Agenda 06/23/2009 Item #14A
Agenda Item No. 14A
June 23, 2009
Page 1 of 12
EXECUTIVE SUMMARY
Recommendation that the Community Redevelopment Agency (CRA) accepts a response to
RFP #09-5177R from Fifth Third Bank for a $13,500,000 term loan; authorize the CRA
Chairman to sign the proposal and all other documents in connection therewith; direct the
Executive Director to prepare all required enabling documents/resolutions to pledge CRA
Tax Increment Funds as the loan repayment source and return for Board approval; and
authorize all necessary budget amendments
OBJECTIVE: To receive Community Redevelopment Agency approval to accept a Fifth Third
Bank response to RFP #09-5l77R for a $13,500,000 term loan; authorize the CRA Chairman to
sign the proposal; direct the Executive Director to prepare all required enabling documents and
resolutions to pledge CRA Tax Increment Funds as the loan repayment source and return for
Board approval; and authorize all necessary budget amendments.
BACKGROUND: Florida Statute 163.358 - "Exercise powers in carrying out community
redevelopment and related activities" - gives the CRA power to approve the acquisition of
property. Florida Statute 163.370 - "Powers; counties and municipalities, community
redevelopment agencies" - delineates other powers necessary to carry out the purchase of
property and to borrow money.
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On July 26,2006 the BCC authorized the CRA to execute a $7M Line of Credit with Wachovia
Bank. The current balance of the LOC is $5.90lM. The LOC's term is five (5) years and comes
due in July 2011.
On March 27,2007, the CRA and BCC Boards approved a second RFP advertisement for a $9M
line of credit. Wachovia Bank's bid response was accepted by the CRA and BCC Boards;
however the final agreement was not executed as a result of a Florida Supreme Court ruling in
the Strand vs Escambia County case (that ruling was reversed by the Court on September 18,
2008). This RFP response was formally rejected by the eRA Board on October 28,2008.
On October 28, 2008, the CRA Board gave direction to the Executive Director to:
· Coordinate with all appropriate entities to secure and structure a new loan from a
commercial lender selected via RFP to purchase certain real property within the Bayshore
Gateway Triangle CRA; and
· Negotiate real estate contracts in the CRA area and return to the CRA Board for approval.
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At a regularly scheduled meeting on December 16, 2008, the CRA Board identified and
prioritized three (3) parcels of land (Exhibit A) for the Executive Director to pursue acquisition.
Each parcel is identified in the CRA Redevelopment Plan as a potential site for a catalyst
redevelopment project, and their acquisition or assembly with adjacent parcels will provide the
CRA an opportunity to achieve many of the objectives stated in the CRA Redevelopment Plan.
Acting on the direction received from the CRA Board on October 28, 2008 and December 16,
2008, the Executive Director, advertised RFP #09-5177 for a bank loan for up to $20M in
. December 2008. No responses were received; therefore the RFP was reissued in January 2009.
One response was received from Fifth Third Bank on February 26,2009.
Agenda Item No. 14A
June 23. 2009
Page 2 of 12
CONSIDERA TIONS: The CRA has issued three (3) RFPs for a bank loan over the last two
years to acquire catalyst site properties. The current Fifth Third RFP response (Exhibit B)
provides sufficient funds to purchase the CRA Board's number one priority parcel of 6.29 acres
of assembled land in the mini-triangle (Exhibit C).
Fifth Third Bank proposes a $13,500,000 term loan that would absorb the Wachovia $5.90IM
debt and provided an additional $7.599M in new debt. As a condition, Fifth Third Bank accepts a
pledge of CRA Tax Increment Funds as the repayment source for the loan. The specific terms
and conditions of the proposal are:
. $13,500,000 term loan
. Refinance existing Wachovia Line of Credit ($5.90lM)
. Allow acquisition of land in mini-triangle
. 5-YearTerm
. 15- Y ear Amortization
. Interest Rate Options:
o Taxable Variable Rate (LlBOR + 3.75% as of June 9,2009), or
o Taxable Fixed Rate (6.78%)
. Monthly principal and interest payments
Source of repayment for the Fifth Third Bank term loan will be Bayshore Gateway Triangle
CRA Trust Funds, proceeds from the future sale of real property and collected property
leases/rents, and does not obligate any Collier County revenues or funds. Since CRA tax
increment revenues are pledged to pay debt service, notification to all affected taxing bodies will
be been made by certified letters.
Projected annual debt service for the loan instrument will be approximately:
. Variable Rate Options:
o $1,204,000/yr, using a 'low' LlBOR interest rate
· Annual debt service is based on a predicted 'low' LlBOR rate increase.
· No prepayment penalty.
· $9.877M balance due at 'term' in 2014
o $1,567,000/yr, using an 'average' LlBOR interest rate.
· Annual debt service is based on a predicted 'average' LlBOR rate increase.
· No prepayment penalty.
· $10.7M balance due at 'term' in 2014.
. Fixed Rate Option:
o $1,434,300/yr.
· This rate is fixed however there may be a pre-payment penalty.
· $lO.4M balance due at 'term in 2014.
Financing through the CRA to date have been short term - five years or less - due in large part to
the financial markets. Hopefully within one or two years the credit markets will loosen and the
CRA can restructure this debt to reflect a longer term horizon in keeping with the districts
Agenda Item No. 14A
June 23, 2009
Page 3 of 12
remaining twenty (20) year life span. A longer term debt schedule with predictable principle and
interest streams would allow the CRA to plan for district improvements without the burden of a
large principle bullet payment, which typically is associated with shorter term notes - at least in
today's environment. The interest cost over the short term, given the current LlBOR rate, may
lead to acceptance of the Variable Rate Option.
FINANCE COMMITTEE CONSIDERATIONS: The CRA Executive Director met with the
Collier County Finance Committee on March 20 and 27,2009 to discuss CRA purchase of land,
CRA debt and bank financing options. The Committee's primary concern was not with a new
debt instrument, but with the CRA's ability to pay the Wachovia Bank debt of $5.90IM in July
2011 when the note came due. The Committee was firm in their stance that to incur additional
debt, the Wachovia LOC must be refinanced.
At the Committee's June 12,2009 meeting, members of the Finance Committee discussed this
financing proposal at length including the short term credit duration, ability of the CRA to fulfill
the credit conditions, the nature and extent of available revenues pledged as re-payment as well
as the prospects for engaging a developer to partner in the catalyst project. After discussion of
the proposal as it was received by the lender on June 12th, the Finance Committee voted to not
endorse the financing proposal. However, it should be noted that the Finance Committee will
meet again on Friday June 191h to consider proposal clarifications and additional information
provided by the proposed lender.
FISCAL IMPACT: Sufficient Bayshore/Gateway Triangle CRA tax increment revenues are
available to service debt payments if either interest rate option is selected. Budget amendments
will be necessary to set up the required debt service reserve. This financing requires the pledge
of CRA tax increment revenues as the debt repayment source as well as other ministerial
language required by statute. While the CRA has sufficient regular TlF increments and non ad
valorem revenue to support this financing plan, the concern has and continues to be the final
large bullet payment at the end of this note - a condition which is prevalent with short term
financing in this market. All enabling documents will be drafted by bond counsel and prepared
for BCC and CRA approval.
GROWTH MANAGEMENT IMPACT: Policy 4.7 of the Future Land Use Element of the
Growth Management Plan states that redevelopment plans may be developed for specific areas
within the County, including the Bayshore Gateway Triangle CRA. The 14 acre mini-triangle
site is identified in the Growth Management Plan (GMP) Future Land U"le Element (FLUE)
Bayshore/Gateway Triangle Redevelopment Overlay as a catalyst project site"... eligible for the
maximum density of 12 units per acre, with development standards as contained in the Gateway
Triangle Mixed Use District zoning overlay...".
LEGAL CONSIDERATIONS: Bond counsel together with the county attorney's office will
review and prepare all necessary loan documentation as presented for approval. The financing
will be done under the authority of Chapters 125 and 163, Florida Statutes. This item is not
quasi-judicial, and as such, ex parte disclosure is not required. A simple majority vote is
necessary for CRA action. (STW)
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Agenda Item No. 14A
June 23, 2009
Page 4 of 12
RECOMMENDATION: Recommendation that the Community Redevelopment Agency
accepts the Fifth Third RFP #09-5l77R proposal; authorizes the Chairman to execute a
Commitment Letter with Fifth-Third Bank for a $13,500,000 term loan and other documents in
connection therewith; direct the Executive Director to prepare all required enabling documents
and resolutions to pledge CRA Tax Increment Funds as the loan repayment source and return for
Board approval; and authorize all necessary budget amendments.
Prepared by:
David L. Jackson on June] 0,2009
Executive Director, Bayshore/Gateway Triangle Community Redevelopment Agency
Item Number:
Item Summary:
Meeting Date:
Page I of 1
Agenda Item No. 14A
June 23, 2009
Page 5 of 12
COLLIER COUNTY
BOARD OF COUNTY COMMISSIONERS
14A
Recommendation that the Community Redevelopment Agency (CRA) accepts a response to
RFP #09-5177R from Fifth Third Bank for a $13,500,000 term loan; authorize the CRA
Chairman to sign the proposal and all other documents in connection therewith; direct the
Executive Director to prepare all required enabling documents/resolutions to pledge CRA Tax
Increment Funds as the loan repayment source and return for Board approval; and authorize
all necessary budget amendments. (David Jackson, Executive Director. Bayshore Gateway
Triangle eRA)
6/23/2009900;00 AM
Prepared By
David Jackson
Community Redevelopment
Agency
Executive Director
Date
Bayshore-Gateway Redevelopment
6/11/20099:41:58 AM
Date
Approved By
David Jackson
Community Redevelopment
Agency
Executive Director
Bayshore-Gateway Redevelopment
6/16/200910:27 AM
Date
Approved By
OMS Coordinator
County Manager's Office
OMS Coordinator
Office of Management & Budget
6/16/200910:52 AM
Approved By
Date
Lyn Wood
Administrative Services
Purchasing Agent
Purchasing
6/16/200912:05 PM
Approved By
Steve Carnell
Administrative Services
Purchasing/General Svcs Director
Purchasing
Date
6/16/2009 12:09 PM
Approved By
Heidi F. Ashton
County Attorney
Assistant County Attorney
County Attorney Office
Date
6/16/2009 12:48 PM
Approved By
Leo E, Ochs, Jr.
Board of County
Commissioners
Deputy County Manager
Date
County Manager's Office
6/16/20093:26 PM
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EXHIBIT A
Agenda Item No. 14A
June 23. 2009
Page 6 of 12
The following real estate purchase proposals wcre presented to the CRA Board for consideration
on December 16, 2008. Purchase of any or all parcels will be contingent on successful
acquisition of additional credit through a bank loan.
Mini- Triane;le. At their December 2, 2008 meeting, the Local Advisory Board unanimously
recommendcd that the CRA Board purchase eight (8) parcels from two owners in the 14 acre
tract of land known as the mini-triangle of the larger Gateway Triangle area of the CRA. This
area is identified in the CRA Redevelopment Plan as a potential site for a catalyst redevelopment
project. It is also identified in thc Growth Afanagement Plan (GMP) Future Land Use Element
(FLUE) Bayshore/Gatnvay Triangle Redevelopment Overlay as a catalyst project site "...
eligible for the maximum density of 12 units per acre, with development standards as contained
in the Gateway Triangle Mixed Use District zoning overlay...".
Within the 14 acrc mini-triangle catalyst site, the CRA Board approved the following priorities:
· PRIORITY ONE. One owner has assembled seven (7) parcels in the center of the mini-
triangle comprising approximately 6.29 acres. On March 10, 2008, the assembled parcels
were appraised for the owner at $9,700.000 'as-is" or $8,250,000 "as though vacant". The
eRA Executive Director has commissioned two appraisals for the CRA to determine the
current value. The owner has delivered the CRA a Seller '5 Letter of Intent dated November
10, 2008, offering the CRA all seven parcels for a price of $7,500,000 plus buyer-paid
documentary stamps and 2008 ad valorem taxes for an estimated total of $7,620,948.
· PRIORITY TWO. The 1.66 acre parcel known as the former Burger King site was under
contract by the CRA in 2007 for the appraised value of S3,500,000; however the CRA failed
to close on the site due to the Strand v Escamhia County law suit, which has been resolved
and no longer a factor. In October 2008 the site was rcappraised for the CRA by two
independent appraisers at a value of $2,500,000 and $2,550,000. The ovmer's representative
stated that the owner is willing to accept an offer to purchase from the eRA, and is willing to
execute an owner-held mortgage note and finance two million of the two million five
hundred thousand purchase/sale price. The two million would be a balloon note payable in
three years at an intcrest rate of 3.5 %.
JUSTIFICATION: CRA acquisition of eight (8) targeted parcels (7.95 acres) within the 14 acres
of the mini-triangle would provide the opportunity to be an integral part of any future
assemblage of the remaining land and potcntially leverage public-private partnerships with
adjacent land owners. If the CRA owns and controls ovcr 50% of the land area, then the CRA
has great influence over what is built there (density and intensity), what the resulting uses are
and the ultimatc design. Due to the current economic state of affairs, thcre is great potential for
centrally located parcels to be sold to separate O\vners for individual business use. If any of them
are sold, then the likel ihood a comprehensive assembly and redevelopment of the entire 14 acre
site would be marginalized and the mini-triangle's uses would remain as is indefinitely.
Redevelopment of the entire mini-triangle will achieve many of the objectives stated in the CRA
Rcdevelopment Plan, and significantly increase the tax base. An added bonus to the acquisition
of all eight (8) parcels is that the existing structures currently bring in $445,000/yr in lease
revenues to partially service the CRA debt, with the potential to lease the vacant buildings and
increase the debt service.
Agenda Item No. 14A
June 23, 2009
Page 7 of 12
EXH IBIT A
Bavshore Drive. At their regularly scheduled meetings on February 7, 2006 and June 6, 2006,
the Bayshore Gateway Triangle CRA Local Advisory Board unanimously voted to pursue a 2.51
acre vacant parcel on Bayshore Drive.
Within the Bayshore Drive catalyst site, the CRA Board approved the following priority:
· PRIORITY THREE: After two years of discussions, the owners are willing to accept an offer
to purchase from the eRA. On June 1, 2006 the land was appraised at $1,280,000 and on
October 15, 2008, the land was appraised at $660,000 by the same appraiser. The owner
commissioned his own appraisal that assessed a value of $] ,024,000. An offer to purchase
the land at $660,000 was made by the CRA which was countered with an offer to sell at a
lump sum price after October 1, 2009 or an $800,000 structured sale of $300,000 paid at
closing and the balance of $5,000,000 paid after October 1, 2009. The CRA will be
countering this offer.
JUSTIFICA nON: Acquisition of the 2.51 acre parcel on Bayshore Drive would add the out-
parcel portion of the original 17 acre purchase and complete the assemblage of approximately 20
acres for the proposed Bayshore catalyst development project. This parcel also provides the
future site development with 815 linear feet of road frontage.
Agenda Item No. 14A
June 23, 2009
Page 8 of 12
I EXHIBIT ~
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FIFTH THIRD BANK"
June 15,2009
Mr. David Jackson
Executive Director
Bayshore Gateway Triangle
Community Redevelopment Agency
4069 Bayshore Drive
Naples, Florida 34112
Mr. Jackson:
Please find below an updated Term Sheet for Fifth Third Bank's proposal to provide a
$13,500,000 Term Loan to the Bayshore Gateway Triangle Community Redevelopment
Agency to refinance the existing Line of Credit with Wachovia Bank. and finance the
acquisition of land associated with the Gateway triangle Project.
Uvdated Term Sheet
Borrower:
Bayshore Gateway Triangle Community Redevelopment Agency ("CRA")
Guarantor:
N/A
Request:
$13,500,000 Term Loan
Purpose:
(I)
(2)
Refinance existing revolving Line of Credit debt with Wachovia
Bank.; and
Acquisition of land associated with the Gateway Triangle Project
Term: Five (5) Year Term
Amortization: Fifteen ( 15) Years
Rate:
(1)
Taxable Variable Rate Option
Taxable rate of 30-Day LIBOR plus 3.75%; for illustrative purposes,
the rate as of June 15,2009, is 4.07%.
(2) Taxable Fixed Rate Alternative
Fifth Third Bank would be pleased to offer an interest rate hedged in
the form of an interest rate swap. As of June 15,2009, the indicative
market rate of interest for a 5-year swap (including the Borrower's
option to cancel the swap at any month after the second year) would
Agenda Item No. 14A
June 23. 2009
Page 9 of 12
I EXHIBIT-p-2-- I
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FIFTH THIRD BANK"
be an indicative all-in fixed rate of interest of 6.80%. This rate is
subject to changing market conditions until execution of a swap
agreement via a recorded phone line.
The CRA may hedge the rate of interest of the proposed credit facility
via the execution of an interest rate swap with a counterparty deemed
acceptable by Fifth Third Bank. Under the interest rate swap
agreement, the CRA would receive the proposed variable rate index
and pay a fixed rate to the swap provider. The variable rate received
by the CRA would offset the proposed credit facility's variable rate
index. The proposed effective all-in fixed rate of interest to be paid by
the Borrower would be the fixed rate paid under the swap agreement
plus the proposed credit spread over the variable rate index.
Repayment:
(1)
(2)
Monthly principal plus interest;
Monthly principal plus interest (similar to a IS-year mortgage
style amortization)
Fees:
$800 Loan Documentation Fee plus Borrower is responsible for aJllegal and
out of pocket expenses associated with the proposed financing. I f the
Borrower elects to execute a swap agreement, there will be a $750 Swap
Documentation fee. All documents shall be prepared by CRA bond counsel
and documents and opinions shall be acceptable to the Bank and it's counsel.
Collateral:
The loans will be secured by tax increment revenues and a covenant to budget
and appropriate from all legally available CRA non-ad valorem revenues.
Prepayment: There are no prepayment penalties. However, if the Borrower fixes the
interest rate via the execution of a swap agreement, the Borrower is subject to
a mark to market adjustment at the time the swap is terminated.
Contingencies
and
Covenants:
]) During the term of the facility, the CRA agrees to budget and appropriate
from tax incremental revenues an amount equal to or greater than the
projected Annual Debt Service on the respective credit facilities.
2) The CRA will maintain Debt Service Coverage equal to or greater than
1.25:1.0. The calculation shall be determined by using the average of
actual receipts and cash carried forward (reserves) for the prior fiscal year
based on the CRA's annual audit.
3) The CRA agrees to maintain a Debt Reserve Fund equal to or great than:
Q Annual principal and interest debt service for the Term Loan
Agenda Item No. 14A
June 23, 2009
Page10of12
I EXHIBIT g- 3>1
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FIFTH THIRD BANK"
4) If any land is purchased by the CRA with Fifth Third Bank loan proceeds
and subsequently sold, the sale proceeds will be required to be applied
against the principal amount outstanding.
5) If any land already purchased by the CRA under the Wachovia Line of
Credit is sold, the sale proceeds will be required to be applied against the
principal amount outstanding.
6) Quarterly financial statements shall be submitted within 45-days of
quarter end.
7) Audited annual financial statements shall be submitted within 120-days of
year-end.
8) The operating Budget for the CRA shall be submitted within 45 days of
adoption.
9) The CRA is prohibited from incurring any additional debt without the
written consent of Fifth Third Bank.
10) Final credit approval required by Fifth Third Bank.
Representations and
Warranties:
Usual and customary for transactions of this type.
Events of Default:
Usual and customary for transactions of this type.
Indemnification:
Usual and customary for transactions of this type.
Governing Laws:
State of Florida
Documents:
Any potential transaction is subject to the CRA agreeing to execute
documents and provide any other documentation that the Bank deems
necessary to close the Loan facility and maintain its security interests
in the future.
Mr. Jackson, our entire Fifth Third Bank team is excited about the opportunity to partner
with the Bayshore Gateway Triangle Community Redevelopment Agency. If you have any
questions or require additional information, please feel free to contact me at 239.591.6461 or
via email atLori.Buhs@53.com.
Respectfully Submitted,
~
Lori T. Buhs
Vice President
Fifth Third Bank
Agenda Item No. 14A
June 23, 2009
Page 11 of 12
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I EXHIBIT E>~ t/ l
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FIFTH THIRD BANK"
Financing Proposal Accepted By:
Bayshore Gateway Triangle Community Redevelopment Agency
Signature:
(Print):
Title:
Date:
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