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HomeMy WebLinkAboutComposite Exhibit AComposite Exhibit A Request for Proposals, dated January 10, 2019, and Proposal of Capital One Public Funding, LLC, dated January 28, 2019 and Form of Commitment Letter pfm Memorandum 2222 Ponce de Leon Boulevard 786-671-7480 Third floor www.pfm.com Coral Gables, FL 33134 January 29, 2019 To: City of Miami, Florida — Finance Department From: PFM Financial Advisors LLC Method of Sale Recommendation Memorandum — Special Obligation Parking Revenue Forward Re: Refunding Note, Series 2019 (Marlins Stadium Parking Facilities Project) The purpose of this memorandum is to briefly summarize the proposals received from lending institutions to provide the City of Miami, Florida (the "City") with a fixed-rate loan in the form of a Special Obligation Parking Revenue Forward Refunding Note, Series 2019 (Marlins Stadium Parking Facilities Project) (the "2019 Note" or the "Note") and summarize the recommendation of PFM Financial Advisors LLC ("PFM") to move forward in order to refund the City's Special Obligation Parking Revenue Refunding Bonds, Series 2010A (Marlins Stadium Parking Facilities Project). On January 10, 2019, PFM, on behalf of the City, distributed a request for proposals to a broad pool of lenders that are active in municipal lending. PFM's recommendation to proceed with a loan in the form of a note relies upon the facts that: (1) the credit is well understood by market participants and the RFP would attract a wide viewership; (2) a direct placement would limit the administrative burden on the City. For these reasons, PFM recommended that this particular request be sent to the bank lending community. On January 28th, four proposals were received. A full summary of the proposing firms (in alphabetical order), along with a brief summary of the key points from each proposal is included in the matrix that follows. Based on the responses received, the two direct placement proposals were received from AIG Asset Management U.S. LLC ("AIG") and from Capital One Public Funding, LLC ("Capital One"). The other two proposals received proposed capital market solutions, which would involve a public sale as opposed to a direct placement. A short summary of the provisions found in each response is provided below. AIG — 4.56% indicative rate for a taxable advanced refunding. Rate is based off of 30 Year US Treasuries plus a spread of 150 basis points. Prepayment option is make -whole provision. Other provisions include the requirement of a CUSIP and cross -default to other City debt. Capital One — 3.95% fixed rate for a tax-exempt forward refunding. This rate is locked through closing, which would be set for May 1, 2020. Prepayment in whole at par after July 1, 2029. Final credit approval will be provided after the verbal award. At this time, PFM recommends moving forward with the fixed-rate loan with Capital One. Our recommendation is based on the fact that Capital One offered the full term and loan amount requested with in the form of a direct placement note, and had the most advantageous rate and terms of the direct placement proposals. Based on the proposals received, the 2019 Note would have an All -in TIC of 4.00% and annual debt service savings of approximately $790,000 through the final maturity of July 1, 2039. This amounts to approximately $10.5 million in net present value savings, or 12.50% as a percentage of refunded bonds. We believe the results of this proposal are generally consistent with what a similarly priced competitive public offering would have yielded. In closing, the key benefits of this type of structure, in addition to the economic results, are the significant reduction in costs of issuance and reduced administrative time. We look forward to continuing to work towards a successful closing for the 2019 Note. Please do not hesitate to contact us should you have any questions on the details of this memorandum or the included response matrix. City of Miami Special Obligation Refunding Series 2019 Bank Loan RFP Summa d„ .., i AIG _;, ry 4Y, Michael McDermott T: 217.770.0051 Michael.McDermott@aig.com Capital One,;. ,„ Jacqueline Bretz T: 866.617.2337 F: 866.617.2330 jaci.bretz@capitalone..com ,,,., RBC Capital Markets, ,y„ . , Tom Carlson T: 727.895.8899 thomas.carlson@rbccm.com , Wells Fargo , Contact Information John Generalli T: 727.953.1124 john.generalli@weilsfargo.com Structure Taxable Special Obligation Note Forward Tax -Exempt Special Obligation Note Public Forward or Advance Refunding Public Forward or Advance Refunding Interest Rate Fixed Rate: 30 YR UST + 150 bps (PFM approximation: 4.56%) ° Fixed Rate: 3.95 /° Indicative MMD spread: 104 bps (includes forward premium) Indicative MMD spread not listed (interest rates as high as 4.42% for limited offering forward refunding) Rate Locked to Closing, or Date to be set Unclear when rates will be set Rates valid as long as term sheet is accepted by February 28, 2019, and closed by May 1, 2020 Rates set at sale Rates set at sale Final Maturity 7/1/2039 7/1/2039 7/1/2039 7/1/2039 Prepayment Penalty Prepayable with make -whole provision Prepayable in whole at par after 7/1/29, and in smaller amounts on any interest payment date Similar to other public transactions Similar to other public transactions Bank Counsel Fee None None $30,000 Unlisted Other Conditions CUSIP required Transfers in the amount of $100k or more (QIB minimum) cross -default to other debt Final credit approval to be received Forward provisions to be reviewed by counsel and City staff Public Transaction Public Transaction Prepared by PFM Financial Advisors, LLC 1/29/2019 Public Funding January 28, 2019 Erica Paschal City of Miami epaschal(cr�m iamigov.com Sergio Masvidal / Pete Varona PFM masvidals a,pfm.com varonap@pfm.com Subject: City of Miami, Florida Refunding Special Obligation Bond, Series 2020 (the "Loan") Dear Erica, Sergio and Pete: This Term Sheet is presented in response to that certain Request for Proposal dated January 10, 2019 ("RFP") that you have presented to Capital One Public Funding, LLC ("COPF"). All terms, provisions and covenants set forth in the RFP are incorporated herein except as described below. We are very interested in providing the City of Miami, Florida ("Borrower") the financing for a tax-exempt forward refunding and are pleased to present the following summary terms: Structure Directly purchased Special Obligation Bond, Series 2020 Estimated Amount $90,000,000 Use of Proceeds Refund 2010A bonds for debt service savings. Security Provisions / Repayment Sources As described in the RFP. Fixed Interest Rate 3.95% Payment Assumptions Payments of principal annually and interest due semi-annually; average life of 14.87 years; final maturity 07/01/39. Loan will be payable in installments on the dates and in the amounts set forth on a payment schedule identifying payment dates, principal, interest and total payment due, which shall be attached to the bond. Call Provisions No call until 07/01/29, then in whole at par on any interest payment date. Partial prepayment at par at any time is permitted as noted below. * Tax Treatment Tax-exempt *Partial prepayment is allowed on interest payment date throughout the life of the Loan: (i) from proceeds other than refunding sources; (ii) once per calendar year per transaction; (iii) in a minimum amount of $500,000; (iv) in a maximum amount of $5,000,000; and (iv) provided that any such prepayment is applied to outstanding Loan principal in inverse order of maturity. Interest Rate Assumptions The above -quoted interest rate is based upon the assumptions set forth above regarding average life and final maturity. Any changes from the assumptions may require an adjustment to the quoted rate. The rate may also be subject to change if the contemplated Loan is not closed by May 1, 2020. Capita/ Public Funding Documentation Loan documentation shall be prepared by qualified bond counsel subject to review by COPF and its counsel. Borrower shall provide, at its expense, an opinion of legal counsel (acceptable to COPF) attesting to the legal, valid, and binding nature of the transaction and the tax-exempt nature of the interest component of the Loan payments. Upon selection of COPF, the Borrower shall provide COPF the draft authorizing document for its review and comment. Costs of Issuance The Borrower shall be responsible for normal borrower costs of issuance including a financial advisor, placement agent, and bond counsel. No fees will be due to COPF, which shall be responsible for the costs of its own legal review. Direct Loan The Loan shall be directly funded by (and registered in the name of) COPF as a single, fully registered bond and delivered in physical, non -book -entry, certificated form. The Loan shall not be (i) assigned a separate rating by any rating agency; (ii) registered with the Depository Trust Company or any other securities depository; (iii) issued pursuant to any type of official statement, private placement memorandum or other offering document; or (iv) assigned a CUSIP number. Audited Financial Statements Upon request, as soon as available, the Borrower shall send COPF a copy of its audited financial statements as of the end of the fiscal year. Municipal Advisor Rules As noted, this Term Sheet is submitted in response to your Request for Proposals dated January 10, 2019. The contents of this Term Sheet and any subsequent discussions between us, including any and all information, recommendations, opinions, indicative pricing, quotations and analysis with respect to the Loan, are provided to you in reliance upon the exemption provided for responses to requests for proposals or qualifications under the municipal advisor rules of the Securities and Exchange Commission (Rule 15Ba1-1 et seq.). Role of Capital One Public Funding, LLC The Borrower acknowledges and agrees that: (i) the information contained in this Term Sheet is for discussion purposes only and sets forth certain proposed terms and conditions of an arm's-length commercial transaction between the Borrower and COPF and does not constitute advice, an opinion or a recommendation by COPF; (ii) the Borrower will make its own determination regarding whether to enter into the proposed transaction and the terms thereof, and will consult with and rely on the advice of its own financial, accounting, tax, legal and other advisors; (iii) COPF is acting solely for its own account in connection with the proposed transaction, and is not acting as a municipal advisor, financial advisor, agent or fiduciary to the Borrower or any other person or entity (including to any financial advisor or placement agent engaged by the Borrower) and the Borrower, its financial advisor and placement agent are free to retain the services of such advisors (including as it relates to structure, timing, terms and similar matters and compliance with legal requirements applicable to such parties) as it deems necessary or appropriate; (iv) COPF has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to the Borrower with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto; (v) neither COPF nor any of its affiliates is acting as a broker, dealer, underwriter or placement agent with respect the transactions contemplated hereby; (vi) the only obligations COPF has to the Borrower with respect to the transaction contemplated hereby expressly are set forth in this Term Sheet; and (vii) COPF is not recommending that the Borrower take an action with respect to the transaction contemplated by this Term Sheet. Before taking any action with respect to the Loan, the Borrower should discuss the information contained herein with the Borrower's own legal, accounting, tax, financial and other advisors, as it deems appropriate. If the Borrower would like a municipal advisor in this City of Miami, Florida Page 2 Refunding Special Obligation Bond, Series 2019 January 28, 2019 Capital Public Funding transaction that has legal fiduciary duties to it, Borrower is free to engage a municipal advisor to serve in that capacity. Other Information To the extent that updated financial and other credit materials have not already been provided to COPF or are not available through public resources, COPF may require and request the following: audited and unaudited financial statements; budgets; calculations of historical and projected debt service coverage; information on outstanding bond issues, lease transactions, and contingent/material liabilities; tax base details; and other reasonable and customary information relevant to the Borrower's credit quality and the source of repayment. Confidentiality The information contained herein is strictly confidential and is intended for review by the parties, their advisors and legal counsel only and may not be disclosed to any other person or entity, except as required by law or otherwise consented to by COPF. Forward Provisions From the date hereof to the closing date, there shall not have occurred any (i) material adverse change in the financial condition or general affairs of the Borrower, (ii) event, court decision, proposed law or rule or any pronouncement of the Internal Revenue Service that may have the effect of changing the federal income tax nature of the contemplated Loan (iii) international or national crisis or banking moratorium materially affecting, in the reasonable opinion of COPF, the market value of the Loan or (iv) new restrictions on the extension of credit by banks or other lending institutions by any federal or state agency. Receipt of a closing certificate of the Borrower in form and substance satisfactory to COPF, in which the Borrower shall (i) represent and warrant as of the closing date that all financial statements and other information delivered to COPF relating to the Borrower are correct and complete and that no material adverse changes have occurred since the date of this Term Sheet, (ii) since the last audit date the Borrower has not entered into direct or contingent bond debt, lease, or loan obligations (or list the debt entered into since last audit date), and (iii) represent, warrant and covenant that neither the authorization, execution and delivery of the Loan, nor compliance with the provisions thereof by the Borrower, conflicts in any material respect with or will result in a material breach of any of the terms, conditions or provisions of any resolution or of any agreement, instrument, statute, regulation, court order or decree to which the Borrower is a party or by which it or any of its property is bound, or constitutes a material default under any of the foregoing. Closing Closing is anticipated to take place on May 1, 2020. The funding of the Loan will occur only after, among other things, COPF, the Borrower, and their respective counsels are fully satisfied with the terms of the Loan documents and all of the terms and conditions contained herein and in the Loan documents have been met. Term Sheet Expiration This Term Sheet shall expire if not accepted by the Borrower by February 28, 2019. Once accepted, this Term Sheet shall expire if the transaction has not closed by May 1, 2020, unless extended by COPF at its sole discretion. City of Miami, Florida Page 3 Refunding Special Obligation Bond, Series 2019 January 28, 2019 Capital Public Funding Subject to Final Credit Approval Specifically, but without limitation, this Term Sheet has not yet received all necessary internal and committee approvals of COPF. Any obligation of COPF to provide financing or otherwise shall arise only upon the execution of final Loan documents signed by authorized signatories of COPF and not from statements (oral or written) made during the course of discussions among the parties (whether or not prior to or after the date hereof). Should the above -stated terms be acceptable to you, a formal decision through COPF's internal credit process will be pursued as quickly as possible. Thank you for the opportunity to offer this Term Sheet. Should you have any questions, please do not hesitate to contact me at jaci.bretz(a capitalone.com or 631-457-9582. Sincerely, Jacqueline Bretz Vice President Capital One Public Funding, LLC ACCEPTED BY: CITY OF MIAMI, FLORIDA By Name Title City of Miami, Florida Page 4 Refunding Special Obligation Bond, Series 2019 January 28, 2019