HomeMy WebLinkAbout2011 10 19 Other Handout by Mary Brook regarding Bonds TLBD Regular MeetingDate: October 19, 2011
The attached document was distributed by
Chairperson Mary Brook and discussed with the
Tuscawilla Lighting and Beautification District
Advisory Committee after Reports. Mayor
Charles Lacey, Kevin Smith and Shawn Boyle
spoke on this subject regarding the `Bonds' for
TLBD at the October 19, 2011 Regular TLBD
Meeting.
Consent 204, 10-10-2011 pagel
COMMISSION AGENDA
ITEM 204
Consent X
Informational
Public Hearin
Re ular
October 11►. 2U11 MGR. /DEPT.
Regular Meeting Authorization
REQLTEST: The Cit� Mana�er and Finance and Administrati�-e Sen-ices Department are requestin�
the Commission adopt Bond Resolution ?011-�� to accept the proposal b� BBc�:T Bank to purchase the
Cit�-�s. not to ezcecd $1,800_OOt}, Special Assessmcnt (TLBD) Refi�ndin; Note, Serics 2(}11 to refuud all
of tl�e Cit� outstanding Special Assossmcnt Rcvcnue Bonds. Scrics 2001; and authorizc dii; Cit�
Ma��ager and Cit�- Attorne}` to ezecuta all necessan documents to complete a loan agreeinent �vith BB&T
Bank.
SYNOP5I5:
Tl�e Purpose of this agenda item is approve the advanced refuilding of the Special Assessment
(TLDB) Revcuuc Bonds, Scries 2001; talce advanta�e of the low interest rate environment and issue
a traditional bank note to replace all the outstandin� TLBD Bonds, to minimize the issuances
costs and allo�v for maximum fle�:it�ility for repayment of the bank notes.
CONSIDERATIONS:
In ?001 the C'it�� of Winter Springs issued $2 ?65,U00 Special Assessment Ret�enue Bonds, Series
20U 1 witli a final maturity of 28 years for the purpose of financin� improvements in the
Tuscawilla Impravement Area.
Due to the continued softness in the economy, the interest rate en�Tironment is still very favorable
to retinancin� debt that is in its later stages of repayment. Typically, bonds are issued for a term
between 10 and �0 years at an increasing rate of interest as you move further from the date of
issuance. This is best illustrated by the current yield curve seen Uelo�v.
RcJirinrrce !lu c�i.xlnr,� cic:ht at �� ,
Jhe s�zme reniaining lifir Ilerntl -
bnJ a�t Ilre Io��r ern! �f'ihe j•aeld -
curve - _,
��.. . . �
'3001 Bonds m•e ir� tlreir la,r! l8 �
reurs qfthe life ct�rla f "
��.,,,�,.�.�.....-„�M°'"",..�- � v � � �:
, . . , . . . . . . . , . . . iJ
i:) i;4.
� � �Y..
...(}.i_i;+
. . . . . . . . . .
_C! ;3<1
- P37 .rf'i'f 1'� ..'Y ':y <�: (�i}r i"ir �' tr.,. :�.i�,.
U.S. Treasury Yield Curve c� zs �o� n
Consent 204, 10-10-2011 page2
By refinancin� the bonds at the short end (terms less than 30 years) of the yield curve the City
will realize substantial interest rate savings thus lowering the cost of repaying the debt. The
below aemonstrates the benetit tl�at could be realized �t the C'
I ;
` 6.�0%0
s.00°io
a.00�ro
3.00%
2.00%
1.00%
0.00%
�����
US
Treasury
BB&T
����M4-2001
Bonds
retinances the Special Assessment (TLBD) Revenue Bonds. Series 2001 with a BB&T Bank Note.
There are several considerations that were analyzed to develop the recommendation to retinance
the 2001 bond.s; financial aain, affordability of debt and flexibility in repayment of the debt.
Current interest rates are at historically lo�� levels, due primarily to the U.S. enduring one ofthe
steepest economic contractions in �nany years. The Federal Reseive has maintained short and
lon� term rates at very low levels in order to attempt to stimulate economic grow�th. These low
rates present aii opportunity for the City to review its boi�d contracts to determine if refinancin;
debt would have a positive economic impact on the City's residences. ,
The Series 2001 Bonds were issued oii October l, 2001 with the total principal amount of
$2,265,000 and a �uei�ht avera�e interest rate (coupon) of 4.93% over the 28 year terni. After 10
years, the remaininb principal outstanding (Series 2001) is no�� $1,800,000 (gcoss principle) with
a weighted average interest rate of �.10° o. The reason the wei�hted avera�e interest rate has
increased is because we l�ave moved further away from the ori�ination date and interest rates
tend to increase over time (see Treasury Yield Curve above). This present an opportunity!
Originally, the debt (Series 2401) was issued as a 28 year bond now the City has the opporh�nity
to reissue part of tliis debt as an 18 year note and take advantage of exceptionally low interest
rate market and the lower cost of interest for short tenn Uorrowina. These savings are
demonstrated in the chart below. We have set the ne«� proposed 325% (fixed rate) bank note
next to the remaining bond payments. The net (NPV) effect of this refinancin� is a saviiigs of
�252,952 over the next 18 years. This savin�s is accomplished with no extension of the term of
the bond.
12-Month 2-Year 3-Year 5-Year 7-Year 10-Year
Consent 204, 10-10-2011 page3
SAVINGS
City of Winter 5prings
Refunding of the Series 2D01 Bonds (BB&T)
Current Prior Debt Refunding
Date Bond Prior Receipts Service Debt Service Annual Savings NPV @3.25%
10/1/2012 155,936.26 50,733.22 105,203.04 86,597.48 18,605.56 16,695.57
10/1/2013 152,978.76 152,978.76 134,216.82 18,761.94 17,835.76
10J1/2014 154,761.26 154,761.26 135,998.68 18,762.58 17,265.42
10/1/2015 151,296.26 151,296.26 132,534.42 18,761.$4 16,711.34
10/1/2016 152,831.26 152,831.26 134,069.00 18,762.26 16,175.85
10/1/2017 154,118.76 154,118.76 135,356.80 18,761.96 15,656.18
10/1/2018 155,018.76 155,018.76 136,256.42 18,762.34 15,152.08
10/1/2019 155,662.50 155,662.50 136,900.18 18,762.32 14,663.07
10/1/2020 151,050.00 151,050.00 132,288.36 18,761.64 14,188.52
10/1/2021 151,437.50 151,437.50 132,674.92 18,762.58 13,73021
10/1/2022 151,450.00 151,450.00 132,687.90 18, 762.10 13, 284.21
10/1/2023 151,200.00 151,200.00 132,437.78 18,762.22 12,852.23
10/1/2024 155,687.50 155,687.50 136,925.70 18,761.80 12,433.07
10/1/2025 154,650.00 154,650.00 135,887.42 18,762.58 12,026.95
10/1/2026 153,350.00 153,350.�0 134,588.16 18,761.84 11,632.Z5
10/1/2027 151,787.50 151,787.50 133,025.64 18,761.86 11,250.07
10/1/2028 154,962.50 154,962.50 136,200.78 18,761.72 10,879.45
10/1/ 152,612.50 152,612.50 133,850.20 18,762.30 10,520.09
$2,760,791.32 $2,710,058 $2,372,497 $337,561 $252,952
Additionally, by issuing a traditional bank note as an alternative to a traditional bond the City
will realize a"Cost of Issuance" savings of approximately $120,000.00.
The fival variable reviewed was tl�e flexibility of repayment terms beriveen bank notes and
bonds. The .BB&T Banl< Note has a 1°% prepayment penalty clause which ��ill permit the C'ity
repay the loan at an_ytime. Bonds ty�ically are much more ri�id in their terms for repayment.
This financing request ��•as bid via a formal Request for Proposal to all banks that had both the
financial means to bid and are of the hi�l�est investment grade quality as deemed by Standard
and Poor's and Fitch Rating. Three banks choose to bid on this financing (BB&T, Bank of
America, SunTrust Bauk} and BB&T Bank put forth the best proposal for this patticular request.
Tl�e RFP and the responses were mana�ed by PFM, the City of Winter Sprin�s' Financial
Advisor.
- __
Consent 204, 10-10-2011 page4
FISCAL IMPACT:
Upon acceptance of the refinancing of the Special Assessment (TLBD) Re�-enue Bonds. Series
2UUlby BB&T Bank the Cit�� will rzalize a Net Present Value saviiibs of $252,952(net) (14.3°io)
o�er the remaining 18 years until final mariirity of the BB&T note on 10i1;20?9. This equates to
a savings for the TLDB of �$19,OOU (nominal) annually. This briiigs the total debt restn�cturing
savings to $2,000,�00.00 over the ne�t 10 to 15 years.
CON11Vl C1NiCAT10N EFFORTS:
This Agenda Item Has Been Electronicallr Foi���arded To The I����-or And Cih� Conunission Cih Mana�*er. Cih
Attorne��iStaff. And Is A�-ailable On The Cin�'s Website. LaserFiche, And The Cih��s Sen-er. Additionall� , Portions
Of Tlus Ageuda Item Are T}ped Verbatim On The Respecfi��e Meetnig Agencla Wluch H�s A1so Been
Electroiucalh� Fon�•arded To The Indi��iduals Noted Abo��e, And Wluch Is Also A� On The Cin-'s Website,
LaserFiche, And The Cin��s Sen•er: Has Been Sent To A�plicable Cih St�ff. eAlert/eC'itizen Recipients,
Media,'I'ress Representati�es Who H�i�•e Requested Agendas/Agenda Item Ii�fo�n��tion, Homeo��ner's
Associatious/Representati� On File With The Cin�_ And All li►di��iduals Wlio Ha1�e Reqtiested Such Ii�forn��tion.
Tlus Ii�forn�rtion Has Also Been Posted Outside Cih� Hall, Posted L�side Cin� Hall With Additioilial Copies
A�•ailablc For The General Pu�lic. And Posled At Fi� e(�) Diflerent Locatioi�s Around The C:ilv. Furlhenuore, Tlns
Inf'onnation Is Also A�•ailable To An}� Indi�idual Requestors. C'rh� Staf�l,s.-�hr�rls 6lillirzg To I)isccr.c,s Tl:i,r _�gc�rdn
Itern Or.�rrt'.�,�encicr Item i�7th _=�n1: Iriterested L�dii�rc�'trc�ls.
RECOMMENDATION:
The City Manager and Finance Department recommend that the City Commission accept the
BB&T proposal to issue a bank note to refund the Special Assessment (TLBD) Revenue Bonds,
Scrics 2001 not to e�ceed $1,800,000; adopt Resolution 2011-54; and to authorize the City
Manager and City� Attorney to complete all applicable paperwork necessary to complete this
refinancing.
ATTACHMENTS:
Resolution 2011-54
Consent 204, 10-10-2011 page5
RESOLUTION N4. 2011-
A RES(?.LUT[ON OF TIIE CITY Ol�' WINTER �PRINGS,
�+'LORIDA ACCEFTYNG THE PROPQSAI, O� k3RANCIi
BANI�NG AND `I'RIJST (:OMPA�Y TO PURCFIASE THE CITY'S
N4T 'I'() EXCEE� �1,840,040 SP�CIAL ASS�SSI�'I��1T REVENUE
I2EFL7NllING NOT�, SERIES 2011 (TI75CAWILLA
IiYIPRO�EMF..I`�T ART,�A,} Ta REFUND ALL' OI+ THE CITY'S
OiJTSTAi'�1DING SPECIAL ASSL+'SSME:IV'1' ItEVEhTUE BONDS,
�ERIES 2t?OX (TUSCA'4 1MYI�ii)VFMENT ARTA);
AUT�-IORIZII�G TH� EXL+`CUTION AND DEL�VrR�' DI{` A LOAN
AGREEI4I�NT WITH SAID 13ANK T4 S�GUR� '1'HE
TtI;PAYIVIL:NT {)F SAID NQTE; PItOVrllYNC rC3R THE
PAYNIEI�IT G1F SUCII NOTE F120M C�RTAIN SPECIAT,
A�SESSM�N`I'S BY THL+' Cl'1'Y WIT�iIN THL+; TUSCAWILLA
�MPROVEi1ZENT ARLA, ALL AS PiZUV�DEA I11T THE LOAN
AGItEi:M�I�'I`; AU`I'IfORIZING THE PRQPER OF�CCIALS OF
T��� Gi'1'Y 'i'U llU ANI' OTI��R ADDI'I`rONAL THINGS
DE�M�D IYEC�,SSARY pR A.DVISABL� YN CONNE{:TI()N
WYTH THE F,XEGUTIC)i�! �I` TI�E LQAN AGR.L+`EMENT, THE
N(?TF,, ANl7 TiTF; SECURITI' T��tLrt`�R; AIITH{?RI7fING TIiE
EXCCUTION AND D�LIVERY QF AN r�cr�o�� DEPOSr`i`
AGREElV1ENT AND OTHFR pUCLJMENT;S IN C(�NN�CTION
'�VI'I'H SAID LOAN; �ROVIDING FOR SEVERABILITY;
I)�SIGt�tATING THE NOT� AS "BANK QIIALIFIF,T�;" AND
PROVIDIIYG AN EFFEC7'.rVI+, l)ATE.
BC IT RESOLVED .BY THE C.ITY CQMMI�S1tlN (}r TH� CITY OF WINTER
�SPRING�, FLORIDA, AS TOZ�LQWS:
SECTION 1. AiJ`I'IC()R[TY �()IZ THIS RESOLUTIOI�. 'This �eso].u#iox� is
�2doptccl pt�rst�ant to the prot�isions oi Chapter 166, rlorida Statutes, tha Florida Constit�ttion, and
otl�er ap�}licable prc�visians ol� l��v.
SECTI()N 2. FINI�INGS. It is hereby asce��tained, cteterminett and declareci:
(A) 'I'lie City ol' Wrnte�� Sprinbs, Florida {the "City"} d�ams it z�ecessa�•y,
desirable and in the best interests of the City tl�at the City refttnd all of tlie City's S�ecial
�ssess�nant Revenue Bosids, Series 2001 {T�.�scawilIa .Iinproveri�etxl Area} (the "Refunded
I3onds"), all as t��ciz�e particulatly desci•ibed iti the I,oan Agreement (as ciefu�ed. lie�•ein).
{B} Ptu�suatit to Sectio�i 2(b}, l�rtiele VtIf of the State Constiti�tio�i, and
Secti�n 106.02I, Florida Statut:es, nn��iicipalities have tlte go�ernmeiital, corporate and
p�'c���riet�ry pawez�s to ena171e fiiefn to conciuct inunicipal gc�vernnient, peefoi•m mw�ici�al
funcfions, �nc� render n�ttnicipai services, and may exercise any power for tnunici�al p�rposes,
excepf when exp�essly prohit��ted b}� law. Tl�e issua.nce 6y the City of its Special Assessment
Reve3iue Refui�ding 14TOtc, Series 20.11 (Tuscawilia lmproventent Area) (tl�e "Note") and the
{2 �.�2o�so }
Consent 204, 10-10-2011 page6
execution ai�d delivery of the Loan Agreeme��t for the purposes af refunding t�ie Refunded Bonds
is nat prahibited by law.
(C) The Note will be sec��red 6y the Assessments as provided in Section 6
hereof and the Loan Agz•eenient pursuant to urhich the City ���ill issue the Note to secure the
��epayment ot'the T,oa�� (as defned iu fhe Loan �1g�•eement).
(D) The City has engaged Public Financial Manager�ae�it, Iz�c. ("P�'M") as lhe
City's fitiancial uclvisor. PFM adviscs th.e City il�af due to the present volatility of the �narket for
��utnicipal debf, it is i�i flie b�st interesl ot' ihe City to issue the Note p�rsuant to the Loan
Agreement by ne�otiated sale, alloj��ing the City to issue the Note at the znc�st adva,ntageot�s time,
ratl�er t13an a specified advei�tised future date, thereby allowiY�g flie City to obt�in ttie best
�ossible price, in.terest a•ate atici other terms fai� the 1�ate a�zd, accordit�gly, the City Commission
of the City heruby fiz�ds and determii�es ttaat it is in the best financial interest of tlle City that a
negatiated sale of fl�e Nofe to Braiich Ba��king anc� Tz•i�st C'.ompany (the "Bank") be �utliorized.
SECTIUN 3. AUTHORIZATION OF REFUNDING O� ItE��UND�D BUNDS.
`I'#�e Cify ltereby autIiorizes thc rcfianditig of the ReaFut7ded Bond as more pat�ticularly deseribed in
tlze Loatt Agreement.
S�CTI01�14. ACCEP'1'ANCE OF CaMMITMENT LETTER WITH BANK.
Based c�n a recoizimenciation fi•on� the City's financial advisor, tl�e City liereb�� accepts f1�e
co�xa�nitinent Ietter af tl�e Bank dated Septetnber 16, 2011 attacited �ereto to provide fl�e Czty
wi#li the Loa�i.
SECTION S. At'PIZnVAL, OF F�I21�f Or AND A�.1THC}RIZATIOI�f OF LOAI�
r�,GItEEiY1EI�tT �1ND EXECUTI4N OF LOA�I AGREEMF_,NT A�ID NOT�. Tlte repayment �f
tl�e loaii as evidenced �y the Note s}tall bc puisuant to the te��ms a��d. pro�Jisions of the Loan
r�greenient and tl�.e �Tote. The City hereby appx•oves t�e Loan Ag�•ccrnent by and between the
C,.ify and tl7e Bank in substantialty the foini attaelied hereta as Ex}xibit A(the "Loan
A��eenae��t") aud authorizes fhe Mayor or tlie Deputy M�yoa•/Coirunissioner of the City
(colleetively, the "M�yc�r") and the City Clerk or any deputy or assistant City Clerk of t�ie City
(collectiveiy, the "Crty Ciez•k") to execute and deliver on beI�alf of the City the Loan Agreeme�t
and tlie Nate in substantzally the form attacl7.ed to the Loan Agrectnent, with such cl�anges,
inscrtions and additioi�s �s they may appr•ove, t}ieir execution thereof being evideztce of such
a�prov�l.
SECTION G. �'AYMEN"1' OF DEBT SERVICE ON N()'1'E. Puxsuant to the
I�oan Agreemetit, the Note will be seci�x•ed by the proceeds to L�e c�erived frorn tke special
assessmei�ts (tfie "Assessments") imposed and le��ied by the City fox� the payrnent of the Project
Cost of Locat Inl�rovernel�ts (as c�efined in City Ord�nance 98-704) �gainst the pro�aerty within
the Tz�scawilla Imprc�vez�ient Area specially benefitted b5� tl�e Project constructeci with proeeeds
af the Refunded Tit�ncis, inclt3din� iu#e�•est on siicli Assessme�its ��d any penalties thereo�i and
x��otties received upon tlie fo�•eclosure c�f t��e liens t�f a.ny sucli Assessineuts, but excluding
moi7eys recoverecl for the cxpcnsc of collecting Assessments, ali as niare particularly descrihed
in tlte L,c�azi Agreei��eiit.
�zi.;zo�so;i� 2
Consent 204, 1 Q-10-2011 page7
SEC�'IOI�T 7. AU'I'HORI'1,A1'I(3N UF OTHER DOCUh1ENTS T �� r•EC r
1'RANSACTION. To the extetit ihat othe�• documenfs including but not Iimited to an esci•o�u
de��asit a.greement, ��ede�ilption no€ices, certiflcates, opiilions, or other iten�s are i�eeded to effect
any of the transacti��3s referei�ced in tlus Resolntion, the Loan Agt the Note, and the
secu�•ity therefore, the Mayor, the City Clerk, the City Ivlanager, the Finance Director at�d the
City Attc�cney nre hereby autharizcd to cxecute and deliver such doctunents, certificates,
opinio��s, o�• r�thez• iteins and #o take sucli other aetions as are necessary for thc full, ptuictuat, �u�d
cam}�lete performance of the covenants, agreements, pravisions, and other terins as are cat�tained
Iiereili and in the documei�ts included he�-ein by reference.
SECTION 8. PAYING AGENT AND It�GIST�2AR. '1'he City het•eby accepts
ttie dt�ties to serve as registrar aiic� �aying tigent for flie Note.
��CTION 9. LIMI`I'ED ()BLIGATION. The obli�ation of ihe City to repay
amounts under tt2e Loan Agrecinent and ttie Note a.re liznited and s�ecial obligatioi�s, payable
sc�lely from the sou�•ces and in the marFner sct forth in the Loan Agreement and shatl not be
deemed a pledge of the faitl� and credit or taxing po��er of fl�e City.
SECTION 10. EFl{ECT OI� PAI2TIAL IN��ALIDITY. If a�ry one ar more
provisions of this Resal�.ttion, tlie Laau Agreement, or the Nate shall for any reason be held to be
illegal or invalid, sLicli illegality ar imralidity shall ��oi effeet any other provisiaiz of this
12.esaiutic,n, the Note oa• the Loai� tlgreement, bul this Resolution, the Loat� t�greer3�ent, and the
Nc�te slaall be constrned and enforced as if` siich illegal or invalic! pi�ovision had iiat. been
co��tained thereui. `I'he Note and Loan Agreement shall be iss�ied and ihis Resolution is adopted
���ith tl�.e iiite��t tliat i}ie .l3ws o�'tlie State of Iilarida sha11 goveri� their constr�iction.
S�CTION 11. DES�[GNATION �� NQ'I'E AS F3ANK QUALIFIED. The City
design�tes thc Natc as a"qualil'ieJ tax-exempt obligatic�n" wi�hi�� fhe meanit�g of Secfion
2G5(b}(3) of #lie Internal Revenue Code of 1986, as amended (the "Code"). 'The City does not
reasonably aiiticipate tl�at the City, a�iy subo��dinaEe entities of the City, anc� issuers of debt t11at
issue "o1i behalf" of th.e Crity, wi11 during the calenciar year 201 I issue mare fixan $10,000,000 of
"ta:�-exempt" obli�ations, exclusive of tllose obIiga#ions described in Section 265(b)(3}(C}(ii) of
ti�e Code.
,SECTrON 12. F'FFEC"�IVE DAT�. 'I'his Resohltian siiall take effect
imljleciiately upon its adoption,
[�ig�3atures on Foliowi�lg �'agel
t2t��za�so;�}
Consent 204, 10-10-2011 page8
P�,.SSEll, A�PRO�'L+'D Ahl) AI)OPTED this 10` day of Octaber, 2011.
[SEAL]
AT'I'LS'I':
�Y __
Cit�� CIerk
A��iLaved as to 1'�z•m:
By
City Attorne}r
(;ITY OF WINT.C:R SPRINGS,1iL01tIDA
By:
Ivtayor
i2t�tzo�so;�# 4