|Manatee County Government Administrative Center Commission Chambers, First Floor 9:00 a.m. - March 22, 2016|
Agenda Item #39
Transportation Debt Issuance - Line of Credit
Contact and/or Presenter Information
Jan Brewer, Director, Financial Management Department, ext. 3726
Motion to approve acceptance of the proposal for a line of credit loan by Bank of America, N.A., in an amount not to exceed $36,000,000 for the five 44th Avenue Transportation Projects, 45th Street East - 44th Ave, and 9th Street East - 53rd Avenue East and to authorize the execution of the summary of Terms and conditions included in the agenda, per the recommendation of MBS Capital Markets, LLC., the County's Financial Advisor, indicating the Board's acceptance of proposal, subject to final negotiations of all terms and conditions.
The Capital Improvement Program for FY16-20 anticipates issuance of debt to finance a portion of the Transportation Projects.
A work session with the Board was held on October 13, 2015, to identify the projects in need of debt issuance. The recommendation by staff was to issue debt to provide funds for seven Transportation projects adopted within the FY16-20 Capital Improvement Plan and reimbursements of advanced funding associated with the projects, as listed in Attachment A.
At the November 3, 2015, Board meeting, the Board approved the authorization of our Financial Advisor and staff to determine the most cost effective financing option for the transaction. It was determined to fund a portion of the project with a draw-down line of credit with a maturity of two years. Business lines of credit provide a cost effective way to finance phases of construction without paying interest on full construction costs which are not yet needed. The credit line will be used during the design and engineering phase of the Transportation projects which are a small percentage of total project costs. Once construction phase will occur on the projects, the business line of credit will be replaced with an issuance of long-term bonds. The new issuance of bonds will repay the credit line, establish the timely funding needed for construction and establish long term debt.
On February 26, 2016, a request for proposal was sent to ten banks with proposals due on March 10, 2016. Acting in its capacity as Financial Advisor, MBS hereby recommends that the Loan be negotiated with Bank of America, N.A. ("BANA"), which provided the lowest indicative interest rate for the Line of credit, with the following parameters:
i ) Loan Amount will not to exceed $36,000,000.
ii) Payment of principal and interest shall be secured by a covenant to budget and appropriate from legally available non-ad valorem revenues.
iii) The indicative non-bank qualified interest rate as of March 16, 2016 is .77%, which is a daily rate; the actual rate will be set two business days prior to closing utilizing a published index plus a defined credit spread and will adjust daily;
iv) Interest will be paid to the Bank on a monthly basis;
v) The final maturity of the Loan is March 23, 2018;
vi) Prepayments are permitted at any time with five business days' prior notice. There is no prepayment penalty;
vii) Bank counsel fees not to exceed $5,500, and no other fees of the bank.
Upon approval, County staff, Bond Counsel , and the Financial Advisor will negotiate final documents. Once final documents are received, they will be presented to the Board for approval.
County Attorney Review
Other (Requires explanation in field below)
Explanation of Other
Loan Documents will be prepared by Bond Counsel and reviewed by William Clague, Assistant County Attorney.
Instructions to Board Records
Copies of approved agenda item to:
Jan Brewer, Financial Management Director. firstname.lastname@example.org
William Clague, County Attorney's Office. email@example.com
Debbie Underwood, Financial Management Department. firstname.lastname@example.org
Cost and Funds Source Account Number and Name
Amount and Frequency of Recurring Costs
Attachment: Resolution R-15-119.pdf
Attachment: MBS Capital Markets FA Letter to BOCC RE Line of Credit 032216.pdf
Attachment: Attachment A- Transportation line of Credit.pdf