HomeMy WebLinkAbout2011-192-1585 - Tax Anticipation Note City of Miami Gardens Agenda Cover Memo Council Meeting Date: November 9, 2011 Item Type: (Enter X in box) Resolution Ordinance Other X Fiscal Impact: (Enter X in box) Ye s N o Ordinance Reading: (Enter X in box) 1 st Reading 2 nd Reading X Public Hearing: (Enter X in box) Yes No Yes No Funding Source: General Fund Advertising Requirement: (Enter X in box) Yes No x Contract/P.O. Required: (Enter X in box) Y es No RFP/RFQ/Bid #: X Strategic Plan Related (Enter X in box) Y es N o Strategic Plan Priority Area: Enhance Organizational Bus. & Economic Dev Public Safety Quality of Education Qual. of Life & City Image Communication Strategic Plan Obj./Strategy: (list the specific objective/strategy this item will address)N/A x Sponsor Name Danny O. Crew, City Manager Department: City Manager City Manager’ s Office Short Title: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MIAMI GARDENS, FLORIDA, AUTHORIZING THE ISSUANCE OF A CITY OF MIAMI GARDENS, FLORIDA TAX ANTICIPATION NOTE, SERIES 2011, IN THE PRINCIPAL AMOUNT NOT TO EXCEED $2,000,000; PROVIDING FOR THE PAYMENT OF THE NOTE; ESTABLISHING AN INTEREST RATE, MATURITY DATE AND CERTAIN OTHER PROVISIONS CONCERNING THE NOTE; AWARDING THE NOTE TO WELLS FARGO BANK, NATIONAL ASSOCIATION AT A NEGOTIATED SALE; AND PROVIDING AN EFFECTIVE DATE. Staff Summary: As in 2010, the City anticipates that as we approach the new fiscal year, we may find ourselves short of actual cash. This is due to three factors: 1) The City does not receive a steady cash flow; instead, it receives the bulk of its cash in December ‐April when property taxes are due. This often leads to a cash shortage in the months prior to receipt of the taxes; 2) Unlike most cities with utility systems and their large cash reserve, Miami Gardens has only the General Fund reserve to serve as a cash pool. Due to the reduction in the City’s reserve, this pool of liquid cash is limited; and 3) The City has a number of federal ITEM L-2) RESOLUTION Tax Anticipation Note
1515 NW 167 Street, Building 5 Suite 200 Miami Gardens, Florida 33169 and County grants outstanding. We are required to expend the cash and then seek reimbursement. This requires sufficient cash to continue to meet current obligations until reimbursement arrives. The combination of these three factors makes it likely that we will need the ability to short ‐term borrow sufficient cash to carry us through the tax payment season. On September 14, 2011, the Council adopted an ordinance to allow the City to issue the Tax Anticipation Note. At that time, we anticipated having to borrow $6 million. That figure now looks to be between $0 and $2,000,000. Staff has negotiated with the City’s banking institution Wells Fargo for the issuance of a Tax Anticipation Note not to exceed $2,000,000. Any amount drawn from the TAN will incur an interest rate of LIBOR rate plus 1.5%. The Libor Rate as of October 27 is 0.25%. The Commitment fee for the TAN is 0.5%, ($10,000). However, staff will not execute the TAN document until we are sure that the funding is really in needed. All borrowing, if used, will be repaid by January 2012. The City has incurred the bond counsel cost $3,500 (bank’s bond counsel) and not to exceed $2,500 (city’s bond counsel) in preparing this note document. Proposed Action: It is Recommend that the City Council approve the TAN resolution and Note document. Attachment: Attachment A: Bond document