2009-27076 ResoRESOLUTION NO. 2009-27076
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING LOANS IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $60,000,000
OUTSTANDING AT ANY TIME FROM SUNTRUST BANK, BANK OF
AMERICA, N.A., AND WACHOVIA BANK, NATIONAL ASSOCIATION,
TO PAY COSTS OF WATER, SEWER AND STORMWATER PROJECTS;
AUTHORIZING THE EXECUTION AND DELIVERY OF LOAN
AGREEMENTS AND PROMISSORY NOTES TO EVIDENCE THE
OBLIGATION OF THE CITY TO REPAY SUCH LOANS; PROVIDING
SECURITY FOR THE REPAYMENT OF THE LOANS; AUTHORIZING
OTHER ACTIONS IN CONNECTION WITH THE LOANS AND THE
FINANCING PROGRAM; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City of Miami Beach, Florida (the "City") is duly authorized, 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; and
WHEREAS, the City is in need of interim financing to pay the Costs of the Project (as
such terms are defined in the Loan Agreements described below) (the "Financing Program"); and
WHEREAS, in connection with the Financing Program, each of SunTrust Bank, Bank of
America, N.A., and Wachovia Bank, National Association (each, a "Bank" and collectively, the
"Banks") has offered to the City a separate line of credit in a principal amount not to exceed
$20,000,000 outstanding at any time (each, a "Loan" and collectively, the "Loans"), resulting in
Loans available to the City in an aggregate principal amount not to exceed $60,000,000
outstanding at any time; and
WHEREAS, the City has determined that it is in the best interests of the City to
undertake the Financing Program through the Loans; and
WHEREAS, to evidence its obligation to repay each Loan, the City will execute and
deliver to each Bank a Loan Agreement (each, a "Loan Agreement" and collectively, the "Loan
Agreements") and aTax-Exempt Note and a Taxable Note (all six of such notes collectively, the
"Notes"); and
WHEREAS, to repay the Loans, the City wishes to covenant to budget and appropriate
Non-Ad Valorem Revenues (as defined in the Loan Agreement), in accordance with and subject
to the limitations contained in the Loan Agreements and the Notes.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA:
MIAMI/4239138.2
SECTION 1. DEFINITIONS.
Terms defined in the preambles shall have the meanings set forth in such preambles. All
capitalized terms used in this resolution (the "Resolution") which are defined in the Loan
Agreements shall have the meanings assigned in the Loan Agreements, unless the context
affirmatively requires otherwise.
SECTION 2. FINDINGS.
The preambles are incorporated as findings. In addition, it is found, determined and
declared that:
(A) The Financing Program and the Loans are permitted under the Act, are
necessary and desirable, are in the public interest and will serve a proper public purpose.
(B) In accordance with Section 218.385, Florida Statutes, as amended,
undertaking the Financing Program on a negotiated basis through the Loans is in the best interest
of the City (rather than a sale through competitive bidding) because the offer (i) borrowing at
lower rates than those which the City could command in the market, and (ii) flexibility of
financing which could not be obtained in a sale through competitive bidding.
SECTION 3. LOANS AUTHORIZED.
The Loans in an aggregate principal amount not to exceed $60,000,000 outstanding at
any time to undertake the Financing Program, as described in this Resolution and in the manner
provided in the Loan Agreements, are authorized and approved.
SECTION 4. AUTHORIZATION OF EXECUTION AND DELIVERY OF LOAN
AGREEMENTS.
The Loan Agreements, in substantially the forms attached as Exhibits "A," "B" and "C"
to this Resolution, with such changes, alterations and corrections as may be approved by the
Mayor of the City (the "Mayor"), after consultation with the Chief Financial Officer of the City
(the "Chief Financial Officer") and the City Attorney of the City (the "City Attorney"), such
approval to be presumed by the execution by the Mayor of the Loan Agreements, are approved
by the City. The City authorizes and directs the Mayor to execute and the City Clerk or Deputy
City Clerk of the City (the "City Clerk") to attest under the seal of the City the Loan Agreement
and to deliver the same to the respective Banks.
SECTION 5. ISSUANCE OF NOTES.
The Loans shall be evidenced by the Notes. The Notes, in substantially the forms
attached to each Loan Agreement, with such changes, alterations and corrections as may be
approved by the Mayor, after consultation with the Chief Financial Officer and the City
Attorney, such approval to be presumed by the execution by the Mayor of the Notes, are
MIAMI/4239138.2
2
approved by the City. The City authorizes and directs the Mayor to make and execute the Notes
and to issue and deliver the Notes to the respective Banks.
SECTION 6. SECURITY FOR THE LOANS.
The Loans shall be payable solely from Non-Ad Valorem Revenues, in accordance with
and subject to the limitations contained in the Loan Agreements and the Notes. Neither the
Loans nor the Notes shall be a general obligation of the City, or a pledge of its faith, credit or
taxing power within the meaning of any constitutional or statutory provisions or limitations, but
shall be payable solely as provided in the Loan Agreements and Notes. The City shall not be
obligated to exercise its taxing power to pay the principal of the Loans and the Notes, the related
interest or other payments or costs.
SECTION 7. GENERAL AUTHORITY.
The City's officials, officers, attorneys, agents and employees are authorized to do all
acts and things and execute and deliver any and all documents necessary by this Resolution, the
Loan Agreements or the Notes, or desirable or consistent with the requirements of this
Resolution, the Loan Agreements or the Notes, in order to obtain the Loans, accomplish the
Financing Program and provide for the full, punctual and complete performance of all the terms,
covenants and agreements contained in the Loan Agreements, the Notes and this Resolution,
including the execution of any necessary Tax Compliance Certificate and the execution and
filing of any necessary form or other document with the Internal Revenue Service with respect to
any Advance under aTax-Exempt Note.
SECTION 8. SEVERABILITY OF INVALID PROVISIONS.
If any one or more of the provisions contained in this Resolution shall be held contrary to
any express provisions of law or contrary to the policy of express law, though not expressly
prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such
covenants, agreements or provisions shall be null and void and shall be deemed separable from
the remaining covenants, agreements or provisions and shall in no way affect the validity of any
of the other provisions of this Resolution or of the Loan Agreements or the Notes.
SECTION 9. REPEALING CLAUSE.
All resolutions or parts of such resolutions of the City in conflict with the provisions
contained in this Resolution are, to the extent of such conflict, superseded and repealed.
SECTION 10. EFFECTIVE DATE.
This Resolution shall become effective immediately upon adoption.
MIAMI/4239138.2
3
Resolution 2009-27076
PASSED AND ADOPTED this 13thday of May , 2009.
Attest:
~' at, ~
City Clerk
Robert Parcher
Mayor
Matti Herrera Bower
MIAMI/4239138.2
APPROVED AS TO
FORM & LANGUAGE
Condensed Title
COMMISSION ITEM SUMMARY
A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Authorizing
Loans In An Aggregate Principal Amount Not To Exceed $60,000,000 Outstanding At Any Time From
SunTrust Bank, Bank Of America, N.A., And Wachovia Bank, National Association To Pay Costs Of
Water, Sewer and Stormwater Projects; Authorizing The Execution And Delivery Of Loan Agreements
And Promissory Notes To Evidence The obligation Of The City To Repay Such Loans; Providing
Security For The Repayment Of The Loans; Authorizing Other Actions In Connection With The Loans
And The Financin Pro ram; And Providin For An Effective Date.
Key Intended Outcome Supported:
• Improve the City's overall financial health and maintain overall bond rating.
Supporting Data (Surveys, Environmental Scan, etc.): N/A
Issue•
Shall the City Commission Adopt the Resolution?
Item Summary/Recommendation:
The City needs additional funding to complete the Water, Sewer and Stormwater portions of the right
of way projects. Typically the City would issue revenue bonds secured by a pledge of revenues from
these three funding sources individually. The City currently has unspent fully committed bond
proceeds from the last issuance of Water, Sewer, and Stormwater bonds. Until the majority of these
proceeds, including interest earned, are spent the City will be prohibited from issuing additional tax-
exempt bonds.
The City has secured a combined offer from SunTrust, Bank of America, and Wells Fargo/Wachovia
for a proposed $60 million line of credit for 18 months. The line of credit should allow the City to
award the majority of the projects planned for fiscal year 2009 preceding the first issuance of the
Water ~ Sewer and Stormwater bonds anticipated in 2010.
The City plans to use the proposed line of credit to award scheduled projects while spending existing
bond proceeds on both existing projects as well as those secured by the line of credit. This strategy
should expedite the expenditure of existing funds, minimize the need to draw against the line of credit
and facilitate the issuance of future tax-exempt bonds while building the required debt service
coverage.
It is anticipated and the City covenants that the City will issue long term debt in the future to refund the
lines of credit prior to maturity.
ADOPT THE RESOLUTION.
advisory Board Recommendation:
The Finance 8 Citywide Projects Committee on May 5, 2009 approved this item and referred it to
the City Commission for action.
= i na ncia I Information:
Source of Amount Account Approved
Funds: 1 $90,000 Water 8 Sewer Fund
Issuance Costs O ratin Contin enc
2 $90,000 Stormwater Fund
Issuance Costs O ratin Contin enc
P Total $180,000
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Trish Walker, ext. 6461
pan- s:
T:WGENOA~2009~may1309Vegular\Line of Credit Summary.doc
Dep ent Director Ass' nt ty Manager City Manager
GE PDW JMG
m MIAMIBEACH
~~
AGENDA tTEM ~~ D
DATE 5 ~ 3'~
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: May 13, 2009
suBJECT: A RESOLUTION OF THE MAY'pR~~B-i/'fTY COMMISSION OF THE
CITY OF MIAMI BEACH, FLOR A, AUTHORIZING LOANS IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $60,000,000
OUTSTANDING AT ANY TIME FROM SUNTRUST BANK, BANK OF
AMERICA, N.A., AND WACHOVIA BANK, NATIONAL ASSOCIATION
TO PAY COSTS OF WATER, SEWER AND STORMWATER
PROJECTS; AUTHORIZING THE EXECUTION AND DELIVERY OF
LOAN AGREEMENTS AND PROMISSORY NOTES TO EVIDENCE
THE OBLIGATION OF THE CITY TO REPAY SUCH LOANS;
PROVIDING SECURITY FOR THE REPAYMENT OF THE LOANS;
AUTHORIZING OTHER ACTIONS IN CONNECTION WITH THE
LOANS AND THE FINANCING PROGRAM; AND PROVIDING FOR
AN EFFECTIVE DATE.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution
KEY INTENDED OUTCOMES SUPPORTED
Improve the City's overall financial health and maintain overall bond rating.
ANALYSIS
The City needs additional funding to complete the Water, Sewer and Stormwater
portions of the right of way projects. Typically the City would issue revenue bonds
secured by a pledge of revenues from these three funding sources individually. The City
currently has unspent fully committed bond proceeds from the last issuance of Water,
Sewer, and Stormwater bonds. Until the majority of these proceeds, including interest
earned, are spent the City will be prohibited from issuing additional tax-exempt bonds.
The City has worked closely with major local solvent banks to secure a proposed line of
credit that will meet its financial commitment needs for the next 12 to 18 months. The
City has secured a combined offer from SunTrust, Bank of America, and Wells
Fargo/Wachovia for a proposed $60 million line of credit for 18 months. The line of
credit should allow the City to award the majority of the projects planned for fiscal year
2009 preceding the first issuance of the Water & Sewer and Stormwater bonds
anticipated in 2010.
Commission Memo Re Line of Credit
May 73, 2009
Page 2 of 3
In order to proceed with the line of credit and any additional projects, increased utility
rates need to be in place in early fiscal year 2010 to generate sufficient debt service
coverage that would allow the first issuance of bonds for each utility or an extension of
the line of credit such that additional projects could be awarded in 2010 preceding the
issuance of additional bond financing in 2012.
The City plans to use the proposed line of credit to award scheduled projects while
spending existing bond proceeds on both existing projects as well as those secured by
the line of credit. This strategy should expedite the expenditure of existing funds,
minimize the need to draw against the line of credit and facilitate the issuance of future
tax-exempt bonds while building the required debt service coverage.
As previously mentioned, the City will have a line of credit with SunTrust, Bank of
America, and Wells FargoNVachovia. The line of credit with each bank will be for $20
million with an aggregate principal balance of $60 million. The three banks require that
the City maintain a minimum of $4 million or 20% of their respective committed amount
in deposits with their institution during the term of the lines of credit.
It is anticipated and the City covenants that the City will issue long term debt in the future
to refund the lines of credit prior to maturity. No additional utility debt may be issued
unless the proceeds are used to retire the lines of credit. The City may prepay the line
of credit prior to maturity at any time without penalty. Any prepayment shall be made
prorate on each line of credit.
Tax-exempt draws against the line of credit will have a variable interest rate equal to the
greater of (1) 2.00% or (2) the 30-day Libor rate plus 1.55%, and taxable draws will have
a variable rate equal to the greater of (1) 3.00% or (2) the sum of 2.30% plus the Libor
Rate. The current 30-day Libor rate is .43%, as of April 30, 2009.
There will be bank origination fee equal to 10 basis points (.10%) of the amount of the
line of credit, or $60,000. In addition, there will be an annual fee of 80 basis points
(.80%) on the unused portion of the line of credit.
BACKGROUND
Florida law requires all governments to have funds available in the amount of the
contract at the time of awarding the contract. Additionally, the current economic
conditions would make the issuance of bonds extremely expensive. Thus, the most
effective way to meet the City's financing needs, without incurring significant additional
cost, is to obtain a line of credit. This line of credit would be guaranteed by a covenant
to budget and appropriate non-ad valorem revenues from the General Fund.
Under this approach, the City could utilize the line of credit to meet its financial
commitment needs and be in compliance with state law while spending its existing
bonds proceeds.
In accordance with Section 218.385, Florida Statutes, as amended, undertaking this
financing program on a negotiated basis through the line of credit is in the best interest
of the City (rather than a sale through competitive bidding) and will serve a proper public
purpose because the offer (1) borrowing at lower rates than those which the City could
command in the market, and (2) flexibility of financing which could not be obtained in a
sale through competitive bidding.
Commission Memo Re Line of Credit
May 73, 2009
Page 3 of 3
CONCLUSION
The Administration recommends that the Mayor and City Commission of the City of
Miami Beach, Florida, adopt the attached resolution, authorizing the Administration to
enter into loans in an aggregate principal amount not to exceed $60,000,000 outstanding
at any time from SunTrust Bank, Bank of America, N.A., and Wachovia Bank, National
Association to pay costs of water, sewer and stormwater projects; authorizing the
execution and delivery of loan agreements and promissory notes to evidence the
obligation of the City to repay such loans; providing security for the repayment of the
loans; authorizing other actions in connection with the loans and the financing program;
and providing for an effective date.
JMG: PDW: jr
T:WGENDA\2009\may1309\regularlLine of Credit Comm AAemo.doc