RFP for Bank Loan for Capital Improvements

COUNTY OF PIKE
COMMONWEALTH of PENNSYLVANIA

General Obligation Notes, Series of 2018
Request for Proposals
November 29, 2018

            The County of Pike, Pennsylvania (the “County”) is seeking proposals from qualified lending institutions to finance certain capital projects of the County, as fully set forth in the following Term Sheet (the “Tax-Exempt Projects”) and upgrades and improvements to the County’s water and sewer systems (the “Taxable Projects”).  The County will issue two series of general obligations, consisting of a General Obligation Note, Series A of 2018, in the maximum principal amount of $2,300,000 (the “Series A Note”) to finance the costs of the Tax-Exempt Projects and to pay costs of issuance of the Series A Note.  The County will issue its General Obligation Note, Series B of 2018 (Federally Taxable), in the maximum principal amount of $1,900,000 (the “Series B Note,” and together with the Series A Note, the “Notes”) to finance the costs of the Taxable Projects and to pay costs of issuance of the Series B Note. The Notes will be issued pursuant to an Ordinance to be duly enacted by the County Commissioners (the “Ordinance”).

            The County will be requesting proposals from a number of regional banking institutions.  In order to ensure the proposals satisfy all pertinent Federal, State and local laws, and so the proposals can be evaluated primarily on their respective economic merits, we have enclosed the following materials:

  1.  Term Sheet:  The term sheet shall provide you with a summary of the basic terms, conditions, security and structure for the proposed financing.  Please note that we are asking your institution to provide a response to only those items listed on the enclosed Proposal Form.  By submitting a response to the County’s request on the form enclosed, it shall be understood that you agree in form and substance to all terms and conditions specified in the Term Sheet.

 

 

  1. Proposal Form.  All interested lenders shall complete the enclosed Proposal Form and submit to:

Gary R. Orben, Chief Clerk
County Pike
506 Broad Street
Milford, PA  18337

(570) 296-3569
Fax:  (570) 296-6055
gorben@pikepa.org

 

            The Proposal Form shall be received at the above address via facsimile, electronic or US mail no later than 10:00 AM on December 20, 2018.  The winning lender shall be notified of the County’s intent to award the note to such lender.  In the event the County determines to issue the Notes, it is anticipated that the County shall accept the winning lender’s proposal at a public meeting of the Board of County Commissioners held at 9:00 AM on Monday, January 7, 2019.

            Closing on the Notes shall occur on Thursday, February 7, 2019 or such other date as the County and the bank may hereafter agree.  Please feel free to contact Gary R. Orben, Chief Clerk for the County, with any questions you may have.  The telephone number is 570-296-3569.

            The County appreciates your consideration in this regard and shall assist each interested financing institution in its credit review and analysis of the proposal.  We look forward to your response.

Very truly yours,

COUNTY OF PIKE

 

By________________________________
Gary R. Orben, Chief Clerk

 

TERM SHEET

November 29, 2018

            The County of Pike, Pennsylvania (the “County”) is seeking proposals from qualified lending institutions to finance certain capital projects of the County, consisting of, but not limited to, the planning, design, purchase, acquisition, additions, improvements, renovations, and construction or reconstruction, as applicable, to various County buildings, facilities and grounds used for governmental operations, including, but not limited to, the old County Courthouse, the County Administration Building and the County-owned John Street Court Complex; the High Street Office Buildings; the Courthouse-Administration Complex Parking, (jointly and severally, the “Tax-Exempt Projects”) and the planning, design, purchase, acquisition, additions, improvements, renovations, and construction or reconstruction, as applicable, to the wastewater treatment facility and the drinking water facility that serve various County buildings and facilities, and related appurtenances, and suitable fixtures, furnishings and equipment therefor, as necessary (the “Taxable Projects,” and together with the Tax-Exempt Projects, the “Projects”).  The County will issue two series of general obligations, consisting of a General Obligation Note, Series A of 2018, in the maximum principal amount of $2,300,000 (the “Series A Note”) to finance the costs of the Tax-Exempt Project and to pay costs of issuance of the Series A Note.  The County will issue its General Obligation Note, Series B of 2018 (Federally Taxable), in the maximum principal amount of $1,900,000 (the “Series B Note,” and together with the Series A Note, the “Notes”) to finance the costs of the Taxable Projects and to pay costs of issuance of the Series B Note. The Notes will be issued pursuant to an Ordinance to be duly enacted by the County Commissioners (the “Ordinance”).

            Proposals shall be submitted using the enclosed Proposal Form, duly signed by an authorized officer of the lender.  All proposals shall be firm and may not be contingent upon any further review or approval of the lending institution or any of its officers, departments or committees.

            Every lender shall be deemed to have requested and obtained from the County all such information concerning the loan, the County, the Projects, the debt of the County and the financial condition of the County as such lender shall have deemed necessary for submission of its proposal and for making of the loan and purchasing the Notes in accordance with the terms of its proposal, if accepted by the County.  Every prospective lender may obtain such financial and other information concerning the County as it may require by contacting the County Chief Clerk, whose contact information is set forth in the Request for Proposals under cover of which this Term Sheet has been received.

            The Proposal Form shall be addressed to the County Chief Clerk and received at the address set forth in the Cover Letter via facsimile, electronic or US mail no later than 10:00 AM on December 20, 2018.

            If its proposal is accepted by the County, the submitting financial institution agrees to be bound by the terms of its proposal and the following terms and conditions from the date of acceptance of its proposal until the Closing Date as set forth below.  No term or condition shall apply to any proposal unless set forth in this Term Sheet or upon the face of the proposal.  All submitted proposals shall remain open for acceptance by the County Commissioners of the County for a period of twenty (20) days following December 20, 2018, or any later date established by written notice to each financial institution to which this Term Sheet has been provided (the “Proposal Deadline”).

  1.  Term of the Notes:

 

The Series A Note shall have a term of, approximately, eleven (11) years with a final maturity on April 1, 2029.

The Series B Note shall have a term of, approximately, ten (10) years with a final maturity on April 1, 2028.

  1. Principal Payments:  The principal of the Notes shall be fully amortized in annual installments over the term of the loan in amounts and in the manner as set forth on the attached “Preliminary Note Principal Amortization Schedules”.

 

  1. Interest Rate:  Interest on each Note shall be calculated on the basis of thirty (30) days, based upon a year of three hundred sixty (360) days, payable semi-annually on April 1 and October 1, commencing April 1, 2019, at the rate set forth in the accepted Proposal.

            The County will only consider proposals which clearly express a fixed rate of interest to be charged during the entire term of each Note.

  1. Advances.  The County shall have the right to draw down any portion of the total amount of each Note at any time during the period from the Closing Date (defined herein), as follows: with respect to the Series A Note, to and including December 1, 2020 and with respect to the Series B Note, to and including June 1, 2021 or any such later date as the Bank, in its discretion, may permit.  The first draw on the Series A Note shall be made by the County in the minimum amount of $50,001.00 and advanced by the Bank to the County on the Closing Date.  Interest only on the outstanding principal amount shall be charged and payable during each draw period.  The first draw on the Series B Note may be made by the County and advanced by the Bank to the County on the Closing Date, or on any subsequent date.  Thereafter, draws shall be made no more frequently than monthly, unless the Bank shall otherwise permit, and the County shall be required to give the Bank no more than two (2) business days prior notice of any draw.  The County shall confirm in writing that each amount drawn will be applied for and toward costs of the Projects identified in the Ordinance, which shall constitute part of the contract between the County and the Bank, but loan advances to the County shall not be contingent upon or subject to any prior inspection or approval by the Bank.

 

  1. Prepayment Option:  The outstanding principal, or any portion, of each Note shall be subject to redemption prior to maturity, at the sole option of the County, at any time, on any date, in any order of principal installments, as specified by the County, upon payment of a redemption price of 100% of the principal amount to be redeemed, plus accrued interest thereon to the date fixed for redemption.
  1. Security:  The Notes shall be general obligations of the County, payable from the taxes and other general revenues of the County.  The County shall covenant in the Ordinance that it will include in its budget the amount of the debt service for each fiscal year of the County in which principal and/or interest on the Notes is payable, that it will appropriate from its revenues in each such year, the amount of the debt service on the Notes for such year and will duly pay or cause to be paid when due the principal of and interest due on the Notes.  For such budgeting, appropriation of payment, the County shall irrevocably pledge its full faith, credit and taxing power, which taxing power presently includes, for the purpose of paying principal and interest due and payable with respect to the Notes in each fiscal year, the power to levy an annual ad valorem tax on all real property taxable for general purposes located within the County at a rate within the limits presently provided by applicable law.

 

  1.  Interest on the Series A Note to be Federally Tax-Exempt:  The County will enter into such covenants as shall be necessary, in the opinion of Note Counsel, to assure compliance by the County with the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder in order to qualify the interest payable on the Series A Note for exclusion from gross income of the Series A Noteholder for Federal income tax purposes and to enable Note Counsel to render the opinion to the Lender as set forth below.
  1. Loan Documents:  The Ordinance, including the form of each Note embodying the terms hereof and of the accepted proposal, and all closing certificates and documents shall be prepared by the Solicitor and Note Counsel for the County, who shall provide the Lender and its Counsel with drafts of the loan documents for review and approval at least one week prior to loan closing.

 

  1. Closing Documents:  As a condition of closing, the County shall deliver to the Lender the following:
  1.  An Opinion of Note Counsel, substantially to the effect that: 1) the County is duly authorized and empowered under the laws of the Commonwealth of Pennsylvania to issue the Notes evidencing the loans; 2) the Ordinance under which the Notes is issued and secured is valid and binding; 3) the Notes are exempt from personal property taxes in the Commonwealth of Pennsylvania, and the interest on the Notes is exempt from the Commonwealth of Pennsylvania Personal Income Tax and the Commonwealth of Pennsylvania Corporate Net Income Tax; 4) the Series A Note has been designated by the County as a “qualified tax-exempt obligation” for purposes and effect contemplated by Section 265 of the Code; 5) interest on the Series A Note is not includable in gross income for Federal income tax purposes under Section 103(a) of the Code; and 6) the Notes are valid and binding obligations of the County and are enforceable in accordance with terms thereof subject to certain creditors’ rights and limitations.

 

  1. A certificate of appropriate officers of the County and of the County Solicitor substantially to the effect that no litigation of any nature is pending or threatened: 1) seeking to restrain or enjoin or restraining or enjoining: (a) execution and delivery by the County of the documents evidencing and securing the Notes; or (b) execution, issuance, delivery or sale of the Notes; or 2) otherwise affecting the ability of the County to carry out the terms, provisions, covenants and agreements contained in the Ordinance; or 3) in any manner affecting or questioning proceedings and authority of the County for execution, authentication, issuance, delivery or sale of the Notes; or 4) affecting, directly or indirectly, or questioning: (a) the validity of the Notes; or (b) the creation, organization and existence of the County;
  1. Evidence of approval of the Pennsylvania Department of Community and Economic Development of the indebtedness of the County evidenced by the Notes, in compliance with the Pennsylvania Local Government Unit Debt Act, as amended (the “Act”); and

 

  1. Such other documents, certificates and instruments as shall be required by the Solicitor and Note Counsel to evidence compliance with, or to comply with, the provisions of the Act or the Code and applicable regulations hereunder, with respect to the exclusion of interest payable on the Series A Note from gross income for federal income tax purposes.
  1. Closing:  It is anticipated that closing for the Note shall occur at 9:00 a.m., prevailing local time, at the Administrative Offices of the County located at 506 Broad Street, Milford, PA  18337, on February 7, 2019, or such other date as may be agreed upon by the County and the Lender (the “Closing Date”).  Closing shall occur at a time and place mutually acceptable to the County and the Lender.   

 

  1. Fees and Expense:  The County shall pay all fees and expenses of its Solicitor and Note Counsel.  The County shall also pay the Lender’s fees and any Lender’s counsel fees subject to a maximum amount as specified on the Proposal Form.
  1. Banking Practices: There shall be no condition on the loan or obligation imposed on the County to change any of its current depositary practices.

 

  1. Continuing Disclosure:  The County shall send, when available, annual audited financial statements to the Bank, and any other information that the Bank shall reasonably request.
  1. Rejection of Proposals:  The County expressly reserves the right to reject any and all proposals and to waive any informality, mistake, error or omission in any proposals received in connection with this Request for Proposals.

 

  1. Manner of Sale:  The County reserves the right to negotiate the final terms and conditions of sale of the Note with any lender and to treat the sale of the Note as a “private sale by negotiation,” within the meaning of the Act.
  1. Amendment:  The County reserves the right to amend or modify this Request for Proposals by depositing in the United States mail, no later than two (2) days prior to the Proposal Deadline, addressed to each lender which at the time has its name and electronic address on file, a copy of a written amendment or modification thereto.

 

17. County Financial Documents.
The County Audits for Fiscal Years 2015, 2016 and 2017, the County 2018 Budget and the County proposed 2019 Budget are available on line at www.pikepa.org.

 

 


PROPOSAL FORM
GENERAL OBLIGATION NOTE, SERIES A OF 2018

            The undersigned financial institution (the “Bank” or “Lender”) hereby agrees to purchase the General Obligation Note, Series A of 2018 (the “Series A Note”), to be issued by the County of Pike, Pennsylvania (the “County”) in the principal amount not to exceed $2,300,000, subject to the terms and conditions set forth in the term sheet dated November 29, 2018, issued by or on behalf of the County (the “Term Sheet”), which is incorporated hereby by this reference.  The Bank agrees to be legally bound to such terms from the date of this Proposal to the Closing Date of the Series A Note.

Interest Rate

The County will only consider proposals which clearly express the a fixed rate of interest to be charged during the entire term of the Series A Note.

            Fixed Rate of Interest

            The Bank agrees to make the loan and to purchase the Series A Note with a term of approximately 11 years (final principal installment due April 1, 2029) at a fixed interest rate of ____________(_____%) percent per annum, with annual installments of principal in the approximate amounts as shown on the Preliminary Note Principal Amortization Schedule attached to the Term Sheet, which is hereby made part of this Proposal Form.   The actual final principal installment schedule for the Series A Note shall be set using the interest rate set forth in the proposal, and shall be established so as to produce when taken together with the debt service on the Series B Note and all of the County’s other outstanding debt level annual debt service for the County over its term, assuming a full draw of the Series A Note.

            Bank Costs and Expense

            The Bank shall request the reimbursement of its fees and fees of its legal counsel, subject to a maximum of $2,000.00.

            The Bank acknowledges that the County reserves the right to reject all proposals received in connection with its request for proposals and negotiate terms directly with any bank.

______________________________________                    ______________________________
Name of Bank                                                                         Telephone Number

______________________________________                    ______________________________
Authorized Officer (Print)                                                       Email Address
_______________________________________                  ______________________________
Signature                                                                                 Date

GENERAL OBLIGATION NOTE, SERIES A OF 2018
PRELIMINARY NOTE PRINCIPAL AMORTIZATION SCHEDULE

            Principal                      Principal
Date                            Amount                       Payment                      Rate

                2020                                       $      5,000                                                                            

                2021                                       $     10,000                                                                           

                2022                                       $       5,000                                                                           

                2023                                       $        5,000                                                                          

                2024                                       $      40,000                                                                          

                2025                                       $      40,000                                                                          

                2026                                       $      45,000                                                                          

                2027                                       $      45,000                                                                          

                2028                                       $      45,000                                                                          

                2029                                       $ 2,060,000                                                                         

 

  1. The principal amortization of the Series A Note will be substantially as set forth above.  Final amortization shall be set when the actual interest rate has been determined, and shall be established so as to produce level annual debt service for the County.

PROPOSAL FORM
GENERAL OBLIGATION NOTE, SERIES B OF 2018

            The undersigned financial institution (the “Bank” or “Lender”) hereby agrees to purchase the General Obligation Note, Series B of 2018 (the “Series A Note”), to be issued by the County of Pike, Pennsylvania (the “County”) in the principal amount not to exceed $1,900,000, subject to the terms and conditions set forth in the term sheet dated November 29, 2018, issued by or on behalf of the County (the “Term Sheet”), which is incorporated hereby by this reference.  The Bank agrees to be legally bound to such terms from the date of this Proposal to the Closing Date of the Series B Note.

Interest Rate

The County will only consider proposals which clearly express a fixed rate of interest to be charged during the entire term of the Series B Note.

            Fixed Rate of Interest

            The Bank agrees to make the loan and to purchase the Series B Note with a term of approximately 10 years (final principal installment due April 1, 2028) at a fixed interest rate of ____________(_____%) percent per annum, with annual installments of principal in the approximate amounts as shown on the Preliminary Note Principal Amortization Schedule attached to the Term Sheet, which is hereby made part of this Proposal Form.   The actual final principal installment schedule for the Series B Note shall be set using the interest rate set forth in the proposal, and shall be established so as to produce when taken together with the debt service on the Series A Note and all of the County’s other outstanding debt level annual debt service for the County over its term, assuming a full draw of the Series B Note.

            Bank Costs and Expense

            The Bank shall request the reimbursement of its fees and fees of its legal counsel, subject to a maximum of $2,000.00.

            The Bank acknowledges that the County reserves the right to reject all proposals received in connection with its request for proposals and negotiate terms directly with any bank.

______________________________________                    ______________________________
Name of Bank                                                                         Telephone Number
______________________________________                    ______________________________
Authorized Officer (Print)                                                       Email Address
_______________________________________                  ______________________________
Signature                                                                                 Date

 

GENERAL OBLIGATION NOTE, SERIES B OF 2018
PRELIMINARY NOTE PRINCIPAL AMORTIZATION SCHEDULE

            Principal                      Principal
Date                            Amount                       Payment                      Rate

                2021                                       $       5,000                                                                           

                2022                                       $       5,000                                                                           

                2023                                       $        5,000                                                                          

                2024                                       $      10,000                                                                          

                2025                                       $      15,000                                                                          

                2026                                       $      10,000                                                                          

                2027                                       $      15,000                                                                          

                2028                                       $ 1,835,000                                                                         

  1. The principal amortization of the Series B Note will be substantially as set forth above.  Final amortization shall be set when the actual interest rate has been determined, and shall be established so as to produce level annual debt service for the County.