HomeMy WebLinkAboutCC AG PKT 2008-08-11 #J - UpdatedOffice of tke City Cler(<,
DATE: August 11, 2008
TO: Honorable Mayor and City Council
THRU: David Carmany, City Manager
FROM: Linda Devine, City Clerk
SUBJECT: UPDATE TO COUNCIL AGENDA: August 11, 2008
*J. Fire Station No. 48 -authorize the City Manager to pursue the financing for the
reconstruction of the fire station with Bank of America.
Bank of America and the City Attorney's office has provided the attached revised
Summary of Terms and Conditions and amark-up version to identify the changes.
The Summary represents an outline of certain basic points around which legal
documents would be structured and does not purport to summarize all of the conditions,
provisions, etc. which would be contained in definitive documentation. Provisions that
are considered standard and customarily found in agreements for similar transactions
will be included (e.g. provisions regarding extraordinary redemptions).
BankofAmeric ~,~~
I~
CITY OF SEAL BEACH
Term Facility
(Private Placement Lease Revenue Bonds)
Summary of Indicative Terms and Conditions
August 6, 2008
This Summary of Indicative Terms and Conditions ("Summary of Terms") does not constitute a commitment to
lend by Bank of America ("Bank") or any of its affiliates, but indicates our desire to enter into or continue
discussions with you and outlines certain of the terms on which we would consider providing or arranging a Term
Loan Facility. Any formal offer is subject to satisfactory completion of due diligence, and the necessary credit
approval by the Bank. This Summary of Terms is intended only as an outline of certain basic points of business
understanding around which legal documentations would be structured and does not purport to summarize all of
the conditions, covenants, representations warranties and other provisions which would be contained in definitive
documentation for the transaction involved in this financing.
ISSUER !OBLIGOR : City of Seal Beach ("City") through its financing authority ("Authority")
PURCHASER: Bank of America, N.A. ("Bank")
FACILITY: Up to $9,000,000 Term Facility ("Facility"). The Bank would expect that the
Facility would be documented as a private placement of Lease Revenue Bonds
("Bonds") issued by the Authority and purchased by the Bank for its own
account.
PURPOSE: Proceeds of the Facility will be used to finance the construction of a new fire
station, fund the costs of issuance, and to fund a reserve.
TERM/REPAYMENT The Bank would be willing to discuss with the City the following tenor and
SCHEDULE: repayment options for the Facility:
O tion 1:
A 10-year fully amortizing term loan based on equal principal payments.
O t° ion 2:
A 15-year fully amortizing term loan based on equal principal payments.
In either option, principal plus interest is payable quarterly in arrears.
All calculations of interest and fees shall be made on the basis of 30 days
elapsed in a 360-day year.
Other repayment options may be available upon further evaluation.
FEES: Upfront fee of $5,000
INDICATIVE INTEREST RATES: The Facility would be anticipated to be atax-exempt bank qualified obligation.
The following assumes the Facility amount is $9,000,000. The following are
indicative interest rates only, and may change as market conditions fluctuate:
Indicative 10-vear BQ Fixed Rate: Indicative 15-vear BQ Fixed Rate:
3.75% 4.06%
These are indicative rates as of July 30, 2008. Final rates will be subject to
market conditions at time of closing.
Bank of Amerfea, N.A.
Page 1 of 4
The City may wish to consider a variable rate alternative for expanded
prepayment flexibility. The Bank would be pleased to present various scenarios
for your consideration to assist the City with the efficient management of its
interest rate risk or exposure.
PREPAYMENT: Prepayment fee in an amount sufficient to compensate the Bank for any loss
incurred by it as a result of the prepayment, as documented by the Bank,
including any loss arising from the liquidation or reemployment of funds obtained
by it to maintain the funds used to fund the financing or from fees payable to
terminate the deposits from which such funds were obtained. For purposes of
this paragraph, the Bank shall be deemed to have funded the transaction by a
matching deposit or other borrowing in the applicable interbank market, whether
or not the transaction was in fact so funded.
SECURITY: The Bonds shall evidence the right to receive lease payments~nstallment
purchase payments in respect of mutually agreeable assets of the Issuer. The
Issuer's obligation to make such lease payments/installment purchase payments
shall be general fund obligations of the Issuer, subject only to abatement. The
Issuer shall be required to maintain not less than 24 months rental interruption
insurance with respect to such assets.
Lease payments to be made by the City to the Authority pursuant to a lease
agreement covering mutually agreed upon property between the Authority, as
lessor, and the City, as lessee, and the Bank.
All payment accounts (other than rebate accounts) established in conjunction
with the Facility by the Authority, if any.
Proceeds from any insurance, including rental interruption insurance, covering
the property leased between the Authority, as lessor, and the City, as lessee.
The Bank's right to approve the leased asset(s) for which payments are made
that support the Facility. The City will be granted the option to substitute the
property subject to the Lease Agreement and Site Lease with the completed fire
station, provided that the City shall satisfy all of the requirements to be conditions
precedent to such substitution (to be determined), among which will be a
certificate stating that the annual fair rental value of the substituted property (fire
station) is at least equal to 105% of the maximum amount of annual Lease
Payments due
RESERVE REQUIREMENT: A debt service reserve fund ("Reserve Fund") will be funded by Bond proceeds
at closing. "Reserve Requirement" means, as of the date of calculation thereof,
the least of (i) the maximum aggregate annual Lease Payments, (ii) 125% of the
average annual aggregate Lease Payments, or (iii) ten percent (10%) of the
proceeds derived from the sale of the Bonds to the original Purchaser.
CONDITIONS PRECEDENT: The Facility will be subject to satisfaction of conditions precedent including, but
not limited to, the following:
• Completion of Bank due diligence and credit approval
• Opinion of bond counsel, acceptable to Bank, regarding the
authorization to issue Bonds and the tax-exempt bank qualified nature
thereof, and other such other customary opinions as required by the
Bank.
• No litigation or government action that purports (a) to materially and
adversely affect the City, or (b) to affect any transaction contemplated
hereby or the ability of the City to pertorm its obligation hereunder.
• No material adverse change.
• City would be required to maintain 2 years of rental interruption
insurance covering the assets leased by the Authority under the Bonds,
with evidence of same prior to closing.
• City to covenant to annually appropriate the lease payments to the
Authority
Bank of America, N.A.
Page 2 of 4
• Evidence of general public liability and property damage insurance
satisfactory to the Bank.
• Leased real property asset acceptable to Bank. Bank's satisfaction as
to the value of the property supporting the Facility.
• Receipt of a certificate of fair rental value for the subject leased property
satisfactory to Bank.
• Receipt of satisfactory leasehold title insurance policy for the subject
leased property.
CONDITIONS TO THE FACILITY:
Reporting Requirements: Including but not limited to the following:
1. City's annual audited financial statements within 210 days of the City's
fiscal year end. These financial statements must be audited financial
statements of the City, prepared in accordance with generally accepted
accounting principals for government entities.
2. Concurrent with the delivery of (1) above, a certificate of the City signed
by an authorized officer stating that no event of default has occurred or
continuing.
3. City's annual budget within 30 days of adoption.
4. Additional information as Bank may reasonably request from time to
time.
Covenants: To be determined after further due diligence, but will likely include, but not limited
to the following:
1. No material amendments, modifications to or termination of any of the
Bond Documents without Bank consent.
2. City will perform all of its obligations under the Bond documents,
including without limitation, its obligation to make annual appropriations
for lease payments.
3. City and Authority will not pledge, assign, sell, transfer, lease, lien or
encumber the leased property during the term of the Facility.
4. A financial covenant to be determined.
Other Terms 8~ Conditions: Other provisions with respect to reporting requirements, events of default,
representation and warranties, as may now be standard and customarily found in
agreements for similar transactions that are reasonably appropriate under the
circumstances and mutually agreed upon by the Bank and the City.
Indemnification: The City shall indemnify Bank and any officer, employee, agent, attorney or
controlling person thereof, or any holding company thereof, from and against all
losses, liability, claims, damages or expenses relating to the Facility, including
but not limited to, reasonable attorney's fees and settlement costs.
Expenses: The City shall pay all reasonable costs and expenses incurred in connection
with preparation, due diligence, administration and enforcement of all
documents executed in connection with the Facility, including without limitation,
the reasonable legal fees of Bank's counsel regardless of whether or not the
facility closes once document preparation has commenced. Bank counsel fees
are estimated at $15,000, but may vary depending on the complexity of the
transaction.
Confidentiality: This Summary of Terms and Conditions is delivered with the understanding that
neither this Summary of Terms and Conditions nor any of its terms and
conditions shall be disclosed, directly or indirectly, to any other person except:
1. The City's employees, agents and advisors who are directly involved in the
consideration of this matter; or,
2. As disclosure may be compelled in a judicial or administrative proceeding or
as otherwise required by law (subject to reasonable approval by Bank).
Bank of America, N.A.
Page 3 of 4
Agreement by the Obligor:
The Obligor hereby agrees to engage Bank of America to provide the Facility, which is
the subject hereof, pursuant to the terms and conditions stated herein.
Please evidence your acceptance of the foregoing by signing and returning a copy of
the document to Bank of America.
ACCEPTED AND AGREED TO:
By:
Date:
Bank of America, N.A.
Page 4 of 4
BankofAmeri ~`'
CITY OF SEAL BEACH
Term Facility
(Private Placement,~ease Revenue Bonds) • -catered: Certlflcates of
Participation
Summary of Indicative Terms and Conditions
U USt s~ Z~OB _ , . •~ Deleted: July 30
This Summary of Indicative Terms and Conditions ("Summary of Terms") does not constitute a commitment to
lend by Bank of America ("Bank") or any of Its affllistes, but Indicates our desire to enter Into or continue
discussions with you and outlines certain of the terms on which we would consider providing or arranging a Term
Loan Facility. Any formal offer is subject to satisfactory completion of due diligence, and the necessary credit
approval by the Bank. This Summary of Terms Is Intended only as an outline of certain basic points of business
underetanding around which legal documentations would be structured and does not purport to summarize all of
the conditions, covenants, representations warranties and other provisions which would be contained in definitive
documentation for the transaction Involved in this financing.
ISSUER /OBLIGOR : City of Seal Beach ("City") through Its financing authority ("Authority")
PURCHASER: Bank of America, N.A. ("Bank")
FACILITY: Up to $9,000,000 Term Facility (°Facility"). The Bank would expect that the
Facility would be documented as a private placement of lease Revenue Bonds _ Deleted: Certficates of Participa0on
"Bonds" issued by the Authority and purchased by the Bank for its own (Certificates° or "COPs")
account.
PURPOSE: Proceeds of the Facility will be used to finance the wnstruction of a new fire
station, fund the costs of issuance, and to fund a reserve„ Deleted: (under Reserve
Requirement- OpOon #1, below).
TERM/REPAYMENT The Bank would be willing to discuss with the City the following tenor and
SCHEDULE: repayment options for the Facility:
O t° Ion 1:
A 10-year fully amortizing tens loan based on equal principal payments.
O tin
A 15-year fully amortizing term loan based on equal principal payments.
In either option, principal plus interest is payable quarterly in arrears.
All calculations of interest and fees shall be made on the basis of 30 days
elapsed in a 360-day year.
Other repayment options maybe available upon further evaluation.
FEES: Upfront fee of $5,000
INDICATIVE INTEREST RATES: The Facility would be anticipated to be atax-exempt bank qualified obligation.
The following assumes the acilit amount is. $9,000,000. The following are . . Deleted: COP
indicative interest rates only, and may change as market conditions fluctuate:
Indicative 10-veer BO Fixed Rate: Indicative 15-veer BO Fixed Rate:
3.75% 4.06%
These are indicative rates as of July 30, 2008. Final rates will be subject to
market conditions at time of closing.
Bank of Amerfea, N.A.
Page 1 of 4
The City may wish to consider a variable rate alternative for expanded
prepayment flexibility. The Bank would be pleased to present various scenarios
for your consideretion to assist the City with the efficient management of its
Interest rate risk or exposure.
PREPAYMENT: Prepayment fee in an amount sufficient to compensate the Bank for any loss
incurred by it as a result of the prepayment, as documented by the Bank,
including any loss arising from the liquidation or reemployment of funds obtained
by it to maintain the funds used to fund the financing or from fees payable to
terminate the deposits from which such funds were obtained. For purposes of
this paregreph, the Bank shall be deemed to have funded the transaction by a
matching deposit or other borrowing In the applicable interbank market, whether
or not the transaction was in fact so funded.
SECURITY: The Bonds shall evidence the right to receive lease payments/installment
purchase payments in respect of mutually agreeable assets of the Issuer. The
Issuer's obligation to make such lease payments/installment purchase payments
shall be general fund obligations of the Issuer, subject only to abatement. The
Issuer shall be required to maintain not less than 24 months rental Interruption
insurance with respect to such assets.
Lease payments to be made by the City to the Authority pursuant to a lease
agreement covering mutually agreed upon property between the Authority, as
lessor, and the Ciry, as lessee, and the Bank.
All payment accounts (other than rebate accounts) established in conjunction
with the Facility by the Authority, if any.
Proceeds from any insurance, Including rental interruption insurance, covering
the property leased between the Authority, as lessor, and the City, as lessee.
The Bank's right to approve the leased asset(s) for which payments are made
that support the Facility. The City will be granted the option to substitute the
property subject to the Lease Agreement and Site Lease wfth the completed fire
station, provided that the City shall satisfy all of the requirements to be conditions
precedent to such substitution (to be determined), among which will be a
certificate stating that the annual fair rental value of the substituted property (fire
station) is at least equal to 105% of the maximum amount of annual Lease
Payments due
RESERVE REQUIREMENT: A debt service reserve fund__I"Reserve Fund") will be funded by Bond oroceeds
at closino. "Reserve Requirement" means. as of the date of calculation thereof.
the least of (i) the maximum aocreaate annual Lease Pavments, (ii) 125% of the
averaoe annual aooreoate Lease Pavments. or (ill) ten oercent (10%) of the
proceeds derived from the sale of the Bonds to the original Purchaser.
CONDITIONS PRECEDENT: The Facility will be subject to satisfaction of conditions precedent Including, but
not limited to, the following:
• Completion of Bank due diligence and credit approval
• Opinion of bond counsel, acceptable to Bank, regarding the
authorization to issue ends and.the tax-exempt.bank qualified nature _ _
thereof, and other such other customary opinions as required by the
Bank.
• No litigation or government action that purports (a) to materially and
adversely affect the Ciry, or (b) to affect any transaction contemplated
hereby or the ability of the City to perform its obligation hereunder.
• No material adverse change.
• City would be required to maintain 2 years of rental Interruption
insurance covering the assets leased by the Authority under thgBonds.
with evidence of same prior to closing.
• City to covenant to annually appropriate the lease payments to the
Authority
Deleted: Option t: Bank will fund a
debt service reserve fund ("Reserve
Fund') with Cerlilicele proceeds at
closing. The Reserve fund will be in
en amount equal to 12596 of
maximum annual debt service.¶
9
Option 2: Minimum Generel Fund
Balance Ratio. City will be required
to maintain unrestricted and
undesignated general fund balances
equivalent to 2596 of total outgo (total
expenditures plus transfers out)
during the Iffe of the Facility.
Deleted: COPs
- • Deleted: is
Deleted: COP
Bank of America, N.A.
Pag• 2 of 4
• Evidence of general public liability and property damage insurance
satisfactory to the Bank.
Leased real property asset acceptable to Bank. Bank's satisfaction as
to the value of the property supporting the Facility.
Receipt of a certificate of fair rental value for the subject leased property
satisfactory to Bank.
• Receipt of satisfactory leasehold title Insurance policy for the subject
leased property.
CONDITIONS TO THE FACILITY:
Reporting Requirements: Including but not limited to the following:
1. City's annual audited financial statements within 210 days of the City's
fiscal year end. These financial statements must be audlted financial
statements of the City, prepared in accordance with generally accepted
accounting principals for government entities.
2. Concurrent with the delivery of (1) above, a certificate of the City signed
by an authorized officer stating that no event of default has occurred or
continuing.
3. City's annual budget within 30 days of adoption.
4. Additional information as Bank may reasonably request from time to
time.
Covenants: To be determined after further due diligence, but will likely include, but not limited
to the following:
1. No material amendments, modifications to or termination of any of the
Bon Documents without Bank wnsent.
2. City wilt perform all of its obligations -under the Bon documents,
Including without limitation, its obligation to make annual appropriations
for lease payments.
3. City and Authority will not pledge, assign, sell, transfer, lease, lien or
encumber the leased property during the term of the Facility.
4. A financial covenant to be determined.
Other Terms 8 Condltlons: Other provisions with respect to reporting requirements, events of default,
representation and warranties, as may now be standard and customarily found in
agreements for similar transactions that are reasonably appropriate under the
ciroumstances and mutually agreed upon by the Bank and the City.
Indemnifleation: The City shall indemnify Bank and any officer, employee, agent, attorney or
controlling person thereof, or any holding company thereof, from and against all
losses, (lability, claims, damages or expenses relating to the Facility, including
but not limited to, reasonable attorney's fees and settlement costs.
Expenses: The City shall pay all reasonable costs and expenses incurred in connection
with preparetion, due diligence, administration and enforcement of all
documents executed in connection with the Facility, including without limitation,
the reasonable legal fees of Bank's counsel regardless of whether or not the
facility closes once document preparation has commenced. Bank wunsel fees
are estimated at $15,000, but may vary depending on the complexity of the
transaction.
Confidentiality: This Summary of Terms and Conditions Is delivered with the understanding that
neither this Summary of Terms and Conditions nor any of Its terms and
conditions shall be disclosed, directly or indirectly, to any other person except:
1. The City's employees, agents and advisors who are directly involved In the
consideration of this matter; or,
2. As disclosure may be compelled in a judicial or administrative proceeding or
as otherwise required bylaw (subject to reasonable approval by Bank).
- belated: COP
Deleted: COP
Deleted: D
Bank of Amertea, N.A.
Page 3 of 4
Agreement by the Obligor:
The Obligor hereby agrees to engage Bank of America to provide the Facility, which is
the subject hereof, pursuant to the terms and conditions stated herein.
Please evidence your acceptance of the foregoing by signing and returning a copy of
the document to Bank of America.
ACCEPTED AND AGREED TD:
By: Date:
Bank of Amerce, N.A.
Page 4 of 4