HARBOR DEPARTMENT OF THE CITY OF LOS ANGELES REQUEST FOR PROPOSALS

Transcription

1 521 MADISON AVENUE, SEVENTH FLOOR NEW YORK, NY TEL: HARBOR DEPARTMENT OF THE CITY OF LOS ANGELES REQUEST FOR PROPOSALS STANDBY LINE OF CREDIT PROVIDERS FOR COMMERCIAL PAPER PROGRAM and/or REVOLVING LINE OF CREDIT Issue Date: October 22, 2018 Due Date: Thursday, November 8, 2018 at 3:00 PM EDT Frasca & Associates, LLC ( FRASCA ), on behalf of the Harbor Department of the City of Los Angeles (the Department ), is seeking proposals for (1) standby Lines of Credit (the LOC or LOCs ) to provide liquidity support for the Department s commercial paper program (the CP Program ) and/or (2) a Revolving Credit Facility (the RCF ). At this time, the Department expects the LOCs for the CP Program and/or the RCF to be sized at $150 million aggregate principal amount (plus applicable interest). Pursuant to this Request for Proposals ( RFP ), the Department seeks proposals from financial institutions that satisfy the minimum qualifications described herein and are interested in providing one or more of the following: 1. An LOC to support the non-amt/amt/taxable 2019 CP Notes, and/or 2. A RCF for non-amt/amt/taxable 2019 indexed notes with drawdown and prepayment flexibility Financial institutions may offer to provide an LOC, a RCF, or both. Based upon the proposals received, the Department will evaluate the most attractive facility or mix of facilities to meet its funding requirements. The Department may select one proposer to provide the full amount of the requested facility or select multiple proposers to provide separate facilities at various sizing amounts. By way of example, the Department may select two (2) separate institutions to provide $100 million each in RCF capacity. Notably, the Department will not consider joint proposals or proposals from syndicates. Page 1

2 Responsible Banking Ordinance Compliance The selected financial institution(s) shall comply with the City of Los Angeles Responsible Banking Ordinance (RBO), Administrative Code Section , including as amended by Ordinance No effective August 19, Noncompliance with the RBO by any financial institution providing services to the Department may result in termination of the LOC and/or RCF. Each Respondent must demonstrate in its proposal that it is in compliance with the RBO or its proposal may be disqualified as non-responsive. General Overview: The Department The Department is an independent proprietary (self-funded) Department of the City of Los Angeles (the City ). As trustee for the State of California under a series of tidelands grants, the Department holds in trust and operates the Port of Los Angeles (the Port ), located in San Pedro Bay, approximately 20 miles south of downtown Los Angeles. The Port is the busiest container port in the nation handling over 9.1 million twenty-foot equivalent units during fiscal year In terms of physical size, the Port is the largest port on the west coast, occupying 7,500 acres of land and water encompassing approximately 43 miles of waterfront and 27 terminal facilities. Additional information and background on the Port can be found on its website at: Outstanding Debt By Section 609 of the City Charter, the Department has the power to borrow money and to issue bonds, refunding bonds, notes and other evidences of indebtedness for any lawful purpose, relating to the [Department], payable from the revenues of the [Department] and from any other money lawfully available to the [Department] or under its control, in the form and manner approved by the [Board of Harbor Commissioners]. A. Revenue Bonds The Department has five outstanding bond issues (Series 2009AC, Series 2011AB, Series 2014ABC, 2015A, and 2016ABC) for total bonded debt of $810,110,000 as of October 1, The Department has achieved the highest credit rating for a non-tax backed container port in the country by all three rating agencies: Moody s Aa2, S&P AA and Fitch AA. Currently, the Department does not have any CP Notes or other variable rate debt outstanding. Page 2

3 B. Commercial Paper Program The Department previously had a three year, $200 million CP Program, which expired on August 24, The Series A-1, C-1 and D-1 Notes were supported by a standby line of credit agreement in an amount of $200,000,000 (plus applicable interest) from Mizuho Bank, Ltd. (acting through its New York branch) dated August 25, The Port did not issue any CP Notes under that program. The Department is authorized by the Board of Harbor Commissioners to issue commercial paper or draw upon revolving credit facilities up to an aggregate amount of $375 million. The commercial paper notes rank on parity with the Department s Revenue Bonds. It is expected that the new CP Program or RCF will rank on parity with the Department s Revenue Bonds. C. Description of the Department s Capital Needs The Department currently projects that its Capital Improvement Program will total approximately $601 million over the next five years (FY 2019 FY 2023) and will be funded with Port cash and grants. At this time, the Port does not anticipate any long-term or short-term debt issuance to fund its capital needs. However, the projected timing, expenditure and funding of the capital improvement program are subject to change and the Department cannot anticipate future changes in the timing, expenditure and funding of the capital improvement program. If circumstances do change, the Port may draw upon the CP Program or Revolving Credit Facility to support its cash flow needs. Preconditions to Bidding: The Department reserves the right to: 1. Reject any or all proposals in response to this RFP; 2. Accept a proposal from other than the lowest bidder; 3. Waive or modify any irregularities in proposals received; 4. Consider proposals or modifications received at any time before the award(s) is made, if such action, in the sole judgment of the Department, is in the best interest of the Department; 5. The Department will negotiate with the successful proposer(s) in the best interests of the Department; and, 6. The Department reserves the right to terminate negotiations with the successful proposer(s) and commence negotiations with the most qualified remaining proposer(s). For your review and comment, a form of a line of credit agreement (Credit Agreement) has been attached to this RFP. It is the Department s strong preference to use a similar Credit Agreement with limited changes or additions. The Department will consider the terms and conditions requested by the proposer, the proposed fees, and the relative trading value of the responding institutions in making its selection. Page 3

4 Minimum Qualifications: Failure to meet each of the following minimum qualifications will result in the proposal being deemed Non-Responsive: A. Credit Ratings If the Respondent is proposing an LOC: The LOC Provider shall have minimum long-term credit ratings of A2 from Moody s Investors Services, A from Standard & Poor s, and A from Fitch Ratings; and, The LOC Provider shall have minimum short-term credit ratings of P-1 from Moody s Investors Services, A-1 from Standard & Poor s, and F1 from Fitch Ratings. If the Respondent is proposing a RCF, the RCF Provider must maintain a minimum long-term credit rating of Baa or BBB from two of three rating agencies (Moody s, S&P, and Fitch). B. Stated Amount Outstanding If a Respondent is proposing an LOC and/or RCF, the Respondent must demonstrate that it currently provides LOCs and/or RCFs with a minimum stated amount of $50 million that support marketed programs for at least three other municipal issuers. Each Respondent must demonstrate in its proposal that it meets the minimum qualifications or its proposal will be disqualified as non-responsive. Information Requests Please direct any questions to Ken Cushine and Juan Pittman of FRASCA by at kcushine@frascallc.com and jpittman@frascallc.com. Procedures for Submittal Please submit your proposal via by no later than 3:00 PM EDT on Thursday, November 8, 2018 to Ken Cushine/Juan Pittman of FRASCA at kcushine@frascallc.com and jpittman@frascallc.com The subject line should read: RFP Submission POLA CP Program {Firm Name}. Your response should follow the format in the attached Proposal Forms, as applicable. All materials submitted in accordance with this RFP become the property of the Department and will not be returned. The Department reserves the right to cancel this RFP, reject any and all proposals and to waive irregularities. The Department and FRASCA will not be liable for any costs associated with your firm preparing its response to this RFP. Nothing in this RFP, the responses, nor the Department s acceptance of any response in whole or in part shall obligate the Page 4

5 Department to complete negotiations with the related respondent. The Department will not provide an engagement letter to any respondent. The Department reserves the right to end, in its sole discretion, negotiation with any respondent at any time up to the consummation of the transaction arising from this RFP. Thank you for your interest in this RFP. Page 5

6 HARBOR DEPARTMENT OF THE CITY OF LOS ANGELES REQUEST FOR PROPOSALS STANDBY LINE OF CREDIT PROVIDERS FOR COMMERCIAL PAPER PROGRAM PROPOSAL FORM Proposers must complete this form or include responses to all items on this form in order to be considered. SECTION 1: GENERAL INFORMATION Full Legal Name of Provider: Contact Person: Phone: Address: Bank s Ratings and Outlooks: Moody s: Long Term Short Term Last Rating Action/Date Standard & Poor s: Long Term Short Term Last Rating Action/Date Fitch: Long Term Short Term Last Rating Action/Date 1.1 Maximum Facility Offered: 1.2 Timeframe for Credit Approval 1.3 Experience: Provide a brief description of your firm s experience with providing lines or letters of credit to municipal issuers satisfying the requirement stated in the Minimum Qualifications section. SECTION 2 PRICING 2.1 Complete the fee table below. Separately, provide a downgrade pricing grid. Facility Length 3 years 4 years 5 years STANDBY LINE OF CREDIT FEE (CP Liquidity) Utilized Unutilized Page 6

7 2.2 List any and all additional fees for which you would expect reimbursement (e.g., Draw, Amendment, Origination, etc.) and any expenses other than Legal Counsel. 2.3 List and describe additional fees, if any, for reduction in size or early termination of LOC. Are these fees waived if Department s action is due to a downgrade of Providers long or short term ratings? 2.4 Provide a description of Term-Out Provisions including interest rates and conditions. 2.5 Bank Counsel: Firm: Primary Contact: Legal Fees and Expenses (Estimate): Capped at: Please note Kutak Rock is serving as the Department s counsel and Proposers are precluded from using Kutak Rock as Bank Counsel. 2.6 If the City selects more than one LOC Provider, your willingness to agree to one law firm as representative of all Providers. SECTION 3 COVENANTS (Note: Please provide the exact language and all proposed provisions; responses stating usual and customary provisions will not be acceptable.) 3.1 Identify and describe in detail any key terms, conditions, covenants or other restrictions that you would propose to revise or add to the attached Credit Agreement. It is the Department s strong preference to use a similar Credit Agreement with limited changes or additions. Page 7

8 HARBOR DEPARTMENT OF THE CITY OF LOS ANGELES REQUEST FOR PROPOSALS REVOLVING CREDIT FACILITY PROVIDERS PROPOSAL FORM Proposers must complete this form or include responses to all items on this form in order to be considered. SECTION 1: GENERAL INFORMATION Full Legal Name of Provider: Contact Person: Phone: Address: Provider s Ratings and Outlooks: Moody s: Long Term Short Term Last Rating Action/Date Standard & Poor s: Long Term Short Term Last Rating Action/Date Fitch: Long Term Short Term Last Rating Action/Date 1.1 Maximum Facility Offered: 1.2 Status and Timeframe for Credit Approval: SECTION 2 PRICING All fees and information requested below must be provided in order for your submittal to be deemed Responsive. Term 3 Years 4 Years 5 Years Unutilized Fee Proposed Spread & Index for Non- AMT Notes Proposed Spread & Index for AMT Notes Proposed Spread & Index for Taxable Notes Up-Front Fee, if any 2.1 If your fees would increase due to a downgrade of the Department s underlying credit ratings, please provide a separate fee matrix. Page 8

9 2.2 List any and all additional fees for which you would expect reimbursement (e.g., Draw, Amendment, Origination, etc.) and any expenses other than Legal Counsel. 2.3 List and describe additional fees, if any, for reduction in size or early termination of the Facility. 2.4 Provide a description of Term-Out Provisions including interest rates and all conditions. Bank Counsel: Firm: Primary Contact: Legal Fees and Expenses (Estimate): Capped at: Please note Kutak Rock is serving as the Department s counsel and Proposers are precluded from using Kutak Rock as Bank Counsel. SECTION 3 COVENANTS (Note: Please provide the exact language and all proposed provisions; responses stating usual and customary provisions will not be acceptable.) 3.1 Identify and describe in detail any key terms, conditions, covenants or other restrictions that you would propose to revise or add to the attached Credit Agreement. It is the Department s strong preference to use a similar Credit Agreement with limited changes or additions. Page 9