COUN

M 1 OADATE 09-2 - 018

ORDINANCE 18-48COUNCIL ITEM 8ADATE

10/8/18

AN ORDINANCE AUTHORIZING THE ISSUANCE OF NOT TO EXCEED$60,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF PORT ST.LUCIE, FLORIDA TAXABLE SPECIAL OBLIGATION REFUNDING REVENUEBONDS, SERIES 2018, IN ONE OR MORE SERIES, TO REFUND ALL OF THECITY'S OUTSTANDING RESEARCH FACILITIES REVENUE BONDS, SERIES2010 (OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENETHERAPY INSTITUTE FLORIDA CORP. PROJECT); PROVIDING FOR ACOVENANT TO BUDGET AND APPROPRIATE LEGALLY AVAILABLE NON-ADVALOREM REVENUES TO PAY THE PRINCIPAL OF, REDEMPTION PREMIUM,IF ANY, AND INTEREST ON THE SERIES 2018 BONDS; PROVIDING FORCERTAIN RIGHTS OF THE HOLDERS OF SUCH BONDS; AND PROVIDING ANEFFECTIVE DATE.

WHEREAS, the City of Port St. Lucie, Florida (the "City") previously issued itsResearch Facilities Revenue Bonds, Series 2010 (Oregon Health and Science UniversityVaccine and Gene Therapy Institute Florida Corp. Project) (the "Series 2010 Bonds") andloaned all of the proceeds thereof (the "Loan") to Vaccine and Gene Therapy Institute ofFlorida Corporation ("VGTI") for the acquisition, construction and equipping of a state-of-the-art biomedical research, development, and training facility on real property locatedwithin the City (the "Research Facility").

WHEREAS, pursuant to the financing documents related to the Series 2010 Bondsand the Loan (the "2010 Financing Documents"), VGTI was obligated to make timelyloan payments with respect to the Loan in amounts sufficient to pay the scheduled debtservice on the Series 2010 Bonds and the City agreed to budget and appropriate sufficientlegally available non-ad valorem revenues of the City to cure any deficiencies in the debtservice reserve fund established with respect to the Series 2010 Bonds (the "ReserveFund").

WHEREAS, commencing May 1, 2015, and continuing thereafter, VGTI failed tomake any of the required payments on the Loan, requiring draws on the debt servicereserve fund to make scheduled payments on the Series 2010 Bonds and requiring theCity to replenish amounts so drawn on the Reserve Fund.

WHEREAS, the City initiated legal action against VGTI to enforce its obligationswith respect to the Loan and the Circuit Court for the Nineteenth Judicial Circuit in andfor St. Lucie County, Florida issued an order appointing a receiver (the "Receiver") forVGTI and the Research Facility.

ORDINANCE 18-48

WHEREAS. since the time of VGTI's Loan default, the City has been required topay debt service on the Series 2010 Bonds, operation and maintenance costs with respectto the Facility, costs and expenses of the Receiver and the trustee for the Series 2010Bonds, and other related costs and expenses.

WHEREAS, the Receiver was unable to sell, lease, or otherwise obtain third partyuse of the Research Facility.

WHEREAS, in order to reduce its costs related to Research Facility and toimprove the likelihood of selling, leasing or otherwise obtaining third party use of theResearch Facility, the City obtained ownership of the Research Facility as of August 11,2017, pursuant to the Transfer Agreement, dated as of March 31, 2017, by and amongVGTI, the City and UMB Bank, National Association.

WHEREAS, the City has actively marketed the Research Facility for sale, lease orother use and received its first reasonable offer to purchase the Research Facility fromRER Ventures LLC (including any successors or assigns, the "Purchaser") pursuant to aLetter of Intent dated June 3, 2018 (the Letter of Intent").

WHEREAS, the purchase price set forth in the Letter of Intent is equal to the fullvalue of the Research Facility set forth in an appraisal prepared by Appraisal &Acquisition Consultants. Inc., dated as of March 10, 2017.

WHEREAS, the City and the Purchaser are entering into a purchase agreement forthe sale and purchase of the Research Facility.

WHEREAS, the sale of the Research Facility by the City will eliminate the City'scosts and expenses with respect to the operation and maintenance of the Research Facilityand the costs and expenses of the trustee for the Series 2010 Bonds.

WHEREAS, under applicable federal tax law provisions, upon the sale by the Cityof the Research Facility to the Purchaser, in order to preserve the tax-exempt status of theSeries 2010 Bonds, it is necessary to defease and refund all of the Series 2010 Bonds.

WHEREAS, the most efficient, cost-effective and desirable method of defeasingand refunding the Series 2010 Bonds is by the issuance of the hereinafter defined Series2018 Bonds payable from a covenant of the City to budget and appropriate sufficientNon-Ad Valorem Revenues (as defined herein) to pay the scheduled debt service on theSeries 2018 Bonds, all to the extent and in the manner provided herein and in thehereinafter defined Bond Resolution.

WHEREAS, the refunding of the Series 2010 Bonds through the issuance of theSeries 2018 Bonds will preserve the tax-exempt status of the Series 2010 Bonds and willresult in net present value debt service savings for the City.

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ORDINANCE 18-48

WHEREAS, the principal of. redemption premium, if any, and interest on theSeries 2018 Bonds shall be paid from the Non-Ad Valorem Revenues, budgeted andappropriated in the manner and to the extent provided herein and in the Bond Resolution,unless otherwise paid by such entity as shall provide credit enhancement, if any. on theSeries 2018 Bonds; the City shall never use or be required to use its ad valorem taxingpower for the payment of the Series 2018 Bonds and the Series 2018 Bonds shall notconstitute a general obligation of the City or a pledge of its faith and credit, nor shall theholders of the Series 2018 Bonds have any lien or encumbrance on any property of theCity.

SECTION 1.

DEFINITIONS. When used in this Ordinance, the followingterms shall have the following meanings, unless some other meaning is plainly intended:

"Bond Resolution" shall mean the resolution of the City providing for thesecurity and payment for the Series 2018 Bonds, the establishment and operation of fundsand accounts, the rights and remedies of the owners of the Series 2018 Bonds and variousother terms and details relating to the Series 2018 Bonds. as the same may be amended orsupplemented from time to time.

"Council" shall mean the City Council of the City.

"Non-Ad Valorem Revenues" shall mean the non-ad valorem revenues of theCity legally available to be budgeted and appropriated to pay the debt service on theSeries 2018 Bonds. as further described in the Bond Resolution.

"Ordinance" shall mean this Ordinance adopted by the Council on the datehereof. as it may be amended and supplemented from time to time.

"Refunded Bonds" shall mean all of the outstanding Series 2010 Bonds.

"Series 2010 Bonds" shall mean the City of Port St. Lucie, Florida ResearchFacilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccineand Gene Therapy Institute Florida Corp. Project)

"Series 2018 Bonds" shall mean the City of Port St. Lucie, Florida TaxableSpecial Obligation Refunding Revenue Bonds. Series 2018 issued by the City pursuant tothis Ordinance and the Bond Resolution in one or more series.

The words "herein," "hereunder." "hereby," "hereto." "hereof" and any similarterms shall refer to this Ordinance.

Words importing the singular number include the plural number. and vice versa.

SECTION 2.

AUTHORIZING THE REFUNDING OF THEREFUNDED BONDS. The Council hereby authorizes and approves the refunding of

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ORDINANCE 18-48

the Refunded Bonds in order to preserve the tax-exempt status of the Refunded Bondsand to achieve debt service savings for the City.

SECTION 3. ISSUANCE OF THE SERIES 2018 BONDS. The Series2018 Bonds are hereby authorized to be issued in one or more series in the aggregateprincipal amount of not exceeding $60,000.000. The title and designation of the Series2018 Bonds may be modified by the Bond Resolution to reflect the actual terms andseries of such Bonds. The Series 2018 Bonds shall be issued for the principal purposes of(A) refunding the Refunded Bonds, (B) funding a debt service reserve, if necessary ordesirable, (C) paying for credit enhancement for the Series 2018 Bonds, if necessary ordesirable, and (D) paying costs and expenses of issuing the Series 2018 Bonds. Theprincipal of, redemption premium, if any, and interest on the Series 2018 Bonds shall bepayable from the Non-Ad Valorem Revenues, budgeted and appropriated in the mannerand to the extent provided herein and in the Bond Resolution.

The Series 2018 Bonds shall be dated such date or dates, shall bear interest at suchrate or rates, shall mature at such times and in such amounts as may be determined by theBond Resolution, and may be made redeemable before maturity, at the option of the City,at such price or prices and under such terms and conditions as may be determined by theBond Resolution. The Council shall determine by the Bond Resolution the form of theSeries 2018 Bonds, the manner of executing such Bonds, and shall fix the denominationor denominations of such Bonds, the place or places and dates of payment of the principaland interest, and such other terms and provisions of the Series 2018 Bonds as it deemsappropriate. The Series 2018 Bonds may be issued as capital appreciation Bonds, currentinterest paying Bonds, variable rate Bonds, serial Bonds. term Bonds. or any combinationthereof, as shall be determined by the Bond Resolution. In case any officer whosesignature or a facsimile of whose signature shall appear on the Series 2018 Bonds shallcease to be such officer before the delivery of such Bonds, such signature or suchfacsimile shall nevertheless be valid and sufficient for all purposes the same as if he hadremained in office until such delivery. The Council may sell the Series 2018 Bonds insuch manner and for such price as it may determine by the Bond Resolution to be in thebest interests of the City. The Series 2018 Bonds may be further secured by any creditenhancement as the Council by the Bond Resolution deems appropriate.

The Series 2018 Bonds may be issued without any other proceedings or thehappening of any other conditions or things than those proceedings, conditions or thingswhich are specifically required by this Ordinance or the Bond Resolution.

The proceeds of the Series 2018 Bonds shall be disbursed in such manner andunder such restrictions. if any, as may be provided by the Bond Resolution.

The Series 2018 Bonds shall be secured by the Bond Resolution which mayinclude, but without limitation, provisions as to the rights and remedies of the holders of

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ORDINANCE 18-48

the Series 2018 Bonds, the establishment and application of funds and such other mattersas are customarily in such an instrument.

SECTION 4. COVENANT TO BUDGET AND APPROPRIATE. TheCity shall covenant and agree pursuant to the Bond Resolution, to the extent permitted byand in accordance with applicable law and budgetary processes, to prepare, approve andappropriate in its annual budget for each fiscal year of the City, by amendment ifnecessary. legally available Non-Ad Valorem Revenues of the City in an amount which issufficient to pay scheduled debt service on the Series 2018 Bonds. Such covenant andagreement on the part of the City to budget and appropriate sufficient amounts of legallyavailable Non-Ad Valorem Revenues will be cumulative and shall continue until suchlegally available Non-Ad Valorem Revenues in amounts sufficient to make all requireddebt service payments shall have been budgeted, appropriated and actually paid;provided, however, that such covenant shall not constitute a lien, either legal or equitable,on any of the City's legally available Non-Ad Valorem Revenues or other revenues, norshall it preclude the City from pledging in the future any of its legally available Non-AdValorem Revenues or other revenues to other obligations (subject to any anti-dilutionprovisions set forth in the Bond Resolution). nor shall it give the holders of the Series2018 Bonds a prior claim on the legally available Non-Ad Valorem Revenues.Notwithstanding the foregoing covenant of the City. the City does not covenant tomaintain any services or programs, now provided or maintained by the City, whichgenerate Non-Ad Valorem Revenues. The City may not expend moneys not appropriatedor in excess of its current budgeted revenues. The obligation of the City to budget,appropriate and make debt service payments from its legally available Non-Ad ValoremRevenues will be subject to the availability of legally available Non-Ad ValoremRevenues after satisfying funding requirements for obligations having an express lien onor pledge of such Non-Ad Valorem Revenues and after paying all expenses for servicesnecessary for the conducting of the public safety and general governmental operations ofthe City, all as provided in the Bond Resolution.

SECTION 5. TAXING POWER NOT PLEDGED. The Series 2018Bonds issued under the provisions of this Ordinance shall not be deemed to constitute apledge of the faith and credit or taxing power of the City, but such Bonds shall be payablefrom the Non-Ad Valorem Revenues in the manner and to the extent provided herein andin the Bond Resolution, unless otherwise paid by such entity as shall provide creditenhancement on the Series 2018 Bonds, if any. The issuance of the Series 2018 Bondsunder the provisions of this Ordinance shall not directly, indirectly or contingentlyobligate the City to levy or to pledge any form of ad valorem taxation whatever therefore.No holder of any such Bond shall ever have the right to compel any exercise of the advalorem taxing power on the part of the City to pay any such Bond or the interest thereonagainst any property of the City, nor shall the Series 2018 Bonds constitute a charge, lienor encumbrance, legal or equitable, upon any property of the City.

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ORDINANCE 18-48

SECTION 6. TRUST FUNDS. All moneys received pursuant to theauthority of this Ordinance. whether as proceeds from the sale of the Series 2018 Bondsor any Non-Ad Valorem Revenues, shall be deemed to be trust funds, to be held andapplied solely as provided in this Ordinance and in the Bond Resolution.

SECTION 7. REMEDIES OF BONDHOLDERS. The holders of theSeries 2018 Bonds, except to the extent the rights herein given may be restricted by theBond Resolution, may, whether at law or in equity. by suit, action, mandamus or otherproceeding, protect and enforce and compel the performance of all duties requiredhereby, or by such Bond Resolution, to be performed by the City.

SECTION 8. ALTERNATIVE METHOD. This Ordinance shall bedeemed to provide an additional and alternative method for the doing of things authorizedhereby and shall be regarded as supplemental and additional to powers conferred by otherlaws, and shall not be regarded as in derogation of any powers now existing or whichmay hereafter come into existence. This Ordinance, being necessary for the health, safetyand welfare of the inhabitants and/or property owners of the City, shall be liberallyconstrued to effect the purposes hereof.

SECTION 9. VALIDATION. To the extent deemed necessary ordesirable by Bond Counsel, Nabors, Giblin & Nickerson, P.A., or by the Interim CityAttorney, the Interim City Attorney is authorized to institute appropriate proceedings forvalidation of the Series 2018 Bonds pursuant to Chapter 75, Florida Statutes.

SECTION 10. GENERAL AUTHORITY. The members of the Council ofthe City and the officers, attorneys and other agents or employees of the City are herebyauthorized to do all acts and things required of them by this Ordinance, or desirable orconsistent with the requirements hereof for the full, punctual and complete performanceof all the terms, covenants and agreements contained herein.

SECTION 11. SEVERABILITY. In the event that any portion or section ofthis Ordinance is determined to be invalid, illegal or unconstitutional by a court ofcompetent jurisdiction, such decision shall in no manner affect the remaining portions orsections of this Ordinance which shall remain in full force and effect.

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ORDINANCE 18-48

SECTION 12.

EFFECTIVE DATE. This Ordinance shall take effectimmediately upon its adoption by the City Council of the City of Port St. Lucie, Florida.

PASSED AND APPROVED by the City Council of the City of Port St. Lucie,Florida this 8th day of October. 2018.

CITY COUNCILCITY OF PORT ST. LUCIE

By:

Gregory J. Oravec, Mayor

ATTEST:

Karen A. Phillips. City Clerk

APPROVED AS TO FORM:James Stokes. Interim City Attorney

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pfm

City of Port St. Lucie, Florida

Proposed Taxable . Special ObligationRefunding Revenue Bonds, Series 2018

September 24, 2018

PFM Financial 300 S. Orange Avenue, 407-648-2208

Advisors LLC Suite 1170

Orlando, FL 32801

pfm.com

Transaction History• In June of 2010, the City issued $64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon

Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) to fund

construction of a building to be used for biomedical and other scientific research

• The 2010 Bonds are currently outstanding in the par amount of $57,320,000 with tax exempt coupons

ranging from 4.125% to 5.00% and are callable May 1, 2020 at par

• In order to sell the building funded with proceeds of the 2010 Bonds and maintain the tax-exempt status

of the 2010 Bonds, the City must refund all of the 2010 Bonds through the issuance of Taxable Special

Obligation Refunding Revenue Bonds, Series 2018

• Given the current favorable market conditions, the City must decide whether to move forward with the

refunding prior to the closing of the building sale or wait and close the transactions simultaneously

• If move forward with refunding prior to closing of the building sale, the $2.9 MM upfront payment would not be

available to contribute to refunding but could be used to make debt service payments on the 2018 Bonds

• The balance of this presentation will outline the estimated debt service savings associated with the

refunding under current market conditions as well as provide a sensitivity analysis to show the impact of

potential rising interest rates

© PFM 2

Historical Treasury Rates

• The below graphic shows a 10 year history of the 5-year, 10-year and 30-year US Treasury Rates.

Since 2016, taxable interest rates have been on the rise with the most significant increase on the

short end of the yield curve.

6.0

TSY Yields (January 2, 2008 - September 10, 2018)

5.0

4.0

1.0

0.0Jan-08 May-09

Sep-10

Feb-12

Jun-13

Nov-14

Mar-16

Aug-17

-5-Year

- 10-Year -30-Year

Source: U.S. Treasury Market data as of September 10, 2018.

3

Refunding Results Under Current Market Conditions

DatePrior Debt Refunding

Savings PV SavingsDebt ServiceService5/1/2019 2,072,181 1,749,278 322,903 303,7345/1/2020 4,143,863 3,766,532 377,331 359,6195/1/2021 4,145,113 3,767,168 377,945 344,959

5/1/2022 4,145,506 3,764,609 380,897 333,029

5/1/2023 4,145,256 3,764,558 380,699 318,772

5/1/2024 4,141,256 3,765,960 375,297 301,001

5/1/2025 4,143,850 3,768,352 375,499 288,4995/1/2026 4,146,000 3,766,593 379,408 279,202

5/1/2027 4,145,500 3,765,553 379,948 267,768

5/1/2028 4,145,500 3,765,865 379,636 256,2265/1/2029 4,145,750 3,767,262 378,489 244,642

5/1/2030 4,146,000 3,764,469 381,531 236,142

5/1/2031 4,141,000 3,767,407 373,593 221,467

5/1/2032 4,140,750 3,764,464 376,286 213,595

5/1/2033 4,144,750 3,765,460 379,290 206,164

5/1/2034 4,142,500 3,764,781 377,719 196,619

5/1/2035 4,144,000 3,767,767 376,233 187,554

5/1/2036 4,143,750 3,765,682 378,069 180,471

5/1/2037 4,141,500 3,768,525 372,976 170,492

5/1/2038 4,142,000 3,765,855 376,145 164,624

5/1/2039 4,144,750 3,767,673 377,077 158,005

5/1/2040 4,144,250 3,764,436 379,814 152,381

5/1/2041 4,145,250 3,764,843 380,407 146,121

5/1/2042 4,142,250 3,763,440 378,810 139,305

97,382,525 88,366,528 9,015,997 5,670,392

PV of savings from cash flow

5,670,392

Less: DSRF Release

(4,146,000)

Net PV Savings

1,524,392

Note 1: Based on current market conditions and subject to change.© PFM

Note 2: $2.9 MM upfront payment from sale could be used to make future debt service payments.

• Based on current market conditions, the City

would realize $1.5 MM of net present value

debt service savings or 2.66% of the refunded

bonds par amount. Annual debt service would

be decreased by approximately $380,000.

Dated/Delivery Date

11/14/2018

Refunding Par

54,905,000

DSRF Contribution

4,146,000

Sinking Fund Contribution

655,000

Refunded Par Amount

57,320,000

Call Date

5/1/2020

Maturities Refunded

2019-2042

Gross Debt Savings

9,015,997

PV Debt Service Savings

1,524,392

% Debt Service Savings

2.66%

True Interest Cost

4.34%

Negative Arbitrage

1,367,624

PV of 1 Basis Point

56,135

4

Refunding Results Under Current Market Conditions + 25 bps

DatePrior Debt Refunding

Savings PV SavingsService Debt Service5/1/2019 2,072,181 1,787,783 284,398 264,931

5/1/2020 4,143,863 3,852,562 291,301 276,6405/1/2021 4,145,113 3,856,201 288,912 262,115

5/1/2022 4,145,506 3,856,388 289,119 250,675

5/1/2023 4,145,256 3,853,796 291,461 241,361

5/1/2024 4,141,256 3,852,560 288,697 228,3895/1/2025 4,143,850 3,857,208 286,643 216,714

5/1/2026 4,146,000 3,852,383 293,618 212,063

5/1/2027 4,145,500 3,853,149 292,351 201,712

5/1/2028 4,145,500 3,854,903 290,597 191,540

5/1/2029 4,145,750 3,857,360 288,390 181,587

5/1/2030 4,146,000 3,855,228 290,772 174,872

5/1/2031 4,141,000 3,853,422 287,578 165,215

5/1/2032 4,140,750 3,855,525 285,225 156,534

5/1/2033 4,144,750 3,855,908 288,842 151,410

5/1/2034 4,142,500 3,854,142 288,359 144,399

5/1/2035 4,144,000 3,855,545 288,456 137,990

5/1/2036 4,143,750 3,856,356 287,395 131,334

5/1/2037 4,141,500 3,856,342 285,159 124,480

5/1/2038 4,142,000 3,855,270 286,731 119,551

5/1/2039 4,144,750 3,852,907 291,844 116,214

5/1/2040 4,144,250 3,854,866 289,384 110,076

5/1/2041 4,145,250 3,854,401 290,849 105,672

5/1/2042 4,142,250 3,856,272 285,978 99,240

97,382,525 90,450,471 6,932,054 4,264,716

PV of savings from cash flow

4,264,716

Less: DSRF Release

(4,146,000)

Net PV Savings

118,716

Note 1: Based on current market + 25 bps conditions and subject to change.© PFM

Note 2: $2.9 MM upfront payment from sale could be used to make future debt service payments.

• Based on current market conditions + 25 bps, the

City would realize $118,716 of net present value

debt service savings or 0.20% of the refunded

bonds par amount. Annual debt service would be

decreased by approximately $290,000.

Dated/Delivery Date 11/14/2018

Refunding Par 54,820,000

DSRF Contribution 4,146,000

Sinking Fund Contribution 655,000

Refunded Par Amount 57,320,000

Call Date 5/1/2020

Maturities Refunded 2019-2042

Gross Debt Savings 6,932,054

PV Debt Service Savings 118,716

Debt Service Savings 0.20%

True Interest Cost 4.57%

Negative Arbitrage 1,485,808

PV of 1 Basis Point 55,191

5

Timing Moving Forward• If the City elects to move forward with the refunding of the 2010 Bonds prior to the sale date of the

building, below is the timing of next steps.

September 24: 1st Reading of Bond Ordinance

October 8: 2nd Reading of Bond Ordinance and Approval of Bond Resolution

• Week of October 22: Bond Sale (lock in interest rates and savings)

• Week of November 19: Bond Closing

• If for some reason the building sale is not completed after the refunding closes, the City will still have

achieved debt service savings and eliminated the tax exempt restrictions on the 2010 Bonds that limit

the flexibility associated with the building sale process.

© PFM

6

PORT ST. LUCIE CITY COUNCILAGENDA ITEM SUMMARY

Meeting Date: September 24, 2018

Agenda Item #: 1 OA

PLACEMENT: First Reading of Ordinances / Public Hearing

ACTION REQUESTED: Motion / Vote

APPROVE THE FIRST READING OF THE ORDINANCE AUTHORIZING THE ISSUANCE OFTAXABLE SPECIAL OBLIGATION REFUNDING BONDS TO REFUND THE OUTSTANDINGVGTI TAX EXEMPT BONDS.

SUBMITTED BY: Jeff Snyder, Chief Finance Officer

STRATEGIC PLAN LINK: The City ' s Mission to be financially responsible.

EXECUTIVE SUMMARY (General Business): The original 2010 tax exempt bonds that funded theconstruction of the Florida Center for Biosciences (formerly VGTI) facility must be paid off (refunded)in order to sell the building for non-public purpose use. Taxable refunding bonds will be used tofinance the refunding.

PRESENTATION INFORMATION: Staff will provide a short informational presentation.

STAFF RECOMMENDATION: Move that the Council approve the first reading of the Ordinanceauthorizing the issuance of the taxable refunding bonds.

ALTERNATE RECOMMENDATIONS:

1. Move that the Council amend the recommendation and approve the first reading of theOrdinance authorizing the issuance of the taxable refunding bonds.

2. Move that the Council not approve the ordinance and provide staff direction.

BACKGROUND: In June of 2010, the City issued $64,035,000 of tax exempt Research FacilitiesRevenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene TherapyInstitute Florida Corporation Project). The entity, referred to as VGTI, was to make all the debtservice payments for those bonds. In May of 2015, VGTI stopped making its debt service paymentsand subsequently vacated the building. The City then started making the debt service payments asobligated per the bond documents. The current outstanding par amount of the bonds is$57,320,000.

ISSUES/ANALYSIS: The City is in the process of selling the building to obtain relief from the annualdebt service payments and the other carrying costs of maintaining the building. The sale proceedswill not be sufficient to pay off the entire amount due on the 2010 bonds. And with the buildingtentatively being sold for a non-public purpose use, the entire balance of tax exempt bonds has tobe paid off to allow for the sale of the building. Taxable bonds will therefore be used to refund theoutstanding balance of the 2010 tax exempt bonds.

Agenda Memorandum (General Business) V 3.5

FINANCIAL INFORMATION: Under current market conditions, it is estimated that the City wouldrealize an overall present value debt service savings of $1,524,392, which is a 2.66% debt servicesavings. This would meet the City ' s refunding guidelines of a minimum of either $400,000 or a 3%savings. The current annual debt service payment of $4.1 would be reduced by approximately$290,000. With interest rates rising, waiting to do the refunding would possibly reduce the savingsto below the refunding guideline minimums.

The bond will be structured with a partial, optional early 5-year call to coincide with when the bulkof the sales proceeds are to be received because of the delayed balloon payment provision in thebuilding sale contract. When received, the balloon payment will be used to call bonds and realizeeven further debt service savings. The initial $2.9 million down payment expected to be receivedaround January of 2019 when the sale is closed will be used to pay approximately $1 million to thestate for the state's funded equipment, with the balance of $1.9 million going towards the annualdebt service payment.

SPECIAL CONSIDERATION: N/A

LOCATION OF PROJECT: N/A

ATTACHMENTS:(1) Ordinance(2) Presentation

NOTE: All of the listed items in the "Attachment" section above are in the custody of the City Clerk. Any item(s) notprovided in City Council packets are available upon request from the City Clerk.

LEGAL SUFFICIENCY REVIEW:Reviewed by Melany K. Crawford, Assistant City Attorney. Approved as to Legal form and sufficiencyby Melany K. Crawford, Assistant City Attorney.

ROUTING:1. Department requesting Agenda Item: Finance DivisionAPPROVAL(S):2. Department preparing Agenda Item: Chief Financial Officer Jeff Snyder3. Secondary Department Approval: N/A4. City Manager' s Office: David Graham, Assistant City Manag e r/5. City Manager ' s Office: N/A

/

6. City Manager: Russ Blackburn

Agenda Memorandum (General Business) V 3.5