HomeMy WebLinkAboutResolution 629 Seminole Utility Company
RESOLUTION NO. 629
A RESOLUTION OF THE CITY OF WINTER SPRINGS, FLORIDA,
APPROVING A LINE OF CREDIT FOR USE IN THE ACQUISITION OF
SEMINOLE UTILITY COMPANY AND PROVIDING FOR AN EFFECTIVE
DATE.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF WINTER SPRINGS, FLORIDA:
SECTION I. That the City Commission of the City of Winter
Springs, Florida, having previously determined that a line of
credit in the amount of $750,000 ("Line of Credit") for use by the
City to pay certain expenses relating to the acquisition of the
assets of Seminole utility Company and to initially support the
working capital requirements of that system is necessary, desirable
and in the best interest of the City, the City Commission hereby
determines that the Line of Credit with Sun Bank, as evidenced by
the Commitment Letter attached hereto as Exhibit "A" and
incorporated herein by reference, satisfies the City's requirements
for a line of credit, and same is hereby approved.
SECTION II. It is the intent of the City that this debt be
bank qualified as defined by the Internal Revenue Code and the City
will comply with all applicable provisions of the Code to protect
such status if issued in 1989 and the potential tax exempt status
of the interest or a portion thereof paid on the debt.
SECTION III. That the City representatives are hereby
authorized and instructed to take those actions necessary in order
to execute and effectuate the terms and conditions of the Line of
Credit.
SECTION IV. That this Resolution shall take effect
immediately upon its passage.
PASSED AND ADOPTED this 18th day of December, 1989.
CITY OF WINTER SPRINGS, FLORIDA
LEANNE M. GROVE, MAYOR
ATTEST:
MART T. NORTON
CITY CLERK
12/22/89
Sun Bank, N.A.
P.O. Box 3833
Orlando. Florida 32897
December 20, 1989
Board of City Commissioners
City of Winter Springs
c/o Mr. Harry E. Martin
Director of Finance
1126 East S.R. 434
Winter Springs, FL 32708
Honorable Members of the City Commission:
On behalf of Sun Bank, National Association (the "Bank"), I am pleased to offer the City
of Winter Springs (the "Borrower") a bond anticipation note (the "Note") in the amount
of Seven Hundred, Fifty-Thousand Dollars ($750,000). The Bank's commitment to lend
hereunder shall be subject to the following terms and conditions:
Borrower:
City of Winter Springs
Bank:
Sun Bank, National Association
Amount:
Seven Hundred, Fifty Thousand Dollars ($750,000)
Purpose:
Proceeds from this note shall be used to pay consulting and
engineering costs related to the City's future purchase of the
Seminole Utilities water and sewer system. Additionally, these
funds may initially be used to support the working capital
requirements of the system.
Closing Date:
On or before December 29, 1989
Terms:
The note shall be issued for a term of five (5) years with
interest payable monthly and principal due at maturity.
Rate:
7.0875% (Fixed) over the five (5) year period.
Fee:
None
A SunTrust Bank
Board of City Commissioners
December 20, 1989
Page 2
Security:
The lender shall be secured by a junior lien on revenues from
the Borrower's present water and sewer system. However,
after the Seminole Utilities system is acquired the Borrower
shall have the right to substitute the revenue stream of the
acquired Seminole system as collateral for this debt, provided
the Lender approves of such action.
In addition, the Bank shall have a first security interest in the
proceeds of any future utility system revenue bond issue.
Other Conditions:
(1)The Borrower shall agree to annually appropriate funds
sufficient to satisfy the debt service requirements related
to this Note.
(2) The Borrower shall provide quarterly internal
statements, along with an annual financial report
audited by a certified public accountant, acceptable to
the Bank, within 120 days following fiscal year-end.
(3) Following the acquisition of Seminole Utilities, the
Borrower shall maintain a debt service coverage ratio
for each system equal to 1.1 to 1.
(4) The Borrower shall set rates, at all times, such that a
1.10 to 1 debt service coverage is maintained.
(5) The Borrower and Lender shall agree on the content
of final documentation, to include Resolutions from the
Borrower and all other legal documentation relating
to this Note. All persons responsible for document
preparation and/or execution and delivery are subject
to Bank approval.
(6) The interest rate quoted above is based on a Preference
Reduction Rate of 20% which assumes borrowings
hereunder will be qualified under Section 265(B)(3) of
the Code. If any borrowings hereunder are not
qualified tax exempt obligations, then this shall
constitute a change in the Preference Reduction Rate
from 20% to 100% in which event the rate shall be
subject to adjustment.
Board of City Commissioners
December 20, 1989
Page 3
(7) The quoted interest rate takes into consideration the
change effective July 1, 1987 in the Maximum Corporate
Income Tax Rate as established in Section 11 of the
Internal Revenue Code of 1986 from 46% to 34%.
Should there be a change in the Maximum Corporate
Tax Rate, the Bank shall have the right to adjust the
Rate in order to maintain the same after tax yield.
(8) Any legal costs incurred in connection with the
preparation and/or review of documents for this loan
shall be borne by the Borrower.
As demonstrated by our proposal, we at Sun Bank, NA are indeed excited about the
possibility of extending this financing to the City of Winter Springs. Should you have any
questions regarding any aspect of our proposal, please do not hesitate to contact me at
407/237-6764. If our proposal is acceptable, please sign the original commitment letter
and return it to my attention prior to December 23, 1989, at which time this commitment
shall be deemed to have expired. The enclosed duplicate is for your files.
Sincerely,
Sun Bank, National Association
By: ·
Accepted by:
Date:
Enclosure
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