LTC 231-2010 Mandatory Prepayment of the Sunshine State Loan' ',
~~ MLAML .~
' OFFICE OF. THE CITY MANAGER
~~- ~ LETTER TO COMMISSION
NO. LTC #~2~ 31-2010
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' TO: Mayor Matti Herrera Bower and Members of the City Commission C' ~~' "-".~
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FROM: Jorge M. Gonzalez, City Manager «; ..:~ ~~
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DATE: August 31, 2010 ~ ~ , , .. -._n
SUBJECT: Mandatory Prepayment of the Sunshine State Loan °~"+ ~"
- The purpose of this LTC is to advise you that on Wednesday, September 1, 2010, the City
wily. be making a mandatory prepayment of the remaining principal balance of the loan
between the City. and the Sunshine State Governmental Financing Commission (SSGFC) in
the amount of $2,930,000. .
' On August 16, 1994, the Mayor and City Commission approved by Resolution 94-21233
vvhich authorized a'Loan Agreement (the "Loan Agreement") in the amount of $30,000,000 "
for. the streetscape improvements- in the Lincoln Road and North Shore Special
Assessments Districts. Principal and interest payments for this loan have been funded
through special assessments from the Lincoln Road and North Shore Special Assessments
. Districts since 1994. These tax-exempt variable-rate commercial paper revenue notes were .
. secured by a liquidity facility from Dexia Credit.
Dexia has advised the SSGFC of its intent not to renew their commitment which expires on
October.. 11, 2010. As a result, this loan program is being terminated because of the
severely diminished availability of bond insurance and the very limited supply of credit
enhancement and liquidity support offered by highly rated banking institutions. The SSGFC
tried to seek variable rate financing alternatives,. however they do not see suitable and
economically viable rate refunding options for this loan at this time. For this reason, the
t SSGFC is demanding .mandatory prepayment of this loan, as of the next principal payment
date, which is September 1, 2010.
~~ This mandatory prepayment is in accordance with Section 6.02 of the Loan Agreement with
- SSFGC which states that ... in the .event that. the liquidity provider [Dexia Credit] has
determined not to extend the term of the. liquidity facility,:..and the [SSGFC is] unable to
`. provide an alternative liquidity facility,,. [the City] shall prepay the... then outstanding principal
balance.
This mandatory prepayment will be included in the supplemental budget amendment for
fiscal year 2009/2010, and it will be paid from the available funds collected and reserved in a '
Special Revenue Fund for this purpose. .
Should you .have any questions,. please do not hesitate to call me.
'I
JMG/PDW ,