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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