789
Telephone: 407.678 .0977 Telecopy: 407.678 .6240
rFitm I
I Comac: Person
A ll-ln True Intents! Cost
'
lndic.ative Prici ng
R ate _oc;;ed
·R a te Formula
San'< Counsel Fee
(San~ Counsel)
F onal l.<a tu":Y
lntare-st Calcula!JCn
Pnepa,men:
A:idr:.o,..• Bor.ds T ~st
-em-ct Propcsal
'-axa!>l:y All,us:noe~:
•Co"P')fa~e Tax Rate AC:II$Men:
~.:ory Re!atonshop
::>e!a .. tRa te
,F ,nanc.aJ Statemen:s Req,.,•ed
I Othe< PI'O\IIS O'l
Coty of Atlantic Beach
Utilities S ystem Revenue Refundong Bond, Series 2014 (2004, 2010A-1 , and 20108 )
Summary of R esponses i n O rder by All-in True Interest Cost
TD Bank (Option 1) I TD a.nk (Option 2) JPII ChaM IODtion 1) Banltol~
Coley ~O.'leS I Coley ~'OneS R e1'1ee L.gon;Oan laly All a.&..ie<
(90<' i 26>25~ ,904 26$.2504 4~ 925-2726 l 850 I 934-5946
Ja CASOnv .e ~da ~~·· Florida
"--:aTT".a Geotg.a Pens.aco43 F1onda
2.39% 2.62% 2.66% 2..711%
2..33% 2.56% 2.60~ 2.64%
No 112Dc :o Si18 14; No (121bp to 8118'1 4) ll.o oSet u oon acceptance! No : Set2 Clays P'10I' t11 Clos.ng)
70'11. 10yr LI3 0R Swap R ate • 4 3bp$ 7~ 10yr L•BOR Swap Rate + 6&.lps -6 % 10yr 7reasury • 61 .7bps 79n"th Swap Ra:e • 52bps
56.000 $6,000 S8.500 $5500
(TB D) (TBDJI (Ho1and & Kn.ghl) (TBO)J
10 112025 1Di112025 10:1 '2025 1 1QJ1'20251
JO,J60 301360 301360 301360
Ma<.~·t.'>C>e Any.me@Par II. on-c:ab!>Oe l.'a<e-Whole
:10% 1 1~ 110% N:A
N~A .~A 5112;;4 &.112/1 4
Yes Yes Yes VII$
Yes Yes No Yes
to.o No No No
: .. rrent ~n:erest p~~s 6'14 Current ln:erest !lk>s ~ N'A Maxlnum ~ Lav.
'
270 Days Z70 Days 270 Oa ts 270 Days
1) A~~on o' Loan
2 ) Ass.gnment at Ulall
JPiot ChaM IODtion 2)
R~ L.gon!Oan Laly
404 926-2-26
Al:an:a Georg.a
2.71 %
'
2..6 5%
No ·(Set upon aroeptanc:e)
76 % lOyr Tneasury ~ 66 7bps
S8.500
(f'ooand & Kn.ght)
10''12025
30'360
1017119!!!! Pa!
:10%
a :2.14
Yes
No
No
N IA
2i1 Oats
> 0
c:~ ro -<>
-~ =i rv er:
~s::
A :;:, .....,
-:;
Fi nn
ContaC1 Person
A ll-in True Interest Cost
Indicative Prici ng
Rate Locked
Rate Formula
Bank Counsel Fee
(Bank Counsel)
Final Matunty
Interest Calculation
Prepayment
Addotional Bonds Test
Term of Proposal
Taxabihty Adjustment
Corporate Tax Rate AdJUStment
Deposotory Relabonshop
Default Rate
Fi nancial Statements Required
Other Provision
Ci ty o f Atlantic ~ac h
Ut ilit i es S y stem Revenue R efunding Bond , S eries 2014 (2004, 2 010A ·1, and 201 0 6 )
S u m m ary of Responses in Order by A ll·in T r ue Interes t C o s t
JPM Chase !OPtion 3 Sun Trust IODtio n 1 1 Su n Trust (Option 31 Su n T rust (Option 2)
Renee Ugon/Oan Lally Lisa Hayes Usa Hayes Losa Hayes
{404) 926-2726 (904) 632-2599 (904) 632-2599 (904) 632-2599
Atlanta. Georgoa JacksonviUe. Florida Jacksonville, Flonda Jacksonvolle. Florida
3.04% 3.14% 3.30% 3.39%
2.98% 3.08% 3.24% 3.33'!.
No (Set upon acceptance) No (8bps for 75 days) No (8bps for 75 days) No (8bps for 75 days)
76% 10yr T reasury + 997bps NJA NIA N/A
$8,500 $8,500 S8,500 $8,500
(Holland & Knight) (Holland & Knight) (Holland & Knight) (HoDand & Knight)
10/1/2025 10/1/2025 10/1/2025 10/1/2025
301360 30/360 30/360 30/360
1012115@ Par Make-Whole After 10/1119@ Par Any!Jme @ Par
110% 110% 110% 110%
8/12/14 6 /16/14 6/16/14 611 6/14
Yes Yes Yes Yes
No Yes Yes Yes
No No No No
NJA Lesser of P+8% or MaXJmum by Law Lesser of P+S% or Maxomum by Law Lesser of P+8% or Maximum by Law
270 Days 210 Days 210 Days 210 Days
24bps to delete Corporate Tax 24bps to delete Corporate Tax 24bps to delete Corporate Tax
language Lanouage Langua~e