Item C31
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: May 16, 2006
Division:
Budget & Finance
Bulk Item: Yes ~
No
Department:
Staff Contact Person: Salvatore Zappulla
AGENDA ITEM WORDING:
Request for approval for the Mayor to execute the attached letter of Commitment from Bank of America for a
direct pay letter of credit not to exceed $35,402,740.00 in Principal and Interest combined. The Letter of Credit
will provide liquidity and credit support for the Variable Rate Demand Obligations (V.R.D.O.'s) to be issued
by the County to pay for a portion of the Terminal Improvements.
ITEM BACKGROUND:
The County's engineer, URS Corp., has estimated the total project cost to be $31,186,901. This estimated
project cost has been used by the financial advisors, Public Financial Management (PFM) and Airport
Consultants, Newton & Associates, Inc. in the analysis of financial feasibility. The majority of this amount will
be raised through a (VRDO) Variable Rate Demand Obligation. $5.0 million of this will be funded by the
County's Capital Improvements Plan Fund (304) over three years, and 2.3M of which will be funded by the
Federal Aviation Administration (FAA) A.LP. Airport Improvements Grant, which will be available to the
County in August, 2006. The current plan of finance assumes the application of $8.708 million in State and
Federal Grants to the advanced repayment of the VRDOs. However, it should be noted that these grant funding
assumptions represent the minimum level of grant funding for financial planning purposes. The actual grants
applied to the repayment of the VRDOs are not limited to those amounts described herein. If more grant funds
are realized the local share cost of the project will be reduced accordingly.
PREVIOUS RELEVANT BOCC ACTION:
On April 19, 2006 the Board of County Commissioners approved a plan of Finance for the New Terminal
Complex at the Key West International Airport
CONTRACT/AGREEMENT CHANGES:
ST AFF RECOMMENDATIONS:
Approval
TOTAL COST: 81 basis points of available amt.
BUDGETED: Yes X No
COST TO COUNTY: Approx 600K for 3 years
SOURCE OF FUNDS: Bond Proceeds
REVENUE PRODUCING: Yes
No
AMOUNT PER MONTH
Year
APPROVED BY: County
OMB/Purchasing _
DIVISION DIRECTOR APPROVAL:
Risk Man~t
~,-~
DOCUMENT A TION:
Included
Not Required_
DISPOSITION:
AGENDA ITEM #
March 30, 2006
Lauren Shelton, Consultant
Public Financial Management, Inc.
13350 Metro Parkway, Suite 302
Fort Myers, FL 33912
RE: Request for proposals for direct pay letter of credit for Monroe County, Florida (Key West
International Airport Project)
Dear Ms. Shelton:
Bank of America, N.A. (the "Bank") is pleased to have approved Monroe County, Florida (the
"County") for a credit facility consisting of a direct pay letter of credit in an amount of not to exceed
$35,000,000.00 in principal amount, plus an interest component of not exceeding $402, 740. 00 ,aggregpring
up to $35,402,740.00 (such instrument, the "Letter of Credit"). The Letter of Credit will provide credit
support for variable rate demand bonds (the "Bonds") proposed to be issued by the County to provide
funds to pay a portion of the cost of improvements to Key West International Airport.
This commitment is subject to the execution and delivery to the Bank oflegal documents yet to be
prepared, including, without limitation, a bond resolution, a letter of credit, a letter of credit
reimbursement agreement and other Bond authorizing, collateral and security documents. All such
documents must be satisfactory in form and substance to the Bank and its counsel.
Questions regarding the proposal may be addressed to the following individuals:
Linda Mason
Senior Client Manager
Senior Vice President
625 N. Flagler Drive, 10th floor
West Palm Beach, Florida 33401
Phone: 561-838-2329
Fax: 561-838-2325
Holly Kuhlman
Credit Products Officer
Senior Vice President
450 I Tamiami Trail North, Suite 400
Naples, Florida 34103
Phone: 239-659-2275
Fax: 239-659-2284
The credit ratings for Bank of America are:
Long Term/Short Tenn Ratings
Moody's
Standard & Poor's
Bank
AallP-1
AA/A-1+
Fitch
AA-/Fl +
Any extension of credit under this commitment (in addition to any other conditions which may be
required in the documents referred to in the preceding paragraph) is expressly subject to the terms and
conditions set forth in the attached Terms and Conditions. If the County finds the terms and conditions of
this commitment to be acceptable, please have the County execute both copies of the attached Terms and
Conditions, keep one copy for your records and prior to the expiration date return one to the undersigned.
If not accepted, this commitment shall expire on May 31,2006. If accepted, the transaction must close on
or before August 31, 2006.
We appreciate your consideration of our credit proposal and look forward to your response.
Sincerely,
~tU~
Linda A. Mason
Senior Client Manager
Holly Kuhlman
Credit Products Officer
COUNTY:
FACILITY:
AMOUNT OF
FACILITY:
PURPOSE:
REPAYMENT
TERMS:
TERMS AND CONDITIONS
Monroe County, Florida
Direct Pay Letter of Credit ("Letter of Credit").
The outstanding principal amount of the Bonds, plus an interest component as
required by the Bond documents, up to $35,402,740.00 (as reduced from time to
time, the "Available Amount").
To provide credit and liquidity support for variable rate demand bonds to be issued
by the County the proceeds of which will be used to pay a portion of the cost of
improvements to Key West International Airport (the "Project") and to pay costs
of issuance of the Bonds.
Amounts drawn under the Letter of Credit, exclusive of liquidity draws but
inclusive of all other draws, shall be due and payable immediately. Liquidity
drawings, i.e., drawings to purchase variable rate demand Bonds optionally
tendered and not remarketed, shall be repaid on or before the scheduled expiration
of the Letter of Credit and will bear interest until repaid at 30 day Libor plus
2.00% per annum (adjusted daily). Any amount not paid when due will bear
interest at the maximum lawful rate.
The Bonds will have a maturity of up to 30 years and will amortize in accordance
with 'Pproximately level annual debt service based upon a hypothetical fixed
interest rate yet to be determined and which shall be acceptable to the Banle The
Bank will allow for the capitalization of interest during the first two years of the
Bonds with the first principal redemption scheduled for on or about July 1,2008.
As the Bonds are retired, the principal and interest components (Available
Amount) of the Letter of Credit shall be reduced.
The Bank understands that the Airport is anticipating the receipt of two grants
which shall be utilized to fund a portion of the cost of the project. The first
anticipated grant is an AlP Entitlement Grant in the amount estimated at
$6,900,000, payable at an estimated rate of $2,300,000 per year bebrinning in
fiscal year 2006. The second is a Florida Department of Transportation Grant of
$8,7] 8,000, payable through fiscal year 2010. The Bank will require that
proceeds from these grants be applied as advanced principal reductions to the
Bonds. The Bank shall also require documentation which details the approval of
the project application for the AIP grants and a copy of the written commitment for
COLLATERAL:
LETTER OF
CREDIT FEE:
OTHER FEES:
EXPIRA TION/
EXTENSION:
REPORTING
REQUIREMENTS:
the $8,718,000 FDOT grants. Such documentation shall be acceptable to the
Bank and its counsel.
The proceeds in the PFC Capital Improvement Account (to the extent legally
available to pay debt service) may not be utilized for purposes other than payment
of the proposed debt until such time as all anticipated grants as detailed above have
be received and applied as advance principal reductions on the Bonds. After
receipt and application of grant monies the funds may be utilized as detailed in the
Bond Resolution as long as the County is in compliance with all rate covenants and
other terms on conditions of the letter of credit reimbursement agreement.
The Bonds and the reimbursement obligation under the Reimbursement Agreement
shall be secured by the Pledged Funds (as defined in the Airport Revenue Bond
Resolution (Key West Airport), draft 2, dated 1/24/06, as revised and acceptable
to Bank and its counsel, the "Bond Resolution"). Prior to issuance of the Letter of
Credit, the Bank shall be provided evidence that the PFC's may lawfully be used to
finance the 2006 Project and are lawfully available to pay debt service on the
Bonds and any reimbursement obligation under the Reimbursement Agreement.
County shall pay an annual Letter of Credit facility fee for the Letter of Credit of81
basis points of the Available Amount, payable in advance on the date of issuance
and each anniversary of the date of issuance of the Letter of Credit.
Ifthe Airport obtains an underlying (uninsured) debt rating ofBBB or better from
either Moody's, S & P or Fitch, the Letter of Credit facility fee shall be reduced to
49 basis points of the Available Amount.
$150.00 per draw, $2,500.00 per amendment or transfer fee.
The Letter of Credit shall expire on the third anniversary of the date of issuance of
the Letter of Credit. Unless the Bank shall have notified the County 30 days
before an anniversary of the issuance of the Letter of Credit that the expiration date
will not be extended, on each such anniversary date the expiration date will be
extended by one year.
So long as the Letter of Credit is outstanding, the County shall submit to the Bank
annually, within 270 days following the end of the County's fiscal year, financial
statements prepared in accordance with generally accepted accounting principles
on an audited basis by an independent certified public accountant acceptable to the
Bank. These financial statements shall include separate statements of account for
2
FINANCIAL
COVENANTS:
CREDIT
DOCUMENTS:
AUTOMATIC
PAYMENTS:
SURVIVAL:
the Pledged Funds and shall be in sufficient detail to determine compliance with all
applicable financial convents.
The Bank shall require a copy of the preliminary ("in house") 2005 fiscal year end
financial statements prior to closing. Such statements shall not materially vary from
the information provided to the Bank in the feasibility study. In addition, prior to
closing the Borrower shall provide the bank a written detail of the source of
historical operating grants and capital grants as detailed in the financial statements.
Such explanation shall detail the cause of the significant fluctuation in operating and
capital grants for the FY02, FY03, FY04 and FY05 which shall be acceptable to
the Bank. The 2005 final audited financial statement shall show no material adverse
change form the preliminary statements provided to the Bank.
As stated in the Bond Resolution, except that for so long as the Letter of Credit is
outstanding (i) the Rate Covenant shall be modified to require 100% coverage of
any Subordinated Indebtedness (the 125% test shall remain as stated in the
resolution), (ii) the Additional Bonds test ("ABT") shall be modified to include
100% coverage of Subordinated Indebtedness, (iii) completion Bonds (per
6.02(C) of the Bond Resolution) may not be issued except with the consent of the
Bank unless the general ABT (Section 6.02(B) is met and (iv) the required
coverages shall be met not only based upon the estimates of future financial
performance as set forth in the Bond Resolution, but also based upon the actual
results for the most recently concluded fiscal year or any period of twelve
consecutive months in the 24 months most recently concluded prior to the issuance
of the Additional Bonds
The Facility shall be issued in accordance with and governed by definitive
documents to be executed and delivered by the County to the Bank and containing
the terms set forth in this commitment and such other terms, conditions,
representations, warranties and covenants as are usual and customary in similar
transactions.
The County shall authorize the Bank to automatically deduct from a designated
account with the Bank the amount of any payment due under the Letter of Credit
documents. If the funds in the account are insufficient to cover any payment, the
Bank shall not be obligated to advance funds to cover the payment.
This commitment letter shall not survive the execution and delivery of the definitive
credit documents. This commitment is revocable by the Bank at any time prior to
acceptance by the County.
3
DELIVERY OF
DOCUMENTS:
The Bank shall not be obligated to deliver the Letter of Credit until certain
conditions precedent to such delivery are satisfied, including, but not limited to and
in addition to the other conditions set forth in this commitment, the following:
The Bank shall have received, duly executed, all credit documents and any other
documents and instruments necessary or advisable in connection with the issuance
of the facilities, all of which shall be in form and substance satisfactory to the Bank
and its counsel.
The Bank shall have received the written opinion ofCounty:s counsel as to (i) the
County:s valid existence, (ii) the validity and enforceability of the credit documents,
(iii) the due authorization of the credit documents, and (iv) such other matters as the
Bank may reasonably require.
MISCELLANEOUS: All computations of interest and fees shall be based upon a 360 day year for the
actual days elapsed. The default rate for the letter of credit fee shall be 2% per
annum.
COVENANTS:
CLOSING COSTS
AND EXPENSES:
MATERIAL
ADVERSE
CHANGE:
NON-
ASSIGNABLE:
RELIANCE:
AMENDMENT
AND
WAIVER:
The documents will contain other affirmative and negative covenants, provisions
and representations, including default provisions and remedies.
The Bank will be represented by Moyle, Flanigan, Katz, Raymond, White &
Krasker, P.A. The County shall pay said firm's attorney's fees in connection with
the transaction in the amount of $25,000.
Ibis commitment may be tenninated, in the sole discretion of the Bank, upon the
occurrence of a material adverse change in the financial condition of the County.
Ibis commitment may not be assigned by County.
This commitment constitutes an offer by the Bmk to the County to issue the
Facility described herein on the terms and conditions set forth herein and may not
be relied upon by any third party for any purpose.
No alteration, modification, amendment or waiver of any terms and conditions of
this commitment, or of any of the documents required by or delivered to the Bank
4
ma
any
matter
The
not
or not
obligation to extend credit
terms and
set
above are
BOARD OF COUNTY COMMISSIONERS
OF MONROE COUNTY. FLORIDA
Date:
~1te