11-02-2009 - Special
Voting Order
Mayor Thomas
Councilwoman Rogers
Councilwoman Bennington
Councilwoman Rhodes
Councilman Cooper
AGENDA
CITY COUNCIL OF EDGEW ATER
SPECIAL MEETING
November 2,2009
5:00 P.M.
COUNCIL CHAMBERS
We respectfully request that all electronic devices are set for no audible notification.
1. CALL TO ORDER, ROLL CALL, PLEDGE OF ALLEGIANCE, INVOCATION
2. APPROY AL OF MINUTES - None at this time
3. PRESENT A TIONSIPROCLAMA TIONSIPLAQUES/CERTIFICA TES/DONA TIONS
None at this time
4. CITIZEN COMMENTS
This is the time for the public to come forward with any comments they may have. Citizen comments
relating to any agenda matter may be made at the time the matter is before Council. Please state your
name and address, and please limit your comments to three (3) minutes or less.
5. APPROY AL OR CHANGES/MODIFICA TIONS TO THE AGENDA
6. CITY COUNCIL REPORTS
7. CONSENT AGENDA - None at this time
8. PUBLIC HEARING, ORDINANCES AND RESOLUTIONS - None at this time
9. BOARD APPOINTMENTS - None at this time
10. OTHER BUSINESS
a. Authorization for the Mayor to execute the Commitment Letter with Wachovia for the Series
1991 and Series 1993 Revenue Bonds.
11. OFFICER REPORTS
a. City Clerk
b. City Attorney
c. City Manager
12. CITIZEN COMMENTS
13. ADJOURN
Note: All items for inclusion on the November 16,2009, agenda must be received by the City Clerk's
office no later than 12:00 pm, Thursdav, November 5, 2009.
Pursuant to Chapter 286, F.8., if an individual decides to appeal any decision made with respect to any mailer considered at a
meeting or hearing, that individual will need a record of the proceedings and will need to ensure that a verbatim record of the proceedings is
made. The City does not prepare or provide such record
In accordance with the Americans with Disabilities Act, persons needing assistance to participate in any of these proceedings should
contact City Clerk Bonnie Wenzel, 104 N. Riverside Drive, Edgewater, Florida, telephone number 386-424-2400 x 1101, 5 days prior to the
meeting date. if you are hearing or voice impaired, contact the relay operator at 1-800-955-8771.
AGENDA REQUEST
Date: November 2, 2009
PUBLIC HEARING
CONSENT
RESOLUTION ORDINANCE
OTHER BUSINESS~ CORRESPONDENCE
ITEM DESCRIPTION:
Commitment letter for the refinancing of the existing Series 1991 and Series 1993 Revenue Bonds
BACKGROUND:
The Series 1991 and Series 1993 bonds are backed by pledged revenue derived from the acquired or constructed
assets to pay debt service. Revenue bonds have been issued for business-type activities. The original amount of
amounts of revenue bonds issued in prior years is described below. Revenue bonds outstanding to be refinanced
are $9,160,000. The current interest rates range from 2.75 - 7.0% and mature in 2021. The refinanced interest rate
is to be 3.53 %. The City will use the available debt service reserve funds to bring the total refinancing amount to
$8,147,125.
These Water and Sewer Revenue Bonds are secured by a first lien on and pledge of the net revenues of the water
and sewer system and a first lien on and pledge of allowable impact fees imposed on new users of the system.
None of these previous will be altered in the refinance.
STAFF RECOMMENDATION:
Staff recommends the approval of the Commitment Letter to provide a bank qualified loan from Wachovia for
the refinance of the Series 1991 and Series 1993 Revenue Bonds.
ACTION REQUESTED:
Motion to authorize the Mayor to execute the Commitment Letter with Wachovia for the Series 1991 and Series
1993 Revenue Bonds.
FINANCIAL IMPACT:
(FINANCE DIRECTOR)
(SPECIFY IF BUDGET AMENDMENT IS REQUIRED)
PREVIOUS AGENDA ITEM:
DATE:
YES NO ~
AGENDA ITEM NO.
Concurrence:
Commitment to
Provide a Bank Qualified Loan to :
The City of Edgewater
Summary of Terms and Conditions
TRANSACTION SUMMARY:
Date: October 26,2009
Obligor:
Credit Amount:
Facility:
Financing Documents:
Lender:
Tax Treatment:
Use of Proceeds:
Security:
4835-6564-9668.6
City of Edgewater (the "Obligor").
$8,147,125
Term Loan
Resolution or Loan Agreement and Note, together with other required
documents (the "Financing Documents")
Wachovia Bank, National Association (the "Bank").
Effective December 31, 2008, Wachovia Corporation merged with
Wells Fargo & Company ("Wells Fargo"), with Wells Fargo as the
surviving holding company. Upon consummation of the merger,
Wachovia Bank, National Association ("Wachovia") became an indirect
subsidiary of Wells Fargo. Wachovia will operate under its existing
national bank charter until it is merged with Wells Fargo Bank, National
Association. Upon such merger the Financing Documents shall
automatically transfer to Wells Fargo Bank, National Association.
The Facility shall constitute a qualified tax-exempt obligation under
Section 265(b) of the Internal Revenue Code. The Obligor shall take all
steps necessary to qualify the Facility for and to maintain the Facility's
treatment as a qualified tax-exempt obligation. The Bank shall be
provided an opinion of tax counsel satisfactory to the Bank which
concludes that the Facility qualifies for treatment as a qualified
tax-exempt obligation.
Proceeds will be used to refinance existing Series 1991 and Series 1993
Bonds.
The loan will be secured by a Senior Lien and Pledge of the Net System
Revenues of the City's Water and Sewer System and Available Impact
Fees (the "Pledged Revenues").
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FEES:
Legal Fees:
Additional Fees:
Increased Costs and
Capital Adequacy;
Taxes:
$5,000.00
Obligor shall pay to the Bank the following additional fees: (i) an
amendment fee for each amendment of the Financing Documents or the
Facility in a minimum amount of $2,500.00 plus associated legal
expenses; and (ii) all other fees charged by Bank for any other activity
regarding the Financing Documents or the Facility determined in
accordance with Bank's then current fee schedule.
If a change in any laws, rules, guidelines, accounting principles or
regulations (or their interpretation, implementation or administration)
shall occur or be implemented which shall increase the cost to the Bank,
or its parent companies, of maintaining the Financing Documents or
decrease the return to the Bank, the Bank may charge a fee in an amount
as is necessary to compensate it or its parent companies for such
increased costs or decreased return. In addition, the Financing
Agreement shall contain customary provisions providing for all
payments to the Bank to be made free and clear of taxes and other
claims and, to the extent the Obligor is required by law to withhold
amounts to the Bank or its parent companies the Obligor shall be
required to gross up those payments.
PAYMENT OF FEES AND EXPENSES:
Timing / Computation All fees are fully earned when due and non-refundable when paid.
of Payments:
INTEREST RATES:
Interest Rate:
4835-6564-9668.6
Any expenses incurred by the Bank in connection with this matter are
payable by the Obligor at closing in immediately available funds.
Obligor shall be responsible for paying all out of pocket costs and
expenses of the Bank (including, without limitation, bank counsel fees
incurred in connection with the negotiation, execution, delivery,
administration and enforcement of the Financing Documents.
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Option 1: Tax-exempt, bank-qualified fixed rate of 3.40DA,.
This interest rate assumes a rate basis of 30/360, semi-annual interest
payments on April 1 and October 1 beginning April 1, 2010, and annual
principal payments beginning October 1, 2010.
This rate is an indication only based on today's market conditions and
Wachovia's assessment of the credit risk. The above rate approximates
67% of the 5 year U. S. Interest Rate Swaps plus 160 basis points. The
5-year US Dollar Swap Rate can be found on the Federal Reserve Board
Statistical Release Page H.15, as of October 23, 2009 the rate was
2.73%. The Bank will set the rate three days prior to closing.
Facility can be prepaid subject to a breakage calculation and payment of
any required breakage penalty. See Exhibit A attached.
Option 2: Tax-exempt, bank-qualified fixed rate 3.53%.
This interest rate assumes a rate basis of 30/360, semi-annual interest
payments on April 1 and October 1 beginning April 1, 2010, and annual
principal payments beginning October 1, 2010.
This rate is an indication only based on today's market conditions and
Wachovia's assessment of the credit risk. The above rate approximates
67% of the 5 year U. S. Interest Rate Swaps plus 173 basis points. The
5-year US Dollar Swap Rate can be found on the Federal Reserve Board
Statistical Release Page H.15, as of October 23, 2009 the rate was
2.73%. The Bank will set the rate three days prior to closing.
Option 2 would allow the City to prepay the Facility commencing
October 1, 2013 and on any interest payment date thereafter, but only
on that specific date. If the Facility is prepaid on any date other than
these dates specified above, the City may incur a breakage fee as
outlined in the attached Exhibit A.
Default Rate:
From and after the date that amounts under the Financing Documents
are not paid when due or the occurrence of an Event of Default, the
Facility shall bear interest at a rate equal to the interest on the Facility
plus 3% (the "Default Rate"). Interest accruing at the Default Rate shall
be payable by the Obligor on demand.
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4835-6564-9668.6
Taxability:
Computation Basis:
Payment of Principal
and Interest:
Prepayment:
Clawback Amounts:
In the event that interest on the Facility is determined to be includable in
gross income of the interest rate on the Facility will be increased to a
rate sufficient to reserve the Bank's after-tax economic yield with
respect to the interest payments on the Facility. In the event that the
Facility does not qualify as a qualified tax exempt obligation under
Section 265(b) of the Internal Revenue Code, the Interest Rate shall be
adjusted to preserve the Bank's after-tax economic yield with respect to
the interest payments on the Facility, taking into account any interest
expense deductions lost by the Bank.
Computations of interest shall be calculated on the basis of a 360 day
year consisting of twelve 30-day months.
Obligor shall repay principal and interest as follows:
The Facility shall mature on October 1,2016. Principal shall be due
and payable annually commencing October 1, 2010 and on each
October 1 thereafter with a balloon payment due at maturity. Interest
will be due and payable semi-annually commencing April 1, 2010
and on each October 1 and April thereafter through maturity. The
amortization will be structured so as to produce substantially level
annual debt service over a twelve year period with a balloon
payment due at maturity.
Should the City choose Option 1 and prepay during the life of the loan,
or choose Option 2 and prepay on any date other than the dates
specified above, the City may incur a breakage fee as outlined in the
attached Exhibit "A".
The Financing Agreement will include customary interest recapture
("clawback") language allowing Bank to recover interest in excess of
any maximum interest rate imposed by law.
DOCUMENT A nON AND COVENANTS:
4835-6564-9668.6
The Financing Documents will be prepared by Broad & Cassel based on
forms and/or required language from Bank Counsel. The Financing
Documents will include, but not be limited to, the terms and conditions
outlined herein as well as provisions that are customary and standard
with respect to conditions precedent, representations and warranties,
covenants, events of default and remedies (including the Bank's rights
to accelerate the Obligor's obligations under the Financing Documents
and Facility following default).
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Conditions Precedent
to Closing:
4835-6564-9668.6
Standard for transactions of this type, including, but not limited to:
1. Absence of any material adverse change in the business
condition, operations, performances of the Obligor since the end
of the period reported in the most recent financial statements
provided to the Bank;
2. Absence of any change in any law, rule or regulation (or their
interpretation or administration), that, in each case, may
adversely affect the consummation of the transaction, to be
determined in the Bank's sole discretion;
3. Disclosure of any pending or threatened litigation (with such
pending or threatened litigation acceptable to the Bank);
4. Payment of accrued fees and expenses;
5. Execution and delivery of Financing Documents and all
certificates, authorizations and opinions requested in form and
substance satisfactory to the Bank, with legal opinions to cover
such matters as the Bank may require;
6. Receipt of any necessary governmental and regulatory
approvals;
7. A certificate of no default, accuracy of representations, covenant
compliance, authorization of persons executing documents on
behalf of the Obligor and such other matters as the Bank may
request in form and substance satisfactory to the Bank;
8. An opinion of tax counsel satisfactory to the Bank which
concludes that the Facility qualifies for treatment as a qualified
tax-exempt obligation;
9. Certified copies of Obligor's organizational documents and
authorizing resolutions, and satisfactory evidence that the
Obligor is a tax-exempt entity; and
10. The Bank shall have received and reviewed any additional
documentation and financial or other information it finds
relevant all of which must be in form and substance satisfactory
to the Bank.
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Representations and
Warranties:
Covenants:
4835-6564-9668.6
As customary for transactions of this type, including, but not limited to,
the following: due organization and good standing of the Obligor; due
authorization of the transaction; Financing Documents valid, binding
and enforceable against the Obligor; Financing Documents not violating
laws or existing agreements or requiring governmental, regulatory or
other approvals which have not been received; no litigation that may
have a material adverse effect; compliance with ERISA, environmental
and other laws and regulations; no adverse agreements, existing defaults
or non-permitted liens; financial statements true and correct; aggregate
amount of debt issued this year; all information given to the Bank is
correct and complete; all approvals, certifications and licenses necessary
to operate Obligor's Water and Sewer System, own its property and to
execute and deliver the Financing Documents have been obtained.
As customary for a transaction of this type, including but not limited to:
(i) reporting requirements (see below); (ii) compliance with laws
(including environmental laws and ERISA matters), rules and
regulations (as applicable), and material contractual obligations;
(iii) maintenance of adequate insurance; (iv) maintenance of relevant
governmental certifications, licenses and accreditations; (v) limitations
on liens, sales of assets, investments ; (vi) limitation on investments
(including loans and advances); (vii) most favored nation provision,
such that more restrictive covenants, ratios and tests, and greater
remedies under the Obligor's other debt instruments shall be
automatically deemed incorporated, mutatis mutandis, into the
Financing Agreement, (viii) prohibitions on the use of loan proceeds for
leveraged or margined investments and on speculative derivative
transactions, in each case without the prior written consent of the Bank
and (ix) preservation of bank qualified status of Facility.
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Financial Covenants:
Reporting
Requirements:
EVENTS OF DEFAULT:
4835-6564-9668.6
In addition to the financial covenants contained in Obligor's other
Facilities, the following financial covenants shall apply:
The City will establish and maintain rates as will always provide:
1) Net System Revenues sufficient to cover Annual Debt Service by
1.15x; and
2) Net System Revenues plus Allowable Impact Fees sufficient to
cover Annual Debt Service by 1.25x; and
3) Net System Revenues plus Allowable Impact Fees plus other
revenues which are pledged to subordinate lien debt sufficient to
cover annual debt service on senior and subordinate debt by 1 x
The City may not issue any Additional Parity Debt unless Net System
Revenues received for any 12 consecutive month period out of the 18
consecutive month period immediately preceding the issuance of the
Additional Parity Debt cover Maximum Annual Debt Service all on
existing and prospective Parity Debt by 1.25x .
Audited annual financial statements within 180 days of fiscal year end,
together with Auditor's letter to the board or management.
Annual budget due within 60 days of fiscal year start.
Financial statements to be accompanied by a certificate of compliance
signed by a responsible officer of the Obligor that includes computation
of all financial covenants.
Copies of governmental audits and inspections as the Bank may
reasonably request from time to time.
Notice of default, material litigation and material governmental
proceedings.
Any reporting requirements required by the rating agencIes shall be
delivered to the Bank.
All current and future ISDA documentation shall be provided to the
Bank.
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Events of Default:
Remedies Upon Event
of Default:
Will include (without limitation) nonpayment, breach of representations
and covenants, cross-default/cross-acceleration (including, without
limitation all other debt secured by the Pledged Revenues), bankruptcy
and insolvency events with respect to Obligor, ERISA events,
environmental matters, judgments, invalidity or contest of Obligor's
obligations, the Facility shall cease to qualify as a qualified tax exempt
obligation and a bank qualified obligation under Section 265(b) of the
Internal Revenue Code.
Upon the occurrence of an Event of Default the Bank may declare all
amounts owed under the Financing Documents to the Bank due and
payable immediately, exercise right of set off, pursue rights with respect
to any collateral or guaranty, exercise any other rights or remedies
available at law or under contract. Interest accrues daily on such
amounts at the Default Rate and is payable on demand.
CHOICE OF LAW / JURY TRIAL / VENUE:
Governing Law:
Jury Trial:
Venue:
MISCELLANEOUS:
Bank Contacts:
Name:
Title:
Address:
Telephone:
Facsimile:
E-mail:
Bank Counsel:
4835-6564-9668.6
This Commitment, the Financing Documents and any other documents
to which the Bank shall become a party will be governed by the laws of
the State of Florida.
The Obligor agrees to waive a jury trial in any proceeding involving the
Bank.
Any litigation involving the Bank shall be brought in the appropriate
Florida court having jurisdiction over the matter.
Todd Morley
Senior Vice President
800 Magnolia Ave, 81h Floor
Orland, FL 32803
407-649-5638
407-739-6314
T odd.Morley@Wachovia.com
Akerman Senterfitt
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Indemnification:
Assignments /
Participations:
Future Modifications:
Confidentiality:
Whether or not the financing is closed, Obligor will (a) pay all fees and
expenses of the Bank's counsel in connection with the preparation and
administration of the Financing Documents, (b) pay all fees and
expenses of the Bank in connection with the enforcement of the
Financing Documents, and ( c) indemnify the Bank and its respective
directors, officers employees agents and affiliates against all claims
asserted and losses, liabilities and expenses incurred in connection with
the Financing Documents (excluding acts of gross negligence or willful
misconduct of an indemnified party as determined by a court of
competent jurisdiction).
The Bank reserves the right in its sole discretion to assign or sell
participations in the Financing Documents without the consent of the
Obligor.
The terms, conditions and interest rates herein reference the financing
and the Credit Amount indicated herein and are subject to revision in
the discretion of the Bank, including, without limitation, in the event
that (i) the Credit Amount changes, (ii) the transaction deviates
materially from what was initially described in conjunction therewith,
(iii) the proposed financing does not close (other than as a result of
action/inaction by the Bank) within 60 days of the execution by the
Obligor of this Commitment Letter or (iv) events occur resulting in a
material disruption of the market.
This Commitment Letter contains confidential and proprietary
structuring and pricing information. Except for disclosure on a
confidential basis to your accountants, attorneys and other professional
advisors retained by you in connection with this financing or as may be
required by law, the contents of this Commitment Letter may not be
disclosed in whole or in part to any other person or entity without our
prior written consent, provided that nothing herein shall restrict
disclosure of information relating to the tax structure or tax treatment of
the proposed Facility as required to comply with applicable Federal
income tax rules relating to such disclosure.
AGREEMENT BY THE OBLIGOR:
4835-6564-9668.6
All fees and expenses are subject to increase if the transaction is not
closed within 60 days from the date the Bank receives an executed copy
of this Commitment Letter from the Obligor.
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Please evidence your acceptance of the foregoing by slgmng and
returning a copy of the document to the Bank.
Unless this Commitment Letter is earlier rescinded, this Commitment
Letter shall expire automatically without further action or notice on the
part of the Bank 10 business days from date of this Commitment Letter
unless a signed counterpart of this Commitment Letter shall have been
delivered to the Bank.
ACCEPTED AND AGREED TO:
By:
DATE:
EXHIBIT "A"
In addition to principal, interest and any other amounts due under this Note, Borrower shall on demand pay
to Bank any "Breakage Fee" due hereunder for each Break Event. "Break Event' means any voluntary or
mandatory prepayment or acceleration, in whole or in part, of principal of this Note occurring prior to the date
such principal would, but for that prepayment or acceleration, have become due ("Scheduled Due Date").
For each date on which a Break Event occurs ("Break Date"), a Breakage Fee shall be due only if the rate
under "A" below exceeds the rate under "B" below and shall be determined as follows:
Breakage Fee = the Present Value of ((A-B)xC) + UBOR Breakage, where:
A=
The rate per annum equal to the sum of (i) the bond equivalent yield (bid side) of the U.S. Treasury
security with a maturity closest to the Maturity Date as reported by the Wall Street Journal (or other
published source) on the date the Interest Rate of this Note was set ("Lock in Date"), plus (ii) the
corresponding swap spread of Bank on the Lock in Date for a fixed rate payer to pay Bank the fixed
rate side of an interest rate swap of that maturity, plus (iii) .25%.
B=
A rate per annum equal to the sum of (i) the bond equivalent yield (bid side) of the U.S. Treasury
security with a maturity closest to the Maturity Date as reported by the Wall Street Journal (or other
published source) on the Break Date, plus (ii) the corresponding swap spread that Bank determines
another swap dealer would quote to Bank on the Break Date for paying to Bank the fixed rate side
of an interest rate swap of the maturity.
C=
The sum of the products of (i) each Affected Principal Amount for each Affected Principal Period,
times (ii) the number of days in that Affected Principal Period divided by 360 (if this Note uses the
Actual/360 Computation) or the actual number of days in the year (if this Note uses the
Actual/Actual Computation).
"Affected Principal Amounf' for an Affected Principal Period is the principal amount of this Note scheduled to be
outstanding during that Affected Principal Period determined as of the relevant Break Date before giving effect to the
Break Event on that Break Date, and for any prepayment, multiplying each such principal amount times the
Prepayment Fraction.
"Affected Principal Period' is each period from and including a Scheduled Due Date to but excluding the next
succeeding Scheduled Due Date, provided that the first such period shall begin on and includes the Break Date.
"L1BOR Breakage" is any additional loss, cost or expense that Bank may incur with respect to any hedge for the fixed
rate of this Note based on the difference between the London interbank offered rate (for U.S. dollar deposits of the
relevant maturity) available in the London interbank market at the beginning of the interest period in which the Break
Date occurs and that which is available in that market on the Break Date.
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4835-6564-9668.6
"Maturity Date" is the date on which the final payment of principal of this Note would, but for any Break Event, have
become due.
"Prepayment Fraction" is a fraction equal to the principal amount being prepaid over the principal amount of this Note
outstanding immediately prior to that prepayment on the Break Date.
"Present Value" is determined as of the Break Date using "B" above as the discount rate.
In addition, a Break Event shall be deemed to occur hereunder if, on any date ("Borrowing Date") after the date
hereof but prior to any acceleration of this Note, any advance of principal under this Note is scheduled to be made
and that advance fails to be made on that Borrowing Date (whether due to Borrower's default, Borrower's failure to
borrow, the termination of any loan commitment, any unsatisfied condition precedent, or otherwise), in which case
that Borrowing Date shall be a Break Date, the Affected Principal Amount for that Break Event shall be based on the
amount of the failed advance, and the Borrower shall on demand pay to the Bank any Breakage Fee due hereunder
for that Break Event.
Breakage Fees are payable as liquidated damages, are a reasonable pre-estimate of the losses, costs and expenses
Bank would incur in the event of any prepayment or acceleration of this Note, are not a penalty, will not require claim
for, or proof of, actual damages, and Bank's determination thereof shall be conclusive and binding in the absence of
manifest error. For any Break Event hereunder, the foregoing Breakage Fee provisions supersede any breakage
compensation agreement that Borrower and Bank may have executed with respect to this Note.
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4835-6564-9668.6