HomeMy Public PortalAbout19-9720 City National BankSponsored by: City Manager
RESOLUTION NO.19-9720
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF OPA-LOCKA, FLORIDA, SEEKING APPROVAL
OF THE LOAN PROPOSAL FROM CITY NATIONAL
BANK OF FLORIDA; AUTHORIZING THE CITY
MANAGER TO EXECUTE ALL DOCUMENTS
REQUIRED TO GIVE EFFECT TO THE PROPOSAL;
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, on May 29, 2015, the City National Bank of Florida ("Lender") made
loans (Collectively "Loan"); to the City of Opa-Locka ("City") comprised of a $3,494,000
Tax -Exempt Capital Improvement Revenue and Refunding Note, Series 2015A ("Series
A Note") and $5,106,000 Taxable Capital Improvement Revenue Note, Series 2015B
("Series B Note" and collectively with the Series A Note, "Notes"); and
WHEREAS, the Loan Notes were issued in accordance with Ordinance No. 15-06
enacted by the City Commission of the City on May 13, 2015 (the "Master Ordinance"),
Ordinance No. 15-07 enacted by the City Commission on May 13, 2015 (the "Series
Ordinance"), and the Notes Agreement, dated May 29, 2015, between Borrower and
Lender; and
WHEREAS, to guarantee compliance with the terms of the loan, the City secured
the Loan by special revenues derived by the City pursuant to the levy and collection of
the Communications Services Tax and the Public Service Tax (the "Pledged Revenues");
and
WHEREAS, the City deposited all Pledged Revenues into a Tax Revenues Fund
("The Fund") created under Section 401 of the Master Ordinance and held such funds in
trust for the benefit of Lender until the Notes are paid in full; and
WHEREAS, The Fund is not be used for any other purpose other than for the
benefit of the Lender and the Loan; and
WHEREAS, on July 20, 2016, Lender sent the City a Notice Letter that the City
was in default on the Loan; and
WHEREAS, on August 11, 2016, pursuant to the Loan terms, Lender sent the
City an Acceleration Letter declaring the entire principal of the Notes to be due and
payable immediately; and
Resolution No. 19-9720
WHEREAS, as of November 6, 2019, the balance of Excess Pledged Revenues
being held unused in the Tax Revenues Fund totaled Four Million Four Hundred
Seventy -Nine Thousand Three Hundred Eighty -Three Dollars and 11 / 100
($4,479,383.11); and
WHEREAS, to satisfy the terms of the loan, the City and Lender agree on terms for
the future use of funds from The Fund, which includes any additional funds deposited since
November 6, 2019; and propose release of fifty percent (50%) of the Excess Pledge Revenues to
the City and to utilize the other fifty percent (50%) to pay Lender toward one of the loans; and
WHEREAS, the City Commission desires to approve the aforementioned
proposal to accommodate the needs of the City while relieving the Lender of some of its
Loan exposure; and
WHEREAS, the City Commission finds that execution of said proposal by the
City Manager is in the best interests of the residents of the City.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF OPA-LOCKA, FLORIDA, AS FOLLOWS:
Section 1. Adoption of Representations. The foregoing "Whereas" clauses are
hereby ratified and confirmed as being true, and the same are hereby made a specific
part of this Resolution.
Section 2. Approval of Loan Proposal. The City Commission of the City of Opa-
Locka hereby approves the Loan Proposal issued by City National Bank of Florida
attached hereto as Exhibit A.
Section 3. Authorization of City Manager. The City Commission of the City of Opa-
Locka hereby authorizes the City Manager to execute all required documents to give
effect to the Loan Proposal.
Section 4. Effective Date. This Resolution shall be effective immediately upon its
adoption.
PASSED and ADOPTED this 1101 day of December, 2019.
Matthew A. Pigatt, Mayor
Resolution No. 19-9720
ATTEST:
Joa a Flores, City Clerk
APPROVED AS TO FORM AND
LEGAL SUFFICIENCY:
Burnadette Norris -Weeks, Esq.
City Attorney
Moved by: COMMISSIONER BASS
Seconded by: COMMISSIONER KELLEY
VOTE: 5-0
Commissioner Bass: YES
Commissioner Burke: YES
Commissioner Kelley: YES
Vice -Mayor Davis: YES
Mayor Pigatt : YES
WEISS SEROTA HELFMAN
COLE & BIERMAN
AT TFIE CROSSROADS OF BUSINESS, GOVERNMENT & THE LAW
November 6, 2019
FOR SETTLEMENT PURPOSES ONLY
John Pate, City Manager
City of Opa-Locka, Florida
780 Fisherman Street
Opa-Locka, Florida 33054
JEFFREY D. DECARLO
SHAREHOLDER
JDECARLOO WSH-LAW.COM
Re: City National Bank of Florida ("Lender") Loans to City of Opa-Locka, Florida
("Borrower") evidenced by $3,494,000 Tax -Exempt Capital Improvement Revenue
and Refunding Note, Series 2015A ("Series A Note") and $5,106,000 Taxable Capital
Improvement Revenue Note, Series 2015B ("Series B Note" and collectively with the
Series A Note, "Notes")
Dear Mr. Pate:
This letter is a follow-up to the meeting held on October 30, 2019 between the City Of
Opa-Locka (the "City" or "Borrower") and City National Bank of Florida (the "Lender"). The
meeting was attended by you, City Attorney Michelle Austin Paimes, Esq., Gerri Lazarre,
President of TriMerge Consulting Group, David Ritchey, Jr., Assistant Director, Miami -Dade
Water and Sewer Department, and, from the Lender, Juan Castro, Hugo Carreno, Jr. and Mario
Carballo, Esq. As a result of the meeting, the Lender has directed me to prepare a letter on its
behalf outlining the terms, discussed at the meeting, by which the Lender might consider releasing
to the City certain of the Pledged Revenues (defined below) for use in the general operations of
the City. I represent the Lender as outside counsel in connection with the existing defaults under
Notes.
BACKGROUND
On May 29, 2015, the Lender made the referenced loans (collectively, the "Loan") to the
City, which Loan is evidenced by the above -captioned Notes. The Notes were issued in accordance
with Ordinance No. 15-06 enacted by the City Commission of the City on May 13, 2015 (the
"Master Ordinance"), Ordinance No. 15-07 enacted by the City Commission on May 13, 2015 (the
"Series Ordinance"), and the Notes Agreement, dated May 29, 2015, between Borrower and
Lender (the "Notes Agreement" and collectively with the Master Ordinance, the Series Ordinance
and the Notes, the "Loan Documents"). The Notes are secured by the special revenues derived by
John Pate, City Manager
City of Opa-Locka, Florida
November 6, 2018
Page 2
the City pursuant to the levy and collection of the Communications Services Tax and the Public
Service Tax (the "Pledged Revenues").
On July 20, 2016, Lender (by and through its counsel) sent Borrower a letter (the "Notice
Letter") stating that Borrower was in default under several provisions of the Loan Documents,
including its becoming insolvent, its inability to pay its debts as they mature, and its request for
financial assistance from the State under Section 218.503, Florida Statutes. The Notice Letter
confirmed that any of these defaults give Lender the right to accelerate the Notes, at which point
the entire debt would become due and payable and all of the Pledged Revenues would be required
to be used to pay the Notes.
On August 11, 2016, Lender (by and through its counsel) sent Borrower a letter (the
"Acceleration Letter") declaring the entire principal of the Notes to be due and payable
immediately and, pursuant to the provisions of the Loan Documents, Borrower was required to
deposit all Pledged Revenues, as the same are collected, into the Tax Revenues Fund created under
Section 401 of the Master Ordinance, hold such funds in trust for the benefit of Lender until the
Notes are paid in full, and not be used for any other purpose. To date, the Borrower has been
complying with such provisions.
You have indicated that the City would like use a portion of the Excess Pledged Revenues
after payment of monthly debt service on the Loan ("Excess Pledged Revenues"). The amount of
Excess Pledged Revenues which are being held unused in the Tax Revenues Fund currently
amount to $4,479,383.11. That amount, plus all Excess Pledged Revenues that accumulate
between the date of this letter and the execution of the fmal documents that implement the terms
outlined in this letter (the "Closing"), are hereinafter referred to as the "Accumulated Pledged
Revenues".
The current outstanding balance of the Series A Note is $3,049,735.74. The current
outstanding balance of the Series B Note is $4,581,188.90.
PROPOSAL
Subject to the conditions stated below, the Lender proposes the following to accommodate
the needs of the City while relieving the Lender of some of its Loan exposure. The transfer of
funds outlined below will become effective as of the date of Closing.
1. The Accumulated Pledged Revenues will be applied first to reimburse the Bank for all legal
fees and costs incurred by the Lender for outside legal counsel to analyze the Loan
Documents and advise the Lender on protecting its legal position thereunder, both incurred
to date and those that will be incurred up to the date of Closing to facilitate and document
the terms outlined in this letter, all as expressly permitted under the terms of the Loan
Documents. The legal fees incurred to date are approximately $82,000.
2525 Ponce de Leon Blvd., Suite boo, Coral Gables, FL 33134 1305-854-0800 www.wsh-law.com
John Pate, City Manager
City of Opa-Locka, Florida
November 6, 2018
Page 3
2. The Accumulated Pledged Revenues will next be split evenly between the City and
Lender. Proceeds received by Lender will be applied to pay off a corresponding principal
amount of the Series A Note. Proceeds received by the City can be used by the City for its
own permitted purposes.
3. The monthly debt service amount currently being paid on both Notes will remain the same,
which will result in a faster amortization of the remaining Series A Note balance and the
Series B Note.
4. On and after the Closing, all monthly Excess Pledged Revenues can be used by the City
for its own permitted purposes. This will provide the City with an ongoing source of
general revenues in the future.
5. The release of monthly Excess Pledged Revenues described in (4) will be effective for the
period beginning on the date of Closing and ending on September 30, 2020. The Lender,
in its sole discretion, may agree to extend the release of monthly Excess Pledged Revenues
for additional one year periods thereafter.
The above is subject to the following conditions:
1. The approval of the City Council, the State Oversight Board and all other governmental
bodies whose approval is required for the restructuring shall have been obtained and remain
in full force and effect.
2. Written confirmation that the City Council, the State Oversight Board and all other
governmental bodies whose approval is required for the restructuring, agree that the Lender
is entitled under the provisions of the Loan Documents to apply the Accumulated Pledged
Revenues to reduce the Note indebtedness, and to demand that the monthly Excess Pledged
Revenues be held for the benefit of the Lender if the restructuring is not approved initially
or is not renewed in the future.
3. All documentation necessary to amend the Loan Documents to accomplish the
restructuring shall have been prepared and executed to the satisfaction of the Lender and
its counsel.
DISCLAIMERS
This letter supersedes my letter, dated January 9, 2019, concerning the same subject matter
and addressed to former City Attorney Vincent Brown.
Please be advised that the Lender reserves all of its rights and remedies under the Loan
Documents, and that nothing in this letter is intended, and should not be construed, to be a waiver
in any manner of any such rights or remedies, all of which are hereby expressly reserved. The
2525 Ponce de Leon Blvd., Suite boo, Coral Gables, FL 33134 1305-854-080o I www.wsh-law.com
John Pate, City Manager
City of Opa-Locka, Florida
November 6, 2018
Page 4
Notice Letter and the Acceleration Letter remain in full force and effect. This letter is solely for
the purpose of proposing steps toward a resolution of the existing defaults.
The foregoing is not a commitment to lend or to restructure the Notes, but rather an
expression of interest on behalf of the Lender. This proposal is furnished as a means of affording
the Borrower a guide to, and an outline of, the material terms and conditions of a potential
loan/restructuring and is not a commitment to lend or to restructure the Notes on behalf of the
Lender. As such, the terms and conditions outlined herein are subject to change in whole or in part
and are subject to approval by Lender.
Very truly yours,
Jeffrey DeCarlo
2525 Ponce de Leon Blvd., Suite 700, Coral Gables, FL 33134 1305-854-0800 I www.wsh-law.com