96-22246 RESORESOLUTION NO. 96-22246
A RESOLUTION AUTHORIZING THE TERMINATION OF
AN INTEREST-RATE SWAP AGREEMENT BETWEEN
MORGAN STANLEY CAPITAL SERVICES AND THE CITY
AND THE TERMINATION OF ANY ADDITIONAL
TRANSACTIONS.
WHEREAS, on March 1, 1995, the City executed an interest-rate swap agreement witl:t
Morgan Stanley Capital Services; and
WHEREAS, in accordance with the terms of the agreement, Morgan Stanley CaFita L
Services and the City have heretofore entered into, pursuant to the Agreement, a Transacliolt
pursuant to a confirmation date of February 21, 1995, with a termination date of March 1, 20.00
and
WHEREAS, the City, by recommendation of the Capital Improvements/Financ,:
Committee, has determined that it is in its best interests to terminate the existing Agreement
any additional Transactions.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CIr3.'
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and Cit"
Commission hereby authorize the Mayor and City Clerk to execute the agreement attached her, :to .
terminating the Interest-Rate Swap Agreement between Morgan Stanley Capital Services and th, ..
City and the termination of any additional transactions.
PASSED AND ADOPTED THIS 18TH DAY OF DECEMBER, 1996.
ATTEST:
CITY CLERK
MAYOR
APPROVED AS
FORM & LANGUAC,E
& FOR EXECUTIOt',,t
CITY OF MIAMI BEACH
CITY HALL 1'700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
OFFICE OF THE CITY MANAGER
COMMISSION MEMORANDUM NO.
TELEPHONE: (3051 67 t.-7010
FAX: (305] 67 ~-7782
December 18, 1996
To.'
Mayor Seymour Gelber and
Members of the City Commission
From: Jose Garcia-Pedrosa
City Manager
Subject: Elimination of a Interest-Rate Swap and the Execution of a Interest-Rate Swap
Transaction
Administrative Recommendation
The Administration recommends that the Mayor and City Commission adopt this Resoluti. 3n
terminating the existing interest rate swap transaction and executing three new interest rate swap
transactions.
Background
In March, 1995, the City executed an interest-rate swap transaction on the Pension Obligation Bo:~d
Issue concurrent with the closing of those bonds. The transaction has increased the City's earnings
from the bond transaction by $600,000 armually. Interest-rates were approximately one percent
higher when this interest-rate swap was executed than they are now.
Analysis
Given this difference in interest rates, the City could terminate the existing interest-rate swap ~:'~d
receive a payment ot' approximately $1 million. The City could execute additional interest-rate swap
transactions for a two, three and four years and achieve an average rate difference of one percent
the three each $20 million swap transactions. This rate difference would produce earnings of
$600,000 to the City, assuming interest rates stay at their current levels. By executing both of these
transactions, the City could take the profits accrued in the first transaction and achieve additior.al
savings with the other three such transactions.
By entering into a series of swap transactions, the City's risk of changes in the market interest rates
is minimized. Initially, these three transactions would have an average life of three years. T:.~e
expectation is that in two years the City would enter into a new swap transaction for three years to
259
Agenda Item F;,~,~__
replace the two year transaction being recommended in this memo. At that time the City would haw
three interest rote swap transactions with maturities of one, two and three years with an average I.if~
of two years. The risk of such a series of transactions is minimized by the short nature of the duratior
of the transactions.
Conclusion
This series of transactions will allow the City to take the profits from the existing interest rate swa~
transaction and by entering into the new transactions continue the level of savings curretell3
anticipated.
JGPZRJN/cp
260
, ,.*
M0N 16:04 F,,~I 212 412 7027
remain in fnll force and effect; (c) there is no action, suit, proceeding, ~
inv~tigation, at law or in equity beforc or by any court, govenm~ ag~s~, public board c,r
bod~, lznd~ or thre. sten~d ag, in~ it, ~ its e~,istez~ or the e.z=ntion anti delivery
dais Term~n,tiov, Atpumlmn; and (t) this Termination Agzccnnl Ires been duly ami validly
atmorized. excc,,tt'd and delivennt. and cons~____h~_ a ~ and legal obligalion of i':,
cnfoxuesble apinst it in accozdam2 with tInc tnz~ heroeS, except as such enforcemere may
limiml by hws relating to b~-t-~p~, insolvency, zeorg.,,i--.on, morazoziz~ or simil, r
laws ~ credits' riglgs genm31y and subjc~= to geuu'al equimbk, principles (r~gag~s
of whcthc said eafforceability is considered in a proceeding in equil7 ~ ac law).
Bar. h patty fun~ zq,,~r,~s to tlz other as of the dste of this Tei~mi,~.on
(absent a written agzeeus~ bct'we~ tl~ parties that express~ imps sf~rm~ive obligaticz.s
to tlz contnul fo~ this Tcrmir~Ho~ A~eemem) that (a) it is acting/or its own account,
has ms2 izs own ~ decisiom to enter into ~hi~ Termination Agreamenz and as ~:~
whetl~r rhi_~ Termination Agzemem is al~propriatc or proper for it based upon its
judUu--,t and upon gvice fxom such advisers as it has deemed ,~cess-~y; it is not relying
aUy COmTTmnlCa,~iOn (wri2cn or oral) of the vthcr party ss investmen1 advice or as
rccoxnnzndation to enter into t. hi.,~ Tetmina/ion Agrcenxznt Cxt being understood tlu;t
Termination A~ef2xcnt); ._rd no comrmmit'ation (wrilll~tt ot oral) received from the ottxe:r
par~ shall bc deemed to bc an assunnce or SmwanZ~ as to the expet-ied resalrs of this
Term¥-ti0n AFeement; (b) it is capable of -~scssi~ the mexits of an understanding (tin its
own behalf or through hdepend,~nr professional advice). and undcntands _n__~,, a~, the
asp-n~_.% s_nd assumu, llz xisks of t~i. Termi~on ~ and (c) the other party is nct
acting as a fiduciary for or an adviscr xo it in respect of thi,= Tezxrdulnion ASZeemenl:.
Upon ex,'~"ion of ~ T,'u.,;,.~xton ~ Mhmi Bcach agrees to deliver
ccnified copies of all docvm~ evidencing the n,',','ss-~ autho~ons and approvals wif:x
tO ~ ~riOIt, dP=Iive~ and. perfoxmance by 1Vflami Be~_ph of lids Termlnnd. on
This Te.~h,~i,*m Ar,,.~ shall not atfcct th~ rights and obligations that the parties
may have in respect of any other Tnnsaction gew.,~.,cd by thc Agreerues.
Tl:flfS TERMINA~ON AGIzEEMENT ~q~AT,T, BE GOVERI~._D BY, AND
CONSTRUKI) AND ENFOI~(~,_-__n IN ACCORDANCE WITH THE LAWS OF THIi~,
STATE OF NEW YORK (WITHOUT IzErEEENCE TO ITS CHOICE OF IAl~r
~ EACH PARTY WAIVES ANY ]RIGHT IT MAY tlAVE TO A TRIAL BY
JURY IN RF. SPECr OF ANY PROCEEDINGS P~t-4,TING TO Tn!__S TERMINATION
AGRR~'NT.
This Terrnln~fltm Agrmmst may be pxrr~ in ~u, each of which shall
deemedanodgimL
I~OO8
DEC e9 '9~ 16:11
212 412 ?~27
263
DATE: Decem_,!~-er __, 1996
TO:
FROM:
City of M;:,m; Besv, h
1700 Convention ~ Drive
Miami Be~h, Florida 33B9
Aim: Roln't NachlinBer, Finance Dhzc~
Tel: (!~') 67~7466
Fax: (30-9 6B-7795
Morgan Stank7 ~ Servi~ Znc.
SWAP TRANSACTION
The lmrtnse of this letmr ap, r~calc~ is to net forth the terms and c~,~4i~on.~ of
~ ~ of ~ ~ Ron~ (~ -~*) ~ M~ ~ ~i~
('~') ~~ ~ Mo~ S~ ~ k.). ~ 1~ a~~ ~~ a
'~n' u ~ ~ ~ ~ ~p Agt~ ~ ~Ow.
I. This Co,~rmwrion is subject. to and ~,~rz
~~ ~~, f~ a ~ of ~ ~ mb~ m ~ ~A ~r A~
~ ~ C~ ~ ~ ~ ~ of ~ 1, 1995 ~ O) ~,~,~ ~ ~o~
(w~ ~y ~ ~ ~ of a ~~d~)
2. The pazlicuJat tin'ms of the Swap Tnnnction sr~ as follows:
Trade Daze:
FJ:ru. tive DaXe:
T,, ....;,-,,ion Dare:
Notional Amount.:
· 199
~EC 09 ' ~ 16: 89
265
212 412 ?e27
Z2/09/96 MON 16:03 FAX 212 412 7027 CWT H.Y. [~I004
Floating Rate for the Iuitisl
C~lnfiarion Period:
and Stzudsrd & Poor's Ratings Group (a~i
shy 'successor nstionally-rccognizat ratin;!;
ageracy) and sre subject to tender upon seve:l~
uuler tlz ~ Revenue Code of 1986, as
nme-d~4, is e,tcl~,4~Ne from gross income for
To b~ dcsamizd on tlz Wea-esaa:!i
hn~vsl-tcly preceding ~e ~e D~,
~ ~ ~y ~ ~t a B~s Day,
~y.
N~v York.
New York.
[SunTrust Bank
ABA~066000a~
For ~ City of Miami t~sch
Accoust Nmnbor:
A. eption: Milce
Mmllm Guaran~ Tmsr r'n~l~v o[ N~w
York'
For ~
~ N~ ~7~.
DEC {l~ '~ 16:09 267 212 412 '782?
~2/09/96 iON 10:04 FAZ 212 412 7027
e,r,p,C~w, pd COnfirrO-~on tO
It lass been a pleasure working with you on this tnmsctkm, and we look forward
Vcty truly yours,
Morga~ S~ml~y Ca~ S~zvic~ Tnzo
~006
By:,
]~C 09 '96 15:10
212 412'711i2_? ~ ~
269 ** TOTAL PAGiE.I)9 ~
Termi~tion Agreement (the "Termination Agreenznt") dated as of December 18,
1996, between MORGAN STANI.I~-y CAPITAL SERVICES INC. ("MSCS') and CITY OF
MIAMI BEACH, FLORIDA ("Miami Beach").
WHR-REAS, MSCS and Minm! Beach are paxties to an ISDA Master Agreement dated
as of March 1, 1995 (the "Master Agreement") and a SchrAule to the Master Agreement (th,~
"Schedule" and collectively with th~ Master ACremerit, the "Agreemere-); and
WHEREAS, in accordance with the t~m of th~ Agr~raent, MSCS and Miami Beacl:~
have heretofore entered into, pursuant to the Agreement, a Transaction (tim "Trancaction')
pursuant to a Confirmation dated February 21, 1995, with a Termination Date of March 1
2000; and ,
WHEREAS, Miami Beach has determined that it is in its best interests to terminate
Transaction abject to the texms and COnditioD..S' specified in this Tcrraination Agreement;
NOW, THEREFORE, in c. onsidm'ation of the foregoing and other good and valuable
consideration, it is hereby agreed as follows:
The Transaction is hereby terminated as of the date of this Termination Agre. ement and
neither MSCS nor Miami Beach shall continue to have any ril~l~ts or obligations thmuatcr.
I~ISCS Shall pay to Miami Beach the mount of $1,150,000 on Dece~nher 20, 1996, in full
consideration of this Termination Agreemere and in Complet~ satisfaction of all obligations of
the parties in respect of the Tran.~action.
Each party represents to the othex, upon the execution and delivery of this Termination
Agreement, that (a) in the case of MSCS, it is validly organized and existing under the laws of
the State of Delaware; Co) in the case of Miami Beach, it is a municipal corporation duly and
validly created, authorized, organized and existing under the constitution and laws of th~ &ate
of Florida, with full power and authority to enmr into and colw~mmnte the trallSactioll$ under
this Termination Agreement; (c) its execution,and delivery of tiffs Termination Agreeamnt, the
consummation of the transactions contemplated here:in, or compliance with th~ provisions
hereof wffi not viohte any law, rule, regulation, order, writ, judgra~nt, injunction, decree,
award, or contractual restriction binding on it, including, in tl~ case of Miami Beach, the
provisions of any Innsre, instrument or agreement ta which it is a party{,or subject, or by
which it, or its property, is bound, or conflict with or. constitute a default under or result in the
creation or imposition of any lien pursuant to the terms of any such indenture, immmmnt or
agreement; (d) all necessary consents, authorizations, licenses and approvals of, and
registrations and declarations with, any governmcnt3/authority required ill COlOn With its
execution, delivery and perfomaanc, c of thi,~ Termination Agreemere have be~n obtained and
remain in full force and effect; (e) there is no action, suit, proceeding, inquiry or
C'V/&:T/C:XIXi}CSOp~I~I{}944~.03
investigation, at law or in equity Ix:fore or by any court, government agency. public board
body, pending and with ~gard to which it has received service of proccss, or thrcaxex~'.:d
against i~, which materially advcrsely affects its existence or the execution and deliva-y of ~;is
Termination Agreement; and (f) this Termination Agreemen~ has been duly and valid~[y
authorized, executed and delivered, and constitutes a valid and legal obligation of i~,
enforceablc against it in accordance with the tams hereof, except as such cxfforccmexn may
limited by hws relating to bankruptcy, insolvency, reorganization, moratorium, or simih!w
hws affecting creditors' fights geaera/ly and subject m general equitable principles (regardle.,r..s
of whether said enforceability is considered in a proceeding in equity or at law).
Each party further reprcsents to the other as of the claw of this Terminntion Agrecmen~
(absent a written agreement bctweea the parties that expressly imposes affirmative obligations
to the contrary for this Termination Agreement) that (a) it is acting for its own account, and
has made its own independent decisions to enter into this Termination Agreement sud as to
whether this Terminntion Agreement is appropriate or proper for it based upon its
judgment and upon advice from such advisers as it has deemed necessary; it is not relying on
any communiention (written or oral) of the other party as investment advice or as a
rccommeuda~on to enter into thin Termination Agreement (it being understood
information and explan3.t,_'ons related to the terms nnd COnditiOns Of This Tei~tjolIl
Agreement shall not be considered investm_~.ut advice or a recommendation to enter into thh;
Termination Agreement); nnd no communication (wri~cn or oral) received from the other
party shall be deereal to be an assurance or guaran~ as to the expec~l results of ~
Termir~on Agreement; Co) it is capable of assessing the mails of and un~rs~nding (on its
own behalf or through inck:pendent professional advice), and understsnds and accepts, the
terms, conditions and risks of this Termination Agreement; and ir is also capable of assuming,
and assumes, the risks ofthls Termination Agreement; and (c) ~ other party is not acting as a
fiduciary for or an adviser to it in respect of this Terminnfion Agreement.
Upon execution of this Termination Agreement, Miami Beach agrees to deliver
certified copies of aH documents evidencing the neccss3ry authorizations and approvals with
respect to the execution, delivery and performsnc~ by Miami Beach of this Terminst~on
Agreement. · .. '
This T~rmluaflon Agreem~m shall not affect the riEht~ and obligations that the parties
may havc in respect of any offer Transaction governed by the Agreement.
THIS TERMINATION AGREEMENT SHALT. BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE W~YH THE LAWS OF ~
STATE OF NEW YORK (WITHOUT I~E~T-,RENCE TO ITS CHOICE OF LAW
DOCTRINE). EACH PARTY WAIVES ANY RIGHT IT MAY HAVE ~i'O A TRIAL BY
JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS TERMINATION
AGR~-EMENT.
This Terminntion Agreement may be executed in counterparts, each of which shall be
~ an Origin-~!.
-2-
~nz ~. z. t~IUU~
IN WITNESS WItRREOF, the parties have executed thi~ Termination Agreement by
their duly authorized officers as of the date here, of.
MORGAN 8TANLRY CAPITAL
SERVICE8 INC.
Title:
Date:
C OF MIAMI ~~
BEA FLO A ,.~/
B' ~
· ¢,ymour Gelbet
Title: M~yor
Dat~: ~,
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
-3-
eliCt 5OIJTPI IrlO4JF..liCJ, .STR[ET
LOS ANQrLEE. CA iilOOI)*
TELl fill3) OlG-4.~OO
To:
i~rom:
'rtt. iX: lag, 14dl / 4174eli
F',e,X: IZll) 504-EsmlSe
MEMORANDUM
Robert Nac, hlingcr
(City of Miami Beach)
Robat Fgrauau
Termln~fion Agreement betwere Morgiu St_~_n!ey Capital Services
YnC. ("MSCS") ~nd City of Mi~mi Beach, Florida (the "City-)
December 20, i9~6
Enclosed, as per my telephone conversation this morning with Luis Reiter, Esq
of Squire, Sanders & Dempsey, please find a revised execution version of time above,.
referenced Termination Agreement inCo~ora~g tl~ comments I discussed with Mr. l~ita.
Pleas~ call me at (212) 504-6270 with any questions.
l Femann
,~nclosure
BY FACSIM/LE
Lujs Reit~r, Esq.
(5qulrc, Sanders & De. mpsey)
C:~DOCSOPI~qXNYI~I~RPRR.MANN~II1765.01