Title
Fifth Third Bank Loan Commitment - Approval
History
As previously approved by the Board, Fifth Third Bank will be providing financing of the Ninety 7 Fifty on the Park project in the form of a three (3) year adjustable rate Revolving Line of Credit, converting to a seven (7) year adjustable rate Term Loan.
The attached Loan Commitment, and accompanying Summary of Terms and Conditions, formalized the Village’s agreement with Fifth Third Bank and outlines the details of our agreement. The following is a summary of the major terms and conditions:
Credit Facility - Three (3) Year Taxable General Obligation Revolving Line of Credit (RLOC), converting to a seven (7) year Term Loan, up to a maximum amount of $30M. Interest Rate applicable to RLOC is 30-day LIBOR plus 90bps; interest rate applicable to Term Loan is 30-day LIBOR plus 100bps or 10-year Treasury plus 175bps. The Term Loan will be amortized mortgage style with level debt service payments required. If at conversion to Term Loan, LIBOR exceeds 1%, Village must utilize an interest rate management agreement to synthetically fix the rate.
Security - General Obligation of the Village, secured by its Full Faith and Credit. Village to reserve a portion (the lesser of $30M or $65M minus the amount of bonds issued against the Master Bond Ordinance) of the issuance capacity provided by the Master Bond Ordinance adopted on September 19, 2011, providing for the issuance of up to $65,000,000 in General Obligation Bonds.
Reserve Fund - The Village will establish a Reserve Fund at Fifth Third Bank, utilizing general cash balances of the Village, in the amount of $1.5M. In addition, the Village will make monthly deposits into this fund for the payment of debt service on the outstanding RLOC or Term Loan. If at any time the reserve falls below the $1.5M balance, the Village has sixty (60) days to replenish the reserve. Interest earned on the Reserve Fund balance will be maintained within the Fund and can be utilized to offset required monthly deposit amounts.
Fees - Commitment Fee in the total amount of $50K, $10K due upon acceptance and signing of Commitment, $15K due within one week of signing RDA, $25K due at closing. Payment of all expenses related to document drafting and closing. Exit Fee of $20K if the RLOC is not converted to a Term Loan.
Extension of Banking Services - Village agrees to extend banking services for three (3) years, provided that Fifth Third continues to offer industry standard technologies and services.
Other - Opinion of Bond Counsel that Credit Facility is secured on a parity basis with other Village general obligation debt. Evidence that the Village has not received notice of any adverse change in its credit rating.
On October 17, 2011, this item was reviewed and approved by the Finance Committee and referred to the Board for approval.
Financial Impact
Attached is a cash flow statement for the ten (10) year financing term. The interest rates as quoted by Fifth Third are factored in to this cash flow.
Recommended Action/Motion
I move to approve execution of the Fifth Third Loan Commitment and to grant authority to the Mayor, Village Clerk and applicable Village staff to execute any and all loan documents necessary to finalize the execution of this Commitment, including but not limited to, a Note and Loan Agreement