HomeMy WebLinkAboutRES 16-041RESOLUTION NO. 16-041
BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF BEAUMONT-
THAT the City Manager be and he is hereby authorized to execute a five (5) year
Financing Agreement with Wells Fargo Bank with a fixed interest rate of 1.8% to finance
up to $5,955,496 for equipment and vehicle purchases for the Water Utilities
Department, Streets & Drainage Division and Solid Waste Division. The Agreement is
substantially in the form attached hereto as Exhibit "A" and made a part hereof for all
purposes.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 1st day of
March, 2016.
- Mfy r Becky Ames -
February 18, 2016
City of Beaumont, Texas
801 Main Street
Beaumont, Texas 77701
Summary of Proposed Terms and Conditions
ISSUER: City of Beaumont, Texas (the "City").
PURCHASER: Wells Fargo Bank, National Association (the "Bank").
CREDIT FACILITY: Approximately $5955,496 —Financing Agreement, Series 2016
(the "Agreement").
PURPOSE: Proceeds will be used to purchase various equipment and vehicles.
FINAL MATURITY: 5 years
PAYMENT: Monthly, Quarterly or Semi-annual payments of principal and
interest.
RATE: 1.80%
*All rates assume Tax-exempt, Non -Bank Qualified
status of the Agreement. Terms, conditions, and pricing
are subject to change z f closing occurs after der April 1, 2o16
or if it is determined that the Agreement is ineligible for
tax-exempt treatment.
Rates assume a o.25% discount attributed to the City for selecting
payments to be auto -debited by the Bank.
SECURITY: First lien pledge of the Net Revenues of the City's Solid Waste
Fund, within the limits prescribed by law.
PREPAYMENT: The Agreement may be prepaid in whole or in part, on any date at
par plus accrued interest.
CONDITIONS
PRECEDENT
TO CLOSING: Usual and customary for transactions of this nature including but
not limited to:
1) Final credit approval by Bank senior management.
2) Automatic draft of the principal and interest payments.
3) No material adverse change in the business, assets,
operations, condition (financial or otherwise) or prospects
of the City, nor in the facts and information regarding the
City as represented to date prior to Closing.
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EXHIBIT "A"
4) This borrowing is subject to the City being qualified as a
governmental entity or "political subdivision" within the
meaning of Section 103(a) of the Internal Revenue Code of
1986 as amended. The City agrees to cooperate with the
Bank in providing evidence as deemed necessary or
desirable by the Bank to substantiate the City's and this
transaction's tax-exempt status. It is assumed that the
transaction will be "non -bank -qualified".
5) Executed documentation satisfactory to the City's Bond
Counsel and the Bank.
6) Opinion of Bond Counsel to the City as to tax exemption
7) Other conditions deemed appropriate.
REPORTING
REQUIREMENTS: The City shall provide:
1. CPA audited financial statements within 18o days of fiscal year
end.
2. Annual budget provided by the earlier of (i) 3o days after
approval or (ii) 3o days prior to the beginning of the new fiscal
year.
BANK DOCUMENTS: Subject to the negotiation, execution and delivery of a Finance
Agreement, and other documents, which will contain conditions to
borrowings, representations and warranties, covenants, events of
default, and other provisions that are customary for similar
financings by the Bank, including without limitation those
indicated herein.
POSTING ON EMMA: To maintain transparency with its existing bondholders, the City
shall consider posting the documentation on the MSRB's EMMA
site following the closing of the transaction, provided that pricing
and certain other information contained therein, as directed by the
Bank, shall be redacted prior to such posting.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for transactions of this type, to include
without limitation: (i) no declaration of bankruptcy within the past
7 years; (ii) documents not violating laws or existing agreements
or requiring governmental, regulatory or other approvals; (iii) no
material litigation; (iv) compliance with other laws and
regulations; (v) no adverse agreements, existing defaults or non -
permitted liens; and (vi) financial statements true and correct.
FINANCIAL
COVENANTS: Debt Service Coverage ratio of 1.o to 1.o calculated on the Net
Revenues of the Solid Waste Fund
DEFAULT RATE: Prime Rate plus 4.00%.
TRANSFER PROVISIONS: While the Bank is purchasing the Agreement for its own account
without a current intention to transfer the Agreement, the Bank
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reserves the right in its sole discretion to assign, sell, pledge or
participate interests in the Agreement without the consent of the
City.
TAXABLE RATE: Upon a determination of taxability subsequent to the delivery of
the Agreement, the rate on the Agreement will automatically
adjust to a rate equal to the current rate on the Agreement
multiplied by a Tax -Exempt Factor currently estimated at 1.55•
The City shall also pay any other expenses incurred by the Bank as
a result of the determination of taxability.
LOAN TREATMENT: The Bank's purchase of the Agreement is conditioned on its ability
to treat the Agreement as a loan for accounting purposes. To
achieve this treatment, the following conditions must be met:
1. No rating can be assigned to the Agreement
2. The Agreement must be delivered in physical form
3. The physical Agreement must carry a legend referencing
the transfer restrictions
4. The Bank's ability to transfer is limited to certain
commercial bank Qualified Institutional Buyers
5. The Agreement must have minimum denominations of not
less than $250,000
6. No placement agent shall be involved in the financing or, if
the City requires the involvement of a placement agent, any
placement agreement shall be in form and substance
satisfactory to the Bank
FEES AND EXPENSES: Legal fees to prepare and review the documentation will be paid by
the Bank.
CONFIDENTIALITY: This document is confidential and proprietary and shall not be
disclosed.
Page 3 Wells Fargo Business Banking
This Summary of Indicative Terms and Conditions is not intended to be, and should not be
construed as a commitment to lend, nor should it be construed as an attempt to establish all of
the terms and conditions relating to the Credit Facility. It is intended only to be indicative of
certain terms and conditions around which credit approval may be sought, and once
approved, how the documents might be structured, and not to preclude negotiations within the
general scope of these terms and conditions. The documents containing final terms and
conditions will be subject to approval by the City and Wells Fargo.
Sincerely,
Monica Medina
Relationship Manager
Government Banking Group
Wells Fargo, Bank, N.A.
iogoo Research Blvd., 2nd Floor
Austin, TX 78759
ACKNOWLEDGMENT BY THE CITY OF BEAUMONT, TEXAS
The undersigned hereby confirms its interest in pursuing further discussion of the above
preliminary credit proposal.
City of Beaumont, Texas
By: (signature)
Name:
Title:
Date:
As these materials include information related to a bank -purchased bond transaction ("Direct Purchase"), please be
advised that Direct Purchase is a product offering of Wells Fargo Bank, N.A. or a subsidiary thereof ("Purchaser") as
purchaser / investor. Wells Fargo Securities will not participate in any manner in any Direct Purchase transaction between
you and Purchaser, and Wells Fargo employees involved with a Direct Purchase transaction are not acting on behalf of or
as representatives of Wells Fargo Securities. Information contained in this document regarding Direct Purchase is for
discussion purposes only in anticipation of engaging in arm's length commercial transactions with you in which Purchaser
would be acting solely as a principal to purchase securities from you or a conduit issuer, and not as a municipal advisor,
financial advisor or fiduciary to you or any other person or entity regardless of whether Purchaser or an affiliate has or is
currently acting as such on a separate transaction. Additionally, Purchaser, as purchaser / investor, has financial and other
interests that differ from your interests. In its capacity as purchaser / investor, Purchaser's sole role would be to purchase
securities from you (or the issuer in the case of a conduit transaction). Purchaser will not have any duty or liability to any
person or entity in connection with the information provided herein. The information provided is not intended to be and
should not be construed as "advice" within the meaning of Section 15B of the Securities Exchange Act of 1934•
Page 4 Wells Fargo Business Banking