03-15-05 Item 13CITY OF SOUTH MIAMI
INTER - OFFICE MEMORANDUM
To: Mayor and City Commission
Date: March 15, 2005
From: Maria V. Davis AGENDA ITEM #
Cit?An*ge* Re: Commission me ing March 15, 2005
Van Smith Park Loan for $567,366.50
y Plus Loan Fee Ordinance
ORDINANCE
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
SOUTH MIAMI, FLORIDA, RELATING TO VAN SMITH PARK LOAN;
AUTHORIZING THE CITY MANAGER TO CLOSE ON THE TERMS OF AN
ARRANGEMENT FOR A 7 -YEAR MORTGAGE IN AN AMOUNT NOT
EXCEEDING $567,366.50 PLUS LOAN FEE WITH SUNTRUST BANK, UTILIZING
FUNDS FROM THE CITY GENERAL FUND BUDGET TO REPAY THE LOAN
ANNUALLY; PROVIDING FOR SEVERABILITY, ORDINANCES IN CONFLICT,
AND AN EFFECTIVE DATE.
BACKGROUND
On December 7, 2004, the City Commission approved resolution number 190 -04 -11969 to
authorize purchase of the remaining two -third (2/3) of Van Smith Park property. Closing on the
property was done in December 2004, at which time funds were temporarily transferred from
several general fund budget accounts to make the payment, in order to expedite the process and
avoid additional taxes of over $20,000 that the City would have incurred if the closing had been
delayed to 2005. Later, on February 1, 2005 resolution number 15-05-11994 was approved by the
City Commission to authorize the City Manager to obtain a loan from any reputable bank that
offers the best interest rates to repay the general fund budget accounts. The attached resolution is
requesting your authorization to close on a loan in the amount of $567,366.50 plus applicable
loan transaction fee to complete the funding transaction for acquisition of the referenced
property.
In compliance with February 1, 2005 resolution number 15 -05- 11994, the City Administration
solicited and received proposals from several banks as shown below for various loan terms:
7 — YEAR TERM WITH NO PREPAYMENT PENALTY
BANK NAME RATE
Bank of America NO OFFER
Suntrust 3.95%
Wachovia 4.35%
First National Bank of S. Miami 6.0%
7 — YEAR TERM WITH PREPAYMENT PENALTY
BANK NAME RATE
Bank of America 3.98%
Suntrust 3.70%
Wachovia 4.07%
First National Bank of S. Miami NO OFFER
10 — YEAR TERM WITH NO PREPAYMENT PENALTY
BANK NAME RATE
Bank of America NO OFFER
Suntrust 4.15%
Wachovia 4.48%
First National Bank of S. Miami NO OFFER
10 — YEAR TERM WITH PREPAYMENT PENALTY
BANK NAME RATE
Bank of America 4.26%
Suntrust 3.90%
Wachovia 4.15%
First National Bank of S. Miami NO OFFER
15 — YEAR TERM WITH NO PREPAYMENT PENALTY
BANK NAME RATE
Bank of America
NO OFFER
Suntrust
Wachovia
4.78%
First National Bank of S. Miami
NO OFFER
15 — YEAR TERM WITH PREPAYMENT
PENALTY
BANK NAME
RATE
Bank of America
NO OFFER
Suntrust
Wachovia
4.37%
First National Bank of S. Miami
NO OFFER
Funds to repay the loan will be part of the general fund annual budget using account number 001-
2100 -519 -9926 titled "Debt Service — Van Smith Park".
RECOMMENDATION
Based on the above information, I am recommending that we close with Suntrust Bank on the 7-
year loan term with no repayment penalty clause. This will be at 3.95% interest rate.
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ORDINANCE NO,
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF SOUTH MIAMI, FLORIDA, RELATING TO VAN SMITH PARK
LOAN; AUTHORIZING THE CITY MANAGER TO CLOSE ON THE TERMS
OF AN ARRANGEMENT FOR A 7 -YEAR MORTGAGE IN AN AMOUNT
NOT EXCEEDING $567,366.50 PLUS LOAN FEE WITH SUNTRUST BANK,
UTILIZING FUNDS FROM THE CITY GENERAL FUND BUDGET TO
REPAY THE LOAN ANNUALLY; PROVIDING FOR SEVERABILITY,
ORDINANCES IN CONFLICT, AND AN EFFECTIVE DATE.
WHEREAS, on December 7, 2004, the City Commission approved resolution number
190 -04 -11967 authorizing the acquisition of the Van Smith property located at 7800 SW 59th
Avenue to be used as passive park by the City; and
WHEREAS, payment for the property acquisition was made out of various budget
accounts in order to expedite the closing for tax purposes before the end of the year; and
WHEREAS, the City Commission approved resolution number 15 -05 -11994 on February
1, 2005, authorizing the City Manager to negotiate a loan in the amount of the acquisition to
reimburse the various budget accounts used to pay for the purchase; and
WHEREAS, the City Administration has received proposals from four different banks
namely as follows:
Bank of America
Suntrust Bank
Wachovia Bank
First National Bank of South Miami
WHEREAS, Suntrust Bank offers the best competitive rate.
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI:
Section 1. That the City Commission hereby authorizes the City Manager to submit the
City application to the Suntrust Bank and close on the terms of a 7 -year mortgage in an amount
not exceeding $567,366.50 plus loan fee to reimburse the various budget accounts used for
acquisition of the Van Smith park property.
Section 2. That funds to repay the loan will be made as part of the annual City general
fund budget.
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Section 3. That this ordinance shall be effective immediately after the adoption thereof.
PASSED AND ADOPTED this day of , 2005.
ATTEST:
CITY CLERK
1 sc Reading
2nd Reading
READ AND APPROVED AS TO FORM:
CITY ATTORNEY
Hoshikoya'McGruff \Documents\vansmithparkloan
APPROVED:
MAYOR
COMMISSION VOTE:
Mayor Russell:
Vice Mayor Palmer:
Commissioner Wiscombe:
Commissioner Birts- Cooper;
Commissioner Sherar:
RESOLUTION NO. 190-04-11969
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO REAL
PROPERTY; AUTHORIZING THE PURCHASE OF THE PROPERTY
CONSISTING OF THE EAST 101 FEET OF 7800 SW 59 AVENUE,
SOUTH MIAMI; AUTHORIZING THE CITY TO ACCEPT THE DEED
TO THE PROPERTY UPON CLOSING AND REQUESTING TAX
EXEMPTION OF THE PROPERTY, OTHERWISE KNOWN AS THE
"HAMMOCK HOUSE"; PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of South Miami has scheduled a closing for the purchase of
the Hammock House for December 13, 2004, which closing shall convey to the City of
South Miami the east 101 feet of the property located at 7800 S.W. 591h Avenue, the legal
description of which is more fully described as follows:
The East 101 feet of Lot 12, in Block 6, of AMENDED
PLAT OF PALM MIAMI HEIGHTS, according to the.Plat
thereof; recorded in Plat Book 25, at Page 37, of the Public
Records of Miami -Dade County, Florida.
AND
The East 101 feet of the East % of Tract 6,.less the South
125 feet thereof, of REVISED PLAT OF A PORTION OF
THE AMENDED PLAT OF PALM MIAMI HEIGHTS, as
recorded in Plat Book 43, at Page 37, of the Public Records
of Miami -Dade County, Florida.
WHEREAS, the City Commission of the City of South Miami desires to purchase
the property, accept the deed upon purchase, to dedicate the property to public use and to
obtain an exemption from ad valorem taxation for the property.
NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA;
Section 1. The City of South Miami authorizes payment to the seller Garrett
and Antony Van Smith, as Trustees 16061 SW 85th Avenue, Pinecrest, Florida 33157 of
$556,549.40 as the purchase price for the property located at the East 101 Feet of 7800
SW 59th Avenue, South Miami, Florida 33143, known as the "Hammock House. The
funding for this purchase shall be paid out of Account No 001 -2100- 519 -9926
.(Debt Service Real Property) which has a current balance of $245,000.
,',No. 190-04-11969
Section 2 Further, the City authorizes the placement of $30,000 into the
escrow account of Stephen D. Pearson, Esquire, as closing agent, to cover the ancillary
closing costs associated with the property transfer, which ancillary costs include: the
payment of the 2004 property taxes, the city's attorney's fees and survey costs. Attached
to this resolution as exhibit 1 is the HUD -1 Uniform Settlement Statement reflecting the
closing purchase price of $558,549.40, which closing price does not reflect ancillary
closing costs.
Section 3. Upon transfer of the property, the City of South Miami shall accept
delivery and shall immediately record the trustee's deed for the above - described property.
The property shall be dedicated to public use.
Section 4. The City of South Miami requests exemption from ad valorem
taxes as of the date of recording the deed pursuant to Florida Statutes, Section 196.28.
Section 5. A certified copy of this resolution shall be recorded among
the public records for Miami -Dade County and transmitted to the Miami -Dade
Tax Assessor and its Tax Collector.
Section 6. This resolution shall take effect immediately upon ppr-eval: the
City Clerk inserting into Section 1 the account number from which the funds will be
taken.
PASSED AND ADOPTED this 7th day of December, 2004.
ATTEST: APPROVED:
_% Z7 �U,
CL__ J /
TY CLERK Y
COMMISSION VOTE: 4 -0
jREA AND APPR D AS TO FORM: Mayor Russell: absent
Vice MayorPalmer: Yea
Commissioner Birts- Cooper: Yea
A TO Y Commissioner Sherar; Yea
Commissioner Wiscombe: yea
JAMy Documents \resolutions \Resolution Hamnock House.doc
Page 2 of 2
RESOLUTION NO. 15 =05- 11.994
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF SOUTH MIAMI, FLORIDA RELATING TO ACQUISITION OF THE
"HAMMOCK HOUSE "; AUTHORIZING THE CITY MANAGER TO
NEGOTIATE A LOAN IN THE AMOUNT USED TO ACQUIRE THE
PROPERTY AND REIMBURSING VARIOUS BUDGET ACCOUNTS WITH
THE AMOUNT TRANSFERRED FROM THEM FOR THE TRANSACTION.
WHEREAS, the City Commission approved resolution number 190 -04 -11969 on December 7,
2004 to authorize the purchase of remainder of the property known as the "Hammock House "; and
WHEREAS, payment for acquisition of this property was made out of various budget accounts
in order to expedite the closing for tax purposes before the end of the year; and
WHEREAS, the City Administration wishes to negotiate a loan to replenish the various budget
accounts with the amount of $567,366.50 used to close the transaction.
NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION
OF THE CITY OF SOUTH MIAMI, FLORIDA THAT:
Section 1. The above whereas clauses are incorporated by reference..
Section 2. The City Manager is authorized to negotiate a loan with any lending institution
that offers the best rate in the amount of $567,366.50 plus related loan charges to replenish the city's
budget accounts and pay for the loan transaction fees associated with the purchase of the "Hammock
House."
Section 3. The City Manager is to negotiate a loan with a lending institution and shall bring
the loan documents by to the City Commission for final authorization and approval.
Section 4. This resolution shall take effect immediately upon approval.
PASSED AND ADOPTED this day of February, 2005.
ATTEST: APPROVED:
ITY CLERK M O
COMMISSION VOTE: COMMISSION VOTE: 4 -0
Mayor Russell: Yea
READ AND APPROVED AS TO FORM: Vice Mayor Palmer: Yea
Commissioner Wiscombe: Yea
--- __ Commissioner Birts- Cooper: Yea
CIT ATTORNEY Commissioner Sherar: absent
CITY OF SOUTH MIAMI
INTER- OFFICE MEMORANDUM
To: Mayor and City Commission Date: February 1, 2005
From: Maria V. Davis AGENDA ITEM #
City Manager Re: Commission meeting February 1, 2005
Negotiation of loan on the
Van Smith Property (Hammock House)
RESOLUTION
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH
MIAMI, FLORIDA RELATING TO ACQUISITION OF THE "HAMMOCK HOUSE'
AUTHORIZING THE CITY MANAGER TO NEGOTIATE A LOAN IN THE AMOUNT
USED TO ACQUIRE THE PROPERTY AND REIMBURSING VARIOUS BUDGET
ACCOUNTS WITH THE AMOUNT TRANSFERRED FROM THEM FOR THE
TRANSACTION.
BACKGROUND
On December 7, 2004, the City Commission approved resolution number 190 -04 -11969 to
authorize purchase of the property known 'as the "Hammocks House ". In order to expedite
closing of the purchase before the end of the year for tax purposes, funds for the transaction were
temporarily transferred from various budget accounts pending negotiation of a loan by the
Finance Director after returning from vacation.
The attached resolution is requesting your authorization to negotiate a _loan in the amount of
$567,366.50 plus loan transaction fees with any qualified lending institution that offers the best
rate, to reimburse various budget accounts used to pay for the acquisition
At the conclusion of the loan negotiation, I will forward the full loan documents for your review
and approval to complete the transaction.
RECOMMENDATION
Approval is recommended.
Page 1 of 5
Oshikoya, Hakeem
From: Joseph. Del leperche [Del leperche . Jose ph @SunTrust.com]
Sent: Thursday, March 03, 2005 4:45 PM
To: Oshikoya, Hakeem
Subject: RE: $567,000 loan request
SunTrust Terms for this loan are as follows:
Quoted rate will be guaranteed thru expecting closing date of April 22nd, 2005. Because SunTrust is committing
to hold this rate for over 50 days for the City and because market interest rates have gone up as well, the rate
below is slightly higher when compared to our initial quote from almost a month ago. To offset that slight
premium, Bank is reducing the Commitment Fee on this facility from $2,500 to $1,500.
10 -Year Bank Qualified Tax - Exempt Fixed Rate, Level Principal, No Prepayment Penalty: 4.05%
7 -Year Bank Qualified Tax - Exempt Fixed Rate, Level Principal, No Prepayment Penalty: 3.95%
It is important that the City let us know by no later than Tuesday March 8th if SunTrust will be recommended to
City Council to provide this facility at the March 15th reading so that the Bank can continue to hold on to this rate
for the City of South Miami. Both parties understand such a notice shall not be considered a Commitment to
borrow on the part of the City. Please do not hesitate to contact me with any questions.
Delle Joseph,
President Vice
Institutional Government Banking
SunTrust Bank Miami
• 1 4
- - - -- Original Message---- -
From: Oshikoya, Hakeem [ mailto :HOshikoya @cityofsouthmiami.net]
Sent: Thursday, March 03, 2005 11:29 AM
To: Joseph. Del leperche
Subject: FW: $567,000 loan request
Do you have a response for me on this yet? Please advise. Thanks.
. lcum: hikoya, CPA, CGFM
l imw Di r_a 6d
Gly of` Sobi Miarri
South Mzarrr, .F1oi1 2.3314.3
(305) 66.3- 6.34.3 - P/"r wrixr°
From: Oshikoya, Hakeem
Sent: Wednesday, March 02, 2005 7:42 PM
To: 'Joseph. Delleperche'
Subject: FW: $567,000 loan request
Sorry, I forgot to include the date the ordinance will be going to the City Commission for the first approval.
The date is March 15. Thanks.
3/4/2005
SUNTRUST
City of South Miami
Term Sheet
This Term Sheet is made subject to the receipt of additional internal approvals. However, the Bank
has had internal discussions with the requisite approval authorities regarding your request and its
structure and terms.
This Term Sheet has been delivered to you on a confidential basis with the express understanding that
neither it, nor its substance, will be disclosed, except to those who maintain a confidential
relationship with you, or where such disclosure is required bylaw.
The Bank will extend the Loan under the following terms and conditions:
1. BORROWER:
City of South Miami (hereinafter referred to as the "Borrower ")
2. FACILITY:
Up to $5,575,000 tax - exempt bank- qualified term loan (hereinafter referred to as the "Loan ")
3. PURPOSE:
To re- finance the recent purchase of the property located at 7800 SW 59 Avenue (hereinafter
referred to as "the Hammock House "). Funding for the purchase was paid out of the City's
Debt Service Real Property and other accounts pending permanent financing.
4. COLLATERAL:
The Loan will be secured by a Covenant to Budget and Appropriate (CBA) from non -ad
valorem revenues.
5. INTEREST RATE *:
Option A: 7 Year Fully Amortized Term Loan
Rate with no prepayment penalty is 3.80% for required quarterly payments of $23,484.73
Rate with prepayment language is 3.50% for required quarterly payments of $23,243.23
Option B: 10 Year Fully Amortized Term Loan
Rate with no prepayment penalty is 3.95% for required quarterly payments of $17,470.43
Rate with prepayment language is 3.70% for required quarterly payments of $17,263.63
Option C: 15 Year Amortization with a 7 Year Term
Rate with no prepayment penalty is 3.95% for required quarterly payments of $12,747.02
Rate with prepayment language is 3.67% for required quarterly payments of $12,504.76
*Interest shall be calculated on the basis of a 360 -day year with twelve 30 -day months.
1 of 3
TERM SHEET PROPOSAL FOR CITY OF SOUTH MIAMI
February 4, 2005
Page 2
6. REPAYMENT — (Level Principal & Interest -- Mortgage Style):
Same amount for "Principal & Interest" will be due quarterly throughout the term of the loan.
7. MATURITY:
The Loan will mature at either 7 or 10 years from the closing date depending on option chosen
under section 5.
8. FEE(S) AND EXPENSES:
The Borrower shall be required to pay all reasonable and necessary expenses associated with
the contemplated transaction, including but not limited to those listed below:
I. Loan Counsel fee for reviewing and preparing all legal documents for this transaction,
which shall be capped at a maximum of $4,500.
II. This loan shall have a Commitment Fee of 2,500, which shall be due at closing.
9. DOCUMENTATION:
At or prior to closing, the Bank shall have received all documents that are typical for
transactions of this nature
10. FINANCIAL REPORTING REQUIREMENTS:
The Borrower shall submit audited financial statements to the Bank not less than annually.
The Borrower shall also submit an operating budget for all funds, as ratified by the Mayor and
City Commission, to the Bank not less than annually.
11. COVENANTS & CONDITIONS:
• The Bank will require that the two years average non -ad valorem revenues for Borrower, with
the exception of enterprise fund revenues, must equal or exceed two times combined
maximum annual debt service on all outstanding and proposed debt secured by specific or
general non -ad valorem revenues.
Funding of the Loan is contingent upon a satisfactorily legal opinion as to the Borrower's tax -
exempt status and authority under its Charter to borrow money, as well to the fact that the
Loan constitutes bank - qualified status. The authority to borrow money must be acceptable in
form, manner, tenure and purpose.
• The Bank reserves the right, upon reasonable notice to the Borrower, to change the pricing of
the Loan if an adverse change in the tax laws governing the Loan occurs.
2 of 3
TERM SHEET PROPOSAL FOR CITY OF SOUTH MIAMI
February 4, 2005
Page 3
The Borrower will comply with and agree to such other covenants, terms and conditions that
may be reasonably required by the Bank and its counsel and are customary in tax - exempt
financing of this nature. These covenants would include, but not be limited to, covenants
regarding compliance with laws and regulations, the submission of audited financial
statements to the Bank on a timely basis, events of default including failure to make
payments, failure to perform any covenant, and the filing of bankruptcy by the Borrower; and
remedies in event of default.
On behalf of SunTrust Bank it is our pleasure to extend this Term Sheet to you as we look forward to
expanding our mutually beneficial relationship with the City of South Miami.
If you have any questions or comments, please give me a call at (305) 579 -7014
Sincerely,
Delle Joseph, CPA
Vice President
Institutional & Governmental Banking
SunTrust Bank, South Florida
Tel: 305.579.7014
3 of 3
Page 1 of 1
Oshikoya, Hakeem
From: Trumbull, Diane [ diane .trumbull @bankofamerica.com]
Sent: Tuesday, February 15, 2005 12:09 PM
To: Oshikoya, Hakeem
Cc: Mason, Linda A
Subject: RE: Commitment Letter
The proposed rates are with prepayment penalty.
From: Oshikoya, Hakeem [ mailto :HOshikoya @cityofsouthmiami.net]
Sent: Tuesday, February 15, 2005 11:46 AM
To: Trumbull, Diane; Oshikoya, Hakeem
Cc: Mason, Linda A
Subject: RE: Commitment Letter
Thanks for the commitment letter. Could you please tell me if the proposed rates are with prepayment penalty or
no prepayment penalty. Thanks.
I°MIM I)iny -tor
City of Sowb ,44iaati
Souib Ali2m, Florcclat d >-3143
(305) 663-6.34-3 - Pho -,Nxii—cr
From: Trumbull, Diane [mailto: diane .trumbull @bankofamerica.com]
Sent: Monday, February 14, 2005 4:07 PM
To: hoshikoya @cityofsouthmiami.net
Cc: Mason, Linda A
Subject: Commitment Letter
Mr. Oshikoya:
A commitment letter is attached for your review. Please call with any questions.
Although the commitment has later dates stated in the "Acceptance and Survival" section of the letter, we can
have the loan documents available for signature for your March 1, 2005 meeting. We would need the signed
commitment letter by the beginning of next week in order to meet this deadline.
Sincerely,
Diane Trumbull
Senior Underwriter - Credit Products
Government South
941- 750 -9308 (Phone)
941 - 750 -9230 (Fax)
diane.trumbull@bankofamerica.com
3/3/2005
March 3, 2005
Mr. Hakeem Oshikoya
The City of South Miami
City Hall
6130 Sunset Drive
South Miami, Florida 33143
Re: The City of South Miami — Van Smith Park
Dear Mr. Oshikoya:
We are responding to your email dated March 2, 2005. The interest rates detailed below have
been updated based on today's indexes.
BORROWER: The City of South Miami, Florida ( "Borrower ").
LENDER: Bank of America, N.A. ( "Bank of America ").
CREDIT FACILITY: $567,500 Term Loan Facility (the "Term Loan ")
PURPOSE: The proceeds of the Term Loan shall be used to replenish the City's
General Fund. The City acquired Van Smith Park in December 2004 from
such funds.
PRICING /REPAYMENT/ All Fixed Rates Options are based on an actual /360 basis, semi - annual
MATURITY: principal and interest payments, full amortization, standard Bank
prepayment language, tax - exempt, Bank Qualified. These are indicative
fixed rates based on today's indexes and are subject to change between
now and closing.
Option 1: 5 years = 3.74%
Option 2: 7 years = 3.98%
Option 3: 10 years= 4.26%
In the event that the Term Loan is deemed to be "Non -Bank Qualified" a
standard gross up provision will apply.
SECURITY/ Pledge of General Funds.
COLLATERAL:
REPORTING Financial Information from Borrower. Borrower to provide financial
REQUIREMENTS: information and statements in form and content acceptable to Bank of
America indicated below:
• Within 270 days of the Borrower's fiscal year end, the Borrower's
audited comprehensive annual financial report. .
• Within 30 days of approval, the Borrower's annual budget.
EXPENSES:
Borrower will pay all reasonable costs and expenses incurred by Bank of
America associated with the preparation, due diligence, administration and
enforcement of all documentation executed in connection with the Term
Loan, the legal fees of counsel to Bank of America whether or not the Term
Loan is closed. The legal fee is $1,500.
QUALITY OF
Each document and item required by and submitted to Bank of America
DOCUMENTS:
pursuant to the Commitment shall be satisfactory in form and substance to
Bank. Further, the Borrower agrees to execute at the closing all documents
deemed necessary by Bank's attorney.
ACCEPTANCE AND
If the terms and conditions of the Letter Agreement meet with your
SURVIVAL:
approval, please indicate your acceptance by signing below. If the
Borrower elects not to close for any reason, the Borrower shall be
responsible for paying any attorney fees incurred to date. This Letter
Agreement shall become null and void if not accepted prior to the close of
business on March 16, 2005 and /or the Term Loan is not closed prior to
March 31, 2005.
These terms are not intended to be all- inclusive. Other terms, conditions, and financial
covenants shall be included in the Loan Documents.
It has been a pleasure to be of service to you in this matter. If you have any questions or
comments, please call me at (561) 838 -2329.
Sincerely,
Linda .Mason
Linda Mason
Senior Client Manager
Senior Vice President
Acknowledged and agreed to this
Option selected:
Option 1:
Option 2:
Option 3:
By:
The City of South Miami
Authorized Signor
Name:
Title:
Diane Trumbull
Senior Underwriter
Vice President
day of 1.2005
Page 1 of 4
Oshikoya, Hakeem
From: scott.kreiger @wachovia.com
Sent: Thursday, March 03, 2005 3:00 PM
To: Oshikoya, Hakeem
Subject: Re: FW: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
Hakeem:
I'm assuming when the City Attorney refers to "brokerage fees" she means breakage fees. Here are the adjusted
rates that will allow the City of South Miami to prepay the loan at any time without any breakage fees or penalties:
7 Years......... 4.35%
10 Years....... 4.48%
15 Years....... 4.78%
In this rate environment, it is unlikely that the City would incur a prepayment penalty because rates are trending
upwards. However, there are no guarantees. The prepayment penalty protects the bank in case of swings in the
interest rate between when the loan was booked and when it is paid off. For instance, if South Miami were to take
a 10 year loan at 4.15% and then decide to pay it off three years later, there is a chance that the bank will lose
money on the transaction. At the time of booking the bank commits the loan amount for the term of the loan. If
the loan was booked at 4.15% and current rates for a similarly termed loan at the time of payoff are 4.30 %, the
City would not incur a prepayment penalty because the bank can lend out the funds from the loan payoff at a
higher interest rate than it was originally booked for. However, if the loan rate at the time of payoff were to drop to
say 3.90 %, the bank would lose money because they could not relend the payoff amount at a rate as high as the
original interest rate on the loan. Because of this uncertainty, when we offer a loan with the ability to prepay at
any time, the rate increases.
Let me know if you have any other questions. Again, thank you for allowing Wachovia to bid on this opportunity. 1
look forward to meeting you one day soon!
Regards,
Scott
Scott D. Kreiger
Vice President/Relationship Manager
Government & Institutional Banking
Wachovia Bank, N.A.
(954) 596 -6907 Phone
(954) 596 -6908 Fax
scott.kreiger@wachovia.com
"Oshikoya, Hakeem
<H Osh ikoya @cityofsouthm !am i.net>
03/03/2005 11:54 AM
3/3/2005
To "'scott .kreiger @wachovia.com "' <scott.kreiger @wachovia.com>
cc
Subject FW: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
Page 2 of 4
Hi Scott:
Sorry that I have been sending these messages to a wrong email address.
IltXka,m iii. C c q,' ; CPA, CGRff
Ftmzrxe Dinxior
cl�v O iI td) m1wra
S (xid) Mzarr4 Fl idi 33143
(305) 66-3 -6343 - 1)har Nwixr°
From: Oshikoya, Hakeem
Sent: Thursday, March 03, 2005 11:45 AM
To: 'scott.krieger @wachovia.com'
Subject: FW: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
Importance: High
Please see below for my requests. Thanks.
Fzrrizrxr Dimaor
Q, y of -,Sow Mzmz
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(305) 663-6-34-3 - Pb a? 1VLiYY 'Y
From: Oshikoya, Hakeem
Sent: Thursday, March 03, 2005 11:40 AM
To: 'scott.krieger @wachovia.com'
Subject: FW: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
Importance: High
Hi Scott:
Do you have a response for me on this request yet? Thanks.
akainK C lr /eo) 4 PA, C FA4
Fininw Dinaor
City of S0rWh.l ian
Soutar Mzaa , Fly 33143
(-3035) 663 -6343 - Pl"r NTz r xr
Page 3 of 4
Sent: Monday, February 28, 2005 3:43 PM
To: 'scott.krieger @wachovia.com'
Subject: FW: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
Importance: High
Hi Scott:
Could you please give me your rates with no prepayment clause for each of the term periods? Thanks.
FWaI Director
City ofSouth Miarrn
South Alfiami, Fh)vi& 3314-3
(305) 663-634-3 - Pbore Nun hr
From: Eve Boutsis [mailto:eboutsis @ngf- law.com]
Sent: Monday, February 28, 2005 3:28 PM
To: hoshikoya @cityofsouthmiami.net
Cc: Luis Figueredo
Subject: FW: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
Importance: High
NO to brokerage fees and prepayment penalty -- and higher interest rate due to no prepayment penalty, if take
out.
Like with others, you now know what my concerns are. You can negotiate with any of the banks provided you are
comfortable with the terms (and you already know what our issues are).
Very truly yours,
Eve
Eve A. Boutsis,
Office of City Attorney for the
City of South Miami
Nagin Gallop Figueredo, P.A.
3225 Aviation Avenue, Suite 301
Miami, Florida 33133
Telephone: (305) 854 -5353
Facsimile: (305) 854 -5351
eboutsis @ngf- law.com
- - - -- Original Message---- -
From: Mary Jo Pinedo
Sent: Monday, February 28, 2005 3:20 PM
To: Luis Figueredo; Eve Boutsis
Cc: Ginger Roy
Subject: Fax from Hakeem Oshikoya re: Wachovia loan for Hammock House
- - - -- Original Message - - - --
3/3/2005
Wachovia Bank, N.A.
Government Services Group
FL6005
1950 West Hillsboro Boulevard
Deerfield Beach, FL 33442
'L L / ,
February 25, 2005
Mr. Hakeen Oshikoya_
Finance Director
City of South Miami
6130 Sunset Drive
South Miami, FL 33143
Dear Mr. Oshikoya:
Please find enclosed a commitment letter from Wachovia Bank, N.A. to provide
financing in the amount of $567,500.00 in order for the City to reimburse itself for the
cost of the purchase of real estate blown as Hammock House.
We have provided rate quotes for three terms: 7 years, 10 years, and 15 years. Although
we have quoted indication rates, as soon as you notify me that Wachovia has been chosen
to provide the financing, I can lock in the rate as of the date of notification. If you can
notify me of the City's decision by Monday at noon, I will honor the rates quoted in the
attached commitment letter.
With regard to legal costs, item #6 of the Conditions, I can incorporate bond counsel's
fees into the rate if the City does not want to pay the fee out -of- pocket. Please advise,
and I will quote new rates incorporating the fees. The quoted fee includes all document
preparation. If the City would like to use its own bond counsel, let me know. If the
City's counsel is acceptable to Wachovia, I will obtain a new fee quote for our counsel to
review the documents only.
Rates have been quoted with our standard prepayment penalty language. We generally
do not offer prepayment at any time without penalty. However, if this is important to the
City, I can readjust the rates for each term that will allow the City to make prepayment on
certain amliversary dates. Please be aware that this option will result in higher rates for
each of the terms.
Should you have any questions, please do not hesitate to contact me. I thank you for
allowing Wachovia Bank to bid on this financing opportunity. I hope that we will be able
to work with the City on future opportunities as well.
Wachovia Bank, N.A.
Government Services Group
FL6005
1950 West Hillsboro Boulevard
Deerfield Beach, FL 33442
a
February 25, 2005
Mr. Hakeem Oshikoya
Finance Director
City of South Miami
6130 Sunset Drive
South Miami, FL 33143
Dear Mr. Oshikoya:
Wachovia Bank, National Association (the "Bank ") is pleased to submit the
Commitment described below to the City of South Miami (the "City ") subject to the
following terms and conditions.
Borrower: City of South Miami, Florida (the "City ")
Amount: $567,500.00
Facility: Term Loan
Purpose: To provide funds for the City to reimburse itself for the cost of
purchasing real estate known as Hammock House.
Term: 7 -year Term:
To mature seven years from date of closing. Interest will be due
and payable semi- annually of each year commencing six months
from date of closing. Principal payments will be payable annually
based on a 7 -year fully amortizing loan. Interest on the
outstanding balance of the loan will be calculated on a 30/360 -day
basis.
10 -year Term:
To mature ten years from date of closing. Interest will be due and
payable semi - annually of each year commencing six months from
date of closing. Principal payments will be payable annually based
on a 10 -year fully amortizing loan. Interest on the outstanding
balance of the loan will be calculated on a 30 /360 -day basis
15 -year Term:
To mature fifteen years from date of closing. Interest will be due
and payable semi - annually of each year commencing six months
from date of closing. Principal payments will be payable annually
based on a 15 -year fully amortizing loan. Interest on the
outstanding balance of the loan will be calculated on a 30/360 -day
basis
Security: The Loan will be secured by a Covenant to Budget and
Appropriate from all legally available Non -Ad Valorem Revenues
(the "Pledged Revenues ").
Interest Rate: NOTE: The City must indicate closing date and interest option
selected at the time of acceptance.
7 -year Fix ed: 4.07% Bank Qualified*
10 -year Fixed : 4.15% Bank Qualified*
15 -year Fixed : 4.37% Bank Qualified'
* The above fixed rates are indication fixed rates based on current
market conditions and subject to change. The Bank will set the
rate three business days prior to closing at the then prevailing rate.
Prepayment: Should the City prepay during the life of the loan, the City may
incur a breakage fee as outlined in the attached Exhibit "A ".
Conditions
1. The City, by official action, shall approve entering into this commitment and the
loan facility described herein; and shall cause any borrowing under this facility
to be designated as a "Qualified Tax - Exempt Obligation" pursuant to Section
265(b)(3)(B) Internal Revenue Code of 1986, as amended.
Should subsequent but currently unforeseen events cause any borrowing under
this facility to be determined to be a "non- qualified" obligation pursuant to
Section 265(b)(3)(B), Internal Revenue Code of 1986, as amended, the Bank
shall adjust the interest rate on any outstandings hereunder so that it shall
receive the same after tax yield equivalent contemplated as of the time of this
commitment.
2. In the event that the interest on any drawing under this Commitment is ever
determined to be taxable for purposes of federal or state income taxation, or in
the event that any or all of the interest on any drawing under this Commitment
is deemed to be included in the gross income of the Bank for federal or state
City of South Miami Commitment Letter cba 2- 2005.doc
income taxation, or in the event the Bank is unable to deduct any other
amounts as a result of purchasing or carrying any borrowings resultant from the
Commitment, or in the event of a change in the marginal tax rate applicable to
corporations or the alternative minimum tax rate or in the method prescribed by
federal income tax laws for calculating the alternative minimum tax to which
the Bank may be subject, or in the event of any action which would otherwise
decrease the after tax or taxable equivalent yield to the Bank, the interest on
this Commitment shall be subject to a full gross up modification, as determined
by the Bank and its counsel. In no event, however, shall the interest rate on
this Commitment exceed the maximum rate permitted by law.
3. All legally available Non -Ad Valorem Revenues shall mean all revenues of the
City derived from any source whatsoever, other than Ad Valorem taxation on
real and personal property.
4. Each fiscal year during the term of the loan Legally Available Non Ad Valorem
Revenues, as defined above, must cover actual annual debt service on debt
secured by and /or payable from such Revenues by at least 1.5x. Prior to the
incurrence of additional debt secured by any portion of the Legally Available
Non -Ad Valorem Revenues or a Covenant to Budget and Appropriate from all
Legally Available Non -Ad Valorem Revenues, the average of the prior two years
Legally Available Non Ad Valorem Revenues, as defined above, must cover
existing and projected maximum annual debt service on debt secured by and /or
payable from such Revenues by at Least 1.5x.
5. For purposes of calculating maximum annual debt service or annual debt
service, all variable rate borrowings secured by the Pledged Revenues shall be
assumed to bear interest at the higher of 7% per annum or the actual interest
rate borne by the variable rate debt for the month preceding the date of the
calculation.
6. Legal opinions relating to this facility shall be in such form and content as are
acceptable to the Bank and its counsel. The financing will require a tax - exempt
legal opinion from the City's Bond Counsel. All costs relating to the preparation
of documents and to otherwise complete this transaction shall be paid for by
the City. Bank counsel fees shall not exceed $3,500 to prepare all legal
documents associated with this transaction. Documents shall be available for
review at least 5 business days prior to closing.
7. On an ongoing basis, the City agrees that it shall deliver to the Bank printed
copies of, when available, or within 180 days of each fiscal year end,
whichever is sooner, a Comprehensive Annual Financial Report, a Current Year
Operating Budget as soon as it is completed and a Capital Improvement Plan
and any other such information as reasonably requested by Bank.
8. This Commitment shall remain in full force and effect through 3:00 p.m., local
time, March 18, 2005, at which time, if not accepted by execution of the
City of South Miami Commitment Letter cba 2- 2005.doc
acceptance clause below and mailed to the Bank at its 200 South Biscayne
Boulevard, 15th Floor, Miami, FL 33131, office to my attention, this
Commitment shall expire and shall not be enforceable by either the Bank or the
City unless extended by the Bank in writing. Unless extended by the Bank in
writing, this facility must close on or prior to March 31, 2005 after which this
commitment shall expire.
9. If the Bank chooses to waive any covenant, paragraph, or provision of this
Commitment, or if any covenant, paragraph, or provision of this Commitment is
construed by a court of competent jurisdiction to be invalid, it shall not affect
the applicability, validity or enforceability of the remaining covenants,
paragraphs or provisions.
10. The preceding terms and conditions are not exhaustive. Any final commitment
may include other covenants, terms and closing conditions as are customarily
required by the Bank for similar transactions including but not limited to a Cross
Default with other debt, Default Rate, Events of Default, Acceleration upon
Default and waiver of jury trial. This Commitment Letter shall not survive
closing.
11. The City represents and agrees that all information provided to the Bank is
correct and complete. No material adverse change may occur in, nor may any
adverse circumstance be discovered as to, the financial condition of the City
prior to closing. The Bank's obligations under this Commitment are conditioned
on the fulfillment to the Bank's sole satisfaction of each term and condition
referenced by this Commitment.
12. This Commitment supersedes all prior Commitments and proposals with respect
to this transaction, whether written or oral, including any previous loan
proposals made by the Bank or anyone acting within its authorization. No
modification shall be valid unless in writing and signed by an authorized Officer
of the Bank. This Commitment is not assignable and no entity other than the
City shall be entitled to rely on this Commitment.
Wachovia Bank, National Association appreciates the opportunity to submit this
Commitment to you and looks forward to your favorable response. Should you have
any questions, please do not hesitate to contact me at (800) 562 -9272.
Best Regards,
WACHOVIA BANK, NATIONAL ASSOCIATION
Ik A)
' A I
Scott D. Kreiger
Vice President
City of South Miami Commitment Letter cba 2- 2005.doc
ACCEPTANCE
The above Commitment is hereby accepted on the terms and conditions outlined
therein by authority of the Governing Board of the City:
Closing Date:
Its:
Date:
EXHIBIT "A"
Term:
In addition to principal, interest and any other amounts due under this Note, Borrower shall on demand
pay to Bank any "Breakage Fee" due hereunder for each Break Event. "Break Event" means any voluntary
or mandatory prepayment or acceleration, in whole or in part, of principal of this Note occurring prior to
the date such principal would, but for that prepayment or acceleration, have become due ( "Scheduled Due
Date "). For each date on which a Break Event occurs ( "Break Date "), a Breakage Fee shall be due only if
the rate under "A" below exceeds the rate under "B" below and shall be determined as follows:
Breakage Fee = the Present Value of ((A -B)xC) + LIBOR Breakage, where:
A = The rate per annum equal to the sum of (i) the bond equivalent yield (bid side) of the U.S.
Treasury security with a maturity closest to the Maturity Date as reported by the Wall Street
Journal (or other published source) on the date the Interest Rate of this Note was set ( "Lock in
Date "), plus (ii) the corresponding swap spread of Bank on the Lock in Date for a fixed rate payor
to pay Bank the fixed rate side of an interest rate swap of that maturity, plus (iii) .25 %.
B = A rate per annum equal to the sum of (i) the bond equivalent yield (bid side) of the U.S. Treasury
security with a maturity closest to the Maturity Date as reported by the Wall Street Journal (or
other published source) on the Break Date, plus (ii) the corresponding swap spread that Bank
determines another swap dealer would quote to Bank on the Break Date for paying to Bank the
fixed rate side of an interest rate swap of the maturity.
C = The sum of the products of (i) each Affected Principal Amount for each Affected Principal Period,
times (ii) the number of days in that Affected Principal Period divided by 360 (if this Note uses
the Actual /360 Computation) or the actual number of days in the year (if this Note uses the
Actual /Actual Computation).
"Affected Principal Amount" for an Affected Principal Period is the principal amount of this Note scheduled to be
outstanding during that Affected Principal Period determined as of the relevant Break Date before giving effect to
the Break Event on that Break Date, and for any prepayment, multiplying each such principal amount times the
Prepayment Fraction.
"Affected Principal Period" is each period from and including a Scheduled Due Date to but excluding the next
succeeding Scheduled Due Date, provided that the first such period shall begin on and includes the Break Date.
"LIBOR Breakage" is any additional loss, cost or expense that Bank may incur with respect to any hedge for the
fixed rate of this Note based on the difference between the London interbank offered rate (for U.S. dollar deposits
of the relevant maturity) available in the London interbank market at the beginning of the interest period in which
the Break Date occurs and that which is available in that market on the Break Date.
"Maturity Date" is the date on which the final payment of principal of this Note would, but for any Break Event,
have become due.
"Prepayment Fraction" is a fraction equal to the principal amount being prepaid over the principal amount of this
Note outstanding immediately prior to that prepayment on the Break Date.
City of South Miami Commitment Letter cba 2- 2005.doc
"Present Value" is determined as of the Break Date using "B" above as the discount rate.
In addition, a Break Event shall be deemed to occur hereunder if, on any date ( "Borrowing Date ") after the date
hereof but prior to any acceleration of this Note, any advance of principal under this Note is scheduled to be made
and that advance fails to be made on that Borrowing Date (whether due to Borrower's default, Borrower's failure
to borrow, the termination of any loan commitment, any unsatisfied condition precedent, or otherwise), in which
case that Borrowing Date shall be a Break Date, the Affected Principal Amount for that Break Event shall be based
on the amount of the failed advance, and the Borrower shall on demand pay to the Bank any Breakage Fee due
hereunder for that Break Event.
Breakage Fees are payable as liquidated damages, are a reasonable pre- estimate of the losses, costs and expenses
Bank would incur in the event of any prepayment or acceleration of this Note, are not a penalty, will not require
claim for, or proof of, actual damages, and Bank's determination thereof shall be conclusive and binding in the
absence of manifest error. For any Break Event hereunder, the foregoing Breakage Fee provisions supersede any
breakage compensation agreement that Borrower and Bank may have executed with respect to this Note.
City of South Miami Commitment Letter cba 2- 2005.doc 6