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HomeMy WebLinkAboutSummary FormDate: 6/26/2008 AGENDA ITEM SUMMARY FORM FILE ID: ©t -06113 Requesting Department: Finance Commission Meeting Date: 7/10/2008 District Impacted: Citywide Type: ® Resolution ❑ Ordinance ❑ Emergency Ordinance ❑ Discussion Item ❑ Other CA.7 Subject: A Resolution Authorizing the City Manager to Negotiate and Execute a Commitment for a Letter of Credit Purpose of Item: A Resolution of the Miami City Commission authorizing the City Manager to negotiate and execute a Commitment in a form acceptable to the City Attorney between the City of Miami (the "City") and Wachovia Bank National Association (the "Bank"). Background Information: See Supplemental Page Budget Impact Analysis Is this item related to revenue? Is this item an expenditure? If so, please identify funding source below. General Account No: Special Revenue Account No: CIP Project No: Is this item funded by Homeland Defense/Neighborhood Improvement Bonds? Start Up Capital Cost: Maintenance Cost: Total Fiscal Impact: Final Approvals (SIGN AND DATE) CIP Budget If using or receiving capital funds Grants Risk Management Purchasing Dept. Director Chief 1 City Manager Page 1 of 1 Supplemental Page Background Information: The City of Miami, Florida issued it $30,615,000 Non -Ad Valorem Variable Rate Refunding Revenue Bonds, Taxable Pension Bonds, Series 2006 (the "Bonds") on December 1, 2006. The Bonds were issued as variable rate debt, secured by a liquidity facility issued by Wachovia Bank (the "Standby Bond Purchase Agreement") and insured by MBIA Insurance Corporation. Due to the current financial market, most variable rate debt insured by an insurance provider which does not have a "AAA" rating has not been able to be remarketed, i.e. investors are not buying the Bonds due to the insurer's rating. MBIA was rated "AAA" at the time of issuance of the Bonds, but currently they are rated "A2" by Moody's and "AA" by Standard & Poor's. Pursuant to the Standby Bond Purchase Agreement, the fees have increased due to the downgrade of MBIA. Wachovia has offered to provide the City with a Letter of Credit (LOC) in substitution of the Standby Bond Purchase Agreement and the insurance policy. This resolution only authorizes the City Manager to negotiate and execute a Commitment, affirming either 45 basis points per annum for a one year term, or 55 basis points per annum for a three year term. Execution of the LOC is contingent upon approval of the re -funding of the Bonds by the City Commission. If approved, total costs to the City are estimated not to exceed $550,000 over three years.