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CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Approval of Ordinance Number 15-99-9
Refinancing Gulf Breeze Pooled Loan
SUBMITTED BY: David E. Thompson, City Manager
DATE: February 17, 1999
BACKGROUND: See attached memorandums from Finance Director Nelson Van
Liere and Alexandra M. McLennan of Squire, Sanders & Dempsey.
According to the City Charter, an ordinance is required for
refinancing the Gulf Breeze Loan. For this reason, this ordinance
is being presented for City Commission action at this time.
RECOMMENDATIONS: We recommend the approval of Ordinance 15-99-9 on first
reading.
We recommend setting the second reading and public hearing for
the March 8, 1999 City Commission Meeting.
ATTACHMENTS: Memorandums from Nelson Van Liere and Alexandra M.
McLennan
Ordinance 15-99-9
REVIEWED BY CITY MANAGER:
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CITY OF
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MEMORANDUM
Date: Februazy 1 S, 1999
To: David Thompson, City Manager
From: Nelson Van Liere, Finance Director
Subject: Refinancing of the Gulf Breeze Pooled Loan
800 SEbiINOLE ROAD
ATLANTIC BEACH, FLORIDA 32233-5445
TELEPHONE (904) 247-5800
FAX (90~i) 247-5805
SUNCO~i 852-5800
Please find attached a memorandum from the Bond Council, Squire, Sanders & Dempsey L.L.P.,
recommending the approval of Ordinance 15-99-9. Contracting for debt is required by the City
Charter to be done by ordinance.
Also, the date for the second reading and a public hearing should be set for the first Commission
meeting in Mazch.
If you have any questions prior to the meeting, please call me.
LLP. ~p
MEMORANDUM
To: Mayor and Commissioners
City of Atlantic Beach, Florida
From: Alexandra M. MacLennan
Squire, Sanders & Dempsey L.L.P.
Date: February 16, 1999
Re: Refinancing of Gulf Breeze Pooled Loan
Background. The City has previously borrowed money through the Gulf Breeze
Pooled Loan Program at an interest rate in excess of 7.00% (the "Gulf Breeze Loan"). Due to
the favorable economy, interest rates have dropped substantially since the City first entered into
this loan. The Commission has previously authorized the City Staff to seek proposals from
interested financial institutions for the purpose of refinancing the Gulf Breeze Loan. Proposals
have been received and the City Staff and the City's representatives are currently negotiating the
final terms of the refinancing with SunTrust Bank, North Florida, National Association (the
"Bank"), who submitted a proposal offering a new interest rate of 4.20%. Because of the
complexity of the Gulf Breeze Loan, additional documentation and negotiation is necessary to
accomplish the refinancing in a manner which is acceptable to the City and the Bank.
The City Charter requires all City borrowings to be authorized by ordinance. In order to
avoid any unnecessary delay in the completion of the refinancing, we have prepared and attach a
short ordinance, for your consideration on first reading, which meets the Charter requirements to
authorize the refinancing. A resolution supplemental to this ordinance, containing the remaining
details of the refinancing will be submitted for the Commission's consideration at the first
meeting in March, which will, presumably, be the meeting at which the attached ordinance is
considered on second hearing and a public hearing conducted.
The proposed refinancing includes the issuance of up to $1,820,000 principal amount of
revenue refunding bonds, secured primarily by a pledge of the City's Public Service Taxes. The
City's obligations would be additionally secured by a covenant to budget and appropriate from
legally available non-ad valorem revenues an amount sufficient to pay debt service to the extent
the Public Service Taxes are insufficient. The Bank's bond counsel has drafted his documents
calling the refinancing obligations "bonds," however, there is virtually no difference between
"bonds" and a "loan" when the City is the borrower. This obligation is not a general obligation
of the City and the Bank will never be able to compel the City to use its ad valorem taxing power
to repay the debt.
~. Requested Action. Consider the attached ordinance on first reading on February 22,
1999 and set for second reading and public hearing on March 8, 1999.
If you have any questions prior to the meeting on February 22, 1999, please feel free to
contact me or Robert Freeman at 353-1264.
Alexandra M. MacLennan
#2799 v1- raenro mnrntissrott - 2 - '" February 16. 1999
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ORDINANCE NO. 15-99-9
AN ORDINANCE OF THE CITY OF ATLANTIC BEACH, FLORIDA,
PROVIDING FOR THE REFUNDING OF THE CITY'S OUTSTANDING
OBLIGATION IN THE FORM OF A PROMISSORY NOTE BY THE CITY OF
GULF BREEZE, FLORIDA LOCAL GOVERNMENT LOAN PROGRAM;
PROVIDING FOR THE ISSUANCE OF NOT EXCEEDING $1,820,000
CAPITAL IMPROVEMENT REVENUE REFUNDING BONDS, SERIES 1999,
TO FINANCE THE COST OF SUCH REFUNDING; PROVIDING FOR THE
PAYMENT OF THE BONDS FROM CERTAIN PLEDGED REVENUES;
MAKING CERTAIN COVENANTS AND AGREEMENTS IN CONNECTION
THEREWITH; AUTHORIZING THE CITY MANAGER OF THE CITY TO
PROCEED TO DEVELOP NECESSARY DOCUMENTS TO~ ACCOMPLISH
THE FINANCING; AND PROVIDING AN EFFECTIVE DATE.
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 Section 17 of the City's Charter, Chapter 166, Florida Statutes, and
other applicable provisions of law (the "Act").
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SECTION 2. FINDINGS. It is hereby ascertained, determined and declared that:
(A) It is necessary and desirable and in the best interest of the inhabitants of the City
to refund the City's outstanding obligations under that certain Loan Agreement dated as of
January 1, 1989, between the City, SunBank, National Association and Jackson C. Tuttle, acting
on behalf of the City of Gulf Breeze, Florida, in the form of a Promissory Note dated January 4,
1989 (the "Refunded Obligation").
(B) The City is without currently available funds to pay the cost of the refunding and,
therefore, proposes to pay such costs through the issuance of not exceeding $1,820,000 Capital
Improvement Revenue Refunding Bonds, Series 1999 (the "1999 Bonds"). The City is
authorized pursuant to the provisions of the Act to undertake the refunding and issue the 1999
Bonds.
(C) The principal of, premium, if any, and interest on the Series 1999 Bonds and all
required sinking fund and other payments therefor shall be payable solely from the Public Service
Tax (formerly the Utilities Service Taxes) levied and collected by the City pursuant to Section
166.231, Florida Statutes, on every purchase of electricity, metered or bottled gas, natural, liquefied
petroleum gas or manufactured, No. 1 kerosene, No. 2 and No. 3 fuel oils (but not fuel oils of lower
grade) and local telephone service, within the corporate limits of the City. The City shall never be
required to levy ad valorem taxes on any property therein to pay the principal of and interest on the
1999 Bonds or to make any other payments with respect thereto. The 1999 Bonds shall not
constitute a lien upon any properties owned by or located within the boundaries of the City, but
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shall be payable solely from the Pledged Revenues and, if necessary, the Non-Ad Valorem
. Revenues (herein defined), pursuant to the provisions of this ordinance and any ordinance
amendatory hereof or any resolution supplemental hereto.
(D) It is in the best interest of the health, safety, and welfare of the City and the
inhabitants thereof that the City covenant to budget and appropriate all legally available revenues
and taxes (other than ad valorem taxes) of the City derived from any source and legally available to
pay principal of and interest on the 1999 Bonds (the "Non-Ad Valorem Revenues"), subject to any
prior liens or encumbrances on all or any specified portion thereof, whether now existing or
hereafter created, amounts sufficient to pay, if necessary, the principal of and interest on the 1999
Bonds when due.
(E) The City currently receives the Non-Ad Valorem Revenues, and is legally entitled
to covenant to budget and appropriate from such Non-Ad Valorem Revenues sufficient amounts, if
necessary, in each Fiscal Year to pay, together with the Pledged Revenues, the principal of and
interest on the 1999 Bonds, when due.
SECTION 3. AUTHORIZATION OF REFUNDING. The refunding of the Refunded
Obligation is hereby authorized.
SECTION 4. AUTHORIZATION OF 1999 BONDS. The issuance by the City of not
exceeding $1,820,000 Capital Improvement Refunding Revenue Bonds, Series 1999, for the
purpose of paying costs of the refunding is hereby authorized. The 1999 Bonds shall be dated, shall
be in a single denomination of the full principal amount thereof, as to be provided in a subsequent
resolution of the Commission, shall be in fully-registered form, payable to the purchaser thereof,
shall mature at such time and shall bear interest from their date until maturity, payable
semiannually at a rate not to exceed the maximum rate allowed by law, shall be redeemable prior to
maturity, all as to be provided in a subsequent resolution of the Commission. The 1999 Bonds shall
be secured solely by a (i) lien upon and pledge of the Pledged Revenues and (ii) the covenant of the
City to budget and appropriate Non-Ad Valorem Revenues sufficient to pay debt service on the
1999 Bonds to the extent Pledged Revenues are insufficient to pay the same. The Commission
shall, prior to the award of the 1999 Bonds, adopt a specific bond resolution (including any
resolutions supplemental to the bond resolution), supplemental to this Ordinance, setting forth the
details of the 1999 Bonds and other matters relative thereto.
SECTION 5. REPEAL OF INCONSISTENT INSTRUMENTS. All ordinance or
resolutions of the Commission or parts thereof in conflict herewith are hereby repealed to the extent
of such conflict.
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2792V2/LZQOSOOI/O-S}{ORT ATL BC}I
SECTION 6. EFFECTIVE DATE. This Ordinance shall become effective immediately
upon its enactment.
PASSED on First Reading , 1999.
PASSED on Second Reading ,1999.
Approved as to form, sufficiency and
correctness:
City Attorney
SEAL
ATTEST:
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City Clerk
Mayor/Presiding Officer
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