HomeMy WebLinkAbout2003 12 08 Consent 206 Non Revolving Line of Credit to Finance Municipal Projects
120803_COMM_Regular__R.F.P.Page 1 of2
COMMISSION AGENDA
ITEM 206
Consent X
Information
Public Hearing
Regular
December 8, 2003
Meeting
MGR. ~ /Dept.
REQUEST: City Manager requesting the Commission to approve issuance of a R.F.P. for a
bank qualified non-revolving line of credit to finance municipal projects not to exceed
$2,500,000.
PURPOSE: This request is needed to get Commission approval for acquiring financing for
small municipal projects though a bank qualified non revolving line of credit in the alternative to
other financing instruments.
CONSIDERATIONS: The City needs short and intermediate term financing to finance projects
with 3 to 5 year payouts.
A bank qualified non-revolving letter of credit is the ideal financial instrument in this situation
because:
1. It is very inexpensive to issue.
2. It has low interest rates.
3. It is very flexible.
4. It is very safe.
Separate Commission resolutions are required to authorize utilizing the line of credit for each
project.
120803_ COMM _Regular _ _ R.F.P.
Projects that we anticipate financing with the line of credit are:
Parker property improvements
Expansion of City Hall
Expansion of Police Building
New Public Works Facility
Fire Truck Replacement
100,000
600,000
100,000
600,000
300,000
1,700,000
FUNDING: The source of funding for these projects are as follows:
Parker property improvements
Expansion of City Hall
Expansion of Police Building
New Public Works Facility
Fire Truck
Park Impact Fees
Public Building Impact Fees
Police Impact Fees
Public Building Impact Fees
General Fund
RECOMMENDATIONS: It is recommended that the City Commission authorize the City
Manager to issue an RF.P. for a bank qualified variable rate line of credit not to exceed
$2,500,000 and to return the results of the RF.P. to the Commission for approval
ATTACHMENTS: (A) November 24,2003 letter of David Moore and RF.P.
COMMISSION ACTION:
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The PFM Group
Public Financial Management, Inc.
PFM Asset Management LLC
PFM Advisors
Lincoln Plaza
Suite 1170
300 S. Orange Avenue
O~ando, FL
32801-3470
407 648-2208
407-648-1323 fax
www.pfm.com
November 24, 2003
Memorandum
To: Ron McLemore, City Manager
City of Winter Springs
From: David Moore
Rebecca Peterson
cc: Louise Frangoul, Finance Director
Re: RFP for Line of Credit
At the request of the City of Winter Springs (the "City"), Public Financial Management, Inc.
("PFM"), in its capacity as fInancial advisor to the City, has prepared a draft of a Request for
Proposals for a Bank QualifIed Non-Revolving Line Of Credit ("LOC") & Term Loan.
The LOC will be structured to allow the City to take monthly draws and prepay at any time before it
converts to a Term Loan with a fIfteen-year amortization (2018). Interest on the LOC will be paid
semi-annually on June 1 and December 1 and will be calculated at a bank-qualifIed variable rate.
Upon conversion of the LOC to a Term Loan, the City will have the option to keep the obligation
in a variable rate mode or switch the obligation into a fixed rate mode. Interest on the Term Loan
will be paid semi-annually on June 1 and December 1 and amortize the principal balance of the loan
annually on June 1.
The structure of the LOC will provide the City with the flexibility to add projects via Resolution
throughout the draw period. The City's alternatives to using an LOC to fund these projects are as
follows:
Alternative:
1. Regular bond issue
2. l\ number of successive bank loans
3.
Pooled loan program (League of Cities,
Florida Municipal Loan Council, etc.)
Reason for using LOC vs. Alternative:
. Higher costs of issuance.
. Would require multiple, successive loans to achieve the
same flexibility to add projects.
. Limited to interest rate mode, timing, amortization and
prepayment options dictated by program.
All of the above listed alternatives can be optimal with the appropriate circwnstances. However,
since the amount of the financings are expected to be very small and the City prefers the flexibility
to add projects at will and prepay at any time without penalty, the most cost effective option is a
bank-qualified line of credit.
Enclosed with this memo is the RFP. Should you have any questions, please do not hesitate to
contact us at 407-648-2208.
CITY OF WINTER SPRINGS, FLORIDA
REQUEST FOR PROPOSALS
FOR
CAPITAL IMPROVEMENT REVENUE NOTE, SERIES 2004
BANK QUALIFIED NON-REVOLVING LINE OF CREDIT
& TERM LOAN
December 10, 2003
TABLE OF CONTENTS
Page
I. Introduction
A. Objecti ve ....... .... .......... ....... ............ ................ .....____..... ............. .....................1
B. Bidding Instructions
1. Sealed B ids__ ____ ______.__ __.. ................... .............. .____ __ ________ __ .__.. __...... ...... .......2
2. Bid Response....... ____... ______...... ____... .__. .......... ........................ .__. __ ____ __ ____ ____.2
3. Questions, Additional Information..mm.m.............................................__2
4. T entati ve Schedul e............................................. _........... _.........................3
C. Security for LOC and Term Loan____m..mm..m..__m__..m__...........................__.3
D. Structure of the Financing................ ...................... ...... .... ............... ...... .........3
E. Prov isos.... _............................................................................. _.... __.................4
II. Evaluation of Proposals - Criteria__m__mm______m__m.......................__.__m.mm..____A
III. Instructions to Proposers ......... ............ .... __.___... __ m ..... ......... ............. .......... .....m. 6
IV. Other Information. ....... .............. __. ...__. .... __..... ...... .... ..... ....................... ...... ..... __. .__7
REQUEST FOR PROPOSALS
CITY OF WINTER SPRINGS, FLORIDA
CAPITAL IMPROVEMENT REVENUE NOTE, SERIES 2004
BANK QUALIFIED NON-REVOLVING LINE OF CREDIT
& TERM LOAN
I. Introduction
The City of Winter Springs, Florida (the "City") was originally incorporated in 1959 under the
name of the Village of North Orlando and became the City of Winter Springs in 1972. The City
is located in southern Seminole County in central Florida. Adjacent municipalities are
Longwood, Casselberry and Oviedo. The City's estimated 2002 population was 32,000. The City
is served by a City Commission - City Manager form of government consisting of a Mayor, five
commissioners and a City Manager. The Mayor and City Commissioners are elected for four-
year terms. The Mayor votes on matters coming before the City Commission only if needed to
break a tie vote among the other City Commissioners. The City Manager is appointed by the City
Commission.
A. Objective
The objective of this Request for Proposals (the "RFP") is to identify the institution that
can provide the City of Winter Springs, Florida (the "City") with a $2,500,000 variable
rate line of credit (the "LaC") that will provide for conversion to a term loan in the form
of a revenue note (the "Term Loan") at the lowest overall borrowing cost without
prepayment penalty and pursuant to certain conditions. The financing will be a private
placement and the City is not preparing any disclosure information. The LaC and
subsequent Term Loan will be secured by the impact fees of the Project, as well as a
covenant by the City to appropriate in its annual budget an amount from Non-Ad
Valorem Funds to pay the principal and interest on this Note.
The City plans to draw upon the LaC in multiple increments over the period of two (2)
years ("Draw Period") to fund certain capital projects set forth in the City's capital plan
(the "Project"). During the Draw Period on the LaC, the City will pay interest only on a
semiannual basis on each June 1 and December 1 following the date of the first draw on
the LaC. Upon the conclusion of the Draw Period the City plans to convert all or a
portion of the LaC to a Term Loan (the "Conversion Date").
The Term Loan will bear interest at a fixed or variable rate (to be selected by the City at
the time of conversion) and will mature no later than June 1,2018. The principal of the
Term Loan will be paid annually on June 1 commencing the first June 1 at least 12
months after the Conversion Date. Interest on the Term Loan will be paid semi-annually
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on June I and December 1 immediately following the Conversion Date. The debt service
payments on the Term Loan will be structured to produce level annual debt service.
B. Bidding Instructions
I. Sealed Bids
Four (4) copies of the response to this RFP shall be submitted on or before
2:00 p.m. EST on December 19, 2003 at the following addresses:
Louise Frangoul (2 copies)
Finance Director
City of Winter Springs
1126 E. State Road 434
Winter Springs, FL 32708
(407) 327-5960 phone
(407) 327-4753 fax
David Moore (2 copies)
Senior Managing Consultant
Public Financial Management, Inc.
300 South Orange Avenue, Suite 1170
Orlando, FL 32801
(407) 648-2208 phone
(407) 648-1323 fax
The City reserves the right to reject any and all proposals, to waive any
informality or irregularities in any proposal received or take any other such
action that may be deemed to be in the best interest ofthe City.
2. Bid Response
Each bid should address all pertinent areas and be specific. Any conditions should
be clearly stated.
The failure to disclose substantive terms, conditions and covenants may be
considered cause for the proposer's proposal to be rejected by the City.
The City shall not accept any proposals with reserve requirements or other
restrictions to revenues or requirements to maintain minimum balances in any bank
account.
3. Ouestions. Additional Information
Contact with personnel and Board members of the City other than the Finance
Director or the designated representative regarding this Request for Proposals
will be grounds for elimination from the selection process. The City shall not
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be responsible for oral interpretations given by any employee or its
representative. The City will not be liable for any expenses incurred in
connection with the preparation of a response to this RFP.
The proposer shall examine all proposal documents and shall judge all matters
relating to the adequacy of such documents. Any inquiries, suggestions or requests
concerning clarification or solicitation for additional information shall be submitted
in writing to the City's Financial Advisor: Public Financial Management, Inc. 300
S. Orange Avenue, Suite 1170, Orlando, FL 3280 I or fax the same to (407) 648-
1323. Public Financial Management, Inc. will be reviewing the bids and will
recommend the proposer that bids the lowest overall borrowing cost and most
favorable terms.
4. Tentative Schedule
The City will attempt to adhere to the following schedule:
December 10,2003
December 19, 2003
January 12,2004
RFP Issued
Written responses due
Selection of Provider I Adopt Financing
Resolution and Award to Provider
Closing
January 13, 2004
The City reserves the right to alter scheduled dates if necessary.
c. Security for LOC and Term Loan
Amounts due under the LOC and Term Loan will be exclusively secured by the impact
fees of the Project, as well as a covenant by the City to appropriate in its annual budget
an amount from Non-Ad Valorem Funds to pay the principal and interest on this Note as
will be stated by the resolution adopted on January 12,2004.
D. Structure of the Financing
Line of Credit:
I. Amount: $2,500,000
2. Rate: Bank-qualified variable rate based on a spread to a nationally recognized
index.
3. Draws: Draw period of two (2) years. The City may make draws on the LOC no
more frequently than once per month. Draw requests must be funded via wire
transfer (at no cost) within five (5) business days of the request.
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4. Repayment Terms: Interest on the outstanding balance of the LOC will be paid
semiannually based upon a 30/360-day basis and will be paid on each June I and
December I.
5. Principal Prepayment: The LOC can be prepaid in full or in part at any time
without penalty.
Term Loan:
I. At the City's discretion, on the first day of any month, the City may elect to
convert all or a portion of the outstanding balance of the LOC to a Term Loan.
The interest rate on the Term Loan will be fixed or variable (to be decided by
the City at the time of conversion) based on a predefined spread to a nationally
recognized index. The interest rate will be a bank-qualified, tax-exempt rate. The
rate quoted may not exceed the maximum rate permitted under Florida Statute
215.84.
2. Repayment Terms: Interest payments on the outstanding principal balance of the
Term Loan will be calculated on a 30/360-day basis and will be paid semiannually
on June I and December I, of each year. The principal amount of the Term Loan
will be payable annually on June 1 and, upon conversion, shall be structured to
produce substantially level annual debt service payments each year through the
final maturity ofthe Term Loan. Final maturity of the Term Loan is June 1,2018.
3. Prepayment Terms: The City is requesting the fixed interest rate to be bid on the
basis of the following two options of prepayment terms:
a.) The Term Loan is subject to prepayment (without penalty) in whole or in part at
any time. This structure is required.
b.)The Term Loan is subject to prepayment by the City with a prepayment penalty
(please outline prepayment terms). This structure is optional.
E. Provisos
The City will not accept proposals with terms and conditions different than those
included in this RFP.
II. EV ALUA TION OF PROPOSALS - CRITERIA
Proposals will be evaluated on the basis of cost and compliance with the proposed structure
and terms of the Term Loan as outlined in this RFP. The City will select the proposal that
meets its overall goals and objectives and that provides the lowest overall borrowing cost to
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the City. Aside from the lowest overall borrowing cost and the requirements listed In
Section A below, additional criteria for selection will include the following:
· Quality of past performance,
. Financial strength,
· Ability to meet time requirements,
. Cost,
· Qualifications of personnel, and
· Corporate qualifications.
A. Proposal Format
In order to assist the City in reviewing proposals, each proposal shall be prepared
utilizing the following format and headings:
1. Contact Information:
State the legal name of the financial institution or firm, current principal business
address, contact person, telephone and facsimile numbers.
2. Interest Rate:
LOC - Identify the index and state a spread to said index for the bank-qualified
variable rate to be used on the LOC. Provide this interest rate on a current basis and
on a ten (10) year historical basis (i.e. 10-yr average of index with applied spread).
Proposer's must provide the historical database on which the interest rate is based in
an Excel spreadsheet file emailed to moored@pfm.com prior to the proposal's due
date/time.
Term Loan - Identify the index and state the spread to said index to be used to set
the fixed rate or variable rate on the Term Loan upon the Conversion Date. The City
will have the option to choose a fixed rate Term Loan or a variable rate Term Loan.
Proposers must provide interest rates for each of the Prepayment Options identified
in Section I (D) above. Provide a five-year history for each index. Provide these
fixed and variable rates on a current basis and on a ten (10) year historical basis (i.e.
10-yr average of index with applied spread). Proposer's must provide the historical
database on which the interest rate is based in an Excel spreadsheet file emailed to
moored@pfm.com prior to the proposal's due date/time.
Such rates must be presented in two ways: First, show the rate available the day prior
to the RFP due date (December 18, 2003). Second, clearly identify the methodology
for determining the interest rates at the time of conversion for the Term Loan. For
example, the rate may be expressed as a percentage of the yield for the U.S.
Government Treasury obligation having a maturity closest to, but not shorter than, the
final maturity (or weighted average maturity) of the Term Loan. Provide the basis for
the interest rate calculations and provide a detailed example of such calculations.
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3. Fees and Expenses:
Describe in detail all fees and expenses for which the City will be responsible. The
amounts stated in the proposal shall represent the maximum amounts payable to the
proposer by the City. All fees and expenses in excess of those stated in the proposal
shall be the sole responsibility of the proposer and will not be paid or reimbursed by
the City. The City's bond counsel, Akerman Senterfitt, P.A. will prepare all
documents and will render an opinion regarding the tax-exemption of the LOC and
the Term Loan.
4. Prepayment Provisions:
If the proposer's prepayment provIsIons are different than those outlined, above
please specify.
5. Conditions:
Provide a listing of all conditions, terms or restrictions, other than those specified in
this RFP, which would be included in your commitment to provide the Term Loan.
ill. INSTRUCTIONS TO PROPOSERS
A. Proposers shall thoroughly examine and be familiar with the bid specifications. Failure
of any proposer to receive or examine this document shall in no way relieve any
proposer of obligations pertaining to this bid or the subsequent contract.
B. Any changes or modifications to the bid specifications can result in the rejection of the
bid as not being responsive to this RFP.
C. The responsibility for delivering the proposal to the City on or before the specified date
and time will be solely and strictly the responsibility of the proposer. The City will in
no way be responsible for delays caused by the United States Post Office or a delay
caused by any other occurrence.
D. The response deadline shall be strictly observed. Under no circumstances will a
proposal delivered after the time specified be considered. Such proposals will be
returned to the proposer unopened.
E. Proposers will not be allowed to withdraw or modify their bids for a period of ninety
(90) days after the opening time and date.
F. The City reserves the right to reject the bid of any proposer who has previously failed
in the proper performance of a contract or to deliver on time other contracts similar in
nature, or who is not in a position to perform properly under this contract.
G. The City reserves the right to inspect all facilities of the proposer in order to make a
determination as to their capabilities.
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H. Federal, state, county and local laws, ordinances, rules and regulations that in any
manner affect the items covered herein apply. Lack of knowledge by the proposer will
in no way be a cause for relief from responsibility.
I. No successful proposer may assign any portion of the contractual agreement between
the parties without prior written authorization by the City.
1. Changes to the RFP may be made by and at the sole discretion of the City.
K. Public Entity Crimes Form - Each proposer shall complete the Public Entity Crimes
Form and shall submit the same with the proposal. The City considers the failure of the
proposer to submit this document to be a major irregularity and may be cause for
rejection of the proposal.
L. Warranties - The proposer, in submission of its proposal, warrants to the City that it will
comply with all applicable federal, state and local laws, regulations and orders in
providing the services under the proposed documents.
M. Collusion - The Proposer, by affixing its signature to this proposal, certifies that its
proposal is made without previous understanding, agreement, or connection either with
any previous firms or corporations offering a Proposal for the same items, or with the
City. The proposer also certifies that its proposal is in all respects fair, without outside
control, collusion, fraud or otherwise illegal action.
IV. OTHER INFORMATION
A. The City reserves the right to accept or reject any and all bids for any reason deemed
appropriate by the City, to waive any irregularities or informalities in any bid or in the
bidding, and to accept or reject any items or combination of items. The award will be
to the institution whose response complies with all of the requirements set forth in this
RFP and whose bid, in the sole opinion of the City, is best taking into consideration all
aspects of the proposer's response.
B. In the event that the successful proposer does not execute a contract within a timeframe
acceptable to the City, the City may give notice of intent to award the bid to the next
most qualified proposer or to call for new bids and may proceed to act accordingly.
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