The URL can be used to link to this page

Home My WebLink AboutSubmittal-Restructuring of Series 1987, 1995, 2002A, 2002C and 2009 Bondsbbl 1 1.6b1 Dzooz 't1 ZOOZ City of Miami Restructuring of Series 1987, Series 1995, Series 2002A, Series 2002C and Series 2009 Bonds Executive Summary In order to generate monies that can start to replenish the City's General Fund's diminished fund balances, the Administration recommends that the aforementioned bonds, which are backed by the City's covenant to budget and appropriate non -ad valorem revenues, be restructured. The restructuring of these bonds will provide cash flow savings totaling approximately $31.5 Million over FY 2012 through FY 2015. However, the restructuring will increase debt service costs from FY 2016 through FY 2026. Total additional debt service will be approximately $40.3 Million which, on a present value basis, amounts to an additional and approximate $3.6 Million of costs. Exhibit A shows the estimated Cashflow for the restructuring transaction based on the interest rate market of 6/30/11. The transaction will be done on a taxable and tax-exempt basis as the original bonds were issued both taxable and tax-exempt. Exhibit B summarizes the various series of debt that will accomplish the restructuring. Finally as an additional benefit of the proposed transaction, the restructuring of the Series 1987 bonds as a taxable transaction will permit the City's agreement with the Hyatt Hotel to be restructured in a manner to bring additional revenues to the City. Background The City is considering restructuring the following outstanding debt in order to provide debt service savings in fiscal years 2012 through 2015 with the intention that those savings be deposited into General Fund Reserves. On February 10, 2000, the City enacted Ordinance No. 11890 (the "Financial Integrity Ordinance") establishing thirteen financial integrity principles. One of the principles established certain parameters for the levels of the general operating fund reserve of the City, including having general fund reserves equal to twenty percent (20%) of the prior three years average of general revenues, excluding transfers. The City's general fund reserves have declined in recent years. If the general fund reserves are not increased by the end of Fiscal Year 2011 and no other measures are taken, the City will not be in compliance with that provision of the Financial Integrity Ordinance. SUBMITTED INTO THE PUBLIC RECORD FOR ITEr4ON, 7/141 /II For fiscal year 2011, the fund balance requirement is approximately $94.5 million; as of September 30, 2010 the City had a fund balance of $13.4 million. Although the savings gained with the restructuring will not meet the required levels, the administration believes it is a step in the right direction. 1987 Series $65,271,325 The City of Miami, Florida Special Obligation Convention Center Refunding Revenue bonds - Tax Exempt Bonds Series 1987: These Bonds were issued on August 6, 2002, to refund the Outstanding 1980 Special Obligation Bonds that funded the Convention Center and Parking Garage. 1995 Series $72,000,000 The City of Miami, Florida Non -Ad Valorem Refunding Revenue bonds - Taxable Pension Series 1995: These Bonds were issued in December 1995 to pay for the City's Contribution to the Pension System. 2002A Series $22,895,000 The City of Miami, Florida Special Obligation Non -Ad Valorem Refunding Revenue bonds - Tax Exempt Bonds Series 2002A: These Bonds were issued on August 6, 2002, to refund the Outstanding 1995 Special Obligation Bonds that funded the Miami Riverside Center Building. 2002C Series $28,390,000 The City of Miami, Florida Special Obligation Non -Ad Valorem Refunding Revenue bonds - Tax Exempt Bonds Series 2002C: These Bonds were issued on October 31, 2002, to refund the Outstanding Loans from the Sunshine State Governmental Financing Commission Commercial Paper Program that funded various projects that includes Dinner Key Boat Yard, Bayfront Park land, Police Garage, Miamarina, etc. 2009 Series $37,435,000 The City of Miami, Florida Non -Ad Valorem Refunding Revenue bonds - Taxable Pension Series 2009: These Bonds were issued on July 16, 2009 to refund the Outstanding Non -Ad Valorem Variable Rate Refunding Revenue Bonds, Taxable Pension Series 2006. The original Pension bonds were issued in December 1995 to pay for the City's Contribution to the Pension System. Analysis The attached exhibit A shows the current debt service and the expected debt service after the restructuring using municipal market interest rates as of 6/30/11. As with all preliminary bond number runs, interest rates assumed are subject to market changes. Submitted Into the public record in connectiqn with item DI.2 on 7//%// j Priscilla A. Thompson City Clerk The 'stretching out' of debt service payments significantly improves cash flow in the General Fund in the near -term but will increase the total cost of debt service over the Tong -term primarily due to moving of principal payments out to future years. Final maturities (with the exception of the 1987 Series) however, have not been extended with this restructuring. The Series 1987, 1995 and 2009 Bonds must be restructured on a taxable basis and our preliminary numbers reflect a 'flat' interest rate of approximately 7.5%. The Series 2002A and 2002C Bonds are being restricted on a tax-exempt basis with a 'flat' interest rate of approximately 5.8%. Again, these rates are as of 6/30/11 and are subject to change as we get closer to the sale date. It should also be noted that the above reflects uninsured rates at the City's underlying ratings of A3, BBB+ and BBB- (Moody's, Fitch and S&P respectively). The City hopes to obtain insurance, which if successfully obtained, would lower the interest rates and over debt service payment. Conclusion We believe the City Commission should accept the recommendation of the Administration as this restructuring will provide cash flow improvement in the near -term to replenish the general fund reserves. This item will be brought in front of the Finance Committee on July 21st and an authorizing resolution will be brought to the Commission on July 28, 2011. Submitted Into the public record in connection with item at.2 on711' () Priscilla A. Thompson City Clerk EXHIBIT A Oty of Miami, Florida Debt Service Restructuring Preliminary Comparison Fiscal Year Current Scheduled Debt Service After Cashflow Restructuring (Series 2011C&D) Difference Series 1987 Series 1995 Taxable Series 2002A Series 2002C Series 2009 Taxable Total Series 1987 Series 1995 Taxable Series 2002A Series 2002C Series 2009 Taxable Tax -Exempt Refunding 2002A & 2002C2 Taxable Refunding 1995, 20092 Taxable Refunding Hyatt Property 19872 Total 9/30/2011i - 3,500,000 3,500,000 (3,500,000) 9/30/2012 5,615,249 4,053,265 3,349,801 2,655,303 3,152,604 18,826,222 1,760,940 633,239 410,450 2,318,848 472,418 1,094,022 1,333,639 8,023,555 10,802,667 9/30/2013 5,620,691 4,053,465 3,349,801 2,652,906 3,409,141 19,086,005 1,760,940 633,239 410,450 2,318,248 480,425 1,112,565 1,356,243 8,072,709 11,013,295 9/30/2014 5,547,496 4,052,815 3,348,951 2,649,350 4,559,341 20,157,954 4,052,815 633,239 410,450 4,559,341 480,425 1,112,565 1,356,243 12,605,078 7,552,876 9/30/2015 5,165,000 4,050,615 1,593,239 2,649,750 2,307,210 15,765,814 4,050,615 1,593,239 2,649,750 2,307,210 480,425 1,112,565 1,356,243 13,550,046 2,215,768 9/30/2016 4,050,990 1,592,439 2,644,175 2,301,835 10,589,439 4,050,990 1,592,439 2,644,175 2,301,835 480,425 1,112,565 1,356,243 13,538,671 (2,949,233) 9/30/2017 4,054,780 1,588,689 2,641,088 8,192,135 16,476,691 4,054,780 1,588,689 2,641,088 8,192,135 480,425 1,112,565 1,356,243 19,425,924 (2,949,233) 9/30/2018 4,050,720 1,591,889 2,636,438 7,708,298 15,987,344 4,050,720 1,591,889 2,636,438 7,708,298 480,425 1,112,565 1,356,243 18,936,576 (2,949,233) 9/30/2019 4,050,460 1,586,476 8,159,316 13,796,253 4,050,460 1,586,476 8,159,316 480,425 1,112,565 1,356,243 16,745,485 (2,949,233) 9/30/2020 4,052,560 1,587,564 6,778,898 12,419,021 4,052,560 1,587,564 6,778,898 480,425 1,112,565 1,356,243 15,368,254 (2,949,233) 9/30/2021 4,050,760 1,585,444 953,073 6,589,276 4,050,760 1,585,444 953,073 480,425 1,112,565 4,646,243 12,828,509 (6,239,233) 9/30/2022 1,579,750 927,723 2,507,473 1,579,750 927,723 480,425 4,802,565 4,648,579 12,439,041 (9,931,569) 9/30/2023 1,579,750 911,323 2,491,073 1,579,750 911,323 480,425 4,819,874 4,650,299 12,441,670 (9,950,597) 9/30/2024 1,576,500 893,523 2,470,023 1,576,500 893,523 480,425 4,845,752 4,647,804 12,444,003 (9,973,981) 9/30/2025 1,575,000 872,755 2,447,755 1,575,000 872,755 2,030,425 3,312,982 4,649,987 12,441,149 (9,993,394) 9/30/2026 3,865,619 3,865,619 3,865,619 7,580,175 - - 11,445,794 (7,580,175) Totals 21,948,437 40,520,430 27,485,293 18,529,009 54,992,791 163,475,959 3,500,000 35,935,580 19,336,455 11,802,800 53,068,741 15,848,118 28,888,273 35,426,494 203,806,462 (40,330,503) 1 FY 2011 amounts represent Debt Service Fund Transfers only, and do not include normal debt service payments. 2 Preliminary and subject to change as of 6/30/2011 assuming uninsured CB&A bonds. Preliminary Subject to Change Submitted Into the public record in connection with item I. 2 on 7/frtif/ Priscilla A, Thompson City Clerk RrstSouthwest4410 Sources: SOURCES AND USES OF FUNDS EXHIBIT B City of Miami, Florida Special Obligation Refunding Bonds, Series 2011C&D (Restructuring of Series 1987 and Partial Restructuring of Series 1995, 2002A, 2002C, 2009) Uninsured Rates as of EOD 6/30/2011 Preliminary/Subject to Change Dated Date Delivery Date Tax -Exempt Refunding 09/07/2011 09/07/2011 Taxable Refunding Taxable Refunding (Hyatt Property) Total Bond Proceeds: Par Amount Original Issue Discount Other Sources of Funds: Debt Service Fund Suplemental Reserve Fund 8,735,000.00 15,055,000.00 18,900,000.00 42,690,000.00 (148,757.05) (148,757.05) 8,586,242.95 '15,055,000.00 18,900,000.00 42,541,242.95 3,500,000.00 1,500,000.00 3,500,000.00 1,500,000.00 5,000,000.00 5,000,000.00 8,586,242.95 15,055,000.00 23,900,000.00 47,541,242.95 Uses: Tax -Exempt Refunding Taxable Refunding Taxable Refunding (Hyatt Property) Total Refunding Escrow Deposits: Cash Deposit Open Market Purchases Other Fund Deposits: Debt Service Reserve Fund Delivery Date Expenses: Cost of Issuance Underwriter's Discount Other Uses of Funds: Contingency 568.10 897.50 238.42 1,704.02 7,575,531.28 13,319,147.01 21,669,369.65 42,564,047.94 7,576,099.38 13,320,044.51 21,669,608.07 42,565,751.96 873,500.00 1,505,500.00 1,890,000.00 4,269,000.00 71,615.13 61,145.00 123,430.55 105,385.00 204,954.32 132,300.00 400,000.00 298,830.00 132,760.13 3,883.44 228,815.55 337,254.32 639.94 3,137.61 698,830.00 7,660.99 8,586,242.95 15,055,000.00 23,900,000.00 47,541,242.95 Jul S, 2011 518 pm Prepared by FirstSouthwest (Finance 6.020 Miami:2011CD) Page 1 FirstSouthwest,* BOND SUMMARY STATISTICS EXHIBIT B City of Miami, Florida Special Obligation Refunding Bonds, Series 2011C&D (Restructuring of Series 1987 and Partial Restructuring of Series 1995, 2002A, 2002C, 2009) Uninsured Rates as of EOD 6/30/2011 Preliminary/Subject to Change Bond Component Dated Date 09/07/2011 Delivery Date 09/07/2011 First Coupon 03/01/2012 Last Maturity 09/01/2026 Arbitrage Yield True Interest Cost (TIC) Net Interest Cost (NIC) All -In TIC Average Coupon 7.011420% 6.949998% 7.125816% 6.867965% Average Life (years) 12.781 Duration of Issue (years) 8.622 Par Amount 42,690,000.00 Bond Proceeds 42,541,242.95 Total Interest 37,472,885.63 Net Interest 37,920,472.68 Total Debt Service 80,162,885.63 Maximum Annual Debt Service 9,993,393.50 Average Annual Debt Service 5,350,136.97 Underwriter's Fees (per $1000) Average Takedown Other Fee 7.000000 Total Underwriter's Discount 7.000000 Bid Price 98.951541 Par Average Average PV of 1 by Value Price Coupon Life Duration change (Taxable) Serial Bonds (Tax -Exempt) Term Bond due In 2026 (Taxable) Term Bond due In 2025 3,290,000.00 8,735,000.00 30,665,000.00 100.000 98.297 100.000 6.160% 5.500% 7.390% 9.983 14.806 12.504 7.602 10.269 8.351 2,434.60 8,647.65 26,371.90 42,690,000.00 12.781 37,454.15 All -In Arbitrage 0 -C C - TIC TIC Yield 0 �� Par Value 42,690,000.00 42,690,000.00 a O >, + Accrued Interest CO •Y- N. + Premium (Discount) (148,757.05) (148,757.05) a..r - Underwriter's Discount (298,830.00) (298,830.00) O 0 - Cost of Issuance Expense (400,000.00) C C: c: - Other Amounts ® 0 "T Target Value 42,242,412.95 41,842,412.95 •c N O Target Date 09/07/2011 09/07/2011 09/07/2011 Yield 7.011420% 7.125816% 4 2 Jul 5, 2011 5:18 pm Prepared by FirstSouthwest (jgt) (Finance 6.020 Miam1:2011CD) Page 2 • FIrstS ththwest4* BOND DEBT SERVICE BREAKDOWN EXHIBIT B City of Miami, Florida Special Obligation Refunding Bonds, Series 2011C&D (Restructuring of Series 1987 and Partial Restructuring of Series 1995, 2002A, 2002C, 2009) Uninsured Rates as of EOD 6/30/2011 Preliminary/Subject to Change Taxable Period Tax -Exempt Taxable Refunding (Hyatt Ending Refunding Refunding Property) Total 09/30/2012 472,417.92 1,094,021.76 1,333,638.95 2,900,078.63 09/30/2013 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2014 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2015 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2016 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2017 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2018 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2019 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2020 480,425.00 1,112,564.50 1,356,243.00 2,949,232.50 09/30/2021 480,425.00 1,112,564.50 4,646,243.00 6,239,232.50 09/30/2022 480,425.00 4,802,564.50 4,648,579.00 9,931,568.50 09/30/2023 480,425.00 4,819,873.50 4,650,298.50 9,950,597.00 09/30/2024 480,425.00 4,845,751.50 4,647,804.00 9,973,980.50 09/30/2025 2,030,425.00 3,312,981.50 4,649,987.00 9,993,393.50 09/30/2026 7,580,175.00 7,580,175.00 15,848,117.92 28,888,273.26 35,426,494.45 80,162,885.63 Submitted Into the public record in connection with item 'D1-. 2 on 7/4!// Priscilla A. Thompson City Clerk Jul 5, 2011 5:18 pm Prepared by FirstSouthwest (jgt) (Finance 6.020 Mlami:2011CD) Page 3 FlrstSouthwest4 SAVINGS EXHIBIT B City of Miami, Florida Special Obligation Refunding Bonds, Series 2011C&D (Restructuring of Series 1987 and Partial Restructuring of Series 1995, 2002A, 2002C, 2009) Uninsured Rates as of EOD 6/30/2011 Preliminary/Subject to Change Date Prior Prior Prior Refunding Debt Service Receipts Net Cash Flow Debt Service Savings 09/30/2011 3,500,000.00 (3,500,000.00) 09/30/2012 13,702,745.62 13,702,745.62 09/30/2013 13,962,528.49 13,962,528.49 09/30/2014 10,502,108.71 10,502,108.71 09/30/2015 5,165,000.00 5,165,000.00 09/30/2016 09/30/2017 09/30/2018 09/30/2019 09/30/2020 09/30/2021 09/30/2022 09/30/2023 09/30/2024 09/30/2025 09/30/2026 2,900,078.63 2,949,232.50 2,949,232.50 2,949,232.50 2,949,232.50 2,949,232.50 2,949,232.50 2,949,232.50 2,949,232.50 6,239,232.50 9,931,568.50 9,950,597.00 9,973,980.50 9,993,393.50 7,580,175.00 (3,500,000.00) 10,802,666.99 11,013,295.99 7,552,876.21 2,215,767.50 (2,949,232.50) (2,949,232.50) (2,949,232.50) (2,949,232.50) (2,949,232.50) (6,239,232.50) (9,931,568.50) (9,950,597.00) (9,973,980.50) (9,993,393.50) (7,580,175.00) 43,332,382.81 3,500,000.00 39,832,382.81 80,162,885.63 (40,330,502.82) Savings Summary Savings PV date 09/07/2011 Savings PV rate 7.125816% PV of savings from cash flow (6,374,735.34) Less: Prior funds on hand (1,500,000.00) Plus: Refunding funds on hand 4,276,660.99 Net PV Savings (3,598,074.35) Submitted Into the public record in connection with item_on 11 - Priscllia Aa Thompson City Clerk Jul 5, 2011 5:18 pm Prepared by FlrstSouthwest agt) (Finance 6.020 Miami:2011CD) Page 4 • RrstS0uthwest410 SLIMMARY OF REFUNDING RESULTS EXHIBIT B City of Miami, Florida Special Obligation Refunding Bonds, Series 2011C&D (Restructuring of Series 1987 and Partial Restructuring of Series 1995, 2002A, 2002C, 2009) Uninsured Rates as of EOD 6/30/2011 Preliminary/Subject to Change Dated Date Delivery Date Arbitrage yield Escrow yield Bond Par Amount True Interest Cost Net Interest Cost All -In TIC Average Coupon Average Life Par amount of refunded bonds Value of refunded bonds on 9/7/2011 Average coupon of refunded bonds Average life of refunded bonds PV of prior debt to 09/07/2011 @ 7.125816% Net PV Savings Percentage savings of refunded bonds 09/07/2011 09/07/2011 42,690,000.00 7.011420% 6.949998% 7.125816% 6.867965% 12.781 22,937,611.70 39,063,044.22 5.256338% 1.384 38,967,677.61 (3,598,074.36) (9.210942) Submitted Into the public record in con o�%, t1��I� t item z__ Pr.,:.s"a A. Thompson City Clerk Jul 5, 2011 5:18 pm Prepared by FirstSouthwest (Jgt) (Finance 6.020 Miami:2011CD) Page 5