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HomeMy WebLinkAbout02-001RESOLU1-J:ON NO. 0Z-01 A RESOLUT'J:ON ADOPT'J:N6 A REVTSED SET OF 6UTDELINES AND PROCEDURES FOR THE TSSUANCE OF TNDUSTRTAL DEVELOPMENT REVENUE BONDS TN ST. LUCIE COUNTY. WHEREAS, the Board of County Commissioners has made the following determinations: 1. Part IT of Chapter 159, Florida Statutes (the IbRB Act, authorizes this Board to Issue Industrial bevelopment Revenue Bonds ( IbRB for projects to be used by private sector entities (Projects). 2. Section 159.29, Florida Statutes, directs this Board to determine whether proposed Project complies with specified criteria and requirements. 3. The Internal Revenue Code of 1986, as amended (the "Code"), imposes certain requirements which must be satisfied in connection with the issuance of IbRB. 4. On ,Tanuary 15, 1985, after publishing notice in the Fort Pierce News Tribune on December 20, 1984, and January 4, 1985, this Board held a public hearing on a proposal to establish guidelines and procedures for the issuance of IbRBs in fit. Lucia County. 5. By Resolution 85-28, this Board approved "Guidelines and Procedures for the Issuance of Industrial Revenue Bonds in St. Lucia County" (the "Guidelines"). 6. It is necessary and desirable in light of the responsibilities imposed by the IbRB Act and the complexity of the requirements imposed by the Code that the County provide explicitly for review of proposed Projects and TbRBs by bond counsel and financial advisor retained by the County in order to fully and adequately provide for protection of the interests of the County in connection with the issuance by the County of IbRBs and for the payment of fees associated with such review by the applicant for such financing. 7. The attached Guidelines contain revisions to Sections II.C. and III.C.1. intended to address such matters. 8. On. January 15, 2002, after publishing notice in The Tribune on January 2, 2002, this Board held a public hearing on the Guidelines, as so revised. NOW, THEREFORE BE TT RESOLVED, by the Board of County Commissioners of 5t. Lucia County, Florida: A. The Guidelines and Procedures for the Issuance of Industrial Development Revenue Bonds in St. Lucia County, as revised and as attached to this resolution be, and they are hereby, adopted. hereof. This resolution and the Guidelines shall be effective on the date of adoption PASSED AND DULY ADOPTED, this 15th day of January, 2002. BOARD OF COUNTY COMMISSIONERS ST. LUCRE COUNTY, FLORIDA (SEAL) By: of the ~UIDELINE$ AND PROCEDURES FOR THE ISSUANCE OF INDUSTRIAL bEVELOPMENT REVENUE 'BONb$ IN ST. LUCIE COUNTY BACK6ROUND Tndustrial development revenue bonds (IbRBs) are securities issued by a local governmental agency (here, St. Lucia County) for the purpose of financing capital facilities for use by private business and industry. Usually, the facilities are leased or sold by the agency to qualifying industries for lease or installment purchase payments necessary to retire the bonds. The debt service on the bonds is paid solely from revenues or payments received from the company; there is no undertaking on the part of the County or any other governmental unit to make such payments other than from the least or installment payments received. IbRB financing often is comparable to ordinary note and mortgage financing in that o private lender (the bond purchaser) agrees to lend funds to o private company (by buying the bonds). The facilities (the capital project) that the lender's funds (the bond proceeds) are used to finance are mortgaged to secure repayment of the loan (the bonds). In the case of IDRBs, the local issuing agency (St. Lucia County) serves as a pass- through medium. The loan is made to (the bonds are issued by) the County, and the County in turn lends the funds (the bond proceeds) to the private company (the project proponent) to pay the cost of the capital project. For federal income tax purposes, the action of passing the loan through the County qualifies the loan as a special obligation of a local governmental agency. Because IDRBs are considered a special obligation of a local governmental unit, and providing the project meets all qualifying conditions, the interest on the bonds is not subject to federal income tax. The lender (the bond purchaser), therefore, need not charge the same interest rate in order to receive the same net (after tax) rate of return as if the loan were made on a conventional basis. The resulting savings is passed on to the borrower (the project proponent) in the form of an interest rate that is lower than that obtainable through conventional financing. G:katty\docsklDRB Guidelines II. GUIDELINES Aa Use of Bond Proceeds. The use of proceeds realized from the sale of IDRBs issued by the Board of County Commissioners of St. Lucia County shall be governed by the regulations and laws of the State of Florida and the United States Tnternal Revenue Code. Financial Structure. The legal structure of the proposed financing may take any form that is permitted by the applicable federal and state statutes in effect at the time of the bond issue closing. The Board of County Commissioners generally will require that the assets financed with the proceeds of IDRBs be pledged as security for repayment of the bonds. The Board of County Commissioners generally will require that the term of the bonds be no longer than the useful life of the project financed. If the project is for a corporate subsidiary, the Board of County Commissioners generally will require that the parent company guarantee the bonds. o The Board of County Commissioners generally will require that prospective bond issues not considered of investment-grade quality be sold only by private placement or limited public offering. The user of facilities financed by ZDRBs shall pay, as they become due, all taxes, fees, and other assessments levied by all state and local governmental agencies having jurisdiction over the facilities. The IDRBs generally will be required to be redeemed if interest on the bonds becomes taxable or if construction or operation of the project is halted. o At least 10 days notice shall be provided to the Board of County Commissioners prior to any sale or other disposition of a project financed with ZDRBs. C. Fees and Expenses. G:",atty",do c s",[DRB Guidelines An applicant for IbRBs will remit with the application a nonrefundable fee of $1,500. The County Attorney, the County's bond counsel, and the County's financial advisor shall represent St. Lucia County in connection with the review of the proposed Ibl~B issue, the financial feasibility thereof, the documents and procedures relative thereto, and the fiscal soundness of the applicant. The applicant shall pay all fees and expenses incurred by the County in connection with such representation; provided that, in the absence of extraordinary circumstances, such fees and expenses shall be deemed included in the administrative fee paid by the applicant as provided in paragraph 4 of this 5action II.C. The applicant may designate bond counsel for the issue, subject to acceptability to the County Attorney, or may request that the County's bond counsel serve as bond counsel on the issue. If the applicant chooses to have the County's bond counsel serve as bond counsel for the issue, the applicant shall negotiate the fee for such services with such bond counsel, who will represent the County as bond counsel, and shall pay the fees and expenses associated with such services; provided that, in such event, the applicant shall be entitled to a credit against such negotiated fee one-third (1/3) of the amount of the administrative fee payable to the County pursuant to paragraph 4 below. In addition to the application fee payable as provided in paragraph ! above, the applicant shall pay, at or before the date of issuance of the II)l~B's in immediately available funds, an administrative fee equal to one-half of one percent (0.5%) of the aggregate principal amount of TIbRB's issued, provided that such fee will be not less than $10,500 and, in the absence of extraordinary circumstances, not greater than $30,000, regardless of the principal amount of IlbP, B's issues. Extraordinary circumstances may include, but not necessarily be limited to, bonds issued in multiple series, bonds secured by complex collateral mechanisms, bonds having complex financial structures (variable rate, multi-modal, etc.), and other factors affecting the process of review and approval of the documents and structure of the bonds. The applicant shall be responsible for paying all fees charged by any participant in the bond issue, must pay all County fees at or prior to closing in immediately available funds, and shall make arrangements satisfactory to the County for payment of all other fees and expenses GSatty\docs~IDRB Guidelines III. A. PROCEDURE5 Preapplication Review. Representatives for a potential applicant for the issuance of IbRBs may appear at a work session of the Board of County Commissioners to outline the proposed capital project and to request a preliminary, informal, and nonbonding indication of whether the proposal might receive favorable consideration. No further review or analysis will be performed by the Board of County Commissioners or County staff until an application is filed. Application. An application for the issuance of IDRBs shall be made to the Board of County Commissioners. The original and 10 copies of the application shall be submitted with the appropriate application fee to the County Attorney. The application shall be on the company letterhead and shall include the following information about the applicant and the pro~ect: Applicant's name, parent company name or names of principals with 10 percent or more interest in the applicant, names of applicant's principal operating officers, names of principals with 10 percent or more interest in the project, and the applicant's business address and telephone number. 2. 5pacific amount in U.5. dollars being requested to be raised by the issuance of TbRBs. 3. A statement describing the applicant, its history, and its operations. 4. A statement describing the sources and uses of funds for the project, as follows: Sources of funds i. IbRB proceeds ii. Equity (cash, letter of credit, etc.) iii. Other (fixed assets, etc.) Uses of funds III. iv. Land acquisition, including location and size Building construction, including type and size Equipment, listed by type and cost Other costs, itemized G:htty\docs\IDRB Guidelines A statement indicating the applicant's estimate of its financial performance as a result of new investment made possible by 6. A statement indicating the proposed security for and guarantors of the bonds. 7. A statement describing the proposed method of selling the bonds. o Audited financial statements (including balance sheet, income statement, statement of changes in financial condition, and all accompanying notes) of the applicant, parent company (if any), and bond guarantors for the preceding three years. If personal guarantees are required, include a current balance sheet for each individual guarantor. If the applicant has been in business for less than three years, pro-forma statements covering the three years following the commencement of operation of the project. 10. If the application is for a new venture project and institutional guarantees are not available sufficient to render the bonds investment-grade quality, an independently prepared feasibility report on the project. The form, content, and author of the report must be acceptable to the Board of County Commissioners. 11. A statement describing the expected economic impact of the project, including existing employment preserved, new jobs created, approximate annual wages to be paid for new jobs created, and new capital investment. 12. A statement describing the zoning, land use, and other laws, ordinances, rules, and regulations affecting development of the project. 13. A statement indicating the availability or method of providing water, sewer, and other necessary services for the project. 14. A statement describing the effect of the project on the local community, and in particular the environmental impact of the project. 15. A notarized certificate executed by a principal or the chief executive or operating officer of the applicant, as follows: I hereby certify (a) that z am authorized to submit to the Board of County Commissioners of St. Lucia County, Florida, this application for the issuance of industrial development revenue bonds; (b) that I have reviewed the guidelines and Procedures for the Issuance of Industrial Development Revenue Bonds in St. Lucia County and have determined that this application and the project contemplated hereby meets the requirements set forth in such Guidelines and procedures; and (c) that the information contained in this application is true, correct, and complete to the best of my knowledge and belief. G:katty\docsklDRB Guidelines Application Review. Florida Statutes require that agencies issuing IbRBs determine that projects financed are appropriate to the needs and circumstances of and will make a significant contribution to the economic growth of the community in which located, and that affected local communities will be able to copy satisfactorily with the impact of the project. In addition, issuing agencies must also determine that the applicants for such projects are financially responsible and fully capable and willing to operate and maintain the project and to make payments as required to pay principal and interest on the bonds. 1. Financial sufficiency factors. In determining financial responsibility and ability and willingness to make required payments of principal and interest, the Board of County Commissioners will consider financial sufficiency information for both the project and the applicant. History of financial performance. An examination of audited financial statements submitted by the applicant must lead to the conclusion that the company will be able to generate revenues sufficient to operate and maintain the project and to make all required payments of principal and interest on the bonds. Should audited financial statements not be available, the Board may agree to accept statements in unaudited form supported by corporate income tax returns in order to commence processing of the application. Prior to the closing of the bonds, however, statements for the most recently completed period of operations must be submitted with an audit opinion from a Certified Public Accountant. Collateral value of project. Except in the case of bonds rated "investment grade" by a major bond rating agency, the Board will require that any bond issued, and any obligation to make payments to the County or to any third party in connection with the bonds or security therefore, be secured at a minimum by a first mortgage or first lien on the project financed. Tn determining the sufficiency of such collateral, the Board may consider the ratio of market value of the project to the size of the proposed financing and such other factors as it deems appropriate. Additional security or guaranty. The Board may require the guaranty of the principals or of third parties, or may require letters of credit or debt service insurance as a condition to the issuance of bonds. Zn determining the need for such additional security or guaranty, the Board may consider the ratio of the applicant's net worth to the size of the financing, the value of the assets being acquired, and other factors as may be appropriate. G:\atty\docsklDRB Guidelines Z. Staff report. The application for IDRBs will be reviewed by the County Administrator, County Finance Director, County Community Development Director, and County Attorney. The designated County staff shaft report to the Board of County Commissioners on the following matters: The accuracy and completeness of the application. bo The financial soundness of the proposed project, the applicant, and any guarantor. Conformance of the project and the proposed financing with applicable federal, state, and local statutes, policies, and guidelines. d. Potential impact of the project on the St. Lucia County economy. e. Potential impact of the project on the St. Lucia County environment. Board action. When the County staff report is complete, the report and the application will be presented to the Board of County Commissioners for consideration at a regular meeting. If the Board accepts the application, it will authorize publishing notice of a public hearing to be scheduled in accordance with the provisions of the federal Tax Equity and Fiscal Responsibility Act of 198:>. ii. The Board may decide, however, that it requires additional information, or it may decline to consider the application further and suggest that the applicant seek alternative sources of financing. If the application is scheduled for a public hearing, the applicant, through bond counsel, shall be responsible for preparing the required notice of public hearing and submitting the notice to the County Attorney for review and publication. Tn addition, the applicant, again through bond counsel, shall be responsible for preparing the draft of an inducement resolution as described below and for submitting the draft to the County Attorney for review and circulation to the Board of County Commissioners. Following the public hearing, the Board will decide whether the project is financially sound, will inure to the benefit of the residents of St. Lucia County, and will meet all other criteria and requirements of Section 159.29, Florida Statutes. G:\atty\docs~DRB Guidelines If the Board so decides, it may adopt a resolution authorizing execution of a memorandum of agreement between the Board and the applicant specifying the terms under which the Board will issue IDRBs and inducing the applicant to proceed with the project. ii. Again, however,the Board may decide that it requires more information, or it may decline to consider the application further. If a project is approved for IbRB financing, the applicant, through bond counsel, shall be responsible for preparing the Application for Notice of Intent to Issue Bonds and Request for Written Confirmation required by Executive Order Number 84-141 of the Governor of Florida. Extension and subsequent allocation. Generally, the term of the memorandum of agreement authorized by the inducement resolution shall be limited to one year, and shall be subject to the continuing availability of a confirmed allocation and continuing financial responsibility. Any request for an extension shall be accompanied by copies of the latest financial statements for the applicant and the project, a written explanation for the delay in completing the financing, and a report on the status of the project. However, in the case of carryforward allocation for o "priority project" os defined by Governor's Executive Order 85-20 such request shall not be required. Moreover, an II)RB issued receiving a confirmed allocation for one calendar year shall not be entitled any priority for an allocation for the next calendar year. Therefore, if bonds are not sold in the year for which a confirmed allocation is received, Board of County Commissioner approval must be obtained for any allocation for a subsequent calendar year. Preparation of Bond bocuments. After review and approval of the application, adoption of an inducement resolution, and execution of a memorandum of agreement, the applicant, in consultation with bond counsel, the County Attorney, and the bond purchaser, may initiate appropriate steps leading to the final preparation of the bond documents. Bond Validation. If deemed necessary or desirable by the County Attorney or the parties to the bond issue, the bonds may be validated in the manner prescribed in Chapter 75, Florida Statutes. GSatty\docsLIDRB Guidelines F. Sale of Bonds. The action of the Board of Country Commissioners in approving the issuance of IbRBs following a public hearing and entering a memorandum of agreement with the applicant for such issuance should not be construed as indicating the marketability of the bonds. Rather, those actions simply represent an agreement by the Board to issue its bonds only if a willing purchaser can be found and upon the execution of bond sale documents mutually agreeable to all parties. The obligation for the repayment of IbRBs rests solely with the applicant, and neither the Country, the 5tote, nor any political subdivision of the 5tote is responsible for their repayment or for any associated expense. Thus, subject to the conditions contained in these Guidelines and Procedures and subsequent amendments, the manner in which the bonds are sold, as long as complying with all applicable federal and state statutes, shall be the prerogative of the applicant. The Board reserves the right to review the credentials of any investor, financial institution, or investment bankers chosen, and to reject the same for good cause shown. The Board of County Commissioners generally will require that prospective bond issue not considered of investment-grade quality be sold only by private placement or by limited public offering. Prospective issues of investment-grade quality may be sold by public offering or private placement. Investment-grade quality shall be determined as meeting one of the following tests: A rating of the issue equal to or better than Mood's Baa or Standard and Poor's BBB. A rating of recently issued debt instruments of the company of similar term and security as that of the prospective bond issue equivalent to or better than Moody's Baa or Standard and Poor's BBB. For purpose of this paragraph, the term "limited public offering" shall mean an offering made only to institutional investors of not more than 35 in number who agree to purchase for investment for their own accounts and who do not purchase with a view toward distribution. This limitation is applicable not only to the initial sale of the bonds, but to resales, if any, in secondary markets, and shall be incorporated in the bond sale documents. The Board of County Commissioners will not recommend nor suggest to the applicant any investor, financial institution, or investment banker to be used in the sale of bonds. If requested by the applicant, however, the County staff may provide the applicant with a list of investors, financial institutions, and investment bankers who may from time to time advise the County of their interest in purchasing or placing the County's IDRBs. G:htty\docs'ffDRB Guidelines Disposition of Proceeds of Bond Sale. Following the sale of the bonds, the proceeds will be deposited with the Trustee for the bond holders or in a trust account, to be disbursed for the acquisition and/or construction of the project according to a schedule provided in one or more of the bond documents. The County will be concerned that the proceeds are used for items allowed by governing laws and portions of the project as authorized in the memorandum of agreement and bond sale documents. To this end the County requires that the Trustee for the bond holders be furnished with copies of all requisitions for the expenditure of bond proceeds. The Board of County Commissioners reserves the right, upon good cause shown, to waive any of these Guidelines and Procedures except the provision requiring a public hearing. G:~attySdocs~IDRB Guidelines