2011-27590 Reso RESOLUTION NO. 2011
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, AUTHORIZING A LOAN IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000 OUTSTANDING AT ANY
TIME FROM JPMORGAN CHASE BANK, N.A., TO PAY COSTS OF CAPITAL
PROJECTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN
AGREEMENT AND PROMISSORY NOTES TO EVIDENCE THE OBLIGATION
OF THE CITY TO REPAY SUCH LOAN; PROVIDING SECURITY FOR THE
REPAYMENT OF THE LOAN; AUTHORIZING OTHER ACTIONS IN
CONNECTION WITH THE LOAN 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 11, 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 costs of capital projects (the
"Financing Program "); and
WHEREAS, in connection with the Financing nancing Program, JPMorgan Chase Bank, N.A.
(the "Bank "), has offered to the City a revolving line of credit in a principal amount not to exceed
$30,000,000 outstanding at any time (the "Loan "); and
WHEREAS, the City has determined that it is in the best interests of the City to
undertake the Financing Program through the Loan; and
WHEREAS, to evidence its obligation to repay the Loan, the City will execute and deliver
to the Bank a Loan Agreement (the "Loan Agreement ") and a Tax - Exempt Note and a Taxable
Note (such notes collectively, the "Notes "); and
WHEREAS, to repay the Loan, 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 Agreement and the Notes.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA:
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
Agreement shall have the meanings assigned in the Loan Agreement, unless the context
affirmatively requires otherwise.
SECTION 2. FINDINGS.
The preambles are incorporated as findings. In addition, it is found, determined and
declared that:
MIAMI/4263017.2
r
(A) The Financing Program and the Loan are permitted under the Act, are
necessary and desirable, are in the public interest and will serve a proper public purpose.
(B) I n accordance with Section 218.385, Florida Statutes, as amended,
undertaking the Financing Program on a negotiated basis through the Loan is in the best
interest of the City (rather than a sale through competitive bidding) because it offers (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. LOAN AUTHORIZED.
The Loan in an aggregate principal amount not to exceed $30,000,000 outstanding at
any time to undertake the Financing Program, as described in this Resolution and in the manner
provided in the Loan Agreement, is authorized and approved.
SECTION 4. AUTHORIZATION OF EXECUTION AND DELIVERY OF LOAN
AGREEMENT.
The Loan Agreement, in substantially the form attached as Exhibit "A" 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 Agreement, is 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 Bank.
SECTION 5. ISSUANCE OF NOTES.
The Loan shall be evidenced by the Notes. The Notes, in substantially the forms
attached to the 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 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 Bank.
SECTION 6. SECURITY FOR THE LOAN.
The Loan shall be payable solely from Non -Ad Valorem Revenues, in accordance with
and subject to the limitations contained in the Loan Agreement and the Notes. Neither the Loan
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 Agreement and Notes. The City shall not be obligated to
exercise its taxing power to pay the principal of the Loan 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,
2
MIAMI/4263017.2
the Loan Agreement or the Notes, or desirable or consistent with the requirements of this
Resolution, the Loan Agreement or the Notes, in order to obtain the Loan, accomplish the
Financing Program and provide for the full, punctual and complete performance of all the terms,
covenants and agreements contained in the Loan Agreement, 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 the Tax - 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 Agreement 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.
PASSED AND ADOPTED this / day of , f4 A/0194 , 2011._ /
- ,7220:/ W
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Attest:
tilAAA t(i fait. dk
City Clerk
APPROVED AS TO
FORM & LANGUAGE
. - ECUTION
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MIAMI/4263017.2
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Florida,
Authorizing A Loan In An Aggregate Principal Amount Not To Exceed $30,000,000
Outstanding At Any Time From JPMorgan Chase Bank, N.A., To Pay Costs Of Capital
Projects; Authorizing The Execution And Delivery Of A Loan Agreement And Promissory
Notes To Evidence The Obligation Of The City To Repay Such Loan; Providing Security For
The Repayment Of The Loan; Authorizing Other Actions In Connection With The Loan And
The Financing Program; And Providing 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:
1 Shall the City Commission Adopt the Resolution? 1
Item Summary /Recommendation:
The City's current Line of Credit ( "LOC ") was executed in May 2009 to provide the City liquidity to
continue to award contracts for new water, sewer, and stormwater projects. This LOC was a combined
offer from SunTrust, Bank of America, and Wells Fargo/Wachovia of $60 million split equally among
the three banks for an 18 month term.
The City asked the original three banks for proposals to renew the line of credit in the amount of $30
million. Wachovia Bank chose not to participate. SunTrust and Bank of America replied with terms
that were not reflective of current improved market conditions. Therefore, the City reached out to TD
Bank and JPMorgan Chase bank for proposals. JPMorgan Chase had the best offer which
represented substantial savings over the SunTrust and Bank of America offer.
The City plans to use the proposed LOC to award scheduled capital projects while spending existing
bond funds. 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.
Proceeds from the LOC will also be used for interim financing of capital projects approved by the
Commission in anticipation of future bond issues. The proceeds from any such long term fixed rate
bonds for capital projects shall be used to pay down the LOC should any draws have been necessary.
The City may prepay the line of credit prior to maturity at any time without penalty.
ADOPT THE RESOLUTION.
Advisory Board Recommendation:
The Finance & Citywide Projects Committee on December 16, 2010 approved this item and
referred it to the City Commission for action.
Financial Information:
Source of Amount Account Approved
Funds: 1
2
OBPI Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Trish Walker, ext. 6461
Sign -offs:
Department Director As . n • ity Manager City Manager
GE PDW t• JMG
T:IAGENDAl201111- 19- 111regular \Line of Credit Summary 2011.doc m.1 AM I BEACH AGENDA ITEM W7 E
e DATE I -1 #
ILD 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 Cit mmission
FROM: Jorge M. Gonzalez, City Manage
DATE: January 19, 2011
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING A LOAN IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000
OUTSTANDING AT ANY TIME FROM JPMORGAN CHASE BANK,
N.A., TO PAY COSTS OF CAPITAL PROJECTS; AUTHORIZING THE
EXECUTION AND DELIVERY OF A LOAN AGREEMENT AND
PROMISSORY NOTES TO EVIDENCE THE OBLIGATION OF THE
CITY TO REPAY SUCH LOAN; PROVIDING SECURITY FOR THE
REPAYMENT OF THE LOAN; AUTHORIZING OTHER ACTIONS IN
CONNECTION WITH THE LOAN 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's current Line of Credit ( "LOC ") was executed in May 2009 to provide the City
liquidity to continue to award contracts for new water, sewer, and stormwater projects.
This LOC was a combined offer from SunTrust, Bank of America, and Wells
Fargo/Wachovia of $60 million split equally among the three banks for an 18 month
term.
Concurrently with the City's borrowing of the Water & Sewer bonds in fiscal year 2010
through the Gulf Breeze Pooled Loan Program, the LOC was reduced prorata by all
three banks to $12.8 million each for a total of $38.4 million.
The City asked the original three banks for proposals to renew the line of credit in the
amount of $30 million. Wachovia Bank chose not to participate. SunTrust and Bank of
America replied with terms that were not reflective of current improved market
conditions. Therefore, the City reached out to TD Bank and JPMorgan Chase bank for
proposals. JPMorgan Chase had the best offer which represented substantial savings
over the SunTrust and Bank of America offer. The chart below summarizes the
proposals received by all the banks including the original $60 million LOC for
comparative purposes.
Commission Memo Re Line of Credit
January 19, 2011
Page 2 of 3
SunTrustIBOAIWeIIs Fargo SunTrustIBOA TD Bank JP Morgan Chase
Original Renewal Option
Credit Amount $60,000,000 $30,000,000 $20,000,000 $30,000,000
Term 18 Months 18 Months 18 Months 18 Months
Upfront Fee 10 bps ($60,000) 5 bps ($15,000) 0 5 bps ( $15,000)
Annual Fee for Unused Credit 80 bps ($480,000) 80 bps ($240,000) 60 bps ($120,000) 35 bps ($105,000)
Annual Interest on Draws:
Tax - Exempt >2% or Libor +1.55% To be determined 69% of Libor + 1.66% 74% of LIBOR +1.05%
Taxable >3% or Libor + 2.30% To be determined Libor + 1.75% Libor + 1.05%
Total cost w/o borrowing
18 months $375,000 $180,0001 $172,500
The City plans to use the proposed LOC to award scheduled capital projects while
spending existing bond funds. 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.
Proceeds from the LOC will also be used for interim financing of capital projects
approved by the Commission in anticipation of future bond issues. The proceeds from
any such long term fixed rate bonds for capital projects shall be used to pay down the
LOC should any draws have been necessary. The City may prepay the line of credit
prior to maturity at any time without penalty.
Tax - exempt draws against the line of credit will have a variable interest rate equal to
74% of the sum of the Libor rate plus 1.05 %, and taxable draws will have a variable rate
equal to the sum of the Libor rate plus 1.05 %. The current Libor rate is .26% as of
January 12, 2011.
There will be a bank origination fee equal to 5 basis points (.05 %) of the amount of the
line of credit, or $15,000. In addition, there will be an annual fee of 35 basis points
(.35 %) on the unused portion of the line of credit ( "Unused Facility fee ", $105,000 if there
are no draws). The City will also need to pay for any closing costs as well as the fees for
legal counsel and the financial advisor.
The Resolution also authorizes the Mayor, the City Manager, the Chief Financial Officer,
and other City employees to take all necessary actions and execute documents as may
be necessary in connection with the loan and the financing program.
BACKGROUND
Florida law requires all governments to have funds available in the amount of the
contract at the time of awarding the contract. The most effective way to meet the City's
financing needs, without incurring significant additional cost, is to obtain a line of credit.
Commission Memo Re Line of Credit
January 19, 2011
Page 3 of 3
This line of credit would be guaranteed by a covenant to budget and appropriate non -ad
valorem revenues.
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 it offers (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.
On December 16, 2010, Finance and Citywide Projects Committee Meeting, the
committee recommended this financing and requested that this item be brought to the
January 19, 2011 Commission Meeting.
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 a loan in an aggregate principal amount not to
exceed $30,000,000 outstanding at any time from JPMorgan Chase Bank, N.A.,
to pay costs of capital projects; authorizing the execution and delivery of a loan
agreement and promissory notes to evidence the obligation of the City to repay
such loan; providing security for the repayment of the loan; authorizing other
actions in connection with the loan and the financing program; and providing for
an effective date.
JMG: PDW: jr
T:I AGENDAl201111- 19- 11lregularlLine of Credit Comm Memo.doc
EXHIBIT "A"
LOAN AGREEMENT
(including Notes)
A -1
M1AMI/4263417.2