Item B2 BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: September 8 .2014 Division: County Administration
Bulk Item: Yes No Department: County Administration
Staff Contact Person: Kevin Madok X4480
AGENDA ITEM WORDING: Approval to negotiate final terms,with Pinnacle Public Finance for a
10 year term loan in an amount of$32 million at a fixed interest rate of 2.36% and approval to
negotiate final terms with PNC Bank for a two year line of credit in an amount of$16,million at a
floating rate based on one month LIBOR plus a spread. The current interest rate is 0.62%.
ITEM BACKGROUND: At the June meeting, the BOCC approved advertising an RFP for a term loan
not to exceed $32 million and a line of credit not to exceed $16 million. Bids were to be opened
August 6, 2014. No bids were received. Based upon Chapter 3, section (D) (3)or the Monroe County
Purchasing Policies and Procedures, we asked our financial consultant, PFM, to again directly contact a
wide range of banks to request bids based upon the terms in the original RFP and set a new deadline of
August 25, 2014. We received six proposals which are summarized in the attached backup.
County staff, PFM and outside bond council, NGN then met to discuss the merits of each proposal and
to present the most attractive proposals for BOCC approval.
PREVIOUS RELEVANT BOCC ACTION: Approval to advertise the RFP at the June, 11, 2014
BOCC meeting.
CONTRACT/AGREEMENT CHANGES: N/A.
STAFF RECOMMENDATIONS: Approval
TOTAL COST: INDIRECT COST: --BUDGETED: Yes No
DIFFERENTIALOF LOCAL PREFERENCE:
COST TO COUNTY: SOURCE OF FUNDS:
REVENUE PRODUCING: Yes No X AMOUNT PER MONTH Year
APPROVED: BY: County A-'-CL,�—"/-MB/PurcWas-'ing �rvRisk Management_
DOCUMENTATION: Included Not Required _
DISPOSITION: AGENDA ITEM#
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The PFM Group
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August 26,2014
Memorandum
To: Monroe County,Florida
From: Public Financial Management,Inc.
Re: Financing Summary-Series 2014 Term-Loan and Non-revolving Line of Credit
Public Financial Management, Inc. (PFM), as the financial advisor to Monroe County, Florida (the
"County"),is pleased to provide a summary of the process that has led to the presentation of the County's
$32,000,000 Series 2014 non-bank qualified tax-exempt term-loan and $16,000,000 non-revolving
line of credit ("LOC'�. PFM started working with the County on this project in February of 2012 to
understand the unique needs required to finance the upcoming wastewater improvements. In addition to
working with the County to secure the State Revolving Fund Loans, we have assisted the County to
secure this direct-bank.placement.
PFM worked with the County's finance and procurement staff in order to develop a Request for
Proposals ("RFP) that provided the County with$32M in up-front capital as well as the aforementioned
Line of Credit for possible future projects. Procurement distributed that RFP on June I e and responses
were due on August 6". PFM also circulated that R.FP to our complete list of banking contacts,which
includes over 20 different lending institutions. At the proposal due date, no responses were received.
Upon a cursory survey of several market participants, the primary reasons indicated by banks for passing
on the RFP were the following. (1)No existing relationship with the County,(2)procurement forms were
"overwhelming" in light of other demands, (3) Iocal preference concerned bidders that they would not
have a realistic opportunity. Of course, all or none of those reasons may fully explain the lack of
responsiveness.
In order to maintain the expected dineframe for project funding,PFM recommended to the County that
a new streamlined request be made to the potential lenders. As such, PFM circulated an abbreviated
request for bank loans in a format that municipal lending institutions may be more accustomed to seeing.
That package maintained the request from the originsll, in terns of the County's desired borrowing
amount and loan covenants. The prospectus was circulated on August I1' to the same comprehensive
list of banking institutions,along with the County's local banking contacts. The due date for proposals to
be submitted in response to the prospectus was scheduled for August 25'.
6 banks submitted proposals to the County by the revised deadline of August 25,2014. The responders
consisted of BBVA Compass, Centennial Bank, Pinnacle Public Finance, PNC Bank, Regions / TD
Bank,and SunTrust Institutional&Government.
Monroe County,FL
Financing Summary
Page 2
The PFM Group
The following table summarizes the proposals received.
Direct BBVA Centennial Pinnacle PNC Bank Regions/ SunTrust
Placement Compass Bank Public TD Bank Institutional
Loan Finance &
Provider Government
Loan 2.f 4°!0 / 2.75% 2.36% 2.55%/ 2.45% / 2.78% /
Interest Rate Indicative Indicative Indicative Indicative
Loan Term 10 years 10 years 10 years 10 years 10 years 10 years
Rate Lock Any time for Locked Locked Any time Any Time 30 days from
5 bps letter for 4
bps
Prepayment Make-Whole Unknown Prepayable Make-Whole Prepayable Prepayable
4/1/19 at par anytime for after 2 years
21 bps,or for 19 bps,
Make-Whole or Make-
Whole
Complies Yes Yes Yes Yes Yes Additional
with Debt Test of
Existing 1.5x for
Resolution senior debt
Line of None Yes None Yes None None
Credit Offered Offered Offered Offered
Interest Rate 2.75% 70%of 1-
month LIBOR
+ 51 bps
(about 0.62%
as of 8/26/14
Conversion None To be
Formula discussed
Other Must draw
Conditions 50%of LOC
in first 12
months or
non-use fee of
10bps
Other Notes Taxability Prepayment
Language subject to
negotiation _ E
Monroe County,M
rinancing Summary
Page 3
The PFM Group
After a thorough review of the responses and analyzing which proposer offered the best rates and terms,
PFM recommended the County select Pinnacle Public Finance as their lender for the Series 2014 term-
loan for the following reasons:
(1)Pinnacle offered the lowest interest rate on the term-loan;
(2) Pinnacle's rate is locked and will not change filrffier,
(3)Pinnacle allows for prepayment at par after 5 years,and this may be negotiated.
As related to the Line of Credit,PFM recommended the County select PNC as their credit provider.Of
the two bids provided for the Line of Credit, PNC's had a far lower rate and was willing to discuss an
eventual conversion into a fixed-rate term loan.
PFM provided the County with the amortization schedules and debt service payments that could be
expected if the Pinnacle proposal was accepted. The $32,000,000 Series 2014 term-loan and
$16,000,000 non-revolving line of credit are set to dose on or about October 15.