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Home My WebLink AboutR-84-1478J-84-1263 RESOLUTION N0.84-14 9 A RESOLUTION AUTHORIZING THE CITY MANAGER TO =' APPROVE, IN A FORM ACCEPTABLE TO THE CITY ATTORNEY A PROPOSED $300Z000 LOAN FROM M= MIAMI CAPITAL DEVELOPMENT, INC. (MCDI) TO w THE INSURANCE EXCHANGE OF THE AMERICAS, INC. (IEA), AS EVIDENCED BY THE ATTACHED NOVEMBER 299 1984 LOAN COMMITMENT LETTER FROM MCDI TO IEA, WHEREBY THE LOAN PROCEEDS WILL BE DISBURSED FROM MCDI'S EXISTING $1,800,000 REVOLVING LOAN FUND AND WHEREBY A LOAN GUARANTY INSURANCE POLICY, IN A FORM .>' SATISFACTORY TO THE CITY OF MIAMI S DIVISION Fs OF RISK MANAGEMENT, IS TO BE OBTAINED FOR :r3 MCDI'S EXISTING $500,000 LOAN TO IEA AS WELL x; AS FOR MCDI'S PROPOSED $300,000 LOAN TO IEA _:.". AND WHEREBY ALL APPROPRIATE ACTIVITIES REQUIRED FOR THE DISBURSEMENT OF THE PROPOSED $3001000 LOAN AND ISSUANCE OF THE LOAN GUARANTY INSURANCE POLICY ARE COORDINATED AND APPROVED BY THE CITY OF MIAMI'S DEPARTMENT OF ECONOMIC DEVELOPMENT. WHEREAS, the City Commission, on December 9, 1982, adopted Ordinance No. 9534 making appropriations for capital improvements, continuing previously approved capital improvement projects, and establishing new capital improvement projects to begin during fiscal year 1982-83, and WHEREAS, the Ordinance appropriated a sum of $500,000 from FY 183 Florida Power and Light Franchise Revenues for an "Insurance Exchange" project; and WHEREAS, on April 6, 1983, the City Commission passed Resolution No. 83-321 authorizing the City Manager to enter into a contract with Miami Capital Development, Inc. (MCDI) to provide an amount not to exceed $500,000 in loan funds to the Insurance Exchange of the Americas (IEA) to facilitate an insurance business development program; and WHEREAS, on April 8, 1983, the City Manager entered into a contract with MCDI to provide loan funds not to exceed $500,000 to IEA; and CITY COMMISSION MEETING OF DEC 84�147 LMLOON No. REMARKS. WHEREAS, IEA has requested an additional $300,000 loan from MDCI and offered to provide MCDI with a loan guaranty insurance policy for MCDI's existing $500,000 loan as well as for the proposed $300,000 loan; and WHEREAS, MCDI has funds available in the existing $1,800,000 Revolving Loan Fund and issued the attached loan commitment letter dated November 29, 1984; and WHEREAS, it is the desire of the City Commission to continue to support the development of the insurance industry in the City of Miami; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1, The City Manager is hereby authorized to approve, in a form acceptable to the City Attorney, a proposed $300,000 loan from MCDI to IEA as evidenced by MCDI's November 29, 1984 loan commitment letter to IEA whereby the loan proceeds will be disbursed from MCDI's existing $1,800,000 Revolving Loan Fund and whereby a loan guaranty insurance policy, in a form satisfactory to the City of Miami's Division of Risk Management, is to be obtained for MCDI's existing $500,000 loan to IEA as well as for MCDI's proposed $300,000 loan to IEA and whereby all appropriate activities required for the disbursement of the proposed $300,000 loan and issuance of the loan guaranty insurance policy are coordinated and approved by the City of Miami's Department of Economic Development. It is understood that for the purpose of review during IEA's fiscal year, IEA will provide internally prepared "cash basis" information to MCDI not later than 60 days after the end of each fiscal quarter. It is further understood that for the purpose of review at the end of IEA's fiscal year, IEA will provide an 84-1478 independently prepared financial audit to MCDI not later than 90 days after the end of the fiscal year. PASSED AND ADOPTED this _ 20th day of DPCEmyg , 1984. RA- H . ONGIE, CITY CLERK PREPARED AND APPROVED BY: 4" - ROBERT F. CLAR , DEPUTY CITY ATTORNEY APPROVED "AS ;0 FORM AND CORRECTNESS: . V V V V.* L P l ., MA ICE A. FEM MAURICE A. FERRE Mayor 84 -1478 Sy TO: Randolph Rosencrantz City Manager FROM: Charlotte Gallogl Director Department of Economic CItY OF MIAMI, FLOR16A INTER -OFFICE MEMORANDUM DATE: December 14, 1984 FILE: SUBJECT: Agenda Item For The Decem— ber 20th City Commission Meeting Regarding Miami REFERENCES: Capital Development, Inc. l4� and the Insurance Exchange ENCLOSURES:of the Americas, Inc. development Please note that today, this department was advised by Walter Pierce that an agenda item was needed regarding the City Commission's actions on December 13, 1984 regarding a proposed $300,000 loan from Miami Capital Development, Inc. (MCDI) to the Insurance Exchange of the Americas, Inc. (IEA). In response, this department could not confirm through either the City Clerk's office or the Law Department what the specific action of the City Commission was. However, based upon my discussion with you and having participated in the action of the City Commission on December 13, 1984 regarding MCDI and IEA, and based upon the advice of Robert Clark of the Law Department, the attached agenda item has been prepared in response to Mr. Pierce's request. Should this agenda item need to be modified in any way, please advise. CG/SP/ju Attachment 84-14'78 cITY OF MIAMI. FLORIDA INTER -OFFICE MEMORANDUM 1 � i 'to: Randolph Rosencrantz City Manager FROM: Charlotte Gallogl Director Department of Economic DATE: December 14, 1984 FILE: SUBJECT: Agenda Item For The Decem- ber 20th City Commission Meeting Regarding Miami REFERENCES: Capital Development, Inc. and the Insurance Exchange ENCLOSURES:of the Americas, Inc. Development Please note that today, this department was advised by Walter Pierce that an agenda item was needed regarding the City Commission's actions on December 13, 1984 regarding a proposed $300,000 loan from Miami Capital Development, Inc. (MCDI) to the Insurance Exchange of the Americas, Inc. (IEA). In response, this department could not confirm through either the City Clerk's office or the Law Department what the specific action of the City Commission was. However, based upon my discussion with you and having participated in the action of the City Commission on December 13, 1984 regarding MCDI and TEA, and based upon the advice of Robert Clark of the Law Department, the attached agenda item has been prepared in response to Mr. Pierce's request. Should this agenda item need to be modified in any way, please advise. CG/SP/ju Attachment 84-14'78 $ 5 To; Randolph Rosencrantz City Manager FROM: Charlotte Gallogl 1 Director Department of Economic CITY OF MIAMI. 1:1.6010A 177 INTER -OFFICE MEMORANDUM � 1 7 DATE: December 14, 1984 FILE: SUBJECT: Agenda Item For The Decem- ber 20th City Commission Meeting Regarding Miami REFERENCES, Capital Development, Inc. _a and the Insurance Exchange ENCIOSURES:of the Americas, Inc. Development Please note that today, this department was advised by Walter Pierce that an agenda item was needed regarding the City Commission's actions on December 13, 1984 regarding a proposed $300,000 loan from Miami Capital Development, Inc. (MCDI) to the Insurance Exchange of the Americas, Inc. (IEA). In response, this department could not confirm through either the City Clerk's office or the Law Department what the specific action of the City Commission was. However, based upon my discussion with you and having participated in the action of the City Commission on December 13, 1984 regarding MCDI and IEA, and based upon the advice of Robert Clark of the Law Department, the attached agenda item has been prepared in response to Mr. Pierce's request. Should this agenda item need to be modified in any way, please advise. CG/SP/ju Attachment 84-14'78 CITY OF MIAMI, IrLOOtibA INTER -OFFICE MEMORANDUM Randolph Rosencrantz December 14, 1984 To: City Manager DATE: Charlotte FROM: Director Department Gallogl of Economic D SUBJECT: R FERENCES: relo men p � ENCLOSURES: Resolution To Approve A $300,000 Loan From MCDI's Revolving Loan Fund Subject To The Terms Of The Loan Commitment Letter Dated November 29, 1984 December 20th Agenda "It is recommended that the City Commission approve the attached resolution authorizing the City Manager to approve, in a form acceptable to the City Attorney, a proposed $300,000 loan from MCDI to the IEA, as evidenced by the attached November 299 1984 loan commitment letter from MCDI to IEA, whereby the loan proceeds will be disbursed from MCDI's existing $1,800,000 Revolving Loan Fund and whereby a loan guaranty insurance policy, in a form satisfactory to the City of Miami's Division of Risk Management, is to be obtained for MCDI's existing $500,000 loan to IEA as well as for MCDI's proposed $300,000 loan to IEA and whereby all appropriate activities required for the disbursement of the proposed $300,000 loan and issuance of the loan guaranty insurance policy are coordinated and approved by the City of Miami's Department of Economic Development." On December 9, 1982, the City Commission adopted Ordinance No. 9534 and appropriated a sum of $500,000 from fiscal year 1983 Florida Power and Light Franchise Revenues in order to help defray the costs of establishing the Insurance Exchange of the Americas, Inc. (IEA). On April 6, 1983, the City Commission approved Resolution No. 83- 321 authorizing the City Manager to enter into a contract with MCDI to facilitate an insurance business development program in conjunction with the Insurance Exchange of the Americas, Inc. Accordingly, on April 8, 1983, the City Manager executed a contract 84- IL471S 1Z Randolph Rosencrantz Page 2 1-1 with MCDI, and MCDI in turn executed a loan agreement with IEA whereby the $500,000 was conveyed to IEA in the form of a loan. On May 10, 1984, the City Commission raised certain questions regarding IEA which resulted in an analysis by this department per the attached memorandum dated June 18, 1984 noting that this department had advised IEA that it should guaranty its loan from MCDI. Based upon subsequent negotiations which have included MCDI, IEA has proposed that if MCDI extends an additional $300,000 loan, IEA will provide a guaranty for the full amount of the existing $500,000 loan as well as the proposed $300,000'loan. On November 29, 1984, Miami Capital Development, Inc. (MCDI) issued the attached loan commitment letter for a $300,000 loan to IEA which was accepted by IEA subject to clarification regarding the approval of appropriate documentation by IEA's legal counsel and the provision of financial information to MCDI. This proposed $300,000 loan would be disbursed from MCDI's existing $1,800,000 Revolving Loan Fund (RLF) and would not require any new allocation of funds from the City Commission. The loan commitment letter requires that IEA issue a loan guaranty insurance policy covering the existing $500,000 loan as well as the proposed $300,000 loan. The attached resolution authorizes the City Manager to approve the $300,000 loan whereby the loan guaranty insurance policy is provided in a form satisfactory to the City Attorney, the City's Division of Risk Management and the City's Department of Economic Development. Regarding the provision of financial information, the resolution points out that it is the understanding of the City Commission that IEA will provide internally prepared "cash basis" information to MCDI not later than 60 days after the end of each IEA fiscal quarter, and that IEA will provide an independently prepared financial audit to MCDI not later than 90 days after the end of each IEA fiscal year. This department is presently reviewing IEA's business plan and cash flow projection through March, 1986 which has just been made available as requested. A report will be issued by December 18, 1984. CG/SP/ju Attachments 84--14'78 November 29, 1984 Mr. Arturo Toro, President Insurance Exchange of the Americas Inc. 245 Southeast First Street Miami, Florida 33131 Ref. OLS76/84 near Mr. Toro: Miami Capital Development Inc. (hereafter referred to as MCOI) is pleased to confirm the availability of a $300,000 loan to the Insurance Exchange of the Americas Inc. subject to the following terms and conditions: BORROWER: INSURANCE EXCHANGE OF THE AMERICAS INC. PRINCIPAL: $300,000 U.S. Dollars TERMS: Three year loan with a seven year payout REPAYMENT: Interest only from months 1 through 12; interest and principal payments months 13 through 35 and interest, principal plus a balloon payment at the end of the 36th month paying off loan in full. All payments are monthly. RATE: Prime floating based on Southeast Bank's prime rate adjusted monthly; no ceiling but a floor of 10%. TERMS AND CONDITIONS: Miaamn Ca:. 'a• (i) The Insurance Exchange of the Americas Inc. will purchase an $800,000 loan guaranty insurance and Financial Guaranty Bond which is underwritten by at least two-thirds of all underwriting syndicate members of the Insurance Exchange of the Americas Inc.; such participating underwriting syndicate members must have an aggregate December 31, 1983 net worth of at least $15,000,000. Such policy and Financial Guaranty Bond to contain substan- tially the same terms and conditions as provided for in attached policy bearing Broker I.D. Reference Number DR7000 DR00000004 and IEA Contract or Renewal Number 000299-000-0 covering a $450,000 loan to Insurance Exchange of Americas Inc. with Southeast Bank N.A. as agent for the lending con- sortium. (2) Formal Commitments (approved by the Florida Insurance Commissioner) are received fro.a IEA operating syndicates to purchase at least $610.000 in 84'1478 • INSURANCE2 EEXC1g84E Novembe Ref. OLS76/84 Page two... OFF lE AMERICAS INC. El "Participation Notes" as provided for in the Peat, Marwick Mitchell and Company projections. (3) Quarterly review financial statements as well as annual fully audited statements will be provided to MCDI by the Insurance Exchange of the Americas Inc. not later than 60 days after the end of each quarter for each interim audit and not later than 90 days after the end of the calendar and !or fiscal year for each annual audit. (4) MCDI's representatives to have unlimited access (during normal business hours) to all borrowers books, records, reports, correspondence and premises where inventory, supplies and/or other assets are stored without need to give prior notice. (5) Proceeds of this loan will be used solely for the implementation of the calendar year 1985 operational plan; and, in no event will these funds be used to prepay bank and/or any other type of debt. (6) Credit Investigation of borrower which must show a clean business name search and no outstanding business judgements and/or liens. (7) Receipt of a certified copy of Business Certificate authorizing borrower to do business under the name of The Insurance Exchange of the Americas Inc. (8) Letter of opinion from the Borrower's legal counsel that this transaction is not in violation with any existing agreements, also stating that there are no outstanding legal claims against the borrower. (9) Letter of opinion from each participating underwriting syndicate member's legal counsel that the participating underwriting syndicate is in good standing with the Florida Department of Insurances as well as with the Insurance Department of the State and/or foreign Country in which incorporated and/or registered if other than the State of Florida. (10) Borrower will pay for all costs and expenses, antici- pated to include, but not limited to, legal and docum- entary stamp taxes. This commitment is subject to legal review and/or revision by MCDI's legal counsel. 84-1478 . INSURANCE EXCHANGE OF THE AMERICAS INC. November 29, 1984 Ref. OL576/84 _ Page three... Other than for this qualification; all terms and conditions are valid until December 31, 1984; providing that all terms and conditions are continuously met including tax and legal compliance and all exceptions have been approved in writing uy MCDI. If you are in accordance with these terms and conditions, kindly countersign the enclosed copy of this letter and return to Mr. Alfredo Izaguirre, Acting Executive Director (MCDI) with a check for the amount of Si50.00 payable to our attorneys, Koppen and Watkins which will be applied against future closing costs. Cordially, MIAMI CAPITAL DEVELOPMENT, INC. Carlos Fernandez-Gusman Vice Chairman, Loan Committee Accepted By; INSURANCE EXCHANGE OF THE AMERICAS INC. Subject to the additional corunents below r J mes Cord e, Chairman/Chief •Executive Officer �r • l Arturo Toro, Jr., President/Chief Operating Officer CFG/RD/gp COMMEMT S The foregoing is acceptable to the Insurance Exchance of the Americas, Inc. provided that our !Ieneral counsel is permitted to vrovide the oninion required by naragranh no. 9 rather that individual counsel to each Svndicate. Further, we understand that caragranh no. 3 means that internal "cash basis" information will be made available; independent work by outside auditors is not contemplated. i 1 � . Noward V. Gary Jurrc 1L, 1ur4 City fianal; r STATUES OF THE INSURANCE -_ EXCIIki,GE U= THE —� ,, ANERTCkS - ��:Charlotte Gallogly •'' ('�- `` , �i Director Department of Economic eveIopnen In response to a request made on clay 10, 1954 by the City Commission for an update on the status of the Insurance 'Exchange of the Americas (IEA), we are providinf; you r:ith the following information: �= 1. IEA's present loan balance is $500,000. To d::{cr, "LEI, has made two quarterly interest payiaents to t.iaini Capital Dev_lop�ient, Inc. (MCDI) in the amounts of W13,750 on January 20, 1984 a.:d $13,750 on April 20, 1964. On October 1, 19b59 1EA will begin making interest and principal pay..ients to ar.aurtize the loan. 2. On June 13, 1984, IEA refinanced its loans by replacing an 18 bank consortium with a 4 bank eonsortion led b;, Southeast Bank. ` This refinancing includes favorable repayment terns for a $450,000 loan and an additional line of credit in the arliount of $3U0,000. Althou0h collateral was not required as part of the loam agreerient, we have advised IEA that we would lake a guarantee. IEA has indicated that while it cannot predict the result, it is grilling to propose that its underwriters guarantee the 1•',CDI lour.. If IEA is successful, the loLn from fiCD! mould be on par with the loan from the new bank consortium. 3. As a result of the new refinancing, we have beer, advised and have verified that IEh will have an unqualified audit for the fiscal year ending December 31, 1983• 4. ' On June 1, 1984, Arturo Toro replaced Alan Tea1e as President of iE*A. Mr. Toro is the former Ex-t-cutive Vice President and Chief Operating Officer of IEA. 5. I£A is not in compliance with its loan agreer:rent 'w tlA , I)I and the City of Miani for the develop% ent of an aff ir:::st_ : c actic.n plan to encourage and promote the involve►7ent of r_r.erities in the insurance industry; the development of a three—tier educational program to support Mie growth o:' tr c insurance industry irr Miami; the deve:op. tt nt of annu:ei sUm, inarsI conferences and trade fairs des-;.!•r'd to brink. irsurLnee and reinsurance buyers to the City of ::iarji; and the sut-nission of progress reports on these initiatig'i.-L;. 84-14'78 N(,►;z:rd V. Gary PaV,c 2 1•1,rv t u r o Toro, Presidc,nt of I rh be'11tvc!, thF:t t11E 6:r--YC d-fieienc-Ies are the result of unrealistic projections r.-lade by -:!)e former I-resI.dc.nt. t;r. Toro ihi:s proposed tlla;. the reviem `.tile contract requirements rclbted to item 5 and develop a reu for IL'A's pc-h•f'orcr,al,ce in order to meet tllt ob;ectivi... Cxpeett-d. Ir order to resolve the probleoz; identified in IlLem :5), the Cit.;'s contract with I11CL`I and IICH's lost, aDrccnent with If;+ will nee, to be amended. JEP. will be provided ►,,i th a proposed L!,.endment ty "One 28, 1984. The arheneh-ilent should be ready for your sif;nature by July. Once the amendment is in effect, 14CDI will be responsible for monthly monitoring of IEA. CG/SP/es cc: Alfredo Izaguirre, Actinr; Exec. Director, 1•*.:.UI Arturo Toro, President, IEA 84-1471"�