Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Accepting And Ratifying Staff’s Recommendation For Bid No. IFB-4709-22-SS, A Bid For Fiscal Year 2022 Bank Loan; Accepting The Response Of Webster Bank, N.A. For Loans To Pay The Remaining Balance Of The Amount Stipulated In The Settlement Agreement Between The City And The Board Of Trustees Of The City Of Hollywood Employees’ Retirement Fund And To Finance The Acquisition Of Municipal Vehicles; Authorizing The Loans And The Related Issuance Of Electric Franchise Fee Revenue Note, Taxable Series 2022A And Electric Franchise Fee Revenue Note, Series 2022B, In The Aggregate Principal Amount Not To Exceed $10,000,000.00; Awarding The Notes; Approving Execution And Delivery Of A Loan Agreement And The Notes In Connection With Such Loans; Authorizing Proper Officers And Employees To Take All Actions Necessary In Connection With The Issuance Of The Notes.
Strategic Plan Focus
Financial Management & Administration
Body
Staff Recommends: Approval of the attached Resolution.
Explanation:
The City desired to obtain a bank loan for the purposes of: 1) paying the remaining balance of the amount stipulated in the settlement agreement between the City and the City of Hollywood Employees Retirement Fund, and 2) financing the acquisition of municipal vehicles.
Resolution No. R-2022-028, approved by the City Commission on January 19, 2022, authorized the City to seek loan proposals in an amount not to exceed $10,000,000.00. Bid No. IFB-4709-22-SS was issued on January 27, 2022 seeking proposals from qualified financial institutions willing to provide two loans, one in an amount not to exceed $8,500,000.00 for a three year taxable loan to repay the balance of the settlement agreement, and a second loan in an amount not to exceed $1,500,000.00 for a five year period to finance the acquisition of municipal vehicles.
The closing date of the bid was March 10, 2022.
The City received bids from ten financial institutions interested in providing one or both loans to the City, as follows:
Interest Rate
Name Three-Year Loan Five-Year Loan
BF Bank Funding 3.110% 2.610%
Key Government Finance 2.371% 2.300%
Pinnacle Public Finance 2.480% 2.000%
PNC* 2.045% 1.754%
Signature Public Funding no bid 2.171%
Synovus 3.550% 2.510%
TD Bank* 2.490% 2.340%
Truist 2.190% 2.090%
Webster Bank 2.030% 1.900%
Wells Fargo* 2.110% 2.180%
*Submitted an indicative rate, not fixed
Upon review of the submittals, Webster Bank, which submitted an interest rate of 2.030% for the Three-Year Loan and 1.900% for the Five-Year Loan, was determined to be the successful bidder. Webster Bank submitted the lowest fixed bid for both the Three-Year Loan and the Five-Year Loan. The bank met the other conditions of the bid such as prepayment and other terms. Staff believes these rates to be reasonable considering current market volatility and recommends award of the bank loan to Webster Bank. While PNC had a lower interest rate for the Five-Year Loan, they submitted an indicative rate, which means it is tied to an index or other baseline and is subject to change prior to award and closing. In addition, PNC required an award of both loans, and indicated it would not accept being awarded just one loan. Finally, there were other terms in their bid that the City found undesirable.
Fiscal Impact:
This bank loan will bring in funds to pay off the remaining balance of the settlement agreement with the City of Hollywood Employees Retirement Fund, in order to effectuate savings of approximately $569,750 over the remaining three-year period of the repayment term, and also to fund the acquisition of municipal vehicles.
Estimated debt service on the two loans will not exceed approximately $3,246,976 annually for the first three years, decreasing to an amount not to exceed approximately $314,162 for the remaining two years after the Three-Year Loan is paid in full. Only one quarterly payment will be due during fiscal year 2022, in the approximate amount of $810,227.16 or less for both loans combined. Sufficient funding has been appropriated in the Fiscal Year 2022 budget for this debt service payment and will be available in accounts to be determined by the Office of Budget and Performance Management and the Department of Financial Services in a forthcoming budget amendment.
Recommended for inclusion on the agenda by:
David E. Keller, Director, Financial Services Department
Adam Reichbach, Assistant City Manager for Finance and Administration