[Debt Committee on January 6, 2026.]
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JANUARY THE 6TH, 2026 AT 11:00. BAY COUNTY DEBT COMMITTEE MEETING, BAY COUNTY GOVERNMENT CENTER CHAMBERS. AND IF YOU COULD CALL THE ROLL, PLEASE. CHAIR. YES, MA'AM. COMMISSIONER.
YES, MA'AM. HERE. AND WE WILL HAVE PUBLIC PARTICIPATION IF ANYONE WOULD LIKE TO SPEAK, IF YOU WOULD COME FORWARD AND GIVE YOUR NAME AND ADDRESS FOR THE RECORD. SINGLE FILE LINE. DON'T SEE ANYBODY IN THE AUDIENCE WANTING TO SPEAK. SO WE CAN MOVE ON TO THE DEBT PROPOSALS.
JEREMY. GREAT. GOOD MORNING, MADAM CHAIR, AND THANK YOU FOR HAVING ME EARLY IN THE YEAR. I KNOW WE'VE WE'VE HAD A CHANCE TO DO A REVIEW OF THE PROPOSALS THAT CAME IN AND SENT THE PRESENTATION AND MATERIALS LAST WEEK. HOPEFULLY YOU HAD A CHANCE TO TO SEE THOSE MATERIALS AND HAPPY TO ANSWER ANY QUESTIONS ABOUT THOSE BEFORE WE GET INTO THE PRESENTATION, IF THERE WERE ANY. NONE. OKAY. SO TO START THE YEAR, YOU KNOW, JUST WANTED TO QUICK PROVIDE A MARKET UPDATE AND WE CAN FLY THROUGH THIS PRETTY QUICK. Y'ALL ARE IN THE MARKET ON A SOMEWHAT REGULAR BASIS. YOU CAN SEE RATES ON THE FRONT END HAVE COME DOWN A BIT OVER THE PAST YEAR, AND THEN RATES ON THE LONG END OVER THE LAST YEAR ARE A LITTLE HIGHER.
SO WE'RE SEEING FED FUND CUTS IMPROVING. YOU KNOW, THE SHAPE OF THE YIELD CURVE AND RETURNING IT TO A MORE NORMAL YIELD CURVE. THE PICTURE ON THE RIGHT HERE REALLY JUST SHOWS WHERE THE CURRENT RATES ARE COMPARED TO THE TEN YEAR AVERAGE. SO WE'RE ABOUT IN THE MIDDLE OF OF THE TEN YEAR BAN THERE WHERE RATES HAVE BEEN RATES HAVE TRENDED HIGHER.
THERE'S BEEN A DISCUSSION OVER THE PAST YEAR AND A HALF TO TWO YEARS OF RATE CUTS. THAT'S GOING TO HAPPEN AS INFLATION COMES DOWN TO INCENTIVIZE SOME ADDITIONAL FUNDING FOR CORPORATE DOLLARS. AND THAT WILL HELP IMPACT IN A POSITIVE WAY THE BORROWING RATES FOR THE COUNTY OVER TIME. SHORT TERM RATES HAVE STARTED TO COME DOWN. YOU CAN SEE IT'S ABOUT 75 BASIS POINTS. SO THE YELLOW LINE ON THE TOP IS SOFER. SOFER IS THE NEW LIBOR, IF YOU WILL. SO THAT'S THE INDEX THAT'S USED FOR VARIABLE RATE PRICING. AND THAT'S WHAT RATES WERE PROPOSED ON. SO 75 BASIS POINTS IS WHAT THE FED FUNDS TARGET HAS COME DOWN. AND WE'RE LOOKING AT POTENTIAL ADDITIONAL CUTS GOING FORWARD. SPEAKING OF ADDITIONAL CUTS THIS IS THE ANTICIPATION OR THE EXPECTED FORWARD CURVE. SO THIS IS THE DOT PLOT IS WHAT'S COMMONLY REFERRED TO.
AND YOU CAN SEE HERE THE EXPECTATIONS ARE RATES WILL DROP ANOTHER 50 TO 75 BASIS POINTS OVER THE OVER THE NEXT YEAR TO TWO YEARS. ANY QUESTIONS ON WHERE RATES ARE OR WHERE THEY MAY BE HEADED? ARE WE GOING TO RUN THROUGH SOME OF THESE? OKAY, I'LL HOLD MY QUESTION. I'VE GOT A COUPLE OF QUESTIONS. JUST GENERAL QUESTIONS OKAY. SURE.
ABSOLUTELY. AND WE'LL GO THROUGH THE ACTUAL FINANCING PROCESS IN THE COMPARISON OF THE OPTIONS THAT WE'RE ASKING THE COMMITTEE TO CONSIDER THIS MORNING. JEREMY, I DO HAVE ONE QUESTION. SO AS YOU SHOWED THIS, WE'RE ANTICIPATING THIS DECREASE. I MEAN, ARE WE AHEAD OF OURSELVES? DO WE NEED TO WAIT? YEAH, ONE OF THE THE STRUCTURING OPTIONS WE WANTED TO BUILD INTO THE PROCESS WAS TO CONSIDER THE AVAILABILITY OF LOCKING IN RATES IN THE FUTURE.
SO SO WE'RE GOING TO TALK THROUGH A COMBINATION OF VARIABLE RATE AND THEN A FIX OUT IN THE FUTURE OR JUST FIXING OUT A RATE TODAY. SO SO THERE ARE A COUPLE OF REALLY GOOD RESPONSES THAT WILL GIVE US A CHANCE TO DISCUSS THE PLUSES AND MINUSES OF OF BOTH.
OKAY. GREAT QUESTION. OVERVIEW. WHY DO WE GO THROUGH THE PROCESS. SO IT'S BEEN DETERMINED FUNDING HAS BEEN, YOU KNOW, APPROVED FOR THE PURCHASE OF EQUIPMENT FOR THE FOLLOWING TRUCKS, AS SHOWN HERE, ABOUT $14.3 MILLION WORTH OF EQUIPMENT FOR THE BEACHSIDE PUBLIC SAFETY EFFORTS. AS YOU CAN SEE, THE AVAILABILITY DATES OF THESE TRUCKS IS STAGGERED OVER THE NEXT SEVERAL YEARS, WHICH LED US TO TO WANT TO LOOK AT OPTIONS TO TO TIME WHEN WE ACTUALLY DRAW FUNDS FOR THOSE PURCHASES. THE PROCESS BEGAN A LITTLE LESS THAN A MONTH AGO.
RFP WENT OUT TO SEVERAL BANKS. WE ASKED FOR A COUPLE OF DIFFERENT OPTIONS. WE WANTED TO USE THE EQUIPMENT AS COLLATERAL AND AND STRUCTURE THIS AS AN EQUIPMENT LEASE, WHICH IS SIMILAR TO HOW THE SHERIFF'S HELICOPTER WAS FINANCED, AS WELL AS SOME AMBULANCES WERE FINANCED YEARS BACK WITH THE ANTICIPATION THAT SOME BANKS MAY NOT WANT TO COMMIT TO A
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LEASE THIS FAR IN ADVANCE OF RECEIVING THE EQUIPMENT. WE ALSO ASKED FOR ALTERNATIVES TO TO USE A LINE OF CREDIT TO ESTABLISH A LINE OF CREDIT BASED ON THE COUNTY'S GENERAL BORROWING ABILITY TO SECURE THE EQUIPMENT AND THEN FIX IT OUT LATER ON. ONCE THE EQUIPMENT WAS ON HAND. WE ALSO ASKED LENDERS TO GIVE US WHAT THEY THOUGHT THE BEST OPTIONS WERE, AND WE GOT A COUPLE OF GOOD, INTERESTING ALTERNATIVES TO CONSIDER THAT WE'RE GOING TO TALK THROUGH AS WELL. SO WE RECEIVED SEVERAL RESPONSES BASED ON A WHOLE RANGE OF TERMS SEVEN, TEN, 12 AND 15 YEARS, DEPENDING ON WHERE RATES WERE AND AFFORDABILITY FOR WHAT THE COUNTY WOULD WANT TO KICK IN. IN ADDITION TO THE TDC FUNDS THAT ARE COMMITTED TO THIS EQUIPMENT PURCHASE, WE WANTED TO HAVE ALL THOSE OPTIONS TO TALK THROUGH THIS MORNING. AS YOU CAN SEE HERE, THERE IS PLENTY TO DISCUSS. THERE WERE NINE PROPOSALS RECEIVED, AND WITHIN THOSE NINE PROPOSALS THERE WAS A LOT OF OPTIONS WITHIN EACH ONE. SO STARTING AT THE TOP, WE WANTED TO SUMMARIZE THE SEVEN, TEN AND 12 YEAR OPTIONS. YOU CAN SEE RATES RANGE FROM 3.9% TO 4.58%. AND THEN PREPAYMENT OPTIONS, WHICH THE COUNTY HAS TAKEN ADVANTAGE OF OVER THE YEARS, WERE ALL OVER THE BOARD FROM PREPAID WITHOUT PENALTY AT ANY TIME, MEANING WHEN RATES GO DOWN IN THE FUTURE, YOU CAN PAY IT OFF AND DO A REFINANCING OR HAVE A MAKE WHOLE CALL. SO A MAKE WHOLE CALL IS WHERE YOU PAY A MARKET PENALTY TO GET OUT OF A LOAN WHEN RATES GO LOWER. SO WE'VE GENERALLY BEEN HESITANT TO GET INTO THOSE TYPES OF TRANSACTIONS BECAUSE RATES HAVE TYPICALLY CYCLED OVER TIME. AND WHEN RATES GO DOWN, YOU WOULD WANT TO REFINANCE, JUST LIKE YOU WOULD WANT TO REFINANCE A HOME LOAN, FOR EXAMPLE. THE STRUCTURE OF WHETHER IT'S A LEASE, A DRAW DOWN LEASE OR A LOAN, YOU KNOW, I'LL TALK THROUGH THE BASIC DIFFERENCES IN THOSE TERMS. A LEASE IS USING THE TRUCK AS COLLATERAL.SO THE VIN NUMBER FOR THE TRUCK THAT'S ASSOCIATED WITH THAT BORROWING IS WHAT THE BANK USES TO COLLATERALIZE LOAN ON THEIR BOOKS ALONE. A DIRECT LOAN WOULD BE THE COVENANT TO BUDGET APPROPRIATE. SO THE COUNTY'S ABILITY TO ALLOCATE FUNDS ANNUALLY THROUGH THE BUDGET PROCESS TO MAKE THE PAYMENTS. IT'S A PROMISE TO PAY ESSENTIALLY FROM AVAILABLE REVENUES. THE DISTINCTION IS THAT YOU DON'T HAVE FINITE CAPACITY FOR LEASE FINANCING.
THAT'S EQUIPMENT BASED. SO THAT'S GOING TO BE TIED DIRECTLY TO THE EQUIPMENT ITSELF. THE COUNTY'S COVENANT TO BUDGET APPROPRIATE IS SOMETHING THAT COMES INTO CONVERSATION WITH THINGS LIKE THE HURRICANE MICHAEL BORROWING. YOU'RE LIMITED ON HOW MUCH A BANK IS GOING TO BE ABLE TO BORROW TO THE COUNTY TO FUND THINGS THAT ARE A PROMISE TO PAY FROM AVAILABLE REVENUES BECAUSE YOU ONLY HAVE SO MUCH REVENUES. ASK A QUESTION WHY ARE YOU THERE? IS THIS GOING TO HAMSTRING US? IF WE HAVE TO HAVE AN EMERGENCY FUND, IS THIS GOING TO WHEN YOU SAY LIMIT OUR BORROWING ABILITY, ARE WE BETTER OFF WITH A LEASE BECAUSE THE LEASE WILL NOT TAP INTO OUR BONDING OR BORROWING ABILITY IN CASE OF EMERGENCIES? YEAH. NO.
GREAT QUESTION. AND THAT'S CERTAINLY, YOU KNOW, THE THE OPINION OF STAFF AND US IS THAT YOU WOULD WANT TO NOT PUT RESTRICTIONS ON YOUR GENERAL FUND BORROWING ABILITY. LEASE IS DEFINITELY PREFERRED. SO IN A COIN FLIP A LEASE WOULD WOULD BE THE OPTION THAT WE WOULD RECOMMEND GOING WITH IF IT WAS THE SAME RATE. SOMETIMES THERE'S A RATE BENEFIT AND THE IMPACT IS SO MINUSCULE THAT IT DOESN'T AFFECT YOUR LONG TERM BORROWING CAPACITY. WITH A SIZABLE LOAN $14.5 MILLION, THERE IS SOME CONCERN THAT IF YOU DID SEVERAL OF THESE BASED ON YOUR CBNA, THAT THAT COULD IMPACT YOUR ABILITY TO BORROW FOR URGENCY PURPOSES. SO GREAT QUESTION. LOOK AT THE 15 YEAR OPTIONS. YOU KNOW, THERE WERE SOME FEEDBACK THAT WE GOT FROM THE BANKS. YOU KNOW, THE BRUSH TRUCKS AND SOME OF THOSE EQUIPMENT ARE SHORTER LIVED ASSETS. SO THAT WOULDN'T BE A 15 YEAR LOAN. SO THEY WOULD LOOK AT THAT IN AGGREGATE. SOME OF THE PUMPERS AND OTHER LARGER VEHICLES HAVE AN AVERAGE LIFE OF 15 YEARS OR GREATER. SO WE WERE ABLE TO GET THE BANKS COMFORTABLE THAT IN TOTAL, A 15 YEAR LOAN WAS WAS REASONABLE.
SO THAT WAS WHAT PRESENTED THE THE BEST PAYMENT CAPACITY. SO LONGER TERM LOWER ANNUAL PAYMENTS. BUT YOU DO PAY MORE INTEREST OVER TIME. SO SO HERE WE SEE THE RANGE OF RATES IS IN THAT LOW 4% TO TO INTO THE 5% RANGE. I ASK YOU MAYBE JUST STARTING WITH LIKE BANK OF AMERICA OR THESE SAY THE TERM SHEET EXPIRES ON DECEMBER 31ST OF 2025. ARE WE ARE WE ALREADY EXPIRED ON WHAT WHAT THEY'VE GIVEN US HERE. YEAH. SO SO WE'VE WE'VE HAD COMMUNICATION
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WITH THE BANKS THAT HAD AN EXPIRATION AHEAD OF TODAY'S MEETING AND INDICATED TO THEM THAT THE COMMITTEE WAS MEETING TO MAKE A RECOMMENDATION TO THE BOARD. SO SO THEY WILL EXTEND THAT. TYPICALLY WHAT THEY WOULD DO IS HOLD THE RIGHT UNTIL THAT TERM SHEET EXPIRES AND THEN JUST REFRESH THE RIGHT BASED ON WHERE THE MARKET MOVES. THAT MIGHT MOVE ME TO MY SECOND QUESTION ON THAT. AND SOME OF I DON'T HAVE A LOT OF QUESTIONS FOR ALL OF THEM, BUT THIS APPLIES TO SEVERAL OF THE BANKS, IS THE INTEREST RATE WAS ONLY VALID THROUGH JANUARY 20TH 9 OR 26, SO WE ONLY HAVE ONE YEAR'S WORTH OF GUARANTEE ON THE RATE. NO. SO THAT WOULD BE THE INDICATIVE RATE. SO IF THEY SAY THE RATE IS LOCKED UNTIL THE 29TH OF JANUARY, THAT'S BECAUSE WE ANTICIPATED HAVING THE DEAL CLOSED BY THE END OF JANUARY. OKAY. SO THAT'S JUST GIVING US THE FLEXIBILITY TO MAKE THE DECISION AND BRING DOCUMENTS BACK TO YOU FOR APPROVAL. AND SO WE KNOW WHAT THAT RATE IS. SOME OF THEM ARE SET THREE DAYS PRIOR TO CLOSING. YOU KNOW, SOME WILL HAVE A RESET AFTER FIVE YEARS. FOR EXAMPLE, THERE'S A PROPOSAL THAT HAS THAT. SO THERE'S A WE WE ASKED FOR A LOT AND WE GOT A LOT. AS YOU CAN SEE IN THE SUMMARY GRID, WHICH IS GOOD BECAUSE WE CAN TALK THROUGH WHAT, YOU KNOW, RATE RESET IN FIVE YEARS EXPOSES THE COUNTY TO FROM A RATE RISK PERSPECTIVE. JUST LIKE WE CAN TALK ABOUT THE BENEFITS OF BEING ABLE TO LOCK IN LOWER RATES IN THE FUTURE WITH A VARIABLE RATE OPTION. SO WE'LL WE'LL TALK THROUGH THAT. YOU KNOW A LITTLE MORE DETAIL. THERE'S THERE'S TWO LOAN OPTIONS HERE THAT REALLY STAND OUT THAT WE'LL DIVE INTO A LITTLE DEEPER AND AND GO THROUGH KIND OF WHAT THE BENEFITS WOULD BE OF EACH. THE LINE OF CREDIT REALLY WAS, WAS SOMETHING WE WERE HOPING TO GET SOME, SOME RESPONSE TO. WE GOT A, YOU KNOW, NOT AS BROAD A RESPONSE ON THE LINE OF CREDIT OPTIONS, BUT WE DID GET TWO GOOD RESPONSES. SO TRUIST, WHO HAS SEVERAL LOANS OUT TO THE COUNTY CURRENTLY IN UNITED COMMUNITY BANK, BOTH PROPOSED TRUIST PROPOSED AT THE 5 MILLION LEVEL. UNITED COMMUNITY PROPOSED UP TO THE ENTIRE 14.5 MILLION SO SLIGHTLY LOWER RATE. YOU KNOW THAT'S BASED ON THE SPREAD DIFFERENTIAL 60 BASIS POINTS. SO MUCH BETTER RATE. AND THEN MORE IMPORTANTLY, THE UNDER UTILIZED FEE, WHICH IS SOMETHING THAT IS BASICALLY THE COST OF CARRYING THAT CAPACITY. SO I'LL TALK MORE ABOUT THAT.BUT THAT WAS A DIFFERENTIATING FACTOR HERE AS WELL. THAT UNITED COMMUNITY DOES NOT CHARGE YOU TO HAVE THAT IN PLACE. SO PAGE 11 WE LOOK AT YOU KNOW, THE FOCUS HERE REALLY IS ON THE BEST LONG TERM LEASE OPTION COMPARED TO THE BEST LINE OF CREDIT OPTION. SO YOU KNOW, IN ONE SET OF ANALYSIS, YOU KNOW, WE WANTED TO SAY IF WE IF WE WENT AHEAD AND LOCKED UP THE LOAN TODAY AND WE'RE HAPPY WITH TODAY'S RATE, YOU CAN GET A 15 YEAR LOAN AT 4.1%, STRUCTURED AS A LEASE. THAT'S A COMPETITIVE RATE. AS YOU CAN SEE HERE, THAT'S THE BEST RATE THAT WE SAW WITH THOSE OPTIONS. AND YOU HAVE SOME PREPAYMENT FLEXIBILITY AT THE HALFWAY POINT IN THE LOAN. SO THAT WOULD BE A GOOD OPTION TO CONSIDER IF YOU WERE PURCHASING THE TRUCKS TODAY, BECAUSE YOU WOULD START MAKING PAYMENTS ON THAT LOAN OR ON THAT LEASE STRUCTURE YEAR ONE, BUT YOU WOULD MAKE PAYMENTS ON THE ENTIRE AMOUNT OR ONLY WHAT YOU DRAW PER AS YOU GET A TRUCK. YEAH. SO THIS WOULD BE ON THE ENTIRE AMOUNT. YES, MA'AM. AND THERE IS A DIFFERENCE. YOU KNOW, SOME OF THESE HAVE DRAWDOWNS AND YOU ONLY PAY NOTICING THAT WHAT YOU DRAW. SO THIS WOULD BE ON THE ENTIRE AMOUNT, WHICH MEANS THERE WOULD BE A GENERAL FUND REQUIREMENT IMMEDIATELY IN YOUR BUDGET YEAR, FISCAL 27. AND THAT'S A LOT OF THE STUFF THAT WE SENT IN THE SPREADSHEET WAS KIND OF THE BACK, THE BACKGROUND ANALYSIS ON ONE VERSUS THE OTHER. AND WE'RE GOING TO TALK THROUGH THAT HERE IN A MINUTE. UNITED COMMUNITY, THEY PROVIDED FOR THE FULL FIVE YEAR PERIOD UP TO THE 14.5 MILLION, WITH NO UNUTILIZED FEE AT THE LOWEST INDICATIVE RATE. SO SO THAT'S CLEARLY THE BETTER OPTION ON THE LINE OF CREDIT OPTION. IT DOES EXPOSE YOU TO RISK OF INTEREST RATES GOING UP. IT EXPOSES YOU TO PLACEMENT RISK WHEN YOU GO TO DO YOUR FIX OUT. BECAUSE THEIR OFFER WAS A SEVEN YEAR FIX OUT TERM. SO WE WOULD STILL LIKELY WANT TO USE A DIFFERENT BANK, OR AT LEAST A DIFFERENT STRUCTURE WITH UNITED 3 OR 4 YEARS FROM NOW WHEN YOU HAVE THE EQUIPMENT. BUT THOSE ARE THE TWO OPTIONS WE WANTED TO DRILL INTO AND DISCUSS A LITTLE MORE ON PAGE 12, BUT YOU STILL HAD TO DRAW DOWN IN FIVE YEARS, RIGHT? EVERYTHING. YEAH. AND THAT'S THAT'S WHAT THEY'RE GOING TO COMMIT TO. SO, YOU KNOW, SAY AT THE FOUR YEAR MARK, YOU'VE DRAWN DOWN EIGHT OF THE 14.5 MILLION AND YOU'VE FIXED
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OUT THE 8 MILLION. AT THAT POINT, WE WOULD GO BACK TO THE BANK AND DISCUSS A ONE YEAR EXTENSION ON THAT CAPACITY. I WILL ADD THERE I HAVE TALKED TO THE CHIEF ABOUT THIS, AND HE SENT ME AN EMAIL TELLING ME THAT HE WOULD PART MAKE IT PART OF THE DEAL, THE PURCHASE DEAL, THAT WE WOULD GET DELIVERY OF ALL THE VEHICLES IN FOUR YEARS. SO THAT WOULD NOT WE NEED WE REALLY NEED THEM ALL. THAT WOULD NOT BE A PROBLEM FOR YEARS ANYWAY. BUT IF THERE WAS SOMETHING ON BACK ORDER, LIKE YOU SAY, THEN YOU'RE SITTING HERE PAYING, PAYING THE INTEREST ON SOMETHING YOU DON'T HAVE. THANK YOU. PAGE 12 SHOWS THE LEAST FIRST LINE OF CREDIT OPTION. SO IGNORING THE CREDIT ISSUE BECAUSE A LINE OF CREDIT IS GOING TO BE ON YOUR CBA, JUST LIKE WE HAD ON THE HURRICANE FUNDING, AS YOU DRAW DOWN MONEY THAT GOES INTO A CALCULATION THAT WE DO THAT RESTRICTS HOW MUCH YOU'RE ALLOWED TO BORROW FOR OTHER PURPOSES. SO THE LEAST FIRST LINE OF CREDIT, THE LEAST STRUCTURE, IF YOU FIX IT OUT TODAY WOULD START, YOU KNOW, REQUIRING PAYMENTS AT THE 1.3 MILLION LEVEL. AND AS SHOWN HERE IN 2027, YOU WOULD HAVE A REQUIRED GENERAL FUND CONTRIBUTION OF $420,000. SO IMMEDIATELY YOU WOULD START MAKING PAYMENTS ON THE LEASE. AND THOSE LEASE PAYMENTS WOULD REQUIRE A SUPPLEMENTAL CONTRIBUTION IN ADDITION TO THE TDC CONTRIBUTION. IN TOTAL, YOUR TDC CONTRIBUTIONS OVER THAT 15 YEAR PERIOD WOULD BE 14 MILLION. YOUR GENERAL FUND CONTRIBUTIONS WOULD BE 6.3 MILLION. AND AND THAT WOULD BE FOR THE PURCHASE OF OF THE 14.3 MILLION, A HYBRID STRUCTURE, WHICH WE PREFER GIVES US FLEXIBILITY TO TIME THE PURCHASE FOR WHEN THE EQUIPMENT ARRIVES, OR FOR WHEN THERE'S AN OPPORTUNITY TO PURCHASE EQUIPMENT THAT BECOMES AVAILABLE ALONG THE WAY. SO YOU HAVE AN OPEN LINE OF CREDIT. IT OPERATES VERY SIMILAR TO A HELOC OR SOMETHING TO THAT NATURE, TO WHERE YOU CAN ENTER INTO A PURCHASE ORDER AND PAY WHAT YOU'RE REQUIRED TO PAY. AND THEN WHEN THE EQUIPMENT IS DELIVERED, YOU CAN EITHER KEEP IT ON THAT LINE OF CREDIT OR YOU CAN FIX IT OUT UNDER A LEASE STRUCTURE, SO YOU'LL HAVE FLEXIBILITY DOWN THE ROAD TO TO DETERMINE WHERE THE RATES ARE GOING TO BE. THAT DOESN'T INTRODUCE A BIT OF INTEREST RATE RISK, BUT YOU HAVE A LOT OF FLEXIBILITY FOR WHEN YOU WOULD ENTER INTO THE LEASE COMPONENT. SO YOU CAN DO IT.START AS A LOAN, LIKE A CONSTRUCTION LOAN SIMILAR TO AND DRAW DOWN AND THEN MOVE IT TO A LEASE. EXACTLY. YEP. NO. THE DESIGN BEHIND THAT IS, IS THAT YOU CAN BATCH YOUR LEASE SCHEDULES. SO LET'S SAY YOU PURCHASE FOUR TRUCKS IN THE NEXT 18 MONTHS. AT THE 18 MONTH MARK, YOU WOULD HAVE DRAWN FOR THE FOUR TRUCKS AND YOU WOULD PACKAGE THOSE AS A SCHEDULE UNDER YOUR SAME LEASE MASTER LEASE THAT YOU HAVE WITH THE HELICOPTER WITH BANK OF AMERICA, FOR EXAMPLE, OR DO THE SEVEN YEAR FIX OUT THAT UNITED'S OFFERING. WE WOULD TYPICALLY LIKE A LONGER AMORTIZATION JUST FOR PAYMENT FLEXIBILITY, BUT THOSE WILL BE YOUR OPTIONS THAT YOU DECIDE. MIRANDA WOULD BUILD THAT INTO THE DISCUSSION FOR YOUR BUDGET. WHEN IT'S TIME TO BATCH THOSE, ARE YOU ABLE TO DO THE I APOLOGIZE GO AHEAD WITH SOME OF THESE. YOU GET THAT OPTION. YOU KNOW THEY DISCOUNT IT BY $1 MILLION OR 900 WHATEVER. DOES THAT INCLUDE THAT? DO WE GET THAT IF BECAUSE IT'S IT ALMOST SOUNDS LIKE WE'RE NOT COMMITTED TO IT BECAUSE WE'RE DOING IT IN STAGGERED. SO DO WE GET THAT PREPAYMENT DISCOUNT? WE WOULD NOT. SO THE PREPAYMENT DISCOUNTS THAT HAVE BEEN DISCUSSED, THOSE ARE COMING FROM THE MANUFACTURER. AND I DON'T BELIEVE ANY OF THE MANUFACTURERS RESPONDED TO THIS.
WE WE DID THEY DID SEND THIS OUT AND NONE OF THOSE RESPONDED. SO THAT EQUATED TO ABOUT 900 AND SOMETHING THOUSAND OF A DISCOUNT FOR ALL OF THE TRUCKS. IT WOULD BRING IT DOWN TO 13 POINT SOMETHING MILLION. THAT IS, IF WE GO AHEAD AND WE PAY THE WHOLE 13 MILLION UPFRONT NOW AND WE START MAKING DEBT SERVICE ON IT. ONE OF THE OPTIONS WE HAVE BEEN LOOKING AT IS SINCE WE DO HAVE THE DEBT SERVICE IN THE BUDGET THIS YEAR, IF WE DON'T HAVE TO PAY THAT, WE WOULD BANK THAT DEBT SERVICE FOR BASICALLY LIKE A DOWN PAYMENT POSSIBLY, OR IF WE NEEDED TO USE THOSE FUNDS FOR SOMETHING ELSE IN THE FUTURE, THEY WOULD BE AVAILABLE. BUT THEY'RE HERE FOR THE DEBT SERVICE. SO WE COULD DO EITHER WAY. WE COULD WE COULD DO A LOAN AND GO AHEAD AND START MAKING DEBT PAYMENTS. NOW WE DO HAVE IT IN THE BUDGET. OR WE COULD DO THIS OTHER HYBRID OPTION WHERE WE DRAW IT DOWN AS NEEDED, AND WE DON'T START MAKING DEBT PAYMENTS UNTIL LATER. SO NEITHER SCENARIO HAS THE PREPAID DISCOUNT THEN. OKAY.
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YEAH. AND AND WE DID. THAT WAS ONE OF THE TABS I THINK WE HAD IN THAT SPREADSHEET. AND JUST GENERALLY, YOU KNOW, THINK OF IT AS INSTEAD OF 420,000, IT WOULD BE 300,000 WOULD BE THE COUNTY CONTRIBUTION NEXT YEAR. SO IF YOU WENT AHEAD AND PREPAID FOR EVERYTHING AND CLOSED ON THE 15 YEAR LEASE WITH BANK OF AMERICA, YOUR TOTAL PAYMENT WOULD BE 1,000,001.75. SO YOU WOULD SAVE, YOU WOULD HAVE 300,000 LESS, BUT YOU WOULD STILL NEED OR YOU'D HAVE 120,000 LESS. YOU'D STILL NEED 300,000 IN THE BUDGET FROM THE GENERAL FUND NEXT YEAR, ON TOP OF THE TDC CONTRIBUTION. SO TO MIRANDA'S POINT, THE HYBRID STRUCTURE YOU SEE ON THE RIGHT THAT SHOWS THE CONTRIBUTION COMING IN FROM TDC AND THE CONTRIBUTION BEING USED TO MAKE THAT SERVICE PAYMENTS, AND THEN THE EXCESS THAT'S NOT REQUIRED FOR PAYMENTS ESSENTIALLY JUST EARNS 3% IN A FUND. SO THERE WOULD BE AN ESTABLISHED FUND FOR THIS EQUIPMENT. AND THE FIRST IMPACT ON THE GENERAL FUND WOULD NOT BE UNTIL YEAR 2035. SO YOU JUST EFFECTIVELY HAVE EIGHT. SO WE HAVE DEFERRED PAYMENTS AND IT'LL BE ABOUT 1.6 LESS OUT OF OUR GENERAL FUND. YES, EXACTLY. THAT'S THE THAT'S THE PUNCH LINE. SO YEAH. YOU WOULD YOU WOULD PAY YOU KNOW, LESS IN DEBT SERVICE TOTAL BECAUSE YOU WOULD BE ONLY PAYING, YOU KNOW, THE DEBT THAT YOU INCUR AS YOU RECEIVE THE EQUIPMENT AND, AND IT'D BE LESS GENERAL FUND CONTRIBUTION. SO I AGREED TO DO THAT JUST LIKE THIS. IT HAS. SO THE HYBRID STRUCTURE IS REALLY WHAT UNITED COMMUNITY BANK HAS OFFERED WITH THE FLEXIBILITY TO USE ONE OF YOUR CURRENT LEASE PARTICIPANTS TO FIX IT OUT IN THE FUTURE. SO, YOU KNOW, LET'S SAY TWO YEARS FROM NOW, YOU'VE DRAWN THE $5 MILLION AND YOU WANT TO FIX THAT OUT FOR 13 YEARS. THAT 13 YEAR LOAN WOULD JUST BE A SCHEDULE ADDED TO YOUR BANK OF AMERICA MASTER LEASE PROGRAM AT RATES THEN THAT WE GO IN AND NEGOTIATE. US BANK AND BANK OF AMERICA BOTH HAVE DONE MASTER LEASE PROGRAMS WITH THE COUNTY. WE WOULDN'T HAVE TO TAKE IT BACK OUT FOR AN RFP AT THAT POINT. AT THAT POINT, YOUR MASTER LEASE PROGRAM HAS ALREADY BEEN ESTABLISHED, SO YOU WOULD REQUEST A RATE. AND, YOU KNOW, WE HAVE CLIENTS THAT WOULD REQUEST A RATE. MAKE SURE THAT THAT'S A RATE WE'RE COMFORTABLE WITH AND WE WOULD, YOU KNOW, PROVIDE SOME SORT OF INDICATIVE, INDICATIVE, INDICATIVE RATE COMPARISON BASED ON WHAT WE'RE SEEING FROM OTHER COMPETITIVE PROCESSES. CAN I ASK YOU TO SPEAK A LITTLE ON WHAT USED TO BE THE LIBOR SWAP? AND NOW YOU'RE SAYING IS WHAT IS THE DIFFERENCE IN LIBOR AND WHAT IT IS NOW? AND CAN YOU I'VE SEEN I'VE SEEN THIS WORK AND BE BE A VERY GOOD WAY TO DO IT. BUT IT HAD A CAP AT THE AT THE INTEREST RATE. SO I'M NOT SURE WHAT I'M READING HERE IS WHAT I'VE SEEN IN THE PAST AND THEN THE MAKE WHOLE BREAKAGE CHARGE. DO WE KNOW WHAT? I MEAN? WHAT IS THAT AND WHAT? AND THE OTHER ONE QUESTION IS, I GUESS ON THE DRAWS ON, SAY, THIS PARTICULAR ONE WITH JP MORGAN, THE DRAWS HAVE TO BE AT 2,500,000. SO. DOES THAT HELP OR NOT? I MEAN, IT ALL SOUNDS LIKE IT'S A LITTLE STICKY OR A LITTLE. NO, YOU'RE ABSOLUTELY RIGHT. I THINK THE MORE ORNAMENTS YOU PUT ON THE TREE, GIVEN THE TIME OF YEAR IT IS, THE THE HARDER IT IS TO MANAGE. YOU KNOW, THEY DON'T WANT THE COUNTY TO REQUEST DRAWS FOR EVERY $250,000 BRUSH TRUCK. SO THEY WOULD RATHER Y'ALL DO DRAWS TO MAKE IT EFFICIENT FOR THEM TO BOOK THE LOAN ON THEIR BOOKS IN A PROCESS THAT'S EASY FOR THEM. WE'RE LESS FOCUSED ON MAKING IT EASIER FOR THEM AND MAKING IT MORE EFFICIENT FOR Y'ALL. SO WE WOULD WANT, YOU KNOW, TO LIMIT THE DRAWS TO ONCE A MONTH, FOR EXAMPLE, AT LEAST 100,000. THOSE ARE REASONABLE, YOU KNOW, DRAW AMOUNTS BECAUSE YOU WANT TO BE ABLE TO USE THIS AS A FACILITY WHEN NEEDED. AND IF IF YOU HAVE TO DRAW FOR TEN DIFFERENT BRUSH TRUCKS BEFORE YOU COULD USE THAT FACILITY, IT'S JUST PROBABLY NOT GOING TO WORK, RIGHT. LIBOR AND SOFR. SO SO LIBOR WAS THE STANDARD INDEX USED FOR THE TAXABLE OVERNIGHT RATE. AND LIBOR LONDON INTERBANK OFFERED RATE WAS WHAT THE BANKS USED TO SET THEIR OVERNIGHT LENDING RATE FROM BANK TO BANK. IT WAS DETERMINED. AND I I'M NOT A PROFESSOR OF OF THEORY, BUT IT WAS DETERMINED THAT LIBOR WAS NO LONGER AN EFFICIENT INDEX BECAUSE IT WAS BEING GAMED EFFECTIVELY BY THE LARGER BANKS. SO THEY CHANGED IT TO SOFR, WHICH IS A STANDARD OVERNIGHT FUNDING RATE, AND THAT THAT'S A RATE THAT'S MARKET BASED. IT'S NOT BASED ON[00:25:06]
PARTICIPANTS WITHIN THE MARKET. SO IT'S EFFECTIVELY AN OPEN INDEX AS OPPOSED TO A CLOSED PEGGED INDEX. AND WHEN THEY DID THE TRANSFER FROM LIBOR TO SOFR A COUPLE OF YEARS AGO, THERE'S JUST SOME OLD DOCUMENTS THAT ARE STILL TRANSITIONING TO THE NEW LANGUAGE. BUT SOFR IS THE INDEX THAT WE USE. BUT THIS PARTICULAR ONE WOULDN'T HAVE A MAXIMUM PERCENT RATE PERCENT, RIGHT? IT WOULD NOT. SO IT WOULD BE PEGGED TO TO. SO FOR YOU KNOW, THERE'S BEEN A COUPLE OF INSTANCES IN THE IN IN ECONOMIC EVENTS. AND NINE OVER 11 WAS ONE, THE GREAT RECESSION WAS ANOTHER ONE WHERE YOU SAW SPIKES IN, YOU KNOW, THAT SHORT TERM BORROWING RATE, YOU KNOW, WE WOULD WANT TO, YOU KNOW, BE FLEXIBLE IN HOW WE WOULD MANAGE THROUGH THAT IF THERE WERE A SPIKE IN LIBOR OR SOFR, RATHER. SO SO WE WOULD BE EXPOSED TO THAT RISK. CERTAINLY. OKAY. I THINK THAT THAT WAS ALL ON THE ANALYSIS. AS YOU CAN SEE, THE ENDING BALANCE GROWS AS YOU WAIT ON EQUIPMENT TO COME IN. AS EQUIPMENT COMES IN, THAT BALANCE DECREASES AND EVENTUALLY RESULTS IN REQUIRED GENERAL FUND CONTRIBUTIONS. SO THAT'LL BE SOMETHING THAT CHANGES OVER TIME. AND WE WOULD UPDATE AS EQUIPMENT AS IS RECEIVED. SO CONSIDERATIONS WE'VE TALKED THROUGH MOST OF THESE PROBABLY ALL OF THEM RISK AND FLEXIBILITY. SO THERE IS SOME RISK SOME OF IT'S OPPORTUNITY COST. DO YOU LOCK IN YOU KNOW 4.1% NOW. OR DO YOU LOOK FOR OPPORTUNITIES WHERE RATES COULD BE LOWER OVER TIME. YOU KNOW THOSE THOSE ARE THE INTEREST RATE RISK COMPONENTS VENDOR RISK. DO YOU TAKE ADVANTAGE OF PREPAYMENT DISCOUNT AND THEN HAVE RISK THAT THERE IS PERFORMANCE ISSUE ON DELIVERING THE EQUIPMENT THAT WAS ORDERED ON TIME AND AND TO THE SPECIFICATIONS THAT YOU REQUIRE? THERE'S CARRY COST NEGATIVE ARBITRAGE. SO THERE IS A COST EFFECTIVELY OF OF TAKING A LOAN DOWN AND PAYING 4.1% INTEREST ON IT AND NOT EARNING ANYTHING. SO THERE IS A COST OF CARRY OF OF NOT BENEFITING FROM THE EQUIPMENT THAT IS SECURING THE LEASE, BUT HAVING TO PAY FROM THE GENERAL FUND FOR THAT LEASE. AND THEN THERE'S LIQUIDITY RISK. SO THE THE LIQUIDITY RISK OF UTILIZING BORROWING CAPACITY FOR SOMETHING TODAY REDUCES THE FLEXIBILITY TO BUY EQUIPMENT IN THE FUTURE. THAT COMES UP, WHETHER IT'S A FAILED ORDER THAT THE MANUFACTURER HAS THAT THEY'RE ABLE TO OFFER TO YOU AS A, YOU KNOW, AS A INTERIM, YOU KNOW, NEED GAP OR SOMETHING TO THAT EFFECT. OFTENTIMES WE DO SEE THAT THAT EQUIPMENT DOES ON OCCASION COME UP FOR, YOU KNOW, FOR AVAILABILITY PRIOR TO WHEN THEY EXPECT IT WILL. SO THERE IS SOME AVAILABILITY FLEXIBILITY WITH THAT TOO. THE LINE OF CREDIT REALLY JUST LINES UP YOUR DEBT AND YOUR ASSET. IT LINES UP WHEN YOU START MAKING PAYMENTS AND WITHOUT A CARRYING COST, WITHOUT THAT UNUTILIZED FEE, YOU REALLY AREN'T MAKING ANY PAYMENTS UNTIL YOU GET THE TRUCK OR GET THE EQUIPMENT THAT YOU'RE FINANCING. SO YOU DON'T START PAYING FOR IT UNTIL YOU'RE BENEFITING FROM THAT ASSET. ANY QUESTIONS ON THE TOP LINE CONSIDERATIONS? BEFORE I DIVE INTO THE MATRIX? SO SO THIS HAS ALL THE DETAILS OF THE MATRIX. AND SOME OF THESE QUESTIONS HAVE HAVE BEEN ASKED ALREADY. SO MAYBE IF IT'S OKAY IF I JUST WALK THROUGH AND KIND OF TALK ABOUT SOME OF THE HIGHLIGHTS FOR EACH OF THE PROPOSALS. THE COUNTY RECEIVED NINE PROPOSALS TOTAL, WHICH FRANKLY IS A VERY, VERY GOOD SOLID RESULT FOR FOR THIS PROCESS. BANK OF AMERICA IS IS A COMMON PARTICIPANT IN THIS MARKET. AS MENTIONED, THEY HAVE A LEASE OUT WITH THE HELICOPTER AND THEIR RATES ARE ARE VERY COMPETITIVE HERE AS SHOWN.PREPAYMENT FLEXIBILITY IS SOMETHING THAT WE ASK FOR AND SOMETHING THAT WE VALUE. AND THEY DO INCLUDE THAT AT THE HALFWAY POINT IN THE TERM. AND THEY'RE STANDARD CONDITIONS HERE ARE NOT DIFFERENT THAN WHAT WE'VE SEEN IN THE PAST FROM THEM. LIKE STAR IS IS A PARTICIPANT WE SEE FROM TIME TO TIME WHEN THEY LIKE THE CREDIT. THEY DO LIKE THE CREDIT OF THE CBNA. THIS WOULD BE FOR A TERM LOAN. SO THIS WOULD BE A COVENANT TO BUDGET AND APPROPRIATE ON THE THE GENERAL FUND FOR THE COUNTY. THAT INTEREST RATE OF 4.22 IS SET AND HELD UNTIL THE END OF JANUARY. IF THAT WAS THE DIRECTION WE WENT, THE DEBT COMMITTEE DECIDES TO TO MOVE. AND THEY DO HAVE SOME PREPAYMENT FLEXIBILITY.
STARTING OUT AT YEAR FIVE. JP MORGAN. THEY ARE ALWAYS GOOD ABOUT OFFERING MANY OPTIONS,
[00:30:01]
AND THEY OFFER THE 10 TO 15 YEAR OPTIONS HERE WITH VARIOUS SPREADS AS SHOWN. AS YOU CAN SEE, THOSE RATES ARE, YOU KNOW, COMPETITIVE BUT BUT A LITTLE HIGHER THAN WHAT WE SAW FROM BANK OF AMERICA. AND, YOU KNOW, THE PREPAYMENT FLEXIBILITY, YOU KNOW, COMES AT A PRETTY STEEP PREMIUM. SO YOU CAN SEE THE PREPAYMENT FLEXIBILITY COST A LITTLE MORE THAN WHAT IS OFFERED BY BANK OF AMERICA. BUT YOU DO GET THE FLEXIBILITY EARLIER IN THE LOAN. DID YOU ASK DID YOU ANSWER THE WHAT WAS THE MAKE WHOLE BREAKAGE CHARGE? YEAH. SO THAT'S A GREAT QUESTION. IT'S IT'S NOT AN EASY ANSWER BECAUSE IT'S REALLY DEPENDENT ON WHERE THE MARKET RATES ARE. SO IF YOU ENTER INTO A 15 YEAR LOAN AT A 4%, LET'S SAY YOU DO THE 4.1% WITH BANK OF AMERICA, AND YOU WANT TO GET OUT OF THAT LOAN AT YEAR FIVE AHEAD OF THE PREPAYMENT PA OPTION, THERE WOULD BE A CALCULATION FOR WHAT THE RATES ARE. THEN ON A TEN YEAR LOAN, BASED ON HOW THEY SET THE RATE FOR YOUR CREDIT TODAY, THAT CALCULATION EFFECTIVELY TAKES A PRESENT VALUE OF WHAT THE FUTURE CASH FLOWS WOULD BE TO THE BANK AND DISCOUNTS THEM BACK, ESSENTIALLY TAKING AWAY ANY ECONOMIC BENEFIT OF A REFUNDING OR REFUNDING. YEAH.RIGHT. OKAY. SO WE WE LIKE TO LOOK AT THAT AS A IS A NONREFUNDABLE FROM AN ECONOMIC STANDPOINT. BUT IT IS NICE IF RATES GO UP OR YOU WANT TO RESTRUCTURE AND AND CONSOLIDATE AND DO A COMBINED LOAN, LET'S SAY FIVE YEARS FROM NOW, YOU NEED MORE EQUIPMENT AND YOU DON'T WANT TWO DIFFERENT LOANS ON THE BOOKS. YOU COULD GET OUT OF THAT LOAN AT A 4.15% AND MAKE IT MORE EFFICIENT FOR YOU TO MANAGE THE DEBT. THAT WOULD BE A BENEFIT TO THE COUNTY, BUT YOU COULDN'T BENEFIT FINANCIALLY FROM THAT. IT'S JUST IT'S STILL JUST A PENALTY.
IT'S JUST A PENALTY BASED ON INTEREST RATES. AND IT WOULD BE TIED TO THE INTEREST RATE YOU COULD GET IN THE MARKET. WHEN YOU GO TO REFINANCE IT OR RESTRUCTURE IT. YEAH, IT COULD BE VERY PUNITIVE. SO I THINK THE IMPORTANT THING WE LEARNED WITH DERIVATIVE INSTRUMENTS IS, YOU KNOW, AT THE ONE YEAR MARK ON A 15 YEAR LOAN, YOU KNOW, THAT COULD BE $1 MILLION PREPAYMENT PENALTY IF Y'ALL JUST DECIDED NOT TO PURCHASE THE EQUIPMENT. SO WE DO PLACE A VALUE ON THAT WITH A LINE OF CREDIT, BECAUSE YOU'RE NOT ACTUALLY DRAWING THE MONEY YET.
IF YOU DON'T DRAW THE MONEY IN THE FIVE YEARS ON THE LINE, THEN IT JUST GOES AWAY. YOU LOSE THAT CAPACITY AND YOU DON'T MAKE ANY PAYMENTS ON IT. WITH A LOAN THAT HAS A MAKE WHOLE CALL. IF SOMETHING CHANGES AND YOU JUST DON'T WANT THE EQUIPMENT ANYMORE. A YEAR FROM NOW AND YOU HAVE A COLD CALL, YOU'RE GOING TO PAY A 14 YEAR PENALTY. IF RATES ARE DOWN, YOU KNOW, 75 BASIS POINTS LIKE WE'RE HOPING WE'RE HOPING THEY WILL BE, THEN THAT'S A VERY PUNITIVE COST. SO I JUST MAYBE FOR CLARIFICATION, SAY WE HAVE $3 MILLION IN TWO YEARS BECAUSE THAT'S WHAT WE'VE BUDGETED FOR, DEBT SERVICE. WE COULD NOT DRAW DOWN THAT $3 MILLION. AND THEN THEREFORE, IT WOULD NEVER GO INTO A LONG TERM LEASE. AND THAT WOULD REDUCE OUR OUR DEBT PAYMENTS IN THE FUTURE, CORRECT? YEAH. I MEAN, PART OF THE STRATEGY IS TO HAVE THE FLEXIBILITY TO, LET'S SAY THE BRUSH TRUCKS ARE AVAILABLE AND YOU JUST PAY THE MILLION DOLLARS FOR FOR BRUSH TRUCKS AND THEY GET DELIVERED. AND THAT'S ABOUT WHAT YOU GOT BUDGETED FOR THIS YEAR. AND YOU DON'T EVEN MAKE A DRAW ON A LINE. SO THAT FREES UP THAT CAPACITY. NOW YOU'VE JUST REDUCED FROM 14 3 TO 13 THREE. EVEN THOUGH YOU'VE GOT THE CAPACITY, YOU'RE NOT PAYING FOR IT, AND YOU'RE ABLE TO USE CASH AS OPPOSED TO A LOAN. THAT'S GREAT. GREAT POINT. GOING THROUGH THE LIST HERE JUST TO TOUCH ON ALL THESE. AND AGAIN, VERY THOUGHTFUL RESPONSES FROM FROM BANKS. PNC HAD A GOOD GOOD COUPLE OF OPTIONS HERE. RATES ARE A LITTLE HIGHER THAN THAN WHAT WE WERE HOPING TO SEE. BUT THEY DID OFFER SOME PREPAYMENT FLEXIBILITY, WHICH IS GOOD SMART BANK. ONE QUESTION ABOUT PNC. WE HAVE TO DO A PERFORMANCE BOND WITH THEM. WOULD THAT PERCENTAGE OF THE PERFORMANCE BOND BE I MEAN, KIND OF ESSENTIALLY ADDED TO THE INTEREST RATES. SO REALLY THE RATE WHATEVER THE BONDS ARE GOING TO BE, THE RATE WOULD BE UP THAT MUCH. OR IS THAT HOW THIS BOND WOULD WORK. SO THE PERFORMANCE BOND REALLY WOULD IT WOULD BE SOMETHING YOU WOULD PUT IN PLACE TO COMMIT THE MANUFACTURER TO DELIVERING THE EQUIPMENT TO SPEC, AND THAT ADDITIONAL COST WOULD THE BEST WAY TO THINK ABOUT THAT DELIVERY? IT WOULD THAT WOULD BE THAT THAT WOULD EAT INTO THE SAVINGS OF THE PREPAYMENT. OKAY. YOU KNOW, SO TO HAVE A PERFORMANCE BOND LIKE THAT, IT'S IT'S NOT COMMON OKAY. NO, IT'S IT'S NOT COMMON. TYPICALLY THE LEASES ARE STRUCTURED. YEAH
[00:35:05]
THAT'S RIGHT. YEAH. TYPICALLY TYPICALLY YOU'VE GOT THE VIN NUMBER AND YOU KNOW WHAT THE EQUIPMENT IS. BUT WITH THE LONG LEAD TIME UP TO FOUR YEARS, THAT'S THEIR WAY OF ENSURING THAT THE MONEY THAT THEY'RE SENDING OVER IS GOING TO BE PAID BACK. IF THAT EQUIPMENT NEVER SHOWS UP. GOOD. GOOD QUESTION. SMARTBANK. THEY HAD A THEY HAD A GOOD OPTION HERE WITH A DRAWDOWN. YOU KNOW, OVER THE FIRST THREE YEARS PRE PAYABLE AT ANY TIME WITHOUT PENALTY. AND AND THAT WAS AN INDICATIVE RATE HIGHER THAN WHAT WE'D SEEN FROM OTHERS. BUT GOOD TO SEE THEM PARTICIPATE. WE HAVEN'T SEEN THEM PARTICIPATE ACROSS THE BOARD.SO THAT WAS GOOD. TRUIST BANK ALWAYS SHOWS UP FOR THE COUNTY WITH OPTIONS TO CONSIDER. RATES ARE A LITTLE HIGHER. THAT'S JUST WHERE THEIR MODELS GOT IT FOR A TERM LOAN. SO THAT WOULD BE A CBNA THAT'S NOT THROUGH THEIR LEASING DEPARTMENT, WHICH IS WHY RATES ARE A LITTLE HIGHER. TYPICALLY LEASE RATES ARE GOING TO BE A BIT MORE COMPETITIVE. SO ON TRUIST THEY'RE THEY'RE A BANK COUNCIL FEE. IS IT. IT'S IN HERE TWICE. IS IT. TEN 10,000. SO THEY'RE BANK COUNCIL FEE IS 15,000 LISTED 15. IF IT'S A LINE IF IT'S TEN IF IT'S TEN IF IT'S THE BANK LOAN OKAY I SEE. SO IT'S NOT OPTIONS FOR BOTH. SO IT WOULDN'T BE. IT WOULDN'T BE DOUBLE. YEAH OKAY. WHICH OPTION YOU WENT WITH I GOT YOU. GOING TO THE THIRD PAGE HERE US BANK US BANK HAS BEEN ACTIVE WITH THE COUNTY SO HAD ANTICIPATED SEEING A RESPONSE FROM THEM.
THIS IS A SOLID LEASE PROPOSAL. THE 4.39%. THEY GAVE US A LITTLE LONGER TO TO LOCK THAT IN. IF THE COMMITTEE HAD CHOSE TO EXTEND THAT FAR. BUT AT THAT RATE, NOT WHAT WE THINK IS IS THE MOST ADVANTAGEOUS UNITED COMMUNITY. WE'VE TALKED TO AT LENGTH ABOUT THE BENEFITS OF THEIR PROPOSAL. AND WE HAVE CONFIRMED THIS, FRANKLY, THAT WAS PART OF OUR EARLY DISCUSSION, IS WANTING TO MAKE SURE THERE WASN'T A TYPO OR SOMETHING. THEY DID CONFIRM THAT, YOU KNOW, THE SEVEN YEAR TERM LOAN OPTION WASN'T WHAT WE ASKED FOR. SO IT'S ON THE SHORTER END OF WHAT WE WOULD WANT TO TO SEE. BUT SEEING THAT IT COMES WITH THAT BUILT INTO THE DEAL, OUR RECOMMENDATION WOULD BE TO KEEP THAT IN THE DEAL AS AN OPTION FOR THE COUNTY TO TO UTILIZE IF, IF THAT MAKES SENSE AT THAT TIME. SO NOT A REQUIREMENT TO FIX IT OUT WITH THAT SEVEN YEAR TERM. BUT CERTAINLY IS IS A VALUABLE OPTION TO INCLUDE. AND THAT WEBSTER BANK, YOU KNOW THEY CAME IN WITH THE TERM LOAN ALTERNATIVE. AND AND THAT WAS AT A RATE THAT WAS FAIRLY COMPETITIVE 4.165. AND THAT WAS HELD THROUGH THE END OF THE MONTH AS WELL. SO THAT WAS A LOT. I KNOW IT WAS, YOU KNOW, KIND OF ALL OVER THE BOARD WITH WHAT WE ASKED FOR. AND THEN WE GOT A COUPLE OF BONUS SUGGESTIONS FROM THE BANK.
Y'ALL HAD REALLY GOOD QUESTIONS, SO MAYBE WE GOT THEM ALL. BUT IF THERE'S ANY OTHER QUESTIONS, I'M HAPPY TO ANSWER THEM. I THINK IT COVERS MINE. I DON'T KNOW IF YOU GUYS HAVE ANY DON'T HAVE ANY QUESTIONS. SO WITH YOUR EQUIPMENT YOU GET THE DISCOUNT IF YOU PREPAY THEM AHEAD OF TIME. BUT AS LONG AS WE COMMIT TO THE EQUIPMENT WE GET IT. THESE PRICES ARE LOCKED IN. CORRECT. SO THE PREPAID DISCOUNT IS THROUGH THE MANUFACTURERS. AND THEY WOULD DISCOUNT THE TOTAL PURCHASE PRICE. SO THAT WOULD BE WHERE THAT COMES IN. THESE WE WOULD BASICALLY GET THE DISCOUNT IN NOT HAVING A DEBT SERVICE PAYMENT IF THAT MAKES SENSE. IS THAT WHAT YOU'RE ASKING? WELL, I'M JUST ASKING THE PRICES THAT WE HAVE BEFORE US. I MEAN, I UNDERSTAND THERE'S A RATE INCREASE COMING ON THESE APPARATUSES THIS YEAR. SO THIS WOULD LOCK US IN WITH THE MANUFACTURER ON THE PRICES FOR THAT WOULD POSE AND THAT WOULD LOCK US IN AT THE CURRENT RATES FOR ALL THE IF WE DID A LINE OF CREDIT, WE'RE JUST NOT PREPAYING, RIGHT? YEAH. WE WOULD, WE WOULD HAVE WE WOULD BE LOCKED IN WHEN THE MANUFACTURER, THEY JUST WOULDN'T HAVE OUR MONEY UP FRONT. WAS ANY OF THE EQUIPMENT ON THE, ON THE YARD, SO TO SPEAK. SO THAT WOULD BE SOMETHING THAT THE CHIEF COULD PROBABLY ANSWER. MY CONVERSATIONS WITH HIM HAVE BEEN, NO, IT IS NOT. I THINK THAT HE LISTED MOST OF THESE AS CUSTOM BUILDS. I'M NOT SURE IF THERE WOULD BE SOMETHING IN THE NEXT YEAR OR SO COME AVAILABLE IF IT WOULD WORK FOR US IF THEY HAD LIKE A FIRE TRUCK LEFT OVER AND THEY WOULD GIVE US THE DISCOUNT THAT ROBERT'S TALKING ABOUT TO TAKE THAT ONE OFF THE OFF THE YARD. BUT IF WE HAD A LINE OF CREDIT OPTION THEN THAT COULD OPEN THAT UP VERSUS THE PREPAY. WE ARE LOCKED IN TO THE MANUFACTURING. RIGHT. SO YEAH THAT IS A GOOD POINT. YOU KNOW,
[00:40:03]
IF WE DO HAVE THE LINE OF CREDIT AND SOMETHING DOES COME UP AVAILABLE SOONER, THEN WE COULD TAKE ADVANTAGE OF THAT. YEAH. BECAUSE I WATCH THEM UNFORTUNATELY I GUESS MY PHONE FORCES ME TO WATCH THEM NOW BECAUSE I SEARCHED IT AT ONE TIME. SO EVERY, EVERY DAY I GET FIRE TRUCK OFFERS. AND SO I SEE THAT NEW THINGS COME UP ALL THE TIME. SO I WAS JUST WONDERING IF, YOU KNOW, HOPEFULLY YOU'RE GOING TO BE OUR NEW VENDOR. NO, I DON'T WANT ANYTHING TO DO WITH THE TRUCK, REALLY. BUT IT IS INTERESTING THAT, YOU KNOW, PEOPLE ORDER THEM AND THEY DON'T TAKE THEM, AND THEN THEY HAVE THEM LEFT OVER AND THEY MIGHT BE EXACTLY WHAT WE'RE LOOKING FOR. AND IF SO, THEN, YOU KNOW, I WOULD LOVE TO SEE US HAVE THE OPTION TO JUMP ON SOMETHING LIKE THAT. SO. OKAY. SO DOES ANYBODY HAVE ANY OTHER QUESTIONS? I DON'T HAVE ANY QUESTIONS. I DO. NORMALLY WHEN WE SIT UP HERE, I LIKE TO HAVE A FIXED RATE FOR THE LIFE THAT WE ARE BORROWING. SO IT IS CONCERNING THAT WE WILL HAVE A POSSIBLY A NEW RATE WHEN WE MOVE OUT OF THE LINE OF CREDIT AND INTO THE, THE LEASE OR WHATEVER, OR POSSIBLY THE LOAN.BUT I DO FEEL LIKE THAT'S PROBABLY THE BEST OPTION AND GIVES US MORE FLEXIBILITY THAT WE WE NEED RIGHT NOW. AND I LIKE THE IDEA THAT WE COULD HAVE THAT DEBT SERVICE AND NOT DRAW DOWN THE FULL LINE OF CREDIT, WHICH WOULD LOWER OUR OUR PAYMENTS GOING FORWARD. BUT YEAH, IT IS A LITTLE CONCERNING THAT WE DON'T HAVE A FIXED RATE FOR THE LIFE, BUT I THINK THE FLEXIBILITY MAY BE WORTH IT. IT'S REALLY SCARY NOT TO HAVE THE FIXED RATE, BUT. RATES ARE COMING DOWN AND FLEXIBLE TERMS. I'M I'M WITH YOU ON THAT. I THINK IT'S. NO, I TOTALLY AGREE.
JUST BE BAD TO GET GET STUCK WITH ONE AND AND WITH THIS HYBRID WE REALLY HAVE THE BEST OF BOTH WORLDS. IT LOOKS LIKE. OKAY, SO I WILL MAKE A MOTION THAT WE WOULD GO WITH THE UNITED COMMUNITY LINE OF CREDIT. FOR THE THE DRAWDOWN. AND THEN WE WOULD LOOK AT THE LEASE OR THE LOAN DEPENDING ON THE THE RATES AT THE TIME FOR THE BEST OPTION, I'LL SELL YOU THAT HAVE A MOTION AND A SECOND AND ANY OTHER DISCUSSION. I JUST WANT TO BRING UP ONE MORE THING THAT IT IT IS A FIVE YEAR DRAW PERIOD ON THAT ONE THAT I HAD HAD CIRCLED. SO WE FEEL LIKE FIVE YEARS IS ALL WE NEED TO GET GET GOING HERE. I HAVE ASKED THAT, AND I HAVE BEEN TOLD THAT WE SHOULD BE ABLE TO DO IT IN FOUR. OKAY, WE HAVE A MOTION AND A SECOND. COULD YOU CALL THE ROLL, PLEASE? YES, MA'AM. CHIEF GRIFFIN. YES. AND CHAIRMAN. PEACE. YES, MA'AM.
OKAY, WE ARE
* This transcript was compiled from uncorrected Closed Captioning.