Transcript www.tpfa.state.tx.us

Texas Military Preparedness Commission
Revolving Loan Fund
April 2007
Texas Military Preparedness Commission
Office of the Governor
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Who can apply for a TMRVL Loan?

Political subdivisions adjacent to, near, or
encompassing part of an active military installation or
an installation closed as a result of BRAC 2005
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Criteria:

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Increase military value for BRAC scoring
Provide positive economic impact, such as job creation, for
communities negatively impacted by BRAC 2005
Assist communities with infrastructure projects that support
new missions
Communities can “partner” with other Communities
Texas Military Preparedness Commission
Office of the Governor
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Project Criteria

Funds must be expended completely within 5
years from when loan was awarded

Minimum amount of loan will be $1M with a
maximum determined by available funds and
creditworthiness

Applications must be submitted with either
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Military Value Enhancement Statement; or
Economic Redevelopment Value Statement
Projects are generally expected to be related to
facilities or infrastructure
Texas Military Preparedness Commission
Office of the Governor
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Benefits of RLF

State’s AA/AA+/AA1 General Obligation Credit
rating provides a lower interest rate for entities
with a lower credit rating.

Economies of Scale: combining several small
bond issues into one larger bond issue lowers up
front costs of issuance
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Example of Debt Service Savings
Tax Exempt: $20M for 20 years
Rating
Interest
Rate1
Total
Debt Service
Savings2
State of Texas
AA1/AA+/AA
4.475%
$30,946,167
-
Sample A GO Credit
A
4.573%
$31,217,678
$271,511
Sample BBB GO Credit
BBB
4.662%
$31,462,484
$516,317
State of Texas
AA1/AA+/AA
5.862%
$34,848,319
-
Sample A GO Credit
A
6.131%
$35,623,105
$774,786
Sample BBB GO Credit
BBB
6.375%
$36,333,964
$1,485,645
Taxable: $20M for 20 years
1 Based
on market conditions as of April 9, 2007; TIC reflects 20 year level debt service with premium bonds sized to
fund a $20 million project, $5.00/$1000 underwriter’s discount and $200,000 cost of issuance.
2
Over 20 year life of bond issue.
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Loan Terms and Structure

Loan Terms and Repayment Schedule will be
tailored to meet the needs of each borrower

Final term of the loan can not exceed useful life of
the project or asset

Pre-payment provisions (call feature) of the loan
will match the call feature of the bonds TPFA
issues

TPFA Bonds are “Self-Supporting” – all costs and
debt service will be paid from loan payments
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What is the Interest Rate?


Interest rate will be the market rate for State of
Texas General Obligation Bonds on the date the
bonds are sold
Recent Examples:
Tax-exempt : 4.333%
(Feb. 7, 2007, 20 year; 12.54 year average life)
Taxable: 5.921%
(Feb. 22, 2007, 30 year; 20.3 year average life)
AMT: 4.799%
(Feb. 22, 2007, 30 year; 19.81 year average life)
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The Use of the Facility may affect the
Interest Rate

Taxable vs. Tax-exempt: Facilities with a substantial
“non-governmental” or private business use or
guarantee may not qualify for tax-exempt interest
rates.

Under the tax code the federal government is NOT a
a “governmental” entity that is eligible for taxexempt bond use.
Certain types of facilities, such as airports, qualify
for tax-exempt financing but are subject to the
Alternative Minimum Tax (AMT).

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Legal Pledge

Any lawful revenue source can be pledged to
repay the loan

Will vary by type of borrower (City, Economic
Development Authority, Port Authority)
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Examples: Property Tax (General Obligation
pledge); Enterprise Revenue System (Utility,
Municipal Airport); Sales Tax
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Please consult your legal counsel
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Other Costs

TMPC Administrative fee: 1/10 of 1% (10 bp) of par
amount of loan ($1,000 per $1 million loan). Due
when loan is funded. May be paid from bond
proceeds and included in the loan amount.

Local Costs of Issuance (Financial advisor, Bond
counsel, and credit rating if Borrower does not
have an existing rating)
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Arbitrage Rebate Compliance
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Allocation of TPFA Costs of Issuance
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Bond Counsel
Financial Advisor
Rating Agency
Fees
Official Statement
printing and
distribution
Miscellaneous
Loan
Amount
% of
Total
Pro Rata
COI
Borrower A
$5,000,000
25%
$50,000
Borrower B
$10,000,000
50%
$100,000
Borrower C
$4,000,000
20%
$40,000
Borrower D
$1,000,000
5%
$10,000
Total
$20,000,000
100%
$200,000
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Example Sources and Uses Schedule
Borrower A
Borrower B
Borrower C
Borrower D
Total
$5,130,425
$10,209,150
$4,114,000
$1,066,120
$20,519,695
$5,000,000
$10,000,000
$4,000,000
$1,000,000
$20,000,000
$5,000
$10,000
$4,000
$1,000
$20,000
TPFA Cost of
Issuance
$50,000
$100,000
$40,000
$10,000
$200,000
Local Cost of
Issuance
$50,000
$50,000
$50,000
$50,000
$200,000
Underwriter
Discount
$25,425
$49,150
$20,000
$5,120
$99,695
$5,130,425
$10,209,150
$4,114,000
$1,066,120
$20,519,695
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Sources:
Loan Proceeds
Uses:
Project Fund
TMPC Fee
Total
Example Debt Service Schedule
Period
Ending
6/30/2008
6/30/2009
6/30/2010
6/30/2011
6/30/2012
6/30/2013
6/30/2014
6/30/2015
6/30/2016
6/30/2017
6/30/2018
6/30/2019
6/30/2020
6/30/2021
6/30/2022
6/30/2023
6/30/2024
6/30/2025
6/30/2026
6/30/2027
Borrower #1
$5MM - 10 Year
Borrower #2
$10MM - 20 Year
Borrower #3
$4MM - 15 Year
Borrower #4
$1MM - 15 Year
$
57,065
673,800
669,300
674,000
672,800
670,800
672,900
674,000
674,100
673,200
$
126,306
788,300
784,300
784,800
784,700
788,900
787,400
785,300
787,500
784,000
784,800
787,125
785,750
788,000
783,875
788,250
786,000
787,125
786,500
784,125
$
48,803
384,650
385,850
386,650
387,050
387,050
386,650
385,850
384,650
383,050
385,950
386,625
385,000
382,625
384,375
$
12,695
99,150
101,850
99,450
101,950
99,350
101,650
98,850
100,950
97,950
99,850
101,125
101,750
102,125
97,375
$
244,869
1,945,900
1,941,300
1,944,900
1,946,500
1,946,100
1,948,600
1,944,000
1,947,200
1,938,200
1,270,600
1,274,875
1,272,500
1,272,750
1,265,625
788,250
786,000
787,125
786,500
784,125
$
6,111,965
$
15,063,056
$
5,444,828
$
1,416,070
$
28,035,919
Total
1 Based
on market conditions as of April 9, 2007; Each Loan amount assumed to include 10bp TMPC Administrative
Fee, $50,000 Local Cost of Issuance and pro rata share of TPFA Cost of Issuance and Underwriters Discount,
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Borrowers should consult with their
bond counsel and financial advisor
prior to submitting an application.
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Proposed Timeline:
Date
Action
May 1, 2007
Letters of Interest Due
May 17, 2007
TMPC Reviews Letters of Interest and determine if there is
sufficient interest to implement program (Need at least $20
million in total loans per bond issue).
June 15, 2007
Communities Submit Applications
August 16, 2007
TMPC Commissioners Approve Applications
August 30, 2007
Letters of Commitments from Communities (City
Council/Board Resolution)
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Proposed Timeline (continued):
Date
Action
September 6, 2007
TPFA Board Approves Requests for Financing
November 13, 2007
Bond Review Board Planning Session
November 29, 2007
Bond Review Board Approval
Week of Dec. 3
Governing bodies of Borrowers approve Bond
resolution; Bonds sold
December 20, 2007
Loans Funded
Note: Additional approvals by Borrower’s governing body may also be required.
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Questions?
Primary Points of Contact:
Applications and Timeline
Al Casals
(512)936-0517
[email protected]
Finance Questions
Kim Edwards
(512)463-5544 [email protected]
Legal Questions
Judith Porras
(512)463-6735 [email protected]
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