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HomeMy WebLinkAboutHandout 9.b Supplemental Resolution w Memo Handout 9.b BUTLER I SNOW MEMORANDUM To: Clay County Utility Authority Board of Supervisors From: Emily Magee, Esq. Date: June 20, 2023 Subject: A Resolution Amending the Calculation of Annual Debt Service and the Issuance of Additional Bonds The proposed issuance by the Authority of its Utilities System Revenue Bond, Series 2023 (the"2023 Bond")is governed in part by the requirements of Resolution No. 93/94-27(as amended and supplemented, the "Resolution"). In particular, Section 6.02 of the Resolution dictates the financial requirements that must be satisfied for the issuance of additional debt (the "Additional Bonds Test"). The Additional Bonds Test is currently geared towards long-term debt, rather than short- or mid-term debt such as the 2023 Bond. Accordingly, based on the 8-year maturity of the Series 2023 Bond with a 3-year optional tender by the bank, the Authority is unable to satisfy the Additional Bonds Test for the 2023 Bond. The Truist Bank affiliates which hold the Series 2015 Bond and the Series 2019 Bond have agreed to waive the current Additional Bonds Test and consent to the issuance of the 2023 Bond, provided that the Authority adopt a supplemental resolution which amends the Additional Bonds Test going forward. A draft of the proposed supplemental resolution is attached hereto (the "Supplemental Resolution"), amending the relevant sections of the Resolution relating to the calculation of the annual debt service and the Additional Bonds Test. These amendments will provide the Authority with greater financial flexibility to issue additional debt in the future and keep pace with industry lending practices. CLAY COUNTY UTILITY AUTHORITY RESOLUTION NO. 2022/2023- _ A RESOLUTION OF THE BOARD OF SUPERVISORS OF THE CLAY COUNTY UTILITY AUTHORITY AMENDING AND SUPPLEMENTING RESOLUTION NO. 93/94-27 ADOPTED BY THE BOARD OF COUNTY COMMISSIONERS OF CLAY COUNTY, FLORIDA ON DECEMBER 14, 1993, AND ASSUMED BY THE AUTHORITY PURSUANT TO RESOLUTION NO. 94/95-5 ADOPTED BY THE BOARD OF SUPERVISORS OF THE AUTHORITY ON OCTOBER 1, 1994, AS HERETOFORE AMENDED AND SUPPLEMENTED; FOR THE PURPOSE OF AMENDING CERTAIN DEFINITIONS AND PROVISIONS RELATING TO THE CALCULATION OF ANNUAL DEBT SERVICE AND THE ISSUANCE OF ADDITIONAL BONDS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on December 14, 1993, the Board of County Commissioners of Clay County, Florida (the "County") duly adopted Resolution No. 93/94-27 (the "Original Resolution"), to provide for, among other things, the issuance of certain utilities system revenue bonds; and WHEREAS,the obligations of the County under the Original Resolution were assumed by the Clay County Utility Authority (the "Authority") pursuant to the provisions of the Original Resolution, Chapter 94-491, Laws of Florida, Special Acts of 1994, and Resolution No. 94/95-5 duly adopted by the Board of Supervisors of the Authority on October 1, 1994, as amended and supplemented (together with the Original Resolution, the "Resolution") (capitalized terms not defined herein shall have the meaning assigned to such terms in the Resolution); and WHEREAS, Section 8.02 of the Resolution permits the Authority to adopt supplemental resolutions for the purpose of amending certain terms of the Resolution, subject to the consent and approval of the Holder or Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding; WHEREAS, it is desirable and in the best financial interest of the Authority to amend the certain definitions and provisions relating to the calculation of Annual Debt Service and the issuance of Additional Bonds set forth in Section 6.02(B)of the Resolution,in the manner hereafter provided; NOW,THEREFORE,BE IT RESOLVED BY THE BOARD Of SUPERVISORS OF THE CLAY COUNTY UTILITY AUTHORITY: SECTION 1. AUTHORITY FOR THIS SUPPLEMENTAL RESOLUTION. This Supplemental Resolution is adopted pursuant to the Act and other applicable provisions of law and Section 8.02 of the Resolution. In accordance with Section 8.02 of the Resolution, the Holders of not less than a majority in aggregate principal amount of the Bonds Outstanding has consented to and approved of the adoption of this Supplemental Resolution and the amendments contained herein. A copy of such consents are attached hereto as Exhibit A. SECTION 2. AMENDMENTS. (a) The following definitions are hereby added to Section 1.01 of the Resolution: "Chief Financial Officer" means the Chief Financial Officer of the Authority, or such other officer designated by the Executive Director. "Commercial Paper Obligations" means all of the Bonds (which may designated as notes or other obligations) of a Series or a proportionate maturity thereof with a maturity of not less than 271 days so designated by the Authority by a supplemental resolution prior to the issuance thereof. "Designated Maturity Bonds" means all of the Bonds of a Series or a particular maturity thereof, so designated by the Authority prior to the issuance thereof [for which 20% or more of the principal payments of which are due in a single year and which also may be Option Bonds]. "Option Bonds"means Bonds for which by their terms are subject to tender by the Holder thereof for payment or purchase by or on behalf of the Issuer prior to the stated maturity thereof, or the maturities of which may be extended at the option of the Holder. (b) The definition of "Annual Debt Service"in Section 1.01 of the Resolution is hereby amended and restated in its entirety to read as follows (additions indicated by underline): "Annual Debt Service" shall mean, at any time, the aggregate amount in the then current Fiscal Year of(1) interest required to be paid on the Outstanding Bonds during such Fiscal Year, except to the extent that such interest is to be paid from amounts in the Payment Subaccount derived from Bond proceeds, (2) principal of Outstanding Serial Bonds maturing in such Fiscal Year, (3) the Amortization Installments herein designated with respect to such Fiscal Year and (4)any amounts owed by the Issuer to the issuer of such Reserve Subaccount Credit Instrument as a result of a draw thereon or a claim thereunder; provided that in computing such Annual Debt Service for any future period, any Variable Rate Bonds shall be deemed to bear interest at all times to the maturity thereof at a constant rate of interest equal to the higher of (i) the actual rate on the date of calculation, or if the indebtedness is not yet outstanding, the initial rate (if established and binding), (ii) if the indebtedness has been outstanding for at least twelve months,the average rate over the twelve months immediately preceding the date of calculation, and (iii) (1) if the interest on the indebtedness is excludable from gross income under the applicable provisions of the Code, the most recently published Bond Buyer 25 Bond Revenue Index (or comparable index if no longer published) plus fifty (50) basis points, or (2) if interest is not so excludable, the interest rate on direct U.S. Treasury Obligations with comparable maturities plus fifty (50) basis points. For purposes of this definition, all amounts payable on a Capital Appreciation Bond shall be considered a principal payment due in the year it becomes due. For purposes of calculating the Annual Debt Service with respect to Option Bonds,the optional tender or"put"date(s) and amount(s)shall be ignored and the stated maturity date(s)of such Option Bonds shall be used for the purposes of this calculation unless the Authority has received notice of a tender or put from the applicable Holder and the failure of the Authority to repay such tendered Bonds in full on the optional tender or"put" date would result in an event of default under the related documents (e.g., no term-out option available to the Authority). For purposes of calculating the Annual Debt Service with respect to Designated Maturity Bonds, the unamortized principal thereof coming due on the applicable maturity date, Amortization Installment or tender date of the Option Bonds that the Issuer reasonably anticipates refinancing,as reflected in the Annual Budget and/or a certificate of the Chief Financial Officer, shall not be included, and in lieu thereof there shall be included in the Annual Debt service for the Bond Year in which such final maturity occurs and other Bond Years only the principal amount thereof the Authority certifies that it reasonably anticipates to become due in each such Bond Year, taking into account any such anticipated refinancing of such Designated Maturity Bonds. For purposes of calculating the Annual Debt Service with respect to Commercial Paper Obligations, only the interest component of such Commercial Paper Obligations and the principal component of the Commercial Paper Obligations the Issuer reasonably expects to retire and not to pay with the proceeds of roll-over Commercial Paper Obligations in such Bond Year(as reflected in the Annual Budget and/or a certificate of the Chief Financial Officer)shall be included in the calculation of Annual Debt Service. The interest rate on the Commercial Paper Obligations shall be computed in the same manner as the computation of interest on Variable Rate Bonds as described above. (c) Section 6.02 of the Resolution is hereby amended by adding the following paragraph at the end of Section 6.02: For all purposes under this Resolution,upon the effective date of a new line of credit(whether structured as a draw down loan or a revolving line of credit) the Authority may assume either(1)that the full amount available thereunder has been drawn on such date of issuance and thereafter, no additional indebtedness shall be deemed to arise when any funding occurs under any such indebtedness (a "Full Draw LOC") or(2) alternatively may assume that the amount of each draw may be treated as a separate Bond issue under this Resolution on each date on which a draw is made under such line of credit (a "Partial Draw LOC"). The principal shall be amortized in accordance with the terms thereof;provided,however,if the Authority executes a(x)Full Draw LOC and designates it as a Designated Maturity Bond,the entire amount may be assumed drawn on the effective date on the date of the first draw thereunder and the repayment schedule shall be assumed to be as described in the definition of Designated Maturity Bond,taking into account the current amount to be drawn and all previous amounts drawn and outstanding thereunder. SECTION 3. RESOLUTION TO REMAIN IN FULL FORCE AND EFFECT. The Resolution, as amended by this Supplemental Resolution, shall remain in full force and effect. SECTION 4. EFFECTIVE DATE. This Supplemental Resolution shall take effect immediately upon its adoption. PASSED,APPROVED AND ADOPTED this day of ,2023. CLAY COUNTY UTILITY AUTHORITY (OFFICIAL SEAL) Wendell Davis Chairman, Board of Supervisors ATTEST: By: Janice Loudermilk Secretary, Board of Supervisors Exhibit A 80328022.v1