LTC 279-2020 REFINANCING OF 2010 PARKING BONDS AND CHASE EQUIPMENT LEASE PURCHASED ocuS ign E nvelop e ID: 1A8F2C14-4579-42CD-A7CC-F7158115684
MIAM I BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
279-2020 LETTER TO COMMISSION
NO. LTC#
TO:
FROM:
DATE:
SUBJECT:
eDocuSilln•~b: Mayor Dan Gelber and Member the vit ommission
tak, /«yo
Jimmy L. Morales, City Manager' ·oAcos18F2A4414
August 6, 2020
REFINANCING OF 2010 PARKING BONDS AND CHASE EQUIPMENT LEASE PURCHASE
This Letter to Commission ("LTC") serves to provide the final results of the refunding of the City's outstanding
Parking Revenue Refunding Bonds, Series 2010A and Parking Revenue Bonds, Series 2010B (the "2010
Parking Bonds") and the City's 201 O equipment lease purchase financing with Chase Equipment Finance, Inc.
(the "Chase Equipment Lease Purchase Financing"). On July 29, 2020, the Mayor and Commission approved
a resolution authorizing a loan with JPMorgan Chase Bank, N.A. ("JPMorgan") in an amount not to exceed
$41,000,000 to refund these obligations.
The City's $31.5 million in 2010 Parking Bonds are callable on 9/1/2020, and have an average interest rate of
4.91% with a final maturity on 9/1/2040. The City's $7.3 million Chase Equipment Lease Purchase Financing
has a rate of 4.18% and is currently callable. The City combined this refunding as one larger transaction (the
"Loan") secured by secured by a covenant to budget and appropriate from non-ad valorem revenues ("CBA")
due to the effects of COVID on the Parking System and to achieve economies of scale. A bank would not
currently lend with a pledge of parking revenues alone, but the City could refinance the bonds with a loan secured
by a CBA and include excess parking revenues available under the bond resolution as non-ad valorem revenues
to pay debt service.
The Administration and its Financial Advisor negotiated with lenders on the refundings to obtain indicative
interest rates and terms, and requested a term sheet from the bank with the most attractive combination of rates
and terms, which was JPMorgan.
The Loan will refinance the 2010 Parking Bonds with a shorter-term fixed rate of 10 years and the same
amortization as the obligations being refunded. JPMorgan's proposal was recommended as it provided the
lowest interest cost through the 10 year fixed rate period, and resulted in a final interest rate on the Loan of
1.85%. The City will need to refinance the parking portion of the Loan at the end of the 10-year fixed interest
rate period, which will be subject to market conditions at that time, but the Loan will only have 10 years remaining.
Most tax-exempt bonds with a 10 year call feature are refinanced around 10 years even though they have a
longer final maturity.
The final net present value savings from refinancing the 2010 Parking Bonds are $8.9 million, which is 28.3% of
bonds refunded. To provide cash flow relief to the Parking Fund due to the impact of COVID-19, the refunding
provides upfront savings of $2.44 million on 9/1/2020 and $2.64 million on 9/1/2021, and $247,000 annually
thereafter. The final maturity of the refunding will not be later than 2040, which is the final maturity of the 201 O
Parking Bonds.
The final net present value savings on the Chase Equipment Lease Purchase Financing portion of the Loan are
$386,000, which is 5.4% of the lease refunded. The savings are $118,000 on 9/1/2020, $206,000 on 9/1/21 and
breakeven in 2022-2025.
The final maturities are not extended by this refinancing, and annual debt service is not increased in any year.
The final net present value savings total $9.3 million and the Loan front loads savings to help mitigate the
financial impact from COVID-19. Following is a summary of the savings presented to the FERC on May 8, 2020,
updated for the agenda memo on 7/14/20, and final savings at closing on August 4, 2020.
DocuSign Envelope ID: 1A8F 2C14-4579-42CD-A7CC-F71581156B 84
Letter to Commission -- Refinancing of 201 O Parking Bonds & Chase Equipment Lease Purchase
Page 2 of 2
Final Refunding Summary
Chase Equipment Lease Series 2010 A&B Parking Bonds
5/8/20 5/8/20
Finance 7/14/20 Finance 7/14/20
Committee Estimate 8/4/20 Final Committee Estimate 8/4/20 Final
Amount Refinanced $7,330,000 $7,123,558 $7,123,558 $31,560,000 $31,560,000 $31,560,000
Current Interest Rate 4.18% 4.18% 4.18% 4.91% 4.91% 4.91% -- -
Closing Date 06/03/2020 08/04/2020 08/04/2020 06/03/2020 08/04/2020 08/04/2020 --- -
Estimated New Interest Rate 2.09% 2.00% 1.85% 2.09% 2.00% 1.85%
Net Present Value Savings - $36 8,000 $361,000 $385,817 _ $7,900,000 $8,751,000 $8,922,840
NPV Savings as a % of Bonds Refunded 5.02% 5.07% 5.40% 25.03% 27.73% 28.30% --
Annual Savings 2020 $295,934 $117 ,372 $118,174 $2,300,000 $2,435,923 $2,439,558
2021 176,685 206,059 2,500,000 2,594,423 2,642,883
2022 200,000 220,376 247,590
2023 200,000 220,376 247,590
2024 200,000 220,376 247,591
2025 200,000 220,376 247,590
2026 200,000 220,376 247,591
2027 200,000 220,376 247,590
2028 200,000 220,376 247,590
2029 200,000 220,376 247,590
2030 200,000 220,376 247,590
2031 200,000 220,376 247,591
2032 200,000 220,376 247,590
2033 200,000 220,376 247,590
2034 200,000 220,376 247,590
2035 200,000 220,376 247,590
2036 200,000 220,376 247,590
2037 200,000 220,376 247,590
2038 200,000 220,376 247,590
2039 200,000 220,376 247,591
2040 200,000 220,376 247,590
$295,934 $294,058 $324,233 $8,600,000 $9,217,486 $9,786,653
Note: Parking refunding based on a 10 year fixed rate put with the same interest rate assumed for the life of the financing. City will need to refinance the loan
at the end of the 10 years for the remaining 10 years of the loan. Net present value savings for Chase Eq uipmen t lease are higher than the annual savings as
net present value calculation discounts savings (which are breakeven in years 2021-2025) through the final maturity of the loan in 2025 to today's dollars at
the loan rate. ts
JLM/JW/AW