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Home My WebLink About2020-03-27-D01 Bonds Series 2020A - Approve ProposalAGENDA ITEM: CITY OF WAUKEE, IOWA CITY COUNCIL MEETING COMMUNICATION MEETING DATE: March 27, 2020 AGENDA ITEM:Consideration of approval of proposal ($12,100,000 General Obligation Urban Renewal Bonds, Series 2020A) FORMAT:Resolution SYNOPSIS INCLUDING PRO & CON: At the March 23, 2020, regular meeting and on the recommendation of PFM, the City’s financial advisor, the Waukee City Council rejected all bids received related to the sale of $12,100,000 General Obligation Urban Renewal Bonds, Series 2020A. The City Council also approved an Engagement Agreement for Private Placement. FISCAL IMPACT INCLUDING COST/BENEFIT ANALYSIS: COMMISSION/BOARD/COMMITTEE COMMENT: STAFF REVIEW AND COMMENT: Representatives from PFM will participate in the meeting and make a recommendation on the sale of the bond via private placement. RECOMMENDATION: Approve the Resolution. ATTACHMENTS: I. Proposed Resolution II. Summary of Terms and Conditions PREPARED BY:Becky Schuett REVIEWED BY: PUBLIC NOTICE INFORMATION – NAME OF PUBLICATION: DATE OF PUBLICATION: D1 RESOLUTION 2020- RESOLUTION APPROVING PROPOSAL AND DIRECTING SALE OF $12,100,000 GENERAL OBLIGATION URBAN RENEWAL BONDS, SERIES 2020A WHEREAS, in accordance with Iowa Code chapter 75, on March 23, 2020, bids were received at public sale for the sale of $12,100,000 General Obligation Urban Renewal Bonds, Series 2020A, with the terms of the lowest competitive bid received as follows: Bidder: FHN FINANCIAL CAPITAL MARKETS of New York, New York Final Par Amount: $12,100,000 Purchase Price: $12,195,821.00 True Interest Rate: 3.5814% Net Interest Cost: $4,608,432.80; and WHEREAS, bids were also received from Northland Securities, Inc., Stifel, Nicolaus & Co., the Baker Group, JP Morgan Securities, LLC, Piper Sandler & Co., Janney Montgomery Scott, LLC, and a syndicated bid from Robert W. Baird & Co., Inc.; and WHEREAS, all bids were rejected; and WHEREAS, in accordance with Iowa Code chapter 75, the City Council engaged a private placement agent to negotiate terms for a bank placement. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WAUKEE, STATE OF IOWA: Section 1.That the term sheet attached hereto for the sale of the Bonds at a fixed rate of 2.15% is hereby determined to be in the best interest of the City. An analysis of the proposal by the City’s financial advisor, PFM Financial Advisors, LLC, indicates said terms are not less favorable to the public than the most favorable bid made by a bona fide and responsible bidder at the last advertised sale. Accordingly, the Bonds are hereby awarded to Key Government Finance, Inc. Section 2.That the Finance Director, Mayor and Clerk are directed to proceed with the documentation of the sale of the Bonds, as required, and all acts of the City Clerk, City Staff, and its advisors, done in furtherance of the sale of the Bonds are hereby ratified and approved. PASSED AND APPROVED this 27th day of March, 2020. Mayor ATTEST: City Clerk Key Government Finance Page 1 Confidential CITY OF WAUKEE, IOWA $12,800,000 GENERAL OBLIGATION URBAN RENEWAL BONDS, SERIES 2020A Summary of Terms and Conditions March 26, 2020 This Financing proposal is provided for discussion purposes only and does not represent a commitment from Key Government Finance, Inc. (“KGF”). This proposal and its terms are submitted on a confidential basis and shall not be disclosed to third parties (other than the Borrower’s officers, directors, employees and advisors charged with reviewing and/or implementing the transactions contemplated hereby) without KGF's consent. This proposal is intended as an outline of certain material terms of the Facility and does not purport to summarize all the conditions, covenants, representations, warranties and other provisions which would be contained in definitive documentation for the Facility contemplated hereby. Key Government Finance, Inc., (“Lender”) is pleased to provide the following term sheet for a tax -exempt direct purchase financing structure to City of Waukee, Iowa. Lender: Key Government Finance, Inc. (“Lender”). Borrower/Issuer: City of Waukee, Iowa (“City”, “Issuer”, or the “Borrower”). Issue: General Obligation Urban Renewal Bonds, Series 2020A (“2020A Bonds”). Facility: Tax Exempt Non-Bank Qualified Direct Purchase of the 2020A Bonds by the Lender. Amount: $12,800,000. All proceeds of the 2020A Bonds will be disbursed at closing. Use of Proceeds: The Bonds are being issued to provide funds to pay the costs of aiding in the planning, undertaking and carrying out of urban renewal projects under the authority of Iowa Code chapter 403 and the Urban Renewal Plan for the Waukee Consolidated Urban Renewal Area, including the Tenth Street and Sunrise Phase IIA Projects. Repayment: Annual principal payments due June 1 commencing June 1, 2021 through Final Maturity. Semi-annual interest payments due on each June 1 and December 1 commencing on December 1, 2020 through Final Maturity. Any amortization that increases the average life of the financing for the options below may result in an adjustment to the interest rate index provided. The amortization schedule provided on March 26, 2020 was utilized to calculate the weighted average life. Key Government Finance Page 2 Confidential Facility Terms: The Anticipated Closing Date for this Facility is May 7, 2020 (“Anticipated Closing Date”). The Final Maturity Date (“Final Maturity”) of the tax-exempt 2020A Bonds is June 1, 2035. KGF will purchase the 2020A Bonds through Final Maturity. Interest Rate: 2.15%. This interest rate needs to be accepted by the Borrower no later than March 30, 2020 and would be valid for closing on or before the Anticipated Closing Date. Interest Day Count: 30/360 Up-Front Fee: $0 Costs of Issuance: Borrower will be responsible for all costs related to this financing including but not limited to Bond, Issuer’s, Trustee’s, Lender’s and Borrower’s Counsel fees and any related costs associated with the issuance for due diligence by the Lender for this financing. Financing costs can be included in the borrowing amount. Final costs will be based on actual fees for services rendered by providers. Lender plans to use Kutak Rock LLP as outside legal counsel with a fee not to exceed $7,500. Attorney contact information is provided below: Andrew P. Romshek Kutak Rock LLP 1650 Farnam Street Omaha, NE 68102-2186 D (402) 231-8797 O (402) 346-6000 Andrew.Romshek@KutakRock.com www.KutakRock.com Prepayment: The Facility may be prepaid in whole, but not in part, subject to a prepayment premium calculated on the outstanding principal balance at the time of the termination as follows: Month 1 to Month 36 2.00% Month 37 to Maturity 0.00% The Bonds may be prepaid in part on June 1 of each year in a maximum amount of 5% of the original amount, or $640,000. This is not a cumulative right (i.e. if the City does not prepay in year one, the amount does not increase to 10% in year 2). Security: The Bonds are general obligations of the City for which the City will pledge its powe r of levy direct ad valorem taxes against all taxable property within the City without limitation as to rate or amount to the repayment of the Bonds. Financial Reporting: Borrower shall provide to the Lender: 1. Annual audited financial statements including operating statistics within 270 days of Borrower’s fiscal year end. 2. Annual Operating budgets for the upcoming financial year within 60 days of fiscal year end. 3. Other financial reports as Lender may reasonably request. Key Government Finance Page 3 Confidential Debt Service Reserve: Default Rate: None 4% above the current interest rate for any outstanding payments in default, upon the occurrence of a payment default longer than 90 days, the default interest rate shall apply to all outstanding principal, until the payment default has been cured. Documents: All documents shall be attorney prepared and in form and substance acceptable to the Lender and its legal counsel, including legal opinions customary for transactions of this nature. Bond counsel will provide a Validity Opinion regarding the legality, validity, and enforceability of the Facility and a Tax Opinion regarding the tax-exempt nature of the interest earnings on the financing. Credit Approval: Lender has received credit approval for this transaction. Conditions Precedent to Closing: Borrower’s obligation will be subject to such terms and conditions tha t Lender may require with respect to this transaction, or as are customarily required with respect to similar credits and as set forth in the Facility documents. Without limitation, such terms and conditions shall include: 1. Absence of Default. 2. Accuracy of Representations and Warranties. 3. Negotiation and Execution of satisfactory closing documents. 4. Absence of material adverse change in financial condition of Borrower during the period from the date hereof to the Closing Date. Event of Taxability and Gross-Up: 2.72%. Firm Experience: Other: The Lender is a subsidiary of KeyBank, N.A. KGF’s portfolio consists of over $4.5 billion of tax-exempt leases, loans, and bonds for municipalities, not-for-profits, and manufacturers across the United States. The Lender will make a loan by purchasing the 2020A Bonds under the following additional conditions: (i) the 2020A Bonds are not being registered under the Securities Act of 1933 and is not being registered or otherwise qualified for sale under the “Blue Sky" laws and regulations of any state; (ii) the Lender will hold the 2020A Bonds as one single debt instrument; (iii) no CUSIP numbers will be obtained for the 2020A Bonds; (iv) no final official Statement has been prepared in connection with the private placement of the 2020A Bonds; (v) the 2020A Bonds will not close through the DTC or any similar repository and will not be in book entry form; and (vi) the 2020A Bonds are not listed on any stock or other securities exchange. Key Government Finance Page 4 Confidential Proposal Acceptance/Expiration This proposal is issued in reliance upon the accuracy of all information presented by you to us and is contingent upon the absence of any material adverse change in your condition, financial or otherwise, from the condition as it was represented to us at the time of this proposal. This proposal is subject to our formal approval and the execution of documentation acceptable to each of us. IT IS NOT A COMMITMENT BY US TO ENGAGE IN THIS TRANSACTION. Key Government Finance (“KGF”) is not acting as an advisor to you and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act to you with respect to the information and material contained in this communication; (b) KGF is acting for its own interests; and (c) you should discuss any information and material contained in this communication with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material. Key Government Finance, Inc. (i) is an entity directly or indirectly controlled by a bank or under common control with a bank, other than a broker, dealer or municipal securities dealer registered under the Securities Exchange Act of 1934, and (ii) the present intent of the Key Government Finance, Inc., is to hold the municipal securities to maturity or earlier redemption or mandatory tender. Any placement agent, broker or financial advisor may rely upon the representations and warranties contained in this paragraph. Lender notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, as amended and supplemented) (the “Patriot Act”), that Lender is required to obtain, verify and record all information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Patriot Act. Lender acknowledges that, in connection with Borrower’s compliance with any continuing disclosure undertakings (each, a “Continuing Disclosure Agreement”) entered into by Borrower pursuant to SEC Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”), Borrower may be required to file with the Municipal Securities Rulemaking Board’s Electronic Munici pal Market Access system, or its successor (“EMMA”), notice of its incurrence of its obligations under this Facility and notice of any accommodation, waiver, amendment, modification of terms or other similar events reflecting financial difficulties in connection with this Facility, in each case including a description of the material terms thereof (each such notice, an “EMMA Notice”). Borrower shall not file or submit or permit the filing or submission of any EMMA Notice that includes any of the following unredacted information regarding Lender or any Escrow Agent: physical or mailing addresses, account information, e-mail addresses, telephone numbers, fax numbers, tax identification numbers, or titles or signatures of officers, employees or other signatories. Borrower acknowledges and agrees that Lender is not responsible in connection with any EMMA Notice relating to this Facility for Borrower’s compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with the Rule, any Continuing Disclosure Agreement or any applicable securities laws, including but not limited to those relating to the Rule. If the outlined foregoing proposal is satisfactory, reflects an arrangement that suits the need of your organization and you would like Key to commence its due diligence process, please sign and return this proposal. The terms described in this proposal will expire in ten (10) business days if we have not received an authorized signed copy on or before such date. Key Government Finance Page 5 Confidential Thank you for allowing us the opportunity to present this Proposal. If you have any questions, please call me at 720-904-4037. Sincerely, Kristen M. Sundin, Vice President Key Government Finance, Inc. Mountain and Plains Regional Manager 1675 Broadway, Suite 400, Denver, CO 80202 Direct: 720.904.4037 Mobile: 720.219.6918 Kristen.Sundin@Key.com APPROVED THIS DAY OF ___________, 2020 City of Waukee, Iowa By: Print Name: Title: