Agenda 04/22/2014 Item #11B 4/22/2014 11.B.
n EXECUTIVE SUMMARY
Recommendation to approve a resolution accepting the proposal of STI Institutional &
Government, Inc. (A SunTrust Company) to refinance the Collier County, Florida Gas Tax
Revenue Bonds, Series 2005 in an amount up to $90,000,000; authorize the County Manager to
take such action as is necessary to lock the interest rate for such Series 2014 Refunding Bond
to achieve a gross debt service savings up to $11,075,000; and provide for an effective date.
OBJECTIVE: Approve a resolution which locks the proposed fixed interest rate for up to forty-
five(45)days at an anticipated debt service savings of up to $11,075,000.
CONSIDERATIONS: The Finance Committee, guided by the Board's adopted Debt Management
Policy, routinely considers opportunities to restructure the debt portfolio with the objective of
achieving a lower cost of borrowing. Refinancing with a net present value savings of 5% or greater
are targeted. Most recently the Committee after conversation with Public Financial Management,
Inc. (PFM), the County's financial advisor, embarked on an Invitation to Bid (ITB) process seeking
Bank proposals with the objective of refunding substantially all of the remaining outstanding Series
2005 Gas Tax Revenue Bonds. Bank proposals were solicited in lieu of formal bond refunding in
order to both reduce the cost of issuance and take advantage of current market conditions. Financial
institutions have begun aggressively pursuing and acquiring public debt for their portfolios. With an
estimated $11,075,000 gross debt service savings, the proposed refinancing far exceeds the 5%Debt
Management Policy benchmark. The percentage savings on the refunded bonds is 11.4%.
The attached invitation to bid document was posted on March 21, 2014. The number of bid inquiries
totaled 282 and 33 vendors actually pulled bid packages. Attached is a summation of the four (4)
proposals received.
The attached resolution prepared by the County's Bond Counsel provides for acceptance of the.
proposal by STI Institutional & Government (A SunTrust Company) and authorizes the County
Manager to take necessary action to lock the interest rate. Affirmative action by the Board on this
resolution sets in motion the closing process including preparation of all necessary closing
documents and a supplemental bond resolution which will be brought back to the Board on Consent
at the meeting of May 13, 2014. These documents will include the actual savings to be realized
pursuant to the proposed refinancing.
ADVISORY BOARD RECOMMENDATION:
The Finance Committee met on Monday April 14, 2014, to review the proposals contained within
the attached summary. After discourse it was determined that the bid of JP Morgan was not
responsive as the firm did not provide a mechanism for calculating and monitoring the indicative
interest rate. This ability is considered imperative to the proposal. JP Morgan calculates an internal
cost of borrowing specific to the company and as a matter of routine practice does not provide a
method of calculation. The remaining bids were ranked unanimously by the committee in the
following order of preference; STI Institutional & Government (A SunTrust Company), Pinnacle
Public Finance and Fifth Third Bank. The committee unanimously determined that STI Institutional
&Government(A SunTrust Company)was the lowest responsive bidder.
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Upon discussions with STI Institutional & Government (A SunTrust Company) regarding the after
tax yield provision and rate lock cost, it was determined that the interest rate would total 2.33%. The
after tax yield provision only applies at the lender's option in the event the corporate tax rate drops
below 35% by action of the federal government. For example, if corporate taxes were completely
eliminated, the interest rate would jump to a ceiling of 2.69%. In this unlikely event, the gross debt
service savings assuming the event happened prior to closing (45 days) would total $7,500,000. The
corporate tax rate has been at 35% since December 31, 1993. Since 1909 the corporate tax rate has
dropped 10 times never by more than 6%. The provision could be eliminated for an additional
nineteen (19) basis points. These additional basis points are worth approximately $1.4 million
dollars extended over the repayment period. The recommendation is to lock the rate at 2.33% and
not incur the additional 19 basis points to eliminate the corporate tax rate risk.
The indicative interest rate proposal of Pinnacle Public Finance which includes a rate lock feature
through May 30, 2014 is 2.63%. Fifth Third Bank offered an indicative interest rate of 3.35%with a
lock feature 3 days prior to closing.
FISCAL IMPACT: It is anticipated that interest rate savings resulting from this refunding will
total up to $11,075,000 over the remaining eleven(11)year repayment term. This refunding does not
extend the repayment schedule nor add new money to the original issuance.
GROWTH MANAGEMENT IMPACT: None
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, is approved
as to form and legality,and requires majority vote for approval. -JAK
RECOMMENDATION: Recommendation to approve a resolution accepting the proposal of STI
Institutional and Government Inc. (A SunTrust Company) to refinance the Collier County, Florida
Gas Tax Revenue Bonds, Series 2005 in an amount up to $90,000,000; authorize the County
Manager to take such action as is necessary to lock the interest rate for such Series 2014 Refunding
Bond to achieve a gross debt service savings up to $11,075,000; and provide for an effective date.
Prepared by: Mark Isackson, Director of Corporate Finance and Management Services, Office of
Management and Budget
tTh
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COLLIER COUNTY
Board of County Commissioners
Item Number: 11.11.B.
Item Summary: Recommendation to approve a resolution accepting the proposal of STI
Institutional &Government, Inc. (A SunTrust Company)to refinance the Collier County, Florida
Gas Tax Revenue Bonds, Series 2005 in an amount up to $90,000,000; authorize the County
Manager to take such action as is necessary to lock the interest rate for such Series 2014
Refunding Bond to achieve a gross debt service savings up to $11,075,000; and provide for an
effective date. (Mark Isackson, Corporate Financial and Management Services Director)
Meeting Date: 4/22/2014
Prepared By
Name: LehnhardPat
Title: Operations Coordinator, Office of Management&Budget
4/15/2014 4:49:55 PM
Submitted by
Title: Director-Corp Financial and Mngmt Svs, Office of Management&Budget
Name: IsacksonMark
4/15/2014 4:49:56 PM
Approved By
Name: KlatzkowJeff
Title: County Attorney,
Date: 4/16/2014 11:18:02 AM
Name: JohnsonScott
Title: Procurement Specialist, Purchasing&General Services
Date: 4/16/2014 12:04:53 PM
Name: IsacksonMark
Title:Director-Corp Financial and Mngmt Svs, Office of Management&Budget
Date: 4/16/2014 2:28:07 PM
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RESOLUTION NO.
A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS
OF COLLIER COUNTY, FLORIDA ACCEPTING THE PROPOSAL OF
STI INSTITUTIONAL & GOVERNMENT. INC. TO PURCHASE THE
COUNTY'S COLLIER COUNTY, FLORIDA GAS TAX REFUNDING
REVENUE BOND, SERIES 2014; AUTHORIZING THE COUNTY
MANAGER TO TAKE SUCH ACTION AS IS NECESSARY TO LOCK
THE INTEREST RATE FOR SUCH SERIES 2014 BOND; AND
PROVIDING FOR AN EFFECTIVE DATE.
BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF
COLLIER COUNTY, FLORIDA:
SECTION 1. FINDINGS. It is hereby found and determined that:
A. Collier County, Florida (the "Issuer" or the "County") recently solicited
bids from various financial institutions to purchase from the County its Collier County,
Florida Gas Tax Refunding Revenue Bond, Series 2014 (the "Series 2014 Bond") to
allow for the refunding of a portion of the County's outstanding Gas Tax Revenue Bond,
Series 2005 in order to achieve debt service savings for the County.
B. STI Institutional & Government. Inc. (the "Purchaser") submitted the
conforming bid to purchase the Series 2014 Bond that provides the County with the most
debt service savings.
C. It is in the best interest of the County to accept the Purchaser's bid and to
take such action as is necessary to establish a fixed interest rate with respect to the Series
2014 Bond.
SECTION 2. AUTHORITY FOR THIS SUPPLEMENTAL
RESOLUTION. This Resolution is adopted pursuant to the Constitution of the State of
Florida and alI applicable laws of the State of Florida, including but not limited to,
Chapter 125, Florida Statutes.
SECTION 3. ACCEPTANCE OF THE PURCHASER'S BID. The
Purchaser's bid is attached hereto as Exhibit A. The Board of County Commissioners
(the "Board") of the County hereby accepts such bid and awards the sale of the Series
2014 Bond to the Purchaser pursuant to the terms and provision set forth in such bid and
in Resolution No. 2003-89 adopted by the Board on February 25. 2003, as amended and
supplemented.
SECTION 4. AUTHORIZATION TO FIX INTEREST RATE ON THE
SERIES 2014 BOND. The Board hereby authorizes and directs the County Manager, or
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4/22/2014 11.B.
his designee (the "County Manager") to take such action as is necessary to establish and
fix the interest rate on the Series 2014 Bond in accordance with the terms of the
Purchaser's bid. To the extent required by the Purchaser, the County Manager is
authorized to execute and deliver an interest rate lock agreement which is approved by
the County Attorney, Bond Counsel to the County and the Financial Advisor to the
County.
SECTION. 5. SEVERABILITY. If any provision of this Resolution shall
be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable in any
context, the same shall not affect any other provision herein or render any other provision
(or such provision in any other context) invalid, inoperative or unenforceable to any
extent whatever.
SECTION 6. EFFECTIVE DATE. This resolution shall take effect
immediately upon its adoption.
DULY ADOPTED this 22nd day of April, 2014.
COLLIER COUNTY, FLORIDA
(SEAL)
Chairman, Board of County Commissioners
ATTEST:
Dwight E. Brock, Clerk
By: Deputy Clerk
Approved as to Form and Legal
Sufficiency:
County Attorney
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EXHIBIT A
Bid of STI Institutional & Government, Inc.
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THIS TERM SHEET:
-IS FOR DISCUSSION PURPOSES ONLY
-IS NOT AN OFFER TO EXTEND CREDIT
-IS NOT A COMMITMENT TO LEND
-IS NOT AN AGREEMENT TO ISSUE A COMMITMENT
Borrower; Collier County,Florida
Lender: STI Institutional&Government,Inc.
Contact: Joshua A.McCoy
Vice President
STI Institutional&Government,Inc.
1777 Main Street,FL-Sarasota-3061
Sarasota,FL 34236
Email: joshua.a.mccoy@suntrustcom
Phone:941-951-3005
Facility Type: Non-Bank Qualified Loan in the form of a tax-exempt loan
Purpose: The proceeds from the Gas Tax Refunding Revenue Bond, Series 2014 (the
"Bond") will be used to refund outstanding Gas Tax Revenue Bonds, Series
2005 maturing June 1,2016 through June 1,2025.
Amount: Not to exceed$90,000,000
Terms: Interest shall be payable semi-annually on a 30/360-day count basis on June 1;2
and December 1s, commencing December 1, 2014. Principal shall be payable
annually on June 1St commencing June 15,, 2015, with a final maturity date of
June 1, 2025; based upon level debt service structure as provided in RFP
package.
Security: The Series 2014 Bond will be secured by lien on Gas Tax Revenues and moneys
on deposit in certain funds and accounts established under the 2005 Bond
Resolution.
Interest Rate: 11 year Fixed: A fixed rate equal to 2.28%as of April 15,2014 held through the
final maturity date. For this rate,the interest rate shall be based on the H.15
US Dollar Swap Curve based on the following formula: 0.67 times the Five Year
H.15 Swap Rate plus 113 basis points. The interest rate shall be set two days
prior to funding.
Rate Lock options: For any of the above mentioned options,a rate lock is
available for forty five (45) days from the date of this letter at an additional
cost of 5 basis points.
Acceptance of Rate: To maintain this rate quote, the Borrower must notify the Lender of its
acceptance of the general terms and conditions of this Term
Sheet before close of business on April 25, 2014 and this
transaction most close by June 11,2014.
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Prepayment
Alternatives: The following Prepayment Alternatives are applicable.
Standard Prepayment Make Whole Provision: Borrower may prepay the
Bond in whole or in part on any Business Day upon two Business Days' prior
written notice to the Lender. Such prepayment notice shall specify the amount
of the prepayment which is to be made. In the event of a prepayment of the
Bond under this paragraph, the Borrower may be required to pay the Lender
an additional fee (a prepayment charge or premium) determined in the
manner provided below, to compensate the Lender for all losses, costs and
expenses incurred in connection with such prepayment.
The fee shall be equal to the present value of the difference between (1) the
amount that would have been realized by the Lender on the prepaid amount
for the remaining term of the Bond at the Federal Reserve 1-1.15 Statistical
Release rate for fixed-rate payers in interest rate swaps for a term
corresponding to the term of the Bond, interpolated to the nearest month, if
necessary, that was in effect three Business Days prior to the origination date
of the Bond and (2) the amount that would be realized by the Lender by
reinvesting such prepaid funds for the remaining term of the Bond at the
Federal Reserve H.15 Statistical Release rate for fixed-rate payers in interest
rate swaps,interpolated to the nearest month,that was in effect three Business
Days prior to the prepayment date; both discounted at the same interest rate
utilized in determining the applicable amount in (2). Should the present value
have no value or a negative value, the Borrower may prepay at par with no
additional prepayment charge or premium. Should the Federal Reserve no
longer release rates for fixed-rate payers in interest rate swaps, the Lender
may substitute the Federal Reserve H.15 Statistical Release with another
similar index.The Lender shall provide the Borrower with a written statement .0"1
explaining the calculation of the premium due, which statement shall, in
absence of manifest error, be conclusive and binding. This alternative is not
intended to, and does not, increase the interest rate payable on the Bond.
[provide that prepayments on the tender dates can be made without
premium?]
No Prepayment Penalty option: The Lender will allow prepayment in whole
and in part, but only if the partial prepayment is applied in inverse order of
maturity without any penalty after 24 months at an additional cost of 17 basis
points as stated in the"Interest Rate Options"section above.
Corporate Tax Rate
Change Language:
The interest rates quoted herein assumes a marginal maximum federal of 35%.
In the event of a decrease in the marginal maximum corporate tax rate, the
Lender shall have the option to adjust the interest rate upwards, to a capped
rate of 2.69%i,in order to maintain the same after tax yield for the Lender. For
the above mentioned rate, the Lender will waive the right to adjust the loan
rate due to any changes in the marginal maximum corporate tax rate for an
additional cost of 19 basis points.
Determination of
Taxability Language: Taxable Event" means the occurrence after the date hereof of a final decree or
judgment of any Federal court or a final action of the Internal Revenue Service
determining that interest paid or payable on all or a portion of any Bond is or
was includable in the gross income of a Lender for Federal income tax
purposes;provided,that no such decree,judgment,or action will be considered
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4/22/2014 11 .B.
final for this purpose, however, unless the Borrower has been given written
notice and, if it is so desired and is legally allowed, has been afforded the
opportunity to contest the same,either directly or in the name of any Lender,
and until the conclusion of any appellate review, if sought. A Taxable Event
does not include and is not triggered by a change in law by Congress that
causes the interest to be includable in Lender's gross income. Upon the
occurrence of a Taxable Event the Interest Rate on the Bond shall be adjusted
to assure maintenance of the yield.
Legal Counsel: Our proposed counsel to review documents,prepared at the cost of the County
as outlined in the RFP, is Michael Wiener of Holland&Knight LLP at a cost not
to exceed$12,500.
Governing Law and
Jurisdiction: State of Florida
Covenants and Conditions:
A) Borrower shall submit to the Lender annual financial statements within 270 days of fiscal year end and
an annual budget within 30 days of adoption, together with any other information the Lender may
reasonably request.
B) Borrower shall be required to deliver a written opinion from Borrower's Counsel,in form and substance
acceptable to the Lender and Lender's Counsel.
C) The provisions,terms and conditions contained herein are not inclusive of all the anticipated terms that
will be applicable to the credit and do not purport to summarize all of the conditions, covenants,
definitions, representations, warranties, but shall include but not be limited to the waiver of jury trial,
submission to jurisdiction and venue, events of default and remedies including but not limited to
acceleration or other provisions that may be contained in documents required to consummate this
financing. If acceleration is not a remedy the default rate shall be the lesser of 18% or the maximum
allowed rate by law. All of such terms will be set forth in the final, definitive loan documents, and all
such terms must be acceptable to the Lender and its counsel.All matters relating to this loan are subject
to Lender's policies and procedures in effect and applicable government statutes and regulations
D) Receipt of opinion from Note Counsel in form and substance satisfactory to the Lender, which shall
include,without limitation, an opinion that the interest on the Note is excludable from gross income of
the owners thereof for Federal income tax purposes.
E) All covenants of the Master Bond Resolution for the Gas Tax Revenue Bonds Series 2005 Bonds shall
apply to the Note,including but not limited to the Additional Bonds Test of 1.35 times.
F) Parity: This debt will be on parity with all other senior debt secured by the Gas Tax Revenues for the
Borrower,
3
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4/22/2014 11.B.
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4/22/2014 11.B.
SOURCES AND USES OF FUNDS
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Sources:
Bond Proceeds:
Par Amount 89,790.000.00
Other Sources of Funds:
Prior Sinking Fund 2,062,630.63
91.852.630.63
Uses:
Refunding Escrow Deposits:
Cash Deposit 2,085,807.00
SLGS Purchases 89.612,798.00
91.698,605.00
Delivery Date Expenses:
Cost of Issuance 152,342.50
Other Uses of Funds:
Additional Proceeds 1,683.13
91,852,630.63
, . Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management, Inc. Page 1
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BOND SUMMARY STATISTICS �1
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Dated Date 05/29/2014
Delivery Date 05/29/2014
Last Maturity 06/01/2025
Arbitrage Yield 2.329988%
"True Interest Cost(TIC) 2.329988%
Net Interest Cost(NIC) 2.330000%
All-In TIC 2.356805%
Average Coupon 2.330000%
Average Life(years) 6.998
Duration of Issue(years) 6.408
Par Amount 89.790.000.00
Bond Proceeds 89,790.000.00
Total Interest 14,641,343.32
Net Interest 14.641,343.32
Total Debt Service 104,431.343.32
Maximum Annual Debt Service 13.576,159.00
Average Annual Debt Service 9,488,966.08
Underwriter's Fees(per 51000)
Average Takedown
Other Fee
Total Underwriter's Discount �\
Bid Price 100.000000
Par Average Average
Bond Component Value Price Coupon Life
Bond Component 89.790,000.00 100.000 2.330% 6.998
89.790,000.00 6.998
All-In Arbitrage
TIC TIC Yield
Par Value 89,790.000.00 89,790,000.00 89,790.000.00
+Accrued Interest
+Premium(Discount)
-Underwriter's Discount
-Cost of Issuance Expense -152.342.50
-Other Amounts
Target Value 89,790,000.00 89.637,657.50 89,790,000.00
Target Date 05/2912014 05 129:2014 05:'29/2014
Yield 2.329988% 2.356805% 2.329988%
Note: "Preliminary Numbers for discussion purposes only. ,/""
Prepared by Public Financial Management,Inc. Page 2
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4/22/2014 11.B.
SUMMARY OF REFUNDING RESULTS
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Dated Date 05/29/2014
Delivery Date 05/29/2014
Arbitrage yield 2.329988%
Escrow yield 0.099727%
Value of Negative Arbitrage 1,952,798.25
Bond Par Amount 89,790,000.00
True Interest Cost 2.329988%
Net Interest Cost 2.330000%
Average Coupon 2.330000%
Average Life 6.998
Par amount of refunded bonds 85,530.000.00
Average coupon of refunded bonds 4.814596%
Average life of refunded bonds 7.279
PV of prior debt to 05/29/2014 i 2.329988% 101,597,387.74
Net PV Savings 9,746,440.24
Percentage savings of refunded bonds 11.395347%
Percentage savings of refunding bonds 10.854706%
/' Note: "`Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management,Inc. Page 3
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SUMMARY OF BONDS REFUNDED �\
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Maturity Interest Par Call Call
Bond Date Rate Amount Date Price
Gas Tax Revenue Bonds,Series 2005:
SERIAL 06/01/2016 5.000% 6,100,000.00 06/01/2015 100.000
06/012017 5.000% 6,400,000.00 06/01,2015 100.000
06/012018 5.000% 6,725,000.00 06/01/2015 100.000
06/01/2019 5.000% 7,060,000.00 06/01/2015 100.000
06/01/2020 5.000% 7,410.000.00 06/01/2015 100.000
06/01,2021 5.000% 7,780,000.00 06/01/2015 100.000
06/01/2022 5.000% 8,170.000.00 06/01/2015 100.000
06/01/2023 5.000% 8,580,000.00 06/01/2015 100.00(1
06/01/2024 5.000% 13,320,000.00 06/01/2015 100.000
06/01/2025 4250% 133.985.000.00 06/01/2015 100.000
85,530,000.00
Note: °`Preliminary Numbers for discussion purposes only. ,"---•
Prepared by Public Financial Management,Inc. Page 4
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fl.'*■ SAVINGS
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Present Value
Prior Prior Prior Refunding to 05/29/2014
Date Debt Service Receipts Net Cash Flow Debt Service Savings a 2.3299881%
06/01/2014 2,085,80625 2,062.630.63 23,175.62 23,175.62 22.907.20
06/01/2015 4,171,612.50 4,171,612.50 3,168,729.82 1,002,882.68 991,493.49
06/01/2016 10,271,612.50 10,271,612.50 9,267,292.50 1,004,320.00 970,428.64
(16/01/2017 10,266,612.50 10,266,612.50 9,259,532.50 1,007,080.00 950,035.56
06/01;2018 10,271,612.50 10,271,612.50 9,268,044.50 1,003,568.00 924,291.53
06/01/2019 10.270,362.50 10.270,362.50 9,267.362.50 1,003,000,00 901,787.51
06/01/2020 10,267.362.50 10.267,362.50 9,262,603.00 1,004,759.50 881,790.45
06/01/2021 10.266,862.50 10,266,862.50 9.263.766.00 1,003,096.50 859,260.06
06/01.2022 10267,862.50 10,267,862.50 9,260,618.50 1,007.244.00 842,057.44
06/01/2023 10,269.362.50 10,269,362.50 9,263,160.50 1,006,202.00 820,907.92
06/01/2024 14.580,362.50 14,580,362.50 13,576,159.00 1,004,203.50 799,453.13
06/01/2025 14,579,362.50 14,579,362.50 13,574,074.50 1.005,288.00 780,344.18
117,568.793.75 2,062.630.63 115,506.163.12 104,431,343.32 1.1.074,819.80 9,744,757.11
Savings Summary
PV of savings from cash flow 9,744,757.11
Plus:Refunding funds on hand 1,683.13
�\
Net PV Savings 9.746,440.24
'.......\ Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management,Inc. ^ Page 5
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BOND PRICING /"'"\
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Maturity
Bond Component Date Amount Rate Yield Price
Bond Component:
06/01/2015 1.065,000 2.330% 2.330% 100.000
06/01.2016 7,200,000 2.330% 2.330% 100.000
06/01/2017 7,360,000 2.330% 2.330% 100.000
06/01/2018 7,540.000 2.330% 2.330% 100.000
06/01/2019 7.715.000 2.330% 2.330% 100.000
06/01/2020 7,890,000 2.330% 2.330% 100.000
06/01/2021 8,075,000 2.330% 2.330% 100.000
06/01/2022 8,260,000 2.330% 2.330% 100.000
06/01/2023 8.455.000 2.330% 2.330% 100.000
06/01/2024 12,965.000 2.330% 2.330% 100.000
06/01/2025 13,265,000 2.330% 2.330% 100.000
89,790.000
Dated Date 05/29,2014
Delivery Date 05/29/2014
First Coupon 12/01/2014
Par Amount 89,790.000.00
Original Issue Discount
P"\
Production 89,790.000.00 100.000000%
Underwriter's Discount
Purchase Price 89,790,000.00 100.000000%
Accrued Interest
Net Proceeds 89.790.000.00
Note '"Preliminary Numbers for discussion purposes only. /'\
Prepared by Public Financial Management,Inc. Page 6
Packet Page-79-
4/22/2014 11.B.
P'n'N. BOND DEBT SERVICE
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Period
Ending Principal Coupon Interest Debt Service
06/01/2015 1,065.000 2.330% 2,103,729.82 3,168,729.82
06/01/2016 7.200,000 2.330% 2,067,292.50 9.267,292.50
06/01/2017 7,360,000 2.330% 1,899,532.50 9,259,532.50
06/01/2018 7,540,000 2.330% 1,728,044.50 9,268,044.50
06/01/2019 7,715,000 2.330% 1,552,362.50 9,267,362.50
06/01/2020 7,890,000 2.330% 1,372,603.00 9,262,603.00
06/01/2021 8.075,000 2.330% 1,188,766.00 9,263,766.00
06/01/2022 8,260,000 2.330% 1,000,618.50 9,260,618.50
06/01/2023 8.455,000 2.330% 808,160.50 9,263,160.50
06/01/2024 12,965,000 2.330% 611,159.00 13,576.159.00
06/01/2025 13,265,000 2.330% 309.074.50 13.574,074.50
89,790.000 14,641.343.32 104.431,343.32
ice, Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management,Inc. Page 7
Packet Page-80-
4/22/2014 11 .B.
BOND DEBT SERVICE ,,—\
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Period Annual
Ending Principal Coupon Interest Debt Service Debt Service
12/01/2014 1,057,676.32 1.057,676.32
06/01/2015 1.065,000 2.330% l.046.053.50 2.111,053.50 33,168,729.82
12/01/2015 1,033.646.25 1,033,646.25
06/01/2016 7.200,000 2.330% 1,033,646.25 8,233,646.25 9,267,292.50
12/01/2016 949,766.25 949,766.25
06/01/2017 7,360,000 2.330% 949,766.25 8.309,766.25 9,259,532.50
12/01/2017 864,022.25 864,022.25
06/01/2018 7,540,000 2.330% 864,022.25 8,404,022.25 9,268,044.50
12/01/2018 776,181.25 776,181.25
06/01r2019 7,715.000 2.330% 776,181.25 8,491.181.25 9,267,362.50
12/01/2019 686,301.50 686,301.50
06/01/2020 7,890,000 2.330% 686301.50 8,576,301.50 9.262,603.00
12/01/2020 594,383:00 594.383.00
06/01/2021 8,075,000 2.330% 594,383.00 8.669,383.00 9,263,766.00
12/01/2021 500,309.25 500,309.25
06/01/2022 • 8.260.000 2.330% 500,309.25 8,760,309.25 9.260,618.50
12/01/2022 404.080.25 404,080.25
06/01/2023 8.455.000 2.330% 404,080.25 8,859.080.25 9,263,160.50
11/01/2023 305,579.50 305,579.50
06/01/2024 12,965.000 2.330% 305,579.50 13,270,579.50 13.576,159.00
12/01/2024 1 54.537.25 154,537.25
06/01/2025 13,265,000 2.330% 154,537.25 13.419,537.25 13.574.074.50
89.790.000 14.641.343.32 104.431,343.32 104,431,343.32
Note: *Preiiminary Numbers for discussion purposes only. r\
Prepared by Public Financial \1anagcment,Inc. Page 8
Packet Page-81-
4/22/2014 11.B.
/".1 ESCROW REQUIREMENTS
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Period Principal
Ending Interest Redeemed Total
06/01/2014 2,085.806.25 2.085,806.25
12/01/2014 2,085,806.25 2,085,806.25
06/01/2015 2.085,806.25 85,530,000.00 87,615,806.25
6,257.418.75 85.530,000.00 91,787,418.75
Note: `Preliminary'Numbers for discussion purposes only.
Prepared by Public Financial Management, Inc. Page 9
Packet Page-82-
4/22/2014 11.B.
ESCROW DESCRIPTIONS
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Type of Type of Maturity First Int Par Max
Security SLGS Date Pmt Date Amount Rate Rate
May 29,2014:
SLGS Certificate 12/01/2014 12/01/2014 2.040,778 0.050% 0.050%
SLGS Note 06/01/2015 12/01/2014 87.572.020 01D0% 0.100%
89,612,798
SLGS Summary
SLGS Rates File 15APR14
Total Certificates of Indebtedness 2,040,778.00
Total Notes 87,572.020.00
Total original SLGS 89.612,798.00
Note: "Preliminary Numbers fbr discussion purposes only. "—\
Prepared by Public Financial Management,Inc. Page 10
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4/22/2014 11 .B.
ESCROW COST
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Type of Maturity Par Total
Security Date Amount Rate Cost
SLGS 12101/2014 2,040,778 0.050% 2,040,778.00
SLGS 06101/2015 87,572,020 0.100% 87,572.020.00
89,612,798 89,612,798.00
Purchase Cost of Cash Total
Date Securities Deposit Escrow Cost
05/29/2014 89.612,798 2.085,807.00 91.698,605.00
89.612,798 2.085,807.00 91,698,605.00
Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management,Inc. Page 11
Packet Page-84-
4/22/2014 11 .B.
ESCROW CASH FLOW �\
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Net Escrow
Date Principal Interest Receipts
12/01/2014 2,040.778.00 45,027.74 2,085,805.74
06/01/2015 87,572.020.00 43,786.01 87,615,806.01
89,612,798.00 88,813.75 89,701,611.75
Escrow Cost Summary
Purchase date 05/29/2014
Purchase cost of securities 89.612,798.00
"00\
Note: *Preliminary Numbers for discussion purposes only.
P epared by Public Financial Management,Inc. Page 12
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4/22/2014 11.B.
ESCROW SUFFICIENCY
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Escrow Net Escrow Excess Excess
Date Requirement Receipts Receipts Balance
05/29/2014 2,085.807.00 2,085,807.00 2,085,807.00
06/01/2014 2.085.806.25 -2,085.806.25 0.75
12/01/2014 2,085.80625 2,085,805.74 -0.51 0.24
06/01/2015 87,615,806.25 87,615,806.01 -0.24
91,787,418.75 91,787,418.75 0.00
Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management,Inc. Page 13
Packet Page-86-
4/22/2014 11.B.
ESCROW STATISTICS �\
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Modified Yield to Yield to Perfect Value of
Total Duration Receipt Disbursement Escrow Negative Cost of
Escrow Escrow Cost (years) Date Date Cost Arbitrage Dead Time
Series 2005:
SFl 2.062.630.63 0.505 0.050395% 0.050395% 2,060.839.21 1,543.43 247.99
Global Proceeds Escrow:
89.635,974.37 0.994 0.099727% 0.099727% 87,684,699.12 1,951,254.82 20.43
91,698,605.00 89,745,538.33 1,952,798.25 268.42
Delivery date 05/29/2014
Arbitrage yield 2.329988%
�\
Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management,Inc. Page 14
Packet Page-87-
4/22/2014 11.B.
COST OF ISSUANCE
Collier County,Florida
Proposed Refunding of the Series 2005 Gas Tax Bonds
PRELIMINARY NUMBERS
Cost of Issuance $/1000 Amount
Bond Counsel 0.88921 79,842.50
Financial Advisor 0.55685 50,000.00
Bank Counsel 0.13921 12,500.00
Miscellaneous 0.11137 10,000.00
1.69665 152,342.50
Note: *Preliminary Numbers for discussion purposes only.
Prepared by Public Financial Management.Inc. Page 15
Packet Page-88-
FitchRatings 4/22/2014 11.B.
FITCH AFFIRMS COLLIER COUNTY,
FL'S BOND RATINGS; OUTLOOK STABLE
Fitch Ratings-New York-31 March 2014: Fitch Ratings has affirmed the following Collier County,
(the county)bond ratings:
• --$227.8 million special obligation revenue bonds at'AA';
--$127.7 million gas tax revenue bonds at'AA-';
--Implied general obligations(GOs) at'AA+;
The Rating Outlook is Stable.
SECURITY
Special obligation revenue bonds are secured by the county's covenant to budget and appropriate
(CB&A),by amendment if necessary, from non-ad valorem revenues (NAV) amounts sufficient to
pay debt service. Such a covenant shall be cumulative to the extent not paid,and shall continue until
such NAV or other legally available funds in amounts sufficient to make all such required payments
shall have been budgeted,appropriated,and actually paid.
Gas tax bonds are secured by a lien on and pledge of gas tax revenues collected on both a state-
wide (via a population-based formula) and local basis (via a transportation expenditures formula),
including revenues from the constitutional fuel tax,the county fuel tax,the ninth-cent gas tax,and the
six-cent and five-cent local option gas taxes. The series 2005 bonds are additionally secured by an
Ambac surety-funded debt service reserve account(DSRA).The series 2012.bonds have no DSRA.
KEY RATING DRIVERS
POSITIVE ECONOMIC INDICATORS: Recent economic indicators such as employment,housing
values and housing starts show a strengthened recovery. Fitch expects sound long-term population
and economic growth, based on the county's very affluent tax base and recognition as a leading
destination for tourism and leisure activity on Florida's Gulf Coast.
SOLID FINANCIAL MANAGEMENT: Throughout the economic downturn the county managed
revenue declines through conservative budgeting,aggressive expenditure reductions and limited use
of reserves. Reserve levels are solid.
MANAGEABLE DEBT POSITION: The debt burden and future capital needs are manageable, as
are the county's pension and other post-employment benefits (OPEB)liabilities.
BROAD AND DIVERSE REVENUE BASE: The county's NAV revenues represent a wide range of
varied revenues including sales taxes, service charges,and payments in lieu of taxes from the utility
system. Available NAV revenues are ample relative to CB&A debt service obligations.
COVENANT DEBT NOTCHING: A one-notch distinction in the rating on the special obligation
revenue bonds from the implied unlimited tax GO rating reflects the absence of a pledge of specific
revenue and inability to compel an increase of revenues to pay bondholders.
NARROW GAS TAX COVERAGE: Fiscal 2013 gas tax receipts cover annual debt service by a
narrow 1.27x,although revenue collections are generally very stable. n
Packet Page-89-
4/22/2014 11 .B.
RATING SENSIT VITY
DETERIORATION OF RESERVE BALANCES: Deficit operations leading to a significant
contraction of reserve balances could result in negative rating action.
DECLINE IN GAS-TAX PLEDGED REVENUES: Further erosion of gas tax revenues would
weaken credit quality for these bonds.
CREDIT PROFILE
Collier County is located in southwestern Florida, encompassing part of the Everglades National
Park.The county includes the city of Naples(rated'AAA'with a Stable Outlook by Fitch),a popular
destination for affluent tourists and second-home-owners.
FINANCIAL RESULTS
General fund operations are exceptionally stable; for the past three years the county has held a
relatively constant general fund balance. Fiscal 2013 general fund operations closed with better
than budget operations and a $2.1 million operating surplus (0.8% of spending). Fitch attributes
the positive results to conservative budgeting; the county builds a contingency into its budgets,has
strong control of filling of position vacancies and enacts mid-year budget cuts as needed to maintain •
targeted liquidity. The year-end unrestricted general fund balance was$57 million or a healthy 21%
of spending.
The fiscal 2014 general fund budget is a 3.23% increase over the 2013 budget.The millage rate
is unchanged but 3.8% tax-base growth enables revenue growth. Additional revenue expansion is
expected in sales tax and state shared revenues reflecting the strengthening of both the local and
state-wide economy. The county annually budgets a portion of fund balance to balance the budget,
but conservative budgeting practices(the state requires budgeting a 5%offset to revenues)as well as
strong expenditure controls enable the county to maintain stable financials. The county does sizable
paygo financing of capital projects.
TAX BASE SHOWING GROWTH
County-wide taxable values increased a healthy 3.8% in fiscal 2014 after stabilizing in fiscal 2013
with 0.68%growth.The state estimate for fiscal 2015 is a strong 6.4%increase,although the county
is conservatively using a 4.5%increase for budget planning. Property tax revenues,which account
for approximately 73%of recurring general fund sources,had been pressured due to a 27%decline in
taxable values between fiscals 2008 and 2012.The low operating tax rate of 3.56 mills has remained
constant since 2010 and is well under the 10-mil cap.
BROAD REVENUE BASE AVAILABLE FOR CB&A DEBT SERVICE
Legally available NAV revenues provide solid coverage of combined CB&A maximum annual debt
service(MADS), even when essential service expenditures are taken into account. A 1.5x MADS
anti-dilution test for all bonds payable from NAV revenues guards against over issuance but further
leveraging is also inhibited by the county's need of these revenues for operations.
Available NAV revenues increased a combined total of 4.6% in fiscal year 2013.The gains were led
by growth in the half-cent sales tax, the largest NAV revenue source. Service charges and impact
fees are also important components of the county's NAV revenue base. Fitch takes comfort in the
diverse nature of revenues available for.debt service.
Packet Page-90-
NARROW GAS-TAX COVERAGE BUT STABLE COLLECTIONS 4/22/2014 11 .B.
Gas-tax revenue coverage is narrow,as fiscal 2013 collections provided only 1.27x coverage of debt
service. The historical decline in gas tax receipts has generally been modest. From fiscal 2007 to
2013, gas tax revenues fell 7%in aggregate; the single largest year-over-year decline was 3.8% in ,•�
2008. Over the past four years collections have been stable. Fiscal 2013 pledged revenue could be
reduced nearly 6x the worst annual decline and still cover MADS by 1.0x. Fiscal 2014's first four
months of collections are down 2.6%. Given the current economic resurgence, improvement may
occur throughout the year;however,a trend of revenue decline would affect credit quality.
FAVORABLE LONG-TERM SOCIOECONOMIC PROSPECTS
The tax base is predominantly residential and very affluent. Market value per capita is in excess
of$200,000 and per capita income is 35%-40% higher than U.S. and Florida averages. Economic
activity centers on leisure and hospitality and retail trade, resulting in a good deal of seasonal
unemployment.
The county is solidly emerging from the recession as indicated by upward trends in housing prices,
tourist development tax collections (8.6% fiscal 2013 growth) and sales tax receipts (8.3% fiscal
2013 growth).There are multiple indicators of a strong recovery in the housing market:Zillow.com
shows housing values are up 13.9% over prior year levels, Global Insights projects robust growth
in 2014 housing starts, and the county reports permitting of several sizable (as large as 1,999 units)
residential projects which are now in various stages of development
Unemployment as of November 2013 has decreased year-over-year to a low 5.8%,which is lower
than the state and national averages.The improvement is largely attributable to strong growth in the
employment base relative to the labor force.
MANAGEABLE DEBT POSITION
Overall debt remains below average at 1.2% of market value and payout is above average at
approximately 57%retired in 10 years. Debt service is a moderate 9.6%of governmental spending.
There is no tax-supported variable-rate debt,derivatives, or short-term notes.
The 2014 five-year CIP totals$594 million,with$350 million of the planned projects for the water and
sewer utility. The bulk of the general government projects are for road works with related funding
from excess gas tax revenues, transportation impact fees and general-fund paygo. No new debt is
contemplated.
The county's pension liability is limited to its participation in the statewide plan(FRS).The county's
required contribution, including the sheriff's office, totaled $17.1 million (3.8% of governmental
spending) in fiscal 2013. The county provides OPEB through an implied subsidy (as required by
Florida law)in addition to an explicit subsidy to a very small number of retirees.The county funds its
OPEB obligation on a pay-as-you-go basis, $1.4 million(a minimal 0.3%of spending). The OPEB
UAAL is a low $20.2 million, including the sheriffs office. Total fiscal 2013 carrying costs (debt
service,pension and OPEB)were a low 13.7%of government spending.
Contact:
Primary Analyst
Patricia McGuigan
Director
+1-212-908-0675
Fitch Ratings,Inc.
Packet Page-91-
One State Street Plaza 4/22/2014 11.B.
New York,NY 10004
Secondary Analyst
Michael Rinaldi
Senior Director
+1-212-908-0833
Committee Chairperson
Amy Laskey
Managing Director
+1-212-908-0568
Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email:
elizabeth.fogerty@fitclu-atings.com.
Additional information is available at'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria,this action
was additionally informed by information from Creditscope, University Financial Associates, S&P/
Case-Shiller Home Price Index,IHS Global Insight,National Association of Realtors,Zillow.com.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria'(Aug. 14,2012);
-'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14,2012).
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfrn?rpt_id=685314
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS
AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND
DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/
UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE
TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE
OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO
AVAILABLE FROM THE'CODE OF CONDUCT'SECTION OF THIS SITE.FITCH MAY HAVE
PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED
THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD
ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY
SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
•
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