A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE EXTENSION OF THE FINAL ADVANCE DATE UNDER THE LOAN IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $15,000,000 FROM RAYMOND JAMES CAPITAL FUNDING, INC.; AUTHORIZING THE EXECUTION AND DELIVERY OF A SECOND AMENDMENT TO LOAN AGREEMENT AND AN ALLONGE TO PROMISSORY NOTE IN CONNECTION WITH SUCH EXTENSION; AUTHORIZING OTHER ACTIONS IN CONNECTION WITH THE EXTENSION AND THE FINANCING PROGRAM; AND PROVIDING FOR AN EFFECTIVE DATE.

The City previously had a $37.5 million equipment lease line of credit with SunTrust which provided short term financing for the City’s equipment needs such as fleet vehicles.  Under the prior line of credit, which was in place from 2008 – 2015, the City made draws in an amount required for equipment under the capital budget.  When drawn, the amount would be amortized at a fixed interest rate based on a formula and was amortized as level principal and interest payments for a period of up to 10 years.  The City made 21 draws under this line totaling $37.4 million.  The outstanding amounts mature in 2021 – 2025. 

On June 6, 2018, the Mayor and City Commission adopted a resolution accepting the recommendation of the Finance and City wide Projects Committee from its May 18, 2018 meeting to authorize the issuance of an RFP through the City’s Financial Advisor, RBC Capital Markets (“Financial Advisor”), on behalf of the City, for an equipment line of credit in an amount not to exceed $15 million, with the selection of the lender and final terms for the Loan subject to approval of the Mayor and City Commission. 

On November 14, 2018, the City Commission approved a resolution, loan agreement and other related documents which authorized the City to execute the Loan with Raymond James Capital Funding, Inc. in an amount up to $15,000,000 to make draws for vehicles and equipment through September 30, 2021. 

The City regularly has equipment capital needs that it wishes to finance over a multi-year period.  An equipment line of credit provides a cost-effective and efficient financing mechanism for smaller, short-term loans.  The draws convert to a fixed rate loan based on a formula which reflects market conditions at the time of the draw.

The City has the legal authority to obtain a line of credit pursuant to the Constitution of the State of Florida, Chapter 166, Part II, Florida Statutes, as amended, and the Charter of the City (collectively, the “Act”), to borrow money to finance capital projects.

The Loan is secured by a covenant to budget and appropriate from legally available non-ad valorem revenues. In recommending the use of an equipment line of credit versus other financing options, the City’s CFO worked in conjunction with the City’s Financial Advisor, who concurred on the appropriateness and cost-effectiveness of this type of financing.  An equipment line of credit provides efficient access to funds for small and shorter-term financings to the extent that the equipment cannot be paid for with cash on hand. 

Pursuant to the City’s Professional Services Agreement with the City’s Financial Advisor dated April 24, 2017, the Financial Advisor conducted, on behalf of the City, an RFP process with banks and other lending institutions for the Loan.  On August 23, 2018, the Financial Advisor distributed an RFP for an Equipment Line of Credit or Equipment Master Lease on behalf of the City to over 40 financial institutions.  On September 6, 2018, the City received 6 proposals for an equipment line of credit or master lease from the following institutions:

  1)    Bank of America Public Capital Corp

2)    JP Morgan Chase Bank

3)    PNC Equipment Finance

4)    Raymond James

5)    SunTrust Equipment Finance & Leasing

6)    TD Equipment Finance

Based on the proposals received, the City determined that Raymond James had the most favorable combination of interest rate formula and documentation flexibility.  The resolution and loan agreement approved by the City Commission on November 14, 2018 authorized the City to borrow up to $15,000,000 for vehicles and equipment at fixed interest rates based on market conditions and the formula for the desired term at the time of draw with maturities of 5, 7 or 9 years through September 30, 2021.  The draws have level annual debt service for the selected term.

The City has drawn approximately $6.5 million on the Loan as of July 12, 2021 and has approximately $8.5 million undrawn.  Because the City anticipates additional capital needs and the Loan has a final advance date on September 30, 2021, the City would like to extend the Loan for another year.  The extended equipment LOC would expire on September 30, 2022, and would include a minimum floor of 0.75% for the U.S. Treasury Index utilized for the calculation of the interest rate on any draws.

The Administration requests that the Mayor and City Commission of the City of Miami Beach, Florida, adopt the Resolution related to the loan in an aggregate principal amount not to exceed $15,000,000 from Raymond James Capital Funding, Inc., to pay costs of vehicles and equipment, authorizing the execution and delivery of an amendment to the loan agreement extending the loan for an additional year and allonge to the promissory note which provides a minimum floor of 0.75% for the U.S. Treasury Index, authorizing other actions in connection with the loan and providing for an effective date.