HomeMy WebLinkAboutExhibit - ProposalMay 4, 2017
J P. Morgan
Direct Purchase of a Non -Bank Qualified Tax -Exempt Note, Series 2017 issued by the
City of Miami in the amount of up to $117,000,000
May 4, 2017
Erica Paschal, City of Miami
epaschalkmiamigov.com
Dear Erica, Sergio, & Pedro:
J.P.Morgan
Sergio Masvidal, PFM Pedro Varona, PFM
masvidalskpfm.com varonapkpfm.com
On behalf of JPMorgan Chase Bank, N.A. ("JPMorgan"), we are pleased to propose for
discussion indicative terms to the City of Miami for a Tax -Exempt Non -Bank Qualified Direct Purchase
Note in an initial estimated amount of up to $117,000,000, subject to the following terms and conditions
described herein (the "Proposal").
The proposed indicative terms included in the enclosed Summary of Terms and Conditions are
for discussion purposes only and do not represent an offer or commitment to lend on the part of
JPMorgan and will be subject to due diligence, credit analysis and approval, and documentation of
detailed terms and conditions -satisfactory to JPMorgan and its legal counsel. Should any of the enclosed
terms and conditions conflict with the City of Miami's structuring parameters, we will be happy to
discuss mutually acceptable alternatives.
Should you have any questions regarding any of the indicative terms, please do not hesitate to
contact either of us at the numbers set forth below:
Ralph Hildevert Jackie Watson
Executive Director Executive Director, Credit Risk Director
1450 Brickell Ave, Floor 33 450 S. Orange Ave
Miami, FL, 33131 Orlando, FL 32801
305-579-9320 407-236-5382
ralph.hildevert@jpmorgan.com jackie.watson@jpmorgan.com
JPMorgan has been the market leader in public finance credit for over 35 years and ranks among
the largest providers of credit facilities in the municipal market today. Our deep familiarity with this
sector is viewed as a strong benefit by the municipal clients with whom we do business. We believe that
our experience in providing direct purchase note financing, coupled with our long experience in deal
execution, will ensure an efficient, cost-effective transaction. Client references are available upon
request.
Checkfor ratings updates at hgp://investor. shareholder. com%jpmoManchase/ratings.cfin
JPMorgan Chase Bank, Please refer to the JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A.'s rating
N.A. Credit Ratings: table on the above Investor Relations Site.
Annual Report: JPMorgan Chase & Co.'s most recent annual report may be accessed via the above
Investor Relations Website.
We look forward to further discussions with the City of Miami and its financing team regarding
this proposal.
Yours sincerely,
JPMORGAN CHASE BANK, N.A
By: By:
Ralph Hildevert Jackie Watson
Executive Director Executive Director
JY Morgan
CITY OF MIAMI
Direct Purchase Non -Bank Qualified Tax Exempt Note, Series 2017
Summary of Terms and Conditions
May 4, 2017
This Summary of Terms and Conditions (the "Term Sheef') is confidential and is intended as a statement of indicative
terms only, and is provided to facilitate additional discussion. It is a proposal for your consideration only and not a
commitment by JPMorgan Chase Bank, NA or its affiliates ("JPMorgan") to provide the financing described in this Term
Sheet or any other financing. The rates and fees set forth in this proposal are indicative and are subject to market
conditions at all times until JPMorgan will commit to in writing and, in any event should not be regarded as indicative
after the date of this Term Sheet. The terms in this proposal expire on June 29, 2017.
SECTION I DESCRIPTION OF THE NOTE
Issuer: City of Miami (the "Issuer')
Purchaser: DNT Asset Trust and its successors and assigns (the "Purchaser'). DNT Asset Trust is a
Delaware business trust and wholly owned subsidiary of JPMorgan Chase Bank, N.A. DNT
Asset Trust holds $15.8 Billion in capital as of December 31, 2014 and meets the
requirements as a Qualified Institutional Buyer.
Noteholder
Representative: JPMorgan Chase Bank, N.A. (the "Noteholder Representative" or the `Bank7) and its
successors and assigns, or any other entity subsequently appointed by the majority of the
noteholders, will act as the representative on behalf of the noteholders and will be the party
which provides consent, direct remedies and takes all actions on behalf of the Purchaser and
other noteholders under the Note Documents.
Facility / Amount: Up to $117,000,000 Non -Bank Qualified Tax -Exempt Direct Purchase Note, Series 2017
(the "Note" or the "Facility') issued as a single maturity Note. The Note will be purchased
at 100% of Par on an `all or none' basis.
The Note will not be rated by any rating agency, will not be initially registered to participate
in DTC, will not contain a CUSIP number and will not be marketed during any period in
which the Note is held by the Purchaser pursuant to any Official Statement, Offering
Memorandum or any other disclosure documentation. The Purchaser will take physical
delivery of the Note at closing.
Purpose: Proceeds of the Note will be used to current refund all or a portion of the City's outstanding
Limited General Obligation Notes, Series 2007A, and advance refund a portion of the City's
outstanding Limited General Obligation Notes, Series 2009 and fund certain costs of
issuance.
Note Maturity Date: 1/1/2022 — Series 2007A refunding
1/1/2029 — Series 2009 refunding
1/1/2029 — Combined refunding
Confidential
SECTION II INTEREST RATES, PAYMENTS AND FEES
Fixed Interest Rate: The Note will accrue interest at a fixed rate per annum as set forth below, based upon the
option selected by the Issuer. The following fixed interest rates are indicative as of May 4,
2017 and are subject to change daily until a written rate lock letter agreement is executed
between the Issuer and the Bank:
Tenor
Optional Redemption Date
Indicative Fixed Rate
1/1/2022
None (Make Whole)
1.75% **
Series 2007A
11112019
16.070,000
$81,025,000
16,050,000
11112021
1/1/2029
None (Make Whole)
2.37% **
Series 2009
720,000
11112024
$34,555,000
11112025
3,550.000
1/1/2029
None (Make Whole)
2.09% **
Combined
11112028
3,790.000
$115,580,000
3.870.000
Total
** Should the Issuer request the removal of the `Change in Tax Rate' provision
referenced on page 4 of this Term Sheet, an additional 12 basis points would be added to
the Indicative Fixed Rate shown above.
Note Payments /
Amortization: Interest will be payable semi-annually on January 1 and July 1 commencing January 1, 2018
Principal will be payable annually on January 1 commencing on January 1, 2018 for the
refunding of the Series 2007A, January 1, 2020 for the refunding of the Series 2009, and
January 1, 2018 for the combined refunding as summarized below.
Series 2007A
Preliminary Amortization
Average Life: 2.62 Years
Date
Pritrcipal
1/112015
13,795,000
11112019
16.070,000
1/112020
16,050,000
11112021
16.860,000
11112022
18.2.50.000
11112023
720,000
11112024
3,470,000
11112025
3,550.000
1.1112026
3,625,000
11112027
3,705,000
11112028
3,790.000
11112029
3.870.000
Total
81.025.000
Series 2009
Preliminary Amortization
Average Life: 7.14 Years
Date
Principal
1/1/2018
13,795.000
1 11:2019
16,070.000
1/1/2020
3,135,000
111/2021
3,555.000
11!2022
5,135,000
1A/2023 2023
720,000
111/2024
3,470,000
11112025
3,550.000
1 12026
3,625,000
1 1:2027
3,705,000
1/112028
3,790.000
111/2029
3.870.000
Total
34.555.000
All Bonds
Preliminary Amortization
Average Life: 3.97 Years
Date
Principal
11112015
13,795.000
1.1112019
16,070.000
1.1112020
19,185,000
111/2021
20A15.000
1/1/2022
23.385.000
11112023
720,x00
1/112024
3.470.000
11112025
3.550.000
1/1/2026
36251000
11112027
3.705,000
1.1112028
3,790,000
1/1/2029
3.870.000
Total
115,580,000
Notwithstanding the foregoing, the Note will be required to be repaid in full on the Maturity
Date. Upon an Event of Default, interest will be computed at the Default Rate (defined
below).
Prepayment: The Note may be prepaid in whole or in part, without premium or penalty, on any Optional
Redemption Date as defined above. Any prepayment on any date other than those provided
for above is subject to breakage costs payable by the Issuer.
J.P. Morgan 2
Confidential
Day Basis/Year: 30/360
Base Rate: The higher of (i) the Bank's Prime Rate and (ii) 2.5% plus the one month Adjusted LIBOR
Rate, as such terms will be more particularly described in the related note documents.
Default Rate: Base Rate + 4.00%
SECTION III OTHER NOTE TERMS AND PROVISIONS
Security: Pledged Revenues which consist of the Limited Ad Valorem Tax levied up to 1.218 mills
(which is also pledged to the city's General Obligation bonds), and to the extend the Limited
Ad Valorem Tax is not sufficient to make debt service payments, a covenant to budget and
appropriate legally available non -ad valorem revenues in an amount not to exceed 10% of
MADS on the proposed Note. The proposed Note will be on parity with the Series 2015
Note.
Drawdown: The proceeds of the Note will be fully drawn on the date of issuance.
Required Documents: The terms of this financing will be evidenced by agreements, instruments and documents that
are usual and customary for a direct purchase transaction. The required documentation will
include, but not be limited to, the terms and conditions outlined herein as well as the Bank's
standard provisions with respect to representations and warranties, covenants, events of
default, remedies, conditions precedent, waiver of jury trial, compliance with anti -corruption
laws, protections against increased costs and other general provisions that the Purchaser and
its counsel deem necessary and will otherwise be satisfactory in form and substance to the
Purchaser and its counsel. Such documentation will be prepared by Bond Counsel or
Issuer's Counsel as appropriate.
Conditions Precedent: Usual and customary representations and warranties and other conditions prior to the
issuance of the Note for like situated issuers and for the type and term of the Facility,
including absence of default, absence of material litigation, absence of material adverse
change from the Issuer's financial conditions and operations as reflected in its most recent
CAFR, and evidence of compliance with applicable provisions of Chapter 132 of the Florida
Statutes.
Additional conditions precedent will include delivery of acceptable documentation and legal
opinions, including an opinion of note counsel as to the validity and enforceability of the
obligations of the Issuer under the Documents and that interest payable on the Note is
exempt from federal and State of Florida income taxation.
Financial Covenants: Covenants will be consistent with those as currently required and defined in the Issuer's
resolution(s) for its existing Limited General Obligation debt.
Reporting Covenants: The Issuer will provide the following items in an electronic format acceptable to the
Purchaser:
1. Receipt of CAFR within 240 days of the fiscal year end.
2. Additional information as reasonably requested by the Bank.
Tax Gross -Up: In the event that the Note subsequently loses its tax exemption as a result of violations of the
tax covenants, the Purchaser will require an adjustment to the Interest Rates payable on the
Note to account for such loss of tax exemption.
The Purchaser will not require any adjustment to the Interest Rate for (i) changes to the
regulatory environment or required regulatory capital or changes due to a decline in the
J P. Morgan 3
Confidential
Issuer's public bond rating. Any adjustment to the Interest Rate will solely be related to the
loss of tax exemption for violations of the tax covenants.
Change in Tax Rate: In the event of a change in the Corporate Tax Rate (as hereinafter defined) during any period
where interest is accruing on a tax-exempt basis causes a reduction in the tax equivalent yield
on the Note, the interest payable on the Note will be increased to compensate for such
change in the effective yield to a rate calculated by multiplying the note interest rate by the
ratio equal to (1 minus A) divided by (1 minus B), where A equals the Corporate Tax Rate in
effect as of the date of the corporate tax rate adjustment as announced by the IRS and B
equals the Corporate Tax Rate in effect on the date of the original issuance of the Note. The
Corporate Tax Rate will mean the highest marginal statutory rate of federal income tax
imposed on corporations and applicable to the Bank (expressed as a decimal). Should the
Issuer request removal of the `Change in Tax Rate' provision an additional 12 basis points
would be added to the Indicative Fixed Rate as shown on page 2.
Sale / Assignment: The Issuer will agree that the Purchaser may without limitation (i) at any time sell, assign,
pledge or transfer all or a portion of the Note, or one or more interests in all or any part of the
Purchaser's rights and obligations under the Facility to one or more assignees and/or
participants which may include affiliates of the Bank; and (ii) at the Purchaser's option,
disclose information and share fees with such assignees and/or participants.
Waiver of Jury Trial: The Issuer and the Purchaser will waive, to the fullest extent permitted by applicable law,
any right to have a jury participate in resolving any dispute in any way related to this Term
Sheet, any related documentation or the transactions contemplated hereby or thereby.
Governing Law: All aspects of the Facility being discussed including this Term Sheet and any Note
Documents will be governed by the laws of the State of Florida.
SECTION IV OTHER BANK REQUIREMENTS
Municipal Advisor
Disclosure: The Issuer acknowledges and agrees that (i) the transaction contemplated herein is an arm's
length commercial transaction between the Issuer and the Bank and its affiliates, (ii) in
connection with such transaction, the Bank and its affiliates are acting solely as a principal
and not as an advisor including, without limitation, a "Municipal Advisor" as such term is
defined in Section 15B of the Securities and Exchange Act of 1934, as amended, and the
related final rules (the "Municipal Advisor Rules"), agent or a fiduciary of the Issuer, (iii) the
Bank and its affiliates are relying on the Bank exemption in the Municipal Advisor Rules,
(iv) the Bank and its affiliates have not provided any advice or assumed any advisory or
fiduciary responsibility in favor of the Issuer with respect to the transaction contemplated
hereby and the discussions, undertakings and procedures leading thereto (whether or not the
Bank, or any affiliate of the Bank, has provided other services or advised, or is currently
providing other services or advising the Issuer on other matters), (v) the Bank and its
affiliates have financial and other interests that differ from those of the Issuer, and (vi) the
Issuer has consulted with its own financial, legal, accounting, tax and other advisors, as
applicable, to the extent it deemed appropriate.
Expenses: The Issuer will pay or reimburse the Purchaser for all its out-of-pocket costs and expenses
and reasonable attorneys' fees where not prohibited by applicable law and incurred in
connection with (i) the development, preparation and execution of the Note, and (ii) in
connection with the enforcement or preservation of any rights under any agreement, any
amendment, supplement, or modification thereto, and any other loan documents both before
and after judgment.
Legal Counsel: The Bank will engage Locke Lord LLP as the Purchaser's legal counsel. Mark -David
Adams will be acting in the capacity of attorney representing the Purchaser.
J.P Morgan 4
Confidential
Legal fees are estimated at $6,500.
Locke Lord LLP
525 Okeechobee Boulevard, Suite 1600
West Palm Beach, FL 33401
561-820-0281
mark.adamsglockelord. com
Information Sharing: The Issuer will agree that the Purchaser may provide any information or knowledge the
Purchaser may have about the Issuer or about any matter relating to the Facility described in
this Term Sheet to JPMorgan Chase & Co., or any of its subsidiaries or affiliates or their
successors, or to any one or more purchasers or potential purchasers of the Note, or
participants or assignees of the Note or the Facility described in this letter.
Website Disclosure: As a best practice to maintain transparency, final note documentation may be posted by the
Issuer on a national public note market repository provided that certain information be
redacted by the Issuer as directed by the Bank. Items that should be redacted include pricing,
financial ratio covenants, signatures/names, account numbers, wire transfer and payment
instructions and any other data that could be construed as sensitive information.
Confidentiality: This Term Sheet is for the Issuer's confidential review and may not be disclosed by it to any
other person other than its employees, attorneys, board members and financial advisors (but
not other commercial lenders), and then only in connection with the transactions being
discussed and on a confidential basis, except where disclosure is required by law, or where
the Purchaser consents to the proposed disclosure.
J.P. Morgan 5