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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: 2 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 1 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 2 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. 3 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 4 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. 5 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. 6 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. 7