Okaloosa County BOCC — November 5, 2013 — Action Item Printout — reading text

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: December 17, 2013 TO: Honorable Chairman and Members of the Board FROM: Sunil Harman SUBJECT: A Resolution Authorizing Refinancing Series 2013 Bonds and FLGFC Loan DEPARTMENT: Airport BCC DISTRICT: ALL STATEMENT OF ISSUE: The Board of County Commissioners is requested to approve a Resolution that will amend and restate Resolution No.13-164. This amended Resolution will authorize the refinancing of the County’s Series 2003 Airport Revenue Bonds and Repay $1.2 million of the existing $2 million loan with the Florida Local Government Finance Commission (“FLGFC”) through a negotiated sale with Compass Mortgage Corporation (“Compass”). BACKGROUND: The Board had previously approved Resolution No. 13-164 on November 5, 2013 which authorized the refinancing through a Bond Purchase Contract with Royal Bank of Canada and a subsequent resale of bonds to the public. Since then, the County has solicited nineteen banks to provide a direct loan for the refinancing. The County received three proposals. A fair and impartial analysis was performed by the County and coordinated with the County’s financial advisor. Two of the proposals were deemed non-responsive as they did not meet the criteria in the term sheet provided within the Request for Proposals. One of the non-responsive proposals offered a loan with a final maturity of October 1, 2023 with an approximately $5 million balloon payment due on that date, whereas the County was seeking a loan with a final maturity of October 1, 2030 structured to produce level annual debt service. The other non- responsive proposal required a County Covenant to Budget and Appropriate as an additional security for the Bonds. The third proposal, submitted by Compass, met all of the criteria in the term sheet. Compass is proposing a direct loan with a final maturity of October 1, 2030 at a fixed interest rate of 3.31% (Option 1). The County and its financial advisor evaluated the economics of this approval and concluded that it contained more favorable terms than what could be achieved through a bond offering to the public. Attached is a matrix that provides a comparison of the bank loan and a bond offering at estimated market interest rates. Furthermore, the bank is not requiring the County to have a Reserve Fund in place which will enable the County to use its existing Reserve Fund to pay down a portion of the Series 2003 Bonds and reduce the size of the loan. Compass also provided an alternate term structure with a final maturity of October 1, 2028 at a fixed interest rate of 3.15%. Even with the shorter term, the annual debt service on this loan would provide annual savings compared to what is currently being paid on the Series 2003 Bonds and have $500,000 lower interest cost than Option 1. This option would result in a present value savings of $1.7 million, or 20% of the refunded bonds. Thus, the County staff recommends proceeding with Option 2.The Resolution will delegate to the Chairman the authority to sign the final documents and approve final terms of the bonds based on final payoff amounts and dates. The principal amount shall not exceed $10 million, the net present value savings associated with refunding the Series 2003 Bonds shall not be less than 10%, and the costs of issuance shall not exceed 2% of the principal amount of the bonds. A copy of the Compass Bank proposal is also attached. OPTIONS: Approve, Reject or Table RECOMMENDATIONS: Approve and authorize the Chairman to sign the Resolution as of this date, and final loan closing documents when final payoff amounts and dates are established. RECOMMENDED BY: APPROVED BY: Ernie Padgett, County Administrator