Item R1
Revised 2/95
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: April 19. 2000
Division: INDUSTRIAL DEVELOPMENT AUTHORITY
Bulk Item: Yes
No -L Department: INDUSTRIAL DEVELOPMENT AUTHORITY
AGENDA ITEM WORDING:
Approval for the Industrial Development Authority to proceed with assisting Wesley Community
Center, Inc. in obtaining financing.
ITEM BACKGROUND:
The Board of County Commissioners sits as the Industrial Development Authority for the purpose of
assisting in economic development activity and financing for public purposes. Wesley House has
requested the rpA's assistance in providing financing for capital purposes.
PREVIOUS REVELANT BOCC ACTION:
Assistance with other projects.
STAFF RECOMMENDATIONS:
Approval with the condition that any cost to the County be assumed by Wesley House.
TOTAL COST:
-0-
BUDGETED: Yes
No
COST TO COUNTY: -0-
REVENUE PRODUCING: Yes
No
AMOUNT PER MONTH
Year
APPROVED BY: County Atty X
OMB/Purchasing X Risk Management X
=Z::~
DIVISION DIRECTOR APPROVAL:
DOCUMENT A TION:
Included lL
To Follow
Not Required
AGENDA ITEM #J-K I
DISPOSITION:
MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Report on Wesley House Community Center, Inc.
Industrial Development Revenue Bonds,
Series 2000
April 4, 2000
Public Financial Management, Inc.
10100 Dear Run Farms Road, Ste. 201
Fort Myers, FL 33912
Atlanta. Austin, Boston. Fort Myers. Hanisburo, Houston. Los AnJ!cles. MemDhis. Minneanolis, New York, Orlando. Pittsburoh.Philadelphia. San Francisco, Trenton, Washin2lon D.C.
PUBLIC FINANCIAL MANAGEMENT, INC.
Report to
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY,
FLORIDA
Wesley House Community Center, Inc.
Industrial Development Revenue Bonds, Series 2000
INTRODUCTION
In 1995, Public Financial Management, Inc. ("PFM") as financial advisor to Monroe County
(the "County") recommended that the Board of County Commissioners of Monroe County re-
activate the Industrial Development Authority ("IDA") and appoint themselves as interim
members of the IDA until permanent members may be appointed. The IDA acts as the conduit
issuer for industrial development bonds within the County. Prior to sponsoring the issuance of
industrial development bonds, Section 159.29 (2), Florida Statutes, requires the IDA to determine
that the corporation is financially responsible, capable and willing to fulfill its obligation. The
Statute states the following:
No financing agreement for a project shall be entered into with a party that is not financially
responsible and fully capable and willing to fulfill its obligations under the financing agreement"
including:
. obligation to make payments in the amounts and at the times required
. to operate, repair and maintain at its own expense the project
· to serve the purposes of this part and such other responsibilities as may be imposed
under the financing agreement
PFM has developed this report to provide the financial information necessary for the
Monroe County Industrial Development Authority to make an informed decision on the approval
of issuing Monroe County Industrial Development Revenue Bonds to finance a new
administrative and training facility at Ley Memorial.
Public Financial Management, Inc.
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PROJECT
Wesley House was acquired in July 1998. Wesley House is a community center that serves
families with children, has over 140 programs thoughout Monroe County. Wesley House
provides financial assistance for child care based on income, provides child care programs in the
area of information financial assistance, technical assistance, transportation, staff training, child
abuse prevention and most family support services. Wesley House project is to provide a new
administrative and training facilities at Ley Memorial. The Project cost is $1,000,000 in the
form of a non-revolving construction loan with a $775,000 10 year term payout.
Wesley House has asked the Monroe County Industrial Development Authority to sponsor
the issuance of tax-exempt bonds with the IDA acting as the "conduit" issuer of Industrial
Development Bonds (also referred to as Private Activity Bonds). The bond issue will be used to
(i) refinance certain debt, (ii) finance a portion of the cost to renovate certain real property
located at 1304 Truman Avenue, Key West, Florida 33040, and (iii) payment for qualifying costs
of issuance.
FINANCING TEAM PARTICIPANTS
Issuer:
Monroe County Industrial Development Authority
Borrower:
Wesley House Community Center, Inc.
Lender:
First Union National Bank
Bond Counsel:
Moyle, Flanigan, Katz, Kolins, Raymond & Sheehan, P.A.
Issuer's Financial Advisor: Public Financial Management, Inc.
STRUCTURE
This facility shall have a term of 1 year (the "Construction Loan"). The Construction Loan
will convert to a maximum of $775,000 lO-year loan (the "Term Loan"), provided that (i) no
event of default under the loan documents shall have occurred and be continuing, and (ii) all of.
the conditions to conversion shall have been satisfied.
TERMS
The interest rate will be the LIBOR Market Interest Rate plus 2.25% adjusted to a tax
exempt basis. Borrower and Lender plan to enter into an Interest Rate Swap. Borrower shall
maintain the swap for the full amount and term of the loan.
During the term of the Construction Loan, the loan shall be repayed in monthly payments of
accrued interest only. After the earlier of the construction phase completion or twelve (12)
months from the date of funding ("the conversion date"), availability under the non-revolving
Public Financial Management, Inc.
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construction loan shall be reduced by the Bank and repaid by Borrower to a maximum loan
amount of $775,000.
During the Term Loan, the loan shall be repayed in equal monthly payments of principal and
interest in the amount required to repay the loan in full amortized over a hypothetical 20-year
term, at the interest rate set forth above, in substantially equal payments. All remaining principal
and interest shall be due on the maturity date.
Borrower may prepay the loan in whole or in part only if Borrower pays such additional
amounts deemed necessary by First Union to compensate First Union for any lossess, costs or
expenses which First Union may be deemed to incur as a result of such prepayments.
SECURITY
The payment of principal and interest on the Bonds will be secured by a security interest in
all real estate and assignment of all leases plus first priority security interest of all revenues.
FINANCIAL ANALYSIS
As financial advisor to the Monroe County and the IDA, our first priority is to assure that all
information is available to give the IDA comfort in making their decision. In accordance, PFM
has reviewed the (i) loan application summited by Wesley House Community Center, Inc., (ii)
loan commitment from First Union National Bank., and (iii) independent auditor's report and
financial statements for period ending June 30, 1999.
ISSUER'S RESPONSIBILITIES
The Issuer has two categories of responsibilities: (i) responsibilities through closing, and (ii)
responsibilities after closing on the Bonds occurs. The responsibilities of the Issuer through
closing include the following: issuing Bonds, signing Loan Agreement and Indenture, assigning
note and mortgage to the Trustee, and executing any other documents relating to the issuance of
the Bonds.
After closing, the Issuer appears to have two main responsibilities related to the Bonds:
· Reporting - At the expense of the Borrower, the Issuer will submit an annual financial
report and related instruments or documents as provided for in Section 11.45 of the Florida
Statues.
· Rebate - Issuer bears ultimate responsibility if some event occurs in the future that
makes bonds taxable, such as failure by the trustee to make arbitrage rebate payments,
although the Issuer has no oversight responsibility. This is so because federal income tax
law places the ultimate responsibility upon the Issuer, even though other parties, such as the
Borrower, are obligated to file reports, pay rebate, etc., to ensure tax law compliance.
Public Financial Management, Inc.
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FINDING OF STATUTES
As mentioned in the Introduction, the IDA must take into consideration the criteria and
requirements outlined in Section 159.29 (2) Florida Statutes for determining that the Borrower is
financially responsible, capable and willing to fulfill its obligation. In determining the financial
responsibility of such party, consideration shall be given to the party's ratio of current assets to
current liabilities; net worth; earning trends; coverage of all fixed charges; the nature of the
industry or activity involved; its inherent stability; any guarantee of the obligations by some other
financially responsible corporation, firm or person; and other factors determinative of the
capability of the party, financially and otherwise, to fulfill its obligations.
. Wesley House has existing debt obligations of approximately $470,000.
. Wesley House has a positive net cash position sufficient to maintain the required
covenants and to make debt payments as outlined in the commitment letter.
CONCLUSIONS
. A policy decision should be rendered by the IDA regarding Wesley House's need to
build facilities and the economical benefits that would be provided to the community.
The IDA must decide whether it would be in the County's best interest to assist the
Wesley House in expanding and improving their services by issuing the Industrial
Development Bonds, Series 2000.
. This debt will be owned by a private institution (no privat~ investors or bond holders)
who will assume all the financial risks.
. Monroe County IDA would be under no legal obligation to pay the debt should Wesley
House be unable to make debt service payments.
. Should the County act as "conduit" issuer and the issue goes into default, state securities
law would require the County to disclose this information in any future debt offering
statements.
RECOMMENDATION
Based upon the information furnished by the applicant in the data dated February 23, 2000,
PFM is of the opinion that the proposed financing is in compliance with the requirements of
Chapter 159 of the Florida Statutes. Wesley House, as per the documents provided, can
financially fulfill it's obligations and responsibilities in the payment of this debt.
Public Financial Management, Inc. is an independent financial advisory firm and is not
engaged in the business of underwriting, trading or distributing municipal or other public
securities. PFM has not undertaken an independent verification and does not assume
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Page 5
responsibility for accuracy, completeness, or fairness of the information contained in the above
referenced documents. PFM provides this advice with respect to the structure, timing, terms,
planning, and other matters concerning the issuance of the bonds in compliance with Chapter 159
Part II of the Florida Statues.
Public Financial Management, Inc.
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