| | | | | | | | CITY OF OAKLAND PARK, FLORIDA CITY COMMISSION AGENDA ITEM REPORT
AGENDA ITEM NO. 6 | MEETING DATE: 10/20/2021 |
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| | | | | | | | PREPARED BY: | Andrew Thompson, CGFO
Chief Financial Officer | DEPARTMENT HEAD APPROVAL: | FINANCIAL SERVICES |
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| | | | | | | | SUBJECT: Bank Loan for Stormwater Bonds Refunding |
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| | | | | | | | 1. | BACKGROUND/HISTORY | | Issue Statement: The City's Financial Services Department works with the City's financial advisor, Dunlap & Associates, to regularly review outstanding loans and bonds to determine if refinancing opportunities exist that will achieve debt service savings. As part of this review, the Stormwater Assessment Bonds, Series 2011 was identified as a potential candidate for refinancing. After releasing a competitive request-for-proposal, the City has determined that the proposed loan from Sterling National Bank offers the most competitive terms. Legislative authority by ordinance is required to issue debt and enter into the loan agreement with Sterling National Bank to refund the outstanding Stormwater Assessment Bonds, Series 2011.
Recommended Action: The City Commission adopt an ordinance on first reading approving the loan with Sterling National Bank in an amount not to exceed $4.8 million with a final maturity date of 8/1/2041 and an interest rate of 2.19%.
On December 15, 2011, the City issued the Series 2011 Stormwater Assessment Bonds totaling $5,765,000. These bonds were secured by revenues from the City's stormwater fund for the purposes of funding new capital improvements and refunding prior external financing used for drainage system improvements. The bonds fully matured in 2041. Interest rates on the bonds varied from 3.25% to 4.625%. |
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| | | | | | | | 2. | CURRENT ACTIVITY | | The City released Request-for-Proposal #091721 on September 2, 2021 to solicit proposals to refund the Series 2011 Stormwater Assessment Bonds. Proposals were due on September 17, 2021 and five responses were received:
- BB&T
- Key Government Finance, Inc.
- Pinnacle Public Finance
- SouthState Bank
- Sterling National Bank
The selection committee reviewed these proposals with the assistance of the City's financial advisor, Dunlap & Associates, and came to the consensus decision to recommend award to Sterling National Bank. The evaluation committee memorandum is attached as reference.
The attached supplemental ordinance establishes the legal authority to enter into the loan agreement with Sterling National Bank for the purpose of refunding the Series 2011 Stormwater Assessment Bonds. |
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| | | | | | | | 3. | FINANCIAL IMPACT | | The amount of the Sterling National Bank loan is anticipated to be $4,586,000, of which $4,510,112.50 would directly refund the outstanding Series 2011 Stormwater Assessment Bonds and the remaining amount of $75,887.50 would fund the projected costs of issuance. The proposed loan would close by November 5, 2021 and the last payment would be made on August 1, 2041, which is the same length of time as the bonds being refunded. The existing bonds are structured with variable interest rates ranging from 3.25% to 4.625%; the proposed Sterling National Bank loan would result in a consistent interest rate of 2.19% for the approximately 20 years of the loan.
The reduction in the interest rates would create debt service payment savings of approximately $1.085 million over the remaining 20 years of the loan, which is the equivalent of over $53,000 in savings every year. These savings will be reflected in the City's Stormwater Enterprise Fund. The proposed refunding was prepared in furtherance of the City's Financial Stability and Sustainability strategic performance goal.
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| | | | | | | | 4. | RECOMMENDATION | | The City Commission adopt an ordinance on first reading approving the loan with Sterling National Bank in an amount not to exceed $4.8 million with a final maturity date of 8/1/2041 and an interest rate of 2.19%. |
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