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P.H. 2022-52: (PUBLIC HEARING 2ND READING)
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF POMPANO BEACH, FLORIDA AUTHORIZING THE ADVANCE REFUNDING AND DEFEASANCE OF ALL OF THE OUTSTANDING TAXABLE CERTIFICATES OF PARTICIPATION (PARKING GARAGE PROJECT), SERIES 2015; APPROVING THE FORM, AND AUTHORIZING THE EXECUTION OF, A 2022 GROUND LEASE; APPROVING THE FORM, AND AUTHORIZING THE EXECUTION OF A MASTER TRUST AGREEMENT TO PROVIDE FOR THE ISSUANCE FROM TIME TO TIME OF SERIES OF CERTIFICATES OF PARTICIPATION; APPROVING THE FORM, AND AUTHORIZING THE EXECUTION OF A SERIES 2022 SUPPLEMENTAL TRUST AGREEMENT, SUPPLEMENTING THE MASTER TRUST AGREEMENT, TO PROVIDE FOR THE ISSUANCE OF NOT EXCEEDING $25,500,000 IN AGGREGATE PRINCIPAL AMOUNT OF REFUNDING CERTIFICATE OF PARTICIPATION, SERIES 2022 (FEDERALLY TAXABLE) EVIDENCING AN UNDIVIDED PROPORTIONATE INTEREST OF THE OWNER THEREOF IN BASIC RENT PAYMENTS TO BE MADE UNDER A MASTER LEASE-PURCHASE AGREEMENT (PARKING MASTER LEASE PROGRAM) BY THE CITY OF POMPANO BEACH, FLORIDA; APPOINTING THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. AS TRUSTEE UNDER THE MASTER TRUST AGREEMENT, AS SUPPLEMENTED AND AMENDED FROM TIME TO TIME; APPROVING THE FORMS, AND AUTHORIZING EXECUTION OF, A MASTER LEASE-PURCHASE AGREEMENT (PARKING MASTER LEASE PROGRAM) AND LEASE SCHEDULE NO. 2022 THERETO; APPROVING THE FORM, AND AUTHORIZING EXECUTION OF, AN ASSIGNMENT OF LEASE AGREEMENT; APPROVING THE FORM, AND AUTHORIZING EXECUTION OF, AN ASSIGNMENT OF GROUND LEASE AGREEMENT; APPROVING THE FORM, AND AUTHORIZING EXECUTION OF, AN ESCROW DEPOSIT AGREEMENT AND APPOINTING THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. AS ESCROW AGENT THEREUNDER; AWARDING THE SALE OF THE SERIES 2022 CERTIFICATE TO TRUIST BANK PURSUANT TO A NEGOTIATED PRIVATE PLACEMENT; AUTHORIZING ALL REQUIRED ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE SERIES 2022 CERTIFICATE AND ADVANCE REFUNDING AND DEFEASANCE OF THE OUTSTANDING SERIES 2015 CERTIFICATES; PROVIDING FOR SEVERABILITY; PROVIDING AN EFFECTIVE DATE.
(Fiscal Impact: Present value savings of approximately $2.2 million over the remaining life of the refunded certificates or approximately $200,000 per year)
FIRST READING: APRIL 12, 2022
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(Staff Contact: Suzette Sibble)
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Summary Explanation/Background:
The City’s municipal financial advisor has advised the City’s Finance Team that, based on current market conditions, there is an opportunity to realize aggregate present value interest rate savings by accomplishing the advance refunding and defeasance of the City’s outstanding Taxable Certificates of Participation, Series 2015 (the “2015 Series”), which are outstanding as of the date hereof in the principal amount of $22,775,000. The City invited eight-three (83) qualified financial institutions to submit proposals to make a loan to the City to accomplish the refunding of the 2015 Series. Truist Bank submitted a proposal that contained terms and conditions consistent with the request for proposals. The recommended private placement structure for the Refunding Certificate of Participation, Series 2022 (the “2022 Series”) with Truist Bank at a fixed interest rate of 3.40%, allows the City to lock in interest rates much sooner than a comparable public offering, and also saves the City the time and money associated with a public offering. The City’s municipal financial advisor has estimated present value savings of around $2.2 million, or 9.65% as a percentage of the refunded obligation. The 9.65% is well above the minimum of 5% required by the City’s debt management policy, as adopted by the City Commission. On a gross basis, this estimates that the City will save approximately $200,000 per year over the remaining life of the refunded obligation. It is highly recommended to move forward with the proposed refunding at this point to realize significant savings now, while in a rising interest rate environment.
All amounts payable by the City in connection with the lease-purchase financing and/or refinancing of the 2015 Series, including all basic rent payments due, shall be payable solely from unpledged and legally available funds annually appropriated for such purpose by the City and it will not be necessary nor has there been authorized the levy of taxes on any property in the City to pay for same, and the full faith and credit of the City is not pledged for payment of such sums. All rent payments for the 2022 Series will be made from parking revenues in the Parking Enterprise Fund.
Origin of request for this action: City Manager’s Office
Fiscal impact and source of funding: Present value savings of approximately $2.2 million over the remaining life of the refunded certificates or approximately $200,000 per year.
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