Loading...
Resolution 2018-30326RESOLUTION NO. 2018 -30326 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND CITYWIDE PROJECTS COMMITTEE TO AUTHORIZE THE ISSUANCE OF AN RFP THROUGH THE CITY'S FINANCIAL ADVISOR (RBC CAPITAL MARKETS, LLC), ON BEHALF OF THE CITY, FOR AN EQUIPMENT LINE OF CREDIT IN AN AMOUNT NOT TO EXCEED $15 MILLION, WITH THE SELECTION OF THE LENDER AND FINAL TERMS FOR THE EQUIPMENT LINE OF CREDIT SUBJECT TO PRIOR APPROVAL OF THE MAYOR AND CITY COMMISSION. WHEREAS, the City regularly has equipment capital needs that it desires to finance over a multi -year period, and an equipment line of credit ( "LOC ") in an amount not -to- exceed $15 million over the next two to three years should provide sufficient funding for the City's equipment needs during this period; and WHEREAS, an equipment LOC provides a cost- effective and efficient financing mechanism for the issuance of smaller, short -term loans, with the draws converting to a fixed rate loan based on a formula which reflects market conditions at the time of the draw; and WHEREAS, in recommending the use of an equipment LOC versus other financing options, the City's Chief Financial Officer worked in conjunction with the City's Financial Advisor, RBC Capital Markets ( "Financial Advisor "), who concurred on the appropriateness and cost - effectiveness of this type of financing; and WHEREAS, an equipment LOC, if approved, would be secured by a covenant to budget and appropriate non -ad valorem revenues; and WHEREAS, pursuant to the Constitution of the State of Florida, Chapter 166, Part II, Florida Statutes, as amended, Chapter 159, Part VII, Florida Statutes, as amended, and the Charter of the City (collectively, the "Act "), the City has the authority to borrow money to finance capital projects secured by a covenant to budget and appropriate non -ad valorem revenues; and WHEREAS, pursuant to the City's Professional Services Agreement with the City's Financial Advisor dated April 24, 2017, the Financial Advisor will conduct, on behalf of the City, the RFP process with banks and other lending institutions for the Equipment LOC; and WHEREAS, on May 18, 2018, the Finance and Citywide Projects Committee ( "FCWPC ") discussed the item and recommended that the City Commission authorize the issuance of an RFP for an equipment LOC, through the City's Financial Advisor, on behalf of the City; and NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby accept the recommendation of the Finance and Citywide Projects committee to authorize the issuance of an RFP through the City's Financial Advisor, on behalf of the City, for an equipment line of credit in an amount not to exceed $15 million, with the selection of the lender and final terms for the equipment line of credit subject to prior approval of the Mayor and City Commission. PASSED AND ADOPTED this (, day of 2018. ATTEST: o, City Clerk Dan Gelber, Mayor APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION City Attorney n . nf Date �-41 113 MIAM BEACH Resolutions - C7 I COMMISSION MEMORANDUM TO: Honorable Mayor and Members of the City Commission FROM: Jimmy L. Morales, City Manager DATE: June 6, 2018 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND CITYWIDE PROJECTS COMMITTEE TO AUTHORIZE THE ISSUANCE OF AN RFP THROUGH THE CITY'S FINANCIAL ADVISOR (RBC CAPITAL MARKETS, LLC), ON BEHALF OF THE CITY, FOR AN EQUIPMENT LINE OF CREDIT IN AN AMOUNT NOT TO EXCEED $15 MILLION, WITH THE SELECTION OF THE LENDER AND FINAL TERMS FOR THE EQUIPMENT LINE OF CREDIT SUBJECT TO PRIOR APPROVAL OF THE MAYOR AND CITY COMMISSION. RECOMMENDATION The Administration recommends that the Mayor and City Commission adopt the Resolution. ANALYSIS The City previously had a $37.5 million equipment lease line of credit with SunTrust which provided short term financing for the City's equipment needs such as fleet vehicles. Under the prior line of credit, which was in place from 2008 — 2015, the City made draws in an amount required for equipment under the capital budget. When drawn, the amount would be amortized at a fixed interest rate based on a formula and was amortized as level principal and interest payments for a period of up to 10 years. The City made 21 draws under this line totaling $37.4 million, $4.2 million of which remains outstanding as of 4/30/18. The outstanding amounts mature in 2019 — 2025. The City is requesting approval to issue a request for proposal (RFP) for a similar equipment Line of credit ( "equipment LOC ") for future equipment financing needs. The City regularly has equipment capital needs that it wishes to finance over a multi -year period. An equipment LOC provides a cost - effective and efficient financing mechanism for smaller, short -term loans. The draws convert to a fixed rate loan based on a formula which reflects market conditions at the time of the draw. An equipment LOC in an amount not -to- exceed $15 million over the next 2 — 3 years should provide sufficient funding for equipment needs during this period. The City has the legal authority to obtain a line of credit pursuant to the Constitution of the State of Florida, Chapter 166, Part II, Florida Statutes, as amended, Chapter 159, Part VII, Florida Statutes, as amended, and the Charter of the City (collectively, the "Act "), to borrow money to finance capital projects. The equipment LOC will be secured by a covenant to budget and appropriate non -ad valorem revenues. In recommending the use of an equipment LOC versus other financing options, the City's CFO worked in conjunction with the City's Financial Advisor, RBC Capital Markets ( "Financial Advisor "), who concurred on the appropriateness and cost - effectiveness of this type of financing. An equipment line of credit provides efficient access to funds for small and shorter -term financings to the Page 492 of 1103 extent that the equipment cannot be paid for with cash on hand. Pursuant to the City's Professional Services Agreement with the City's Financial Advisor dated April 24, 2017, the Financial Advisor will conduct, on behalf of the City, the RFP process with banks and other lending institutions for the Equipment LOC. Exhibit A, Scope of Work, of the Professional Services Agreement provides that the services shall include, but not be limited to: Item D. Assist the City in the development and implementation of various financing strategies, including research and evaluation of the structuring, timing and procurement of financial instruments to implement a specific strategy. CONCLUSION The Administration requests the recommendation of the Finance Committee that the Mayor and City Commission of the City of Miami Beach, Florida, to authorize the issuance of an RFP through the City's Financial Advisor, on behalf of the City, for an equipment LOC in an amount not to exceed $15 million. The Administration will provide the results of the RFP and a resolution in a form to come authorizing the execution and delivery of an equipment LOC; authorizing other actions in connection with the financing program; and providing for an effective date. Legislative Tracking Finance ATTACHMENTS: Description a Equipment Finance Reso Page 493 of 1103