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Preview <br /> <br /> <br />TO: <br /> <br />FROM: <br /> <br />DATE: <br /> <br />RE: <br /> <br />Page I of2 <br /> <br />City of Sunny Isles Beach <br />18070 Collins Avenne <br />Snnny Isles Beach, Florida 33160 <br /> <br />(305) 947-0606 City 11.11 <br />(305) 949-3113 F.x <br /> <br />MEMORANDUM <br /> <br />The Honorable Mayor and City Commission <br /> <br />Minai Shah, Assistant City Manager-Finance <br /> <br />4119/2012 <br /> <br />Issuance of a $10 million revenue bond to advance refund the 2002C <br />Florida Municipal Loan Council Revenue Bond. <br /> <br />RECOMMENDATION: <br /> <br />Staff is recommending City Commission approve the ordinance and loan documents with <br />BB&T for the issuance of a $10 million revenue bond to be repaid over 10 years with an <br />interest rate of2.0% to defease the 2002C FMLC revenue bonds with a remaining of life <br />of 10 years with an interest rate of 5.25%. <br /> <br />REASONS: <br /> <br />On November I, 2012, the City has the option to defease the bond at a I % early <br />redemption premium. The current principal balance of the bond is $11,510,000. After the <br />November I, 2012 principal payment, the balance is $10,700,000. Every calendar year, <br />the City has the opportunity to obtain up to $10 million of tax-exempt financing. Please <br />note that if the City exceeds $10 million in borrowings in a year, then all monies <br />borrowed no longer benefit from the tax-exempt rate. Tax-exempt financing provides for <br />an interest rate savings of approximately 0.80%. Since interest rates are low now and <br />there is no certainty as to where interest rates will be in 6 months, staff is doing an <br />advance refunding of the 2002C FMLC revenue bond now. As such, the City will incur <br />interest costs of the 2002C bond and the new 2012 bond. However, staff deems that the <br />cost is minor considering the great savings of locking in the 2% rate. The bond closing is <br />scheduled for April 20,2012. Upon closing, a total of $12,211,150 will be sent to an <br />escrow agent for the purposes of defeasing the 2002C FMLC revenue bonds. The <br />$12,211,150 includes $594,150 of interest which half is due on May 1,2012 and the <br />remainder is due Novemeber 1,2012. The remainder is $11,510,000, of which $810,000 <br />is due on November 1,2012 leaving an outstanding balance of $10,700,000 to defease <br />the bond. In addition, there is an approximately $150,000 in costs that include early <br />redemption premium, escrow agent costs. legal fees and other administrative fees. The <br /> <br />Agenda Item <br /> <br />gf\ <br />~-\q-I~ <br /> <br />http://sibagenda.si bfl.net/ agenda/Preview .aspx?1 tem I D~7 4 3 &MeetingID <br />Date <br />