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Agenda 01/23/2018 Item #11H01/23/2018 EXECUTIVE SUMMARY Recommendation to adopt a resolution authorizing the issuance of the Collier County Water-Sewer District Water and Sewer Revenue Bond, Series 2018 in an amount not to exceed $43,000,000 to fund the acquisition of the Golden Gate System from the Florida Governmental Utility Authority; accepting the proposal of STI Institutional & Government, Inc. to purchase such Series 2018 Bond; delegating certain authority to the Board Chairman and other appropriate officers of the County for the execution and delivery of the Series 2018 Bond and related documents; and authorize all necessary budget amendments. OBJECTIVE: Approve the issuance by the Collier County Water-Sewer District of its Water and Sewer Revenue Bond, Series 2018 (the "Series 2018 Bond") to STI Institutional & Government Inc. ("STI") pursuant to a private placement to fund the acquisition of the Golden Gate System from the Florida Governmental Utility Authority (FGUA). CONSIDERATIONS: At the November 14, 2017 meeting of the Board of County Commissioners (Board), item 9B, the Board held a public hearing that found the acquisition of the Golden Gate System by the Collier County Water-Sewer District (CCWSD) to be in the public interest. Included in the executive summary was the recommendation of the Finance Committee, which stated, in part: “The Finance Committee met on October 3, 2017 and recommended that the Series 2010, Series 2012 and Series 2015 Senior Lien Bonds of the Golden Gate System in the cumulative amount of $34,960,00 0 be refinanced and restructured to achieve the greatest net present value (NPV) savings to the CCWSD as opposed to simply assuming the debt…In addition, committee members recommend taking cash from the utility transfer and pay off one Sun Trust loan total ing $2,265, 100 and two State Revolving Fund (SRF) loans in the amount of $1,433,653”. To that end, the County’s financial advisor, PFM, issued a Request for Quote (RFQ) on November 15, 2017 to solicit responses from interested and qualified firms. Staff received four quotes before the December 6, 2017 2:00 PM deadline as summarized in PFM’s Plan of Finance Memo (Attached), which recommended the Sun Trust proposal as the most favorable in terms of cost and loan terms consistent with the CCWSD master resolution. The proposed rate and financing structure is estimated to produce an NPV savings of $3.4 million, or 9.49 percent of the refunded par amount. FINANCE COMMITTEE RECOMMENDATIONS: Members of the Finance Committee met on Thursday, December 14th to consider the four (4) private placement bank proposals as well as the recommended Plan of Finance provided by PFM Financial Advisors LLC, the County’s independent financial advisor. After deliberation, the Committee unanimously recommended that the Board accept the proposal of STI Institutional and Government, Inc. (Sun Trust) at a total all in interest rate of 2.41 percent, which will be locked until February 28, 2018. Committee members noted the substantial net present value savings of 9.49 percent, which is well above the debt management policy guideline of 5 percent and the overall positive net cash flow savings of $7.2 million. FISCAL IMPACT: The recommended Plan of Finance will produce a net positive cash flow to the CCWSD of $7,176,384 over the term of the loan. LEGAL CONSIDERATIONS: This item is approved as to form and legality, and requires majority vote for Board approval. -SRT GROWTH MANAGEMENT IMPACT: This project meets current Growth Management Plan 11.H Packet Pg. 129 01/23/2018 standards to ensure the adequacy and availability of viable public facilities. RECOMMENDATION: That the Board of County Commissioners, Ex-officio Governing Board of the Collier County Water-Sewer District, adopts a resolution authorizing the issuance of the Collier County Water-Sewer District Water and Sewer Revenue Bond, Series 2018 in an amount not to exceed $43,000,000 to fund the acquisition of the Golden Gate System from the Florida Governmental Utility Authority; accepts the proposal of STI Institutional & Government, Inc. to purch ase such Series 2018 Bond; delegates certain authority to the Board Chairman and other appropriate officers of the County for the execution and delivery of the Series 2018 Bond and related documents; and authorizes all necessary budget amendments. Prepared by: Joe Bellone, Director, Financial Operation Support Division ATTACHMENT(S) 1. Plan of Finance Memorandum (PDF) 2. Authorizing Resolution Final (PDF) 11.H Packet Pg. 130 01/23/2018 COLLIER COUNTY Board of County Commissioners Item Number: 11.H Doc ID: 4596 Item Summary: Recommendation to adopt a resolution authorizing the issuance of the Collier County Water-Sewer District Water and Sewer Revenue Bond, Series 2018 in an amount not to exceed $43,000,000 to fund the acquisition of the Golden Gate System from the Florida Governmental Utility Authority; accepting the proposal of STI Institutional & Government, Inc. to purchase such Series 2018 Bond; delegating certain authority to the Board Chairman and other appropriate officers of the County for the execution and delivery of the Series 2018 Bond and related documents; and authorize all necessary budget amendments. (Mark Isackson, Director, Corporate Financial and Management Services) Meeting Date: 01/23/2018 Prepared by: Title: – Public Utilities Department Name: Heather Bustos 01/17/2018 8:19 AM Submitted by: Title: Department Head - Public Utilities – Public Utilities Department Name: George Yilmaz 01/17/2018 8:19 AM Approved By: Review: Public Utilities Department Heather Bustos Level 1 Division Reviewer Completed 01/17/2018 8:26 AM Public Utilities Department George Yilmaz Level 2 Division Administrator Review Completed 01/17/2018 11:47 AM County Attorney's Office Scott Teach Level 2 Attorney Review Completed 01/17/2018 12:02 PM Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 01/17/2018 12:45 PM Budget and Management Office Mark Isackson Additional Reviewer Completed 01/17/2018 1:08 PM County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 01/17/2018 1:15 PM County Manager's Office Leo E. Ochs Level 4 County Manager Review Completed 01/17/2018 2:26 PM Board of County Commissioners MaryJo Brock Meeting Pending 01/23/2018 9:00 AM 11.H Packet Pg. 131 255 Alhambra Circle Suite 404 Coral Gables, FL 33134 305 448-6992 305 448-7131 fax www.pfm.com December 12, 2017 Memorandum To: Collier County, Florida From: PFM Financial Advisors LLC Re: Plan of Finance – Series 2018 Bond (Golden Gate Utility System Acquisition) The purpose of this memorandum is to provide the basis for the recommended plan of finance for acquisition of the Golden Gate Utility System (the “System”) by the Collier County Public Utilities (the “County”), and to summarize the proposals received for the County’s Request for Proposals for the Series 2018 Bond. PFM Financial Advisors LLC (PFM) is working alongside County officials and the financing team to assist the County in the acquisition of the System. One component of that acquisition is the refinancing of the System’s outstanding public debt under the umbrella of the County’s Water-Sewer District. In addition to the proposed refinancing, the County will also pay off the System’s privately-placed loans with existing cash on hand. In order to access the capital markets for this refinancing, PFM has determined that a privately-placed bond offering, as opposed to a public bond offering, would serve to implement the plan of finance in the most effective manner. This determination is based on the desire to expedite the refinancing in order to capture current market conditions as well as lock the rate as soon as possible, minimize the administrative requirements compared to a public offering, and reduce the costs of issuance compared to a public offering. PFM worked with the County to draft the Request for Quote (“RFQ”) for the Series 2018 Bond prior to its release on November 15th. PFM then emailed the RFQ to a broad pool of financing entities that we know to be active in the municipal space. The size of the loan (up to approximately $43 million) and average life (approximately 6.7 years) are generally consistent with parameters typically seen in bank bonds, and such parameters would attract interest from the bank lending community and yield the County with a favorable result. It should also be noted that proposers were not permitted to quote an amount that is less than the full par amount, since we would expect that most capable institutions would be able to finance the amount requested. On December 6th, four (4) quotes were submitted. A summary of the proposing firms, along with the key points from each proposal are included as an attachment to this memorandum. After review of the bank offers and discussion among the County’s finance team, STI Institutional & Government, Inc.’s (“SunTrust”) proposal was considered the most attractive. At first glance, the proposed interest rate is higher than a few of the other proposals. However, the proposals that provide a lower interest rate are also subject to adjustment based on the proposed lowering of the United States corporate tax rate, which at this point has become a near certainty. When those adjustments are considered, SunTrust provides the lowest rate. SunTrust also provides the ability to fix the rate for an additional six basis points, which will provide certainty to the County as they progress through the acquisition. Finally, the County’s legal team has reviewed the terms in the SunTrust proposal and, after clarifying a couple of minor items, is satisfied that they are consistent with the existing terms and covenants in the County’s prior bond resolution. Based on the quoted rate of 2.35%, plus the lock feature (locking the rate to February 28, 2018), the plan of finance is expected to produce net present value savings of 9.94%. The actual cash flow savings will materialize over a number of years, and include periods of dis-savings that are a result of shortening the final maturity on the GGUA’s debt obligations in order to be consistent with the existing term on the County’s own obligations. Overall the refinancing will produce a net positive cash flow to the County of $7.176 million. 11.H.a Packet Pg. 132 Attachment: Plan of Finance Memorandum (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 2018 Collier County W&S Financing December 12, 2017 Page 2 of 2 The schedule below shows the County’s expected annual debt service savings/dis-savings upon completing the 2018 financing: Date Prior Debt Service Refunding Debt Service Savings Present Value to 02/28/2018 @ 2.4102617% 07/01/2018 1,796,581 2,084,573 (287,991) (285,643) 07/01/2019 2,520,363 3,402,307 (881,945) (851,198) 07/01/2020 2,519,863 3,402,539 (882,677) (831,715) 07/01/2021 2,516,563 3,401,325 (884,763) (813,739) 07/01/2022 2,524,163 3,408,665 (884,503) (794,158) 07/01/2023 2,522,163 4,569,318 (2,047,156) (1,798,331) 07/01/2024 2,522,163 4,570,449 (2,048,286) (1,756,579) 07/01/2025 2,518,913 4,569,290 (2,050,377) (1,716,607) 07/01/2026 2,521,013 4,565,841 (2,044,829) (1,671,151) 07/01/2027 2,521,763 4,570,103 (2,048,341) (1,634,124) 07/01/2028 2,521,163 4,571,835 (2,050,672) (1,596,987) 07/01/2029 2,522,256 3,231,036 (708,779) (536,316) 07/01/2030 2,766,788 2,766,788 2,062,384 07/01/2031 2,764,713 2,764,713 2,011,781 07/01/2032 2,768,225 2,768,225 1,966,361 07/01/2033 2,766,225 2,766,225 1,918,000 07/01/2034 2,771,325 2,771,325 1,875,736 07/01/2035 2,765,325 2,765,325 1,826,929 07/01/2036 1,477,325 1,477,325 953,333 07/01/2037 1,480,175 1,480,175 932,322 07/01/2038 1,479,450 1,479,450 909,561 07/01/2039 1,480,150 1,480,150 888,198 07/01/2040 1,477,000 1,477,000 865,068 Total 53,523,663 46,347,279 7,176,384 1,923,127 The current timeline calls for board approval on January 23rd, with a closing on February 28th. This would ensure that funds are ready and available for the acquisition event, which is set to occur March 1st. SunTrust will hold their fixed rate for 90 days, which fits well within the timeframe described here. Please feel free to contact us should you have any questions or comments prior to the Commission meeting to approve the transaction. 11.H.a Packet Pg. 133 Attachment: Plan of Finance Memorandum (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) Collier County, FL Bank Loan RFP Summary Proposal Requirements BAML JP Morgan SunTrust TD Bank Contact Information Holly Kuhlman, Senior Vice President 9128 Strada Place, Suite 10110 Naples, FL 34103 (239) 598-8805 holly.kuhlman@baml.com Ralph Hildevert, Relationship Executive 1450 Brickell Avenue, Floor 33 Miami, FL 33131 (305) 579-9320 ralph.hildevert@jpmorgan.com Joshua A. McCoy, Senior Vice President & Market President 1777 Main Street Sarasota, FL 34236 Delle Joseph, CPA, Senior Relationship Manager FL Middle Market - Muni Lending 375 5th Avenue S Naples, FL 34102 (305) 441-5692 delle.joseph@td.com Not to Exceed Par Amount $43,000,000 $43,000,000 $43,000,000 $43,000,000 Final Maturity 7/1/2029 7/1/2029 7/1/2029 7/1/2029 Tax-Exempt Interest Rate Indicative: 2.41%Option 1: Indicative: 2.48% Option 2: Indicative: 2.58%Indicative: 2.35%Indicative: 2.28% Interest Rate Formula 81 month interest rate swap for a fixed rate for a swap with 3 month LIBOR plus an 18 bps credit spread Not Provided N/A 69.25% of the 10 year USD 1100 ICE Swap Rate + 62 bps Rate Locked to Closing, or Date to be set Actual rate will be set 2 business days prior to closing. Above pricing formula is valid if loan is closed on or before February 28, 2018 The Bank will consider allowing for the interest rate to be locked via a rate lock agreement Rates are subject to change daily until a written rate lock agreement is executed Rate may be locked for 90 days at a rate increase of 6 bps Bank will re-calc and hold the rate until closing for up to 90 days from the date that District formally requests Bank to hold and lock in the Loan Rate Interest Rate Adjustments Upon the determination of taxability as a result of action or inaction of the District the interest rate will be the product of the tax-exempt rate and a current taxable rate factor of 1.54. Determination of taxability does not include changes to the Internal Revenue Code 1) Gross-Up for determination of taxability as a result of action or inaction of the District 2) Interest rate subject to increase in the event of decrease in Max. Fed. Corp. Tax Rate (Removal of 'Change in Tax Rate' provision can be achieved with Indicative Fixed Rate being multiplied by 1.23) "Yield Maintenance" Provision included Documents for the 2017 Bonds will include determination of taxability language should the IRS, or a court of competent jurisdiction, deem the Loan to be a taxable facility In the event of change in Corporate Tax Rates, the Bank reserves the right to charge the District a premium up to 23 bps (if Corp. Tax Rate = 25%) or up to 37 bps (if Corp. Tax Rate = 20%) Prepayment Options Prepayments are permitted at any time with three business days' prior notice. All prepayments will be subject to a prepayment penalty (breakage fee). Option 1: Non-Callable Option 2: Callable 7/1/2023 Option 1: Make Whole Call Option 2: No prepayment penalty with additional 14 bps added to interest rate Option 1: Yield Maintenance Fee applied as prepayment penalty Option 2: District can elect to have a no prepayment penalty by adding 19 bps to the Loan Rate Legal/Other Fees $10,000 $7,500 $7,500 $10,000 Other Conditions & Notes 1) District shall comply with Rate Covenant as defined in the Resolution and all other Financial Covenants 2) Must provide audited financial statements within 270 days after the close of each fiscal year and any additional information reasonably requested 3) Payment that is more than 15 days late, Bank may impose a late fee equal to 4% of the amount of late payment 4) No material adverse change 5) Subject to final credit approval 6) Term sheet expires 15 days from date proposed 1) The finalization of the amortization schedule would be precedent to the Purchaser's acceptance of a written rate lock agreement. 2) Base Rate: there higher of a) Bank's Prime Rate b) 2.50% plus one month adjusted Libor 3) Default Rate: Base Rate + 4.00% 4) Rate Covenant: 1.25x Annual DS; and Net Revenues in each FY must also be sufficient to pay at least 100% of Annual DS on all o/s Bonds 5) Additional Bonds Test of Net Revenues; Spec. Assessment Proceeds and System Dev. Fees of at least 1.25x and Net Revenues equal to at least 1.00x 6) The District is required to submit in electronic format acceptable to the purchaser a) Receipt of CAFR within 210 days of the fiscal year end b) additional information as requested from the Bank 1) District agrees to execute an agreement authorizing Lender to debit a deposit account maintained by Borrower or SunTrust Bank or bank of its choice approved by Lender for all amounts due under the loan 2) DSRF account required. Deposit equal to a sum equal to the lesser of 1) MADS, or 2) 125% of avg. annual DS for all o/s Bonds 3) Rate Covenant: Net Revenues equal to at least 1.00x MADS and Pledged Revenues equal to at least 1.25x MADS 4) Additional Bonds Test: of Net Revenues must equal at least 1.00x MADS and Pledged Revenues must equal 1.25x MADS 1) Late Charge: if payment is more than 15 days overdue, a late charge of 6% of the overdue payment will be applied 2) Default Rate: 8% in excess of the Bank's Prime Rate of interest charged at the time of the event of default or the maximum loan rate allowed under the Law 3) Provide audited financial statements within 210 of fiscal year end and annual budget provided within 30 days after its adoption 4) Rate Covenant: Net Revenues equal to at least 1.00x MADS and Pledged Revenues equal to at least 1.25x MADS 5) Additional Bonds Test: of Net Revenues must equal at least 1.00x MADS and Pledged Revenues must equal 1.25x MADS 6) No Material Adverse Change 7) Debt service payments via auto debit Water-Sewer District Water and Sewer Revenue Bond, Series 2018 11.H.a Packet Pg. 134 Attachment: Plan of Finance Memorandum (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) RESOLUTION 2018-___/CWS RESOLUTION 2018-__ A RESOLUTION SUPPLEMENTING RESOLUTION NO. CWS-85-13 IN CERTAIN RESPECTS, WHICH RESOLUTION NO. CWS-85-13, AMONG OTHER THINGS, RESTATED RESOLUTION NO. CWS-85-5 IN ITS ENTIRETY AND AUTHORIZED THE ISSUANCE BY THE COLLIER COUNTY WATER-SEWER DISTRICT OF WATER AND SEWER REVENUE BONDS FROM TIME TO TIME; AUTHORIZING THE ISSUANCE OF NOT EXCEEDING $43,000,000 AGGREGATE PRINCIPAL AMOUNT OF A COLLIER COUNTY WATER-SEWER DISTRICT WATER AND SEWER REVENUE BOND, SERIES 2018 IN ORDER TO FINANCE THE ACQUISITION OF CERTAIN WATER AND WASTEWATER UTILITY FACILITIES WITHIN THE GOLDEN GATE COMMUNITY; AUTHORIZING A NEGOTIATED SALE OF SAID BOND PURSUANT TO THE PROPOSAL OF STI INSTITUTIONAL & GOVERNMENT, INC.; DELEGATING CERTAIN AUTHORITY TO THE CHAIRMAN IN CONNECTION WITH THE APPROVAL OF THE TERMS AND DETAILS OF SAID BOND; APPOINTING THE CLERK AS PAYING AGENT AND REGISTRAR FOR SAID BOND; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA, ACTING AS THE EX-OFFICIO GOVERNING BOARD OF THE COLLIER COUNTY WATER-SEWER DISTRICT: SECTION 1. FINDINGS. It is hereby found and determined that: (A) On July 30, 1985, the Board of County Commissioners of Collier County, Florida (the "County"), acting as the ex-officio governing board (the "Governing Body") of the Collier County Water-Sewer District (the "Issuer") duly adopted Resolution No. CWS-85-5, as amended and restated by Resolution No. CWS-85-13 duly adopted on December 26, 1985, as amended and supplemented (collectively, the "Resolution"), for the purposes described therein. (B) On November 14, 2017, the Governing Body adopted Resolution No. 2017- 222, authorizing and directing the acquisition of certain water and wastewater utility system facilities and property currently owned by the Florida Governmental Utility Authority (the "FGUA") and located in the Golden Gate community of the County (the 11.H.b Packet Pg. 135 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 2 "Golden Gate System"), all as more particularly described in the Utility System Transition Agreement, dated as of November 14, 2017, between the Issuer and the FGUA (the "Transition Agreement"). (C) The Resolution allows for the issuance of Additional Bonds, payable on a parity with Bonds Outstanding (as such terms are defined in the Resolution) under the Resolution (the "Outstanding Parity Bonds"), for the purpose of financing improvements and additions to the System (as defined in the Resolution) upon meeting certain requirements set forth in the Resolution. (D) The Issuer deems it to be in its best interest to issue its Collier County Water-Sewer District Water and Sewer Revenue Bond, Series 2018 (the "Series 2018 Bond") as an Additional Bond pursuant to the Resolution for the principal purpose of financing the acquisition of the Golden Gate System which shall become part of the System upon its acquisition, which Series 2018 Bond shall be issued on parity in all respects with the Outstanding Parity Bonds pursuant to the terms of the Resolution. (E) PFM Financial Advisors LLC, financial advisor to the Issuer (the "Financial Advisor"), solicited proposals from various financial institutions to purchase the Series 2018 Bond from the Issuer to provide proceeds sufficient to acquire the Golden Gate System, fund the Reserve Account (as defined in the Resolution) in accordance with the Resolution and pay for costs of issuance related to the issuance of the Series 2018 Bond. (F) STI Institutional & Government, Inc. (including any successors and assigns, the "Purchaser") submitted its proposal to purchase the Series 2018 Bond (the "Proposal") in order to provide for the acquisition of the Golden Gate System, which Proposal was the most favorable proposal received by the Issuer and is attached hereto as Exhibit A. (G) Due to the potential volatility of the market for tax-exempt obligations such as the Series 2018 Bond and the complexity of the transactions relating to such Series 2018 Bond, it is in the best interest of the Issuer to sell the Series 2018 Bond by a negotiated sale to the Purchaser pursuant to the Proposal and the provisions hereof and of the Resolution, rather than at a specified advertised date, thereby permitting the Issuer to obtain the best possible price, terms and interest rate for the Series 2018 Bond. (H) The Issuer hereby certifies that it is current in all deposits into the various funds and accounts established by the Resolution and all payments theretofore required to have been deposited or made by the Issuer under the provisions of the Resolution have been deposited or made and the Issuer has complied with the covenants and agreements of the Resolution and is not currently in default under the Resolution. (I) The Resolution provides that the Series 2018 Bond shall mature on such dates and in such amounts, shall bear such rates of interest, shall be payable in such 11.H.b Packet Pg. 136 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 3 places and shall be subject to such redemption provisions as shall be determined by Supplemental Resolution (as defined in the Resolution) adopted by the Issuer; and it is now appropriate that the Issuer determine certain of such provisions, terms and details and establish the mechanisms for determining the remaining provisions, terms and details. (J) The Series 2018 Bond shall not be or constitute a general obligation or indebtedness of the Issuer as a "bond" within the meaning of any constitutional or statutory provision but shall be a special obligation of the Issuer, payable solely from and secured by a lien upon and pledge of the Pledged Funds (as defined in the Resolution), in the manner and to the extent provided in the Resolution. (K) The covenants, pledges and conditions in the Resolution shall be applicable to the Series 2018 Bond herein authorized and said Series 2018 Bond shall be on a parity with and rank equally as to the lien on and source and security for payment from the Pledged Funds and in all other respects with the Outstanding Parity Bonds, and shall constitute a "Bond" within the meaning of the Resolution. SECTION 2. DEFINITIONS. When used in this Supplemental Resolution, the terms defined in the Resolution shall have the meanings therein stated, except as such definitions shall be hereinafter amended and defined. SECTION 3. AUTHORITY FOR THIS SUPPLEMENTAL RESOLUTION. This Supplemental Resolution is adopted pursuant to the provisions of the Act. SECTION 4. AUTHORIZATION OF THE ACQUISITION OF THE GOLDEN GATE SYSTEM; ACCEPTANCE OF PROPOSAL. (A) The Issuer hereby authorizes the acquisition of the Golden Gate System and the financing thereof with proceeds of the Series 2018 Bond. (B) The Issuer hereby accepts the Proposal of the Purchaser to purchase the Series 2018 Bond to finance the Issuer's acquisition of the Golden Gate Syste m. The Chairman of the Governing Body is hereby authorized to execute and deliver any documents required to formally accept the Proposal and the terms thereof. All actions taken by officers of the Issuer and the County, the Financial Advisor and Bond Counsel with respect to the Proposal prior to the date hereof are hereby authorized and ratified. To the extent of any conflict between the provisions of the Resolution and the Proposal, the provisions of the Resolution, as supplemented by this Supplemental Resolution, shall prevail. SECTION 5. AUTHORIZATION AND DESCRIPTION OF THE SERIES 2018 BOND. The Issuer hereby authorizes the issuance of a Series of Bonds in the principal amount of not exceeding $43,000,000 to be known as the "Collier County Water-Sewer District Water and Sewer Revenue Bond, Series 2018" (or such other 11.H.b Packet Pg. 137 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 4 designation as the Chairman may determine), for the principal purpose of financing the acquisition of the Golden Gate System. The specific principal amount of the Series 2018 Bond to be issued pursuant to the Resolution shall be determined by the Chairman, upon the advice of the Issuer's Financial Advisor, provided such principal amount does not exceed $43,000,000. The Series 2018 Bond shall be on parity in all respects and shall rank equally as to lien on and source and security for payment from the Pledged Funds with the Outstanding Parity Bonds. The Series 2018 Bond shall be dated as of its date of issuance, or such other date as the Chairman may determine, shall be issued in the form of one fully registered Bond in the denomination of its outstanding principal amount and shall be numbered "R-1." The Series 2018 Bond shall bear interest from its dated date at a fixed interest rate of 2.41% per annum (the "Interest Rate"). The Interest Rate is subject to adjustment as provided in Sections 9 and 10 hereof. The Interest Rate shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest on the Series 2018 Bond shall be payable semi-annually, on January 1 and July 1 of each year (the "Interest Payment Dates"), commencing on July 1, 2018. The Series 2018 Bond shall be issued as a single Term Bond with a final maturity of July 1, 2029 and shall be subject to mandatory sinking fund redemption in such Sinking Fund Installments commencing on July 1, 2018 and on each July 1 thereafter through the maturity date of the Series 2018 Bond, determined by the Chairman, upon the advice of the Issuer's Financial Advisor, and approved by the Purchaser prior to the issuance of the Series 2018 Bond. The Series 2018 Bond shall be sold on a negotiated basis to the Purchaser at a purchase price equal to 100% of the aggregate principal amount thereof. The Purchaser shall provide the Issuer with an executed Disclosure Letter and Truth-in-Bonding Statement as required by Section 218.385, Florida Statutes, prior to the issuance of the Series 2018 Bond. The Interest Rate on the Series 2018 Bond shall comply in all respects with Section 215.84, Florida Statutes. For purposes of the Resolution, "Bond Year" shall mean the period commencing on July 1 of each year and continuing through the next succeeding June 30. The Series 2018 Bond shall be payable as to principal and interest by, at the sole option of the Issuer, bank wire transfer or direct debit of a deposit account of the Issuer or in such other manner as is agreed to between the Issuer and the holder of the Series 2018 Bond in whose name the Series 2018 Bond shall be registered on the registration books maintained by the Issuer as of the close of business on the fifteenth day (whether or not a Business Day, as defined below) of the calendar month next preceding an Interest Payment Date; provided, that the registered owner of the Series 2018 Bond shall present and surrender the Series 2018 Bond to the Issuer for the final payment of the principal of the Series 2018 Bond or otherwise shall provide evidence that such Series 2018 Bond have been cancelled. Principal of and interest on the Series 2018 Bond shall be payable in any coin or currency of the United States of America, which at the time of payment, are legal tender for the payment of public and private debts. The Series 2018 Bond shall be substantially in the form set forth in Section 2.10 of the Resolution, with such changes, 11.H.b Packet Pg. 138 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 5 amendments, modifications, omissions and additions as may be approved by the Chairman. Execution of the Series 2018 Bond by the Chairman shall be conclusive evidence of approval of any such changes. For purposes of this Supplemental Resolution, "Business Day" shall mean any day other than a Saturday, Sunday or day on which banking institutions within the State of Florida are authorized or required by law to remain closed. SECTION 6. REDEMPTION PROVISIONS. (A) The Series 2018 Bond may be redeemed in whole or in part on any Business Day subject to the terms hereof and of the Resolution and upon at least two Business Days' prior written notice to the Purchaser specifying the amount of redemption. The Issuer shall, at the time of any redemption, whether optional or at any other time the Series 2018 Bond is paid earlier than its scheduled maturity or scheduled Sinking Fund Installment, pay to the Purchaser the interest accrued to the date of redemption on the principal amount being redeemed plus an additional fee or redemption premium equal to the present value of the difference between (i) the amount that would have been realized by the Purchaser on the redemption amount for the remaining term of the Series 2018 Bond at the ICE Benchmark Administration ("IBA") rate for fixed-rate payers in U.S. Dollar interest rate swaps for a term corresponding to the term of the Series 2018 Bond, interpolated to the nearest month, if necessary, that was in effect three Business Days prior to the issuance date of the Series 2018 Bond, and (ii) the amount that would be realized by the Purchaser by reinvesting such redeemed funds for the remaining term of the Series 2018 Bond at the IBA Index for rates for fixed-rate payers in U.S. Dollar interest rate swaps, interpolated to the nearest month, that was in effect three Business Days prior to the redemption date; both discounted at the same interest rate utilized in deter mining the applicable amount in (ii). Should the present value have no value or a negative value, the Issuer may redeem the Series 2018 Bond or portion thereof with no additional fee or redemption premium. Should the IBA no longer release rates for fixed-rate payers in U. S. Dollar interest rate swaps, the Purchaser may substitute the IBA Index for rates for fixed-payers in U.S. Dollar interest rate swaps with another similar index as determined by SunTrust Bank (or affiliate thereof). The Purchaser shall provide the Issuer with a written statement explaining the calculation of the premium due, which statement shall, in absence of manifest error, be conclusive and binding. The application of such fee or prepayment premium is not intended to, and shall not be deemed to be, an increase in the Interest Rate. Principal redemptions shall be applied to the Series 2018 Bond in inverse order of the remaining maturities, treating mandatory Sinking Fund Installments as maturities. (B) Notwithstanding any other provision of the Resolution, the Issuer shall not be required to provide the Purchaser with any notice with respect to the payment of any scheduled Sinking Fund Installment. (C) No presentment or delivery shall be required for prepayment or principal installment payments on the Series 2018 Bond. 11.H.b Packet Pg. 139 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 6 SECTION 7. APPLICATION OF SERIES 2018 BOND PROCEEDS. The proceeds derived from the sale of the Series 2018 Bond shall be applied by the Issuer simultaneously with the delivery thereof as follows: (A) A sufficient amount of Series 2018 Bond proceeds shall be distributed to FGUA, or its designee, to pay the acquisition price for the Golden Gate System as described in and required by the Transition Agreement. (B) A sufficient amount of the Series 2018 Bond proceeds, if any, shall be deposited to the Reserve Account to cause the amount on deposit therein to equal the Reserve Account Requirement for all Outstanding Parity Bonds, including the Series 2018 Bond. (C) A sufficient amount of the Series 2018 Bond proceeds shall be applied to the payment of costs and expenses relating to the issuance of the Series 2018 Bond. SECTION 8. APPOINTMENT OF PAYING AGENT AND REGISTRAR. The Clerk is hereby designated Registrar and Paying Agent for the Series 2018 Bond. SECTION 9. DETERMINATION OF TAXABILITY. (A) Upon the occurrence of a Determination of Taxability (as defined below) and for as long as the Series 2018 Bond remains Outstanding, the Interest Rate on the Series 2018 Bond shall be converted to the Taxable Rate (as defined below) and this adjustment shall survive payment on the Series 2018 Bond until such time as the federal statute of limitations under which the interest on the Series 2018 Bond could be declared taxable under the Code shall have expired. In addition, upon a Determination of Taxability, the Issuer shall, immediately upon demand, pay to the Purchaser (i) an additional amount equal to the difference between (a) the amount of interest actually paid on the Series 2018 Bond during the Taxable Period (as defined below) and (b) the amount of interest that would have been paid during the Taxable Period had the Series 2018 Bond borne interest at the Taxable Rate, and (ii) an amount equal to any interest, penalties on overdue interest and additions to tax (as referred to in Subchapter A of Chapter 68 of the Code) owed by the Purchaser as a result of the Determination of Taxability. (B) For purposes of this Section 9, the following terms shall have the definitions ascribed thereto: "Determination of Taxability" means a final decree or judgment of any Federal court or a final action of the Internal Revenue Service determining that, due to any action or inaction of the Issuer or the County, interest paid or payable on all or a portion of the Series 2018 Bond is or was includable in the gross income of the Purchaser for Federal income tax purposes; provided, that no such decree, judgment, or action will be considered final for this purpose, however, unless the Issuer has been given written notice and, if it is so desired and is legally allowed, has been afforded the opportunity to contest 11.H.b Packet Pg. 140 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 7 the same, either directly or in the name of the Purchaser, and until the conclusion of any appellate review, if sought. A Determination of Taxability shall not include and is n ot triggered by a change in law by Congress that causes the interest to be includable in the Purchaser's gross income. "Taxable Period" shall mean the period of time between (i) the date that interest on the Series 2018 Bond is deemed to be includable in the gross income of the Purchaser for federal income tax purposes as a result of a Determination of Taxability, and (ii) the date of the Determination of Taxability and after which the Series 2018 Bond bears interest at the Taxable Rate. "Taxable Rate" shall mean the interest rate per annum that shall provide the Purchaser with the same after tax yield that the Purchaser would have otherwise received had the Determination of Taxability not occurred, taking into account the incr eased taxable income of the Purchaser as a result of such Determination of Taxability. The Purchaser shall provide the Issuer with a written statement explaining the calculation of the Taxable Rate, which statement shall, in the absence of manifest error, be conclusive and binding on the Issuer. SECTION 10. DEFAULT. After the occurrence of an Event of Default under Section 7.01 of the Resolution or a material breach or default of any covenant, warranty or agreement herein, notwithstanding any other terms hereof or of the Resolution, the Series 2018 Bond shall bear interest at the Default Rate (as defined below) until such Event of Default or such material breach or default of convenant, warranty or agreement is cured. Within 5 days of its actual knowledge, the Issuer shall notify the Purchaser of the occurrence of any Event of Default or a material breach or default of any covenant, warranty or agreement herein. For purposes of this Section 12, "Default Rate" means the lesser of (i) the Prime Rate (defined below) plus eight percent (8.00%) per annum, and (ii) the maximum lawful rate. "Prime Rate" means the per annum rate which the Purchaser's affiliate SunTrust Bank announces from time to time to be its prime rate, as in effect from time to time. The prime rate is a reference or benchmark rate, is purely discretionary and does not necessarily represent the lowest or best rate charged to borrowing customers. The Purchaser's affiliate SunTrust Bank may make commercial loans or other loans at rates of interest at, above or below the prime rate. Each change in the prime rate shall be effective from and including the date such change is announced as being effective. If the Issuer grants any holder of a Bond acceleration rights, it shall also provide such rights to the Purchaser with respect to the Series 2018 Bond. SECTION 11. REPORTING FINANCIAL INFORMATION. A copy of the audited financial statements for each Fiscal Year shall be provided to the Purchaser 11.H.b Packet Pg. 141 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 8 within 270 days after the end of each Fiscal Year. A copy of the annual budget for each Fiscal Year will be provided to the Purchaser within 30 days of final approval by the Governing Body. The Issuer shall also provide the Purchaser with any other information, reports or schedules (financial or otherwise) in form satisfactory to the Purchaser as may be reasonably requested by the Purchaser. SECTION 12. TRANSFER. The Purchaser may sell, transfer or assign the Series 2018 Bond in whole only in accordance with the provisions of Section 2.08 of the Resolution to an "accredited investor" under Regulation D promulgated under the Securities Act of 1933, as amended, or a "qualified institutional buyer" under Rule 144A promulgated under the Securities Act of 1933, as amended; provided, however, the Purchaser of the Series 2018 Bond may transfer the Series 2018 Bond to an affiliate of the Purchaser without restriction. The Purchaser shall notify the Issuer and the Clerk of any sale, transfer or assignment of the Series 2018 Bond. Notwithstanding the foregoing, the Purchaser may sell participations in the Series 2018 Bond to any number of Participants as long as the Purchaser complies with all applicable securities laws. SECTION 13. WAIVER OF JURY TRIAL; APPLICABLE LAW AND JURISDICTION. (A) To the extent permitted by applicable law, the Issuer, knowingly, voluntarily and intentionally waives any right it may have to a trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Supplemental Resolution, the Resolution, the Series 2018 Bond or any agreement contemplated to be executed in connection with this Supplemental Resolution or the Resolution, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of the Issuer or the Purchaser. (B) The substantive laws of the State of Florida shall govern this Supplemental Resolution, the Resolution, the Series 2018 Bond or any agreement contemplated to be executed in connection therewith. The Issuer submits to the jurisdiction of Florida courts and federal courts and agrees that venue for any suit concerning this Supplemental Resolution or the Resolution or the Series 2018 Bond shall be in Collier County, Florida and the Middle District of Florida. SECTION 14. GENERAL AUTHORITY. The members of the Governing Body of the Issuer, the County Manager, the Clerk and the officers, attorneys and other agents or employees of the Issuer are hereby authorized to do all acts and things required of them by this Supplemental Resolution or the Resolution, or desirable or consistent with the requirements hereof or of the Resolution for the full punctual and complete performance of all the terms, covenants and agreements contained herein or in the Series 2018 Bond and the Resolution, and each member, employee, attorney and officer of the Issuer and the Clerk is hereby authorized and directed to execute and deliver any and all papers and instruments and to be and cause to be done any and all acts and things 11.H.b Packet Pg. 142 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 9 necessary or proper for carrying out the transactions contemplated hereunder. In the event the Chairman is absent or unavailable to perform any function or duty hereunder the Vice-Chairman is hereby authorized to perform any and all of such functions or duties. Bond Counsel and the Issuer's Financial Advisor are hereby authorized and directed to take all action necessary and desirable to carryout the intent and purposes of this Supplemental Resolution and the Resolution. SECTION 15. MODIFICATION OR AMENDMENT OF THIS SUPPLEMENTAL RESOLUTION. No modification or amendment of this Supplemental Resolution or of any resolution amendatory thereof or supplemental thereto may be made without the consent in writing of the Purchaser. No modification or amendment of Section 5.04 or Section 6.02 of the Resolution may be made without the consent in writing of the Purchaser. SECTION 16. SEVERABILITY AND INVALID PROVISIONS. If any one or more of the covenants, agreements or provisions herein contained shall be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements or provisions and shall in no way affect the validity of any of the other provisions hereof or of the Series 2018 Bond. SECTION 17. NO ADVISORY OR FIDUCIARY RELATIONSHIP. In connection with all aspects of each transaction contemplated hereunder (including in connection with any amendment, waiver or other modification hereof or of any other documents related hereto), the Issuer acknowledges and agrees, that: (A) (i) it has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, (ii) it is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and any other related loan documents, (iii) the Purchaser is not acting as a municipal advisor or financial advisor to the Issuer and (v) the Purchaser has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act to the Issuer with respect to the transactions contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Purchaser has provided other services or is currently providing other services to the Issuer on other matters); (B) (i) the Purchaser is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary, for the Issuer, or any other person and (ii) the Purchaser has no obligation to the Issuer, with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in any other related loan documents; and (C) the Purchaser may be engaged in a broad range of transactions that involve interests that differ from those of the Issuer, and the Purchaser has no obligation to disclose any of such interests to the Issuer. If the Issuer would like a municipal advisor in this transaction that has legal fiduciary duties to t he 11.H.b Packet Pg. 143 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) 10 Issuer, the Issuer is free to engage a municipal advisor to serve in that capacity. The transactions contemplated herein and the Series 2018 Bond is delivered, pursuant to and in reliance upon the bank exemption and/or the institutional buyer exemption provided under the municipal advisor rules of the Securities and Exchange Commission, Rule 15Ba1-1 et seq, to the extent that such rules apply to the transactions contemplated hereunder. SECTION 18. PERMISSION TO USE INFORMATION. The Issuer agrees and consents that the Purchaser shall be permitted to use information related to the transaction contemplated hereby in connection with marketing, press releases or other transactional announcements or updates provided to investors or trade publications, including, but not limited to, the placement of the logo or other identifying name on marketing materials or of “tombstone” advertisements in publications of its choice at its own expense. SECTION 19. RESOLUTION TO CONTINUE IN FORCE. Except as herein expressly provided, the Resolution and all the terms and provisions thereof are and shall remain in full force and effect. SECTION 20. DATE. This Supplemental Resolution shall become effective immediately upon its adoption. DULY ADOPTED, in Regular Session this 23rd day of January 2017. ATTEST: BOARD OF COUNTY COMMISSIONERS DWIGHT E. BROCK, CLERK COLLIER COUNTY, FLORIDA, AS THE EX- OFFICIO CHAIRMAN OF THE GOVERNING BOARD OF THE COLLIER COUNTY WATER-SEWER DISTRICT By: By: Derek Johnssen, Deputy Clerk Chairman Approved as to form and legality: Jeffrey A. Klatzkow County Attorney 11.H.b Packet Pg. 144 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond) EXHIBIT A PROPOSAL OF THE PURCHASER 11.H.b Packet Pg. 145 Attachment: Authorizing Resolution Final (4596 : Resolution Authorizing the Issuance of the CCWSD Water and Sewer Bond)