Fort Walton Beach — 03-08-11 regular — reading text

City of Fort Walton Beach, Florida Clo Ms. Marissa Wortman Senior Managing Consultant Public Financial Management, inc. 300 South Orange Avenue, Suite 1170 Orlando, Florida 32801 Re: $965,000 Non Ad-Valorem Revenue Note, Series 2011 Your RFP#11-014 dated February 2, 2011 (the “"RFP”) Please accept this letter as a revised commitment of the undersigned to purchase the above captioned Note upon the terms and conditions outlined below: Qur Commitment: Pursuant to Section I.C. (2) of the City's RFP, we are offering to finance the City's needs through an obligation that would be secured bya “covenant to budget and appropriate” (CBA) from non ad-valorem revenues as opposed to lease structures secured by annual appropriation. Accordingly, we think it would be more efficient and cost effective to secure the obligation through a traditional non ad-valorem revenue note — please see the following sections captioned Security and Documentation for further details. Issuer: City of Fort Walton Beach, Florida. Amount: $965,000 Non Ad-Valorem Revenue Note, Series 2011 (the “Note”). Purpose of Issue: Proceeds of the Series 2011 Note will be used to finance a Ladder Truck over a 10 year period (Component A Equipment) and to finance equipment for the City’s Golf Course over a 5 year period (Component B Equipment), and to pay the cost of issuance of the Note, all as further delineated in the City’s RFP (collectively the “Project”). We have revised our original proposal letter to combine the amortization schedules for the Component A Equipment and Component B Equipment into one (1) “blended” amortization schedule, which is attached to this proposal. 113 Designer Circle Dothan, Al 36303 334-792-8422 / Fox 334-792-8424 | Toll Free |8B8) 516-7373 3 £ 3 < i] £ ir o a & £ 2 5 a. & a 3s & 4 1 S £ ra & & a c 8 = = i o 3 9 2 2 a 3 o 2 > 2 = rj s a x ro r-} 3 i S = € ca & £ ro} s ft City of Fort Walton Beach — Series 2011 Note Page 2 Authority for Issue: Provisions of the Florida Constitution, the Charter of the City of Fort Walton Beach, Florida, as amended; Chapter 166, Part Il of the Florida Statutes, and any other valid Constitutional and statutory authority. Dated Date of Note - Date of Delivery Form of Certificate: The Note will be issued as single typewritten or printed certificate, in fully registered form. Note Structure, Interest Rate & Term: The City has requested a “bank qualified” tax exempt fixed rate. The Note would be repaid utilizing forty (40) quarterly payments of principal and interest. Pursuant to this request we are offering the following terms and interest rate: Fixed Rate Option ** “Series 2011 Note - Bank Qualified” Annual Term interest Rate # 10 years — fully amortized utilizing 40 Quarterly payments (see attached amortization) 2.55% “* The Issuer would fully fund the loan on the day we close the loan. # The quoted fixed interest rate is contingent upon the Mayor and City Council accepting our proposal by no later than 35 days from the date of this letter. If the Mayor and Council accept our proposal by the stipulated time, we will hold the above referenced fixed interest rate firm, provided that the Note is closed (fully funded) no later than 60 days from the date of this proposal. If the Note is not fully funded within 60 days the interest rate could be higher based on market conditions at the time we close the loan. We have provided an amortization schedule which combines the Component A Equipment and Component B Equipment amortizations for “internal” information purposes, as well as shows the total “combined” amortization schedule for the Note. The City’s payment schedule would be equal to the “combined” payment schedule — see attached. Attachment: Hancock Bank (revised proposal) Ft. Walton Beach (1175 : Lease-Purchase Financing) City of Fort Walton Beach — Series 2011Note Page 3 Interest and Principal Payments: The Note would be payable in quarterly payments (in arrears) with the first payment commencing 3 months after the date we close the loan(s). Alternately, if the City would like to start its first payment prior to 3 months after close, we will be glad to work with the City in setting an earlier first payment date. Prepayment Provisions: The principal may be prepaid in whole on any date with 10 days advance written notice to the Bank without prepayment penalty. Principal may be prepaid in part on any principal payment date (each quarterly payment date) with 10 days advance written notice to the Bank without prepayment penalty. In the event of partial prepayment, the loan would be re- amortized, using the remaining principal balance over the remaining term of the original obligation. Credit Approval: Already approved. Security: The Loan would be secured by a covenant te budget and appropriate (CBA) from all legally available non ad valorem revenues of the City, subject only to the payment of debt secured by a lien on specific revenues and the requirement that the City fund essential governmental services (the City will not otherwise be entitled to fail to budget and appropriate debt service in order to balance its budget). Such covenant to budget and appropriate shall be cumulative to the extent not paid, and shail continue until such non-ad valorem revenues in amounts sufficient to make all such required payments shall have been budgeted, appropriated and actually paid. Additional Debt: The City would not incur additional debt secured by a lien on all or a portion of the legally available non ad valorem revenues or by a covenant to budget and appropriate unless it shall certify that the legally available non ad valorem revenues, after provision for essential governmental service and payment of all debt secured by all or a portion of the legally available non ad valorem revenues, is no less than 1.25 times the maximum annual debt service on all debt secured by a covenant to budget and appropriate from legally available non ad valorem revenues, including any debt payable from a lien on one or more specific non ad valorem revenue sources and any future proposed debt secured by a covenant to budget and appropriate or a specific lien on one or more non ad valorem revenue sources. Required Accounts: We would not require the City to set up a reserve fund. B = Qo 2 sg £ wh rt n g s 2 5 e é g g g aT © 2 = £ § & $ oO < a} s nM ‘S § iJ 8 ° 2 5 a] o 2 2 & = c 5 oOo = 3 ° 8 g § = rf 5 E E s £ < City of Fort Walton Beach — Series 2011 Note Page 4 Documentation: All documentation would need to be acceptable to the Bank and “Bank Counsel”. The Bank and Bank Counsel would need to review and approve all documentation prior to adoption and/or acceptance by the Issuer's Board. Alll opinion letters from the City’s legal counsel would also have to be acceptable to the Bank and would need to be addressed to the Bank. We understand that the City desires to use the law firm of Nabors, Giblin, & Nickerson to perform the duties of “Bond Counsel”. Bond Counsel would draft the loan documents and issue the customary legal and tax opinions. Based on this, the role of "Bank Counsel” would be limited to that of a “review function” only. We have outlined the cost of Bank Counsel in the paragraph captioned “Closing costs, fees and expenses” presented below. Given the security of a non ad-vaiorem revenue CBA that we are offering (as opposed to annual appropriation lease structures), we believe it would be simpler and thus more cost efficient to evidence the obligation in the form of “traditional CBA revenue Note”, as opposed to a lease structures. Additional Documentation Requirements: We would require that the interest rate on the loan be “grossed up” and applied retroactively to the date of any event of taxability should it be determined by the Internal Revenue Service that the tax status of the Note has changed. Such “gross up” would not exceed any statutory limit imposed by the State of Florida and would be equal to the tax equivalent yield as originally contemplated by the Bank. The required documentation would also include, but not be limited to, a customary non-arbitrage certificate in form and substance acceptable to the Bank and Bank Counsel. The loan documentation would define standard events of default as are customary for this type of transaction and would provide reasonable remedies to the Bank in the event of default under the loan documents. The City would agree to provide to the Bank (at not cost) a copy of its audited financial statement within 180 days following the end of its fiscal year as well as provide to the Bank a copy of its final annual budget for each fiscal year within 30 days of adoption or such other information as the Bank may reasonably request. Closing costs, fees and expenses: The Bank would charge ne fees and assess no closing costs for its own benefit. However, we would require the City to reimburse the Bank for “Bank Counsel” expense, Bank Counsel’s expense would not exceed $3,000.00 for the role outlined above in the section captioned “Documentation”. The cost of Bond Counsel, the City’s Local Counsel, and the City’s Financial Advisor would be paid directly by the City. Tax Status of the Note: The quoted “bank qualified” tax exempt interest rate is predicated upon the Note being designated as a “qualified” tax-exempt obligation under Section 265(b) (3) of the Internal Revenue Service Cade of 1986, as amended (the “Code”). Attachment: Hancock Bank (revised proposal) Ft. Walton Beach (1175 : Lease-Purchase Financing) 84a City of Fort Walton Beach ~ Series 2011 Note Page 5 Delivery: As soon as possible after all approvals. This proposal shall remain valid for a period of 70 days provided the City's Governing Body accepts this proposal within 35 days from the date of this letter. By: Accepted and Approved: Yours very truly, HANCOCK BANK rd (Annee ELE Steven E. Cole Senior Vice President Public Finance Department The Governing Body of the City of Fort Walton Beach has accepted this Financing Proposal from Hancock Bank and hereby selects Hancock Bank to finance the above referenced Project. Approved and accepted: As of this the day of 2011. 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