Item 8DAGENDA ITEM # 8D
JULY 26, 2010
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Update on Proposed Debt financing for Public Utility upgrades to meet
TMDL standards.
DATE: July 14, 2010
SUBMITTED BY: Nelson Van Liere, Finance Director
BACKGROUND: Over the next few months, the City of Atlantic Beach plans to seek
competitive proposals from banks in the Northeast Florida region for the
first of two loans needed to fund Public Utility improvements related to
the TMDL project. This process will take approximately 2-3 months to
complete. As was previously approved in January of 2009, the City will
be using the services of Dunlap and Associates, Inc., who has served the
City for many years pursuant to an agreement approved by the
Commission in prior years. Mr. Jack McWilliams, of Livermore,
Freeman, & McWilliams will be serving as Bond Counsel to ensure that
all of the loan agreements meet the criteria necessary to remain in
compliance with our existing debt. -
The original plan called for debt of approximately $10 million. We now
are planning to issue debt in two phases. The first portion represents
approximately a $5.2 million utility loan for twenty years. These funds
will be used primarily for the new sewer force main project and design of
the upgrades.
Current interest rates for a twenty year fixed rate loan are 4.25%-4.40%.
The annual debt service for this loan will be approximately $399,000 and
will be secured by the Net Revenues of the Utility System along with
other outstanding Utility System debt. A bank loan has been determined
to be the lowest cost type of debt for the City by our financial advisor due
to low interest rates and low issuance costs for this small amount. This
additional debt service is included in the proposed budget document for
Fiscal Year 2011 and will require a 6% increase in revenues to fund the
added debt service requirements. The estimated fees for this transaction
are $32,500. They include Dunlap and Associates, Inc., at $12,500;
Livermore, Freeman and McWilliams for $12,500 and Bank Counsel at
$7,500. These expenses will be paid from the proceeds of the bank loan.
The second phase of loans will be secured upon final design of the plant
upgrades to be completed later next year.
Upon receipt of the competitive bids, staff will bring back to the
Commission a resolution recommending awarding a bank loan to the
successful bidder.
CITY MANAGER APPROV