UNIVERSITY OF NORTH FLORIDA FINANCING CORPORATION REQUEST FOR PROPOSALS SENIOR MANAGING UNDERWRITER DIRECT LOAN BANK February 3, 2016 Introduction The University of North Florida Financing Corporation ( UNFFC ) is requesting proposals from qualified firms to serve as senior managing underwriter and/or direct loan bank for potential refunding and new money transactions over the next five years. Firms not selected to serve as senior managing underwriter may be considered to serve as co-manager, if applicable. Please note that we ask firms that wish to be considered for both senior managing underwriter and direct loan bank to submit a joint proposal. UNFFC and University of North Florida Overview UNFFC is a direct-support organization within the meaning of Florida Statutes Section 1004.28, is organized and operated exclusively to receive, hold, invest, administer property, and make expenditures to or for the benefit of the University of North Florida ( UNF or University ). Pursuant to Florida Statutes Section 1010.60, UNFFC is empowered to issue revenue bonds or other forms of indebtedness when such revenue bonds or other forms of indebtedness are used to finance or refinance capital projects which are to provide facilities necessary and desirable to serve the needs and purposes of the University. UNF is a regional public institution, the primary function of which is to provide a range of undergraduate and graduate programs for the citizens of Northeast Florida. Authorized by the Florida Legislature in 1965, the University opened on a 1,000-acre campus in Jacksonville, Florida as an upper-division institution. The addition of freshmen and sophomore classes in the fall of 1984 expanded the original mission and increased the headcount enrollment to approximately 16,000 in the fall semester of 2015. Please refer to EMMA or the University s website for additional information. Outstanding UNFFC Debt and Proposed Debt Issues Series 2007 (Housing Project) Rating: A with Stable Outlook from S&P Par Outstanding: $95,985,000 The debt service reserve fund requirement for the Series 2007 (Housing Project) Bonds is funded with a surety bond and $2,643,000 of University funds. Page 1 of 7
Historical and Projected Net Operating Revenues Available for Debt Service FY2012 $9,108,186 FY2013 $9,872,283 FY2014 $9,463,616 FY2015 (unaudited, including Flats) $11,308,631 Projected FY2016 $11,766,648 Projected FY2017 $11,999,608 Projected FY2018 $12,074,356 Series 2007 (Student Union Project) Rating: A with Stable Outlook from S&P Par Outstanding: $18,370,000 The debt service reserve fund requirement for the Series 2007 (Student Union Project) Bonds is funded with a surety bond and $1,377,084.38 of University funds. Historical and Projected Student Union Revenues Available for Debt Service FY2012 $1,721,891 FY2013 $1,742,042 FY2014 $1,692,730 FY2015 $1,672,673 Projected FY2016 $1,680,060 Projected FY2017 $1,680,060 Projected FY2018 $1,680,060 Please refer to the Official Statements for more information on security and other provisions. Historical housing system and student union financial information can be found in the University s audited financial statements at http://www.unf.edu/controller/financial_reports.aspx. The Flats at Kernan Bank Loan with BBVA Compass Loan Amount Outstanding: $25,000,000 In October of 2014, UNFFC purchased the The Flats at Kernan. The Property covenants require a debt service coverage ratio of 1.20% based on Net Operating Revenues. UNFFC does not pledge the revenues from the Property or assign the lease rentals or housing contract payments from the Property to any third party. UNFFC cannot incur additional indebtedness with respect to the Property in an amount in excess of $1 million. UNFFC covenants are not to issue any indebtedness secured by housing system revenues as defined in the 2007 Indenture through a public offering unless proceeds of such indebtedness are used to refinance amounts owed under this Loan Agreement and the Note. UNFFC covenants not to incur additional indebtedness through a private placement secured by a pledge of housing system revenues without the prior written consent of the Lender, BBVA Compass. The Loan has a fixed rate of 2.87% and is based on a 20-year amortization. The Lender has a mandatory put option exercisable in the Lender s sole discretion, to call the Loan immediately due and payable upon the fifth anniversary of the Note (the Put Date ). The Lender shall be deemed to have automatically Page 2 of 7
exercised such option unless UNFFC provides a written request for extension at least 180 days prior to the Put Date. UNFFC can prepay the loan at any time without penalty. Proposed Debt Issues Subject to market conditions, UNFFC plans to refund all or a portion of the Series 2007 (Housing Project) and Series 2007 (Student Union Project) Bonds. The terms of The Flats at Kernan bank loan require it to be refinanced if the Series 2007 (Housing Project) Bonds are refunded. The refinancing would be secured by housing system revenues and considered new money for Board of Governor and Division of Bond finance approval purposes. Scope of Services UNFFC expects its senior managing underwriter or direct loan bank to perform all of the normal banking and underwriting services, including but not necessarily limited to the following: a) Monitor market conditions and inform UNFFC of opportunities and risks. b) Review outstanding debt and provide recommendations for optimizing the debt portfolio. c) Review overall debt capacity and assess impact of issuing additional debt on ratings, interest rates and risk. d) Analyze and recommend various methods of financing proposed projects. Analysis should reflect UNFFC s unique financing needs and should include (but not be limited to) consideration of borrowing amount, structure, pricing, and general capital market conditions. e) Advise on alternative bond or loan structures and transaction security structures, including both benefits and risks. f) Assist in preparing the financing schedule for the issuance of bonds or loans and coordinating the responsibilities of involved parties. g) Assist in rating agency/credit enhancement strategies and presentations, if needed. h) Develop a comprehensive marketing plan, including identification of potential investors and market conditions for alternative products, if applicable. i) Assist in the preparation and review of financing and legal documentation. j) Assist in the successful structuring, marketing, and sale of the bonds, if applicable, to achieve the lowest possible borrowing cost. k) Oversee an underwriting syndicate selected by UNFFC to market the bonds to investors, if applicable. l) Follow UNFFC s policies, either oral or written, for syndicate liabilities, priority of orders, designations, and any other procedures, if applicable. Page 3 of 7
m) Attend meetings of the Board of Governors, Board of Trustees, and/or other constituent groups, as requested. Proposal Submission Instructions and Conditions All proposals shall be submitted in a sealed envelope and must be received no later than 4:00 p.m. on Wednesday, March 2nd. Late responses will not be opened or considered. Submit one original and three copies of your proposal to: Michael S. Neglia Director Treasurer Hicks Hall University of North Florida 1UNF Drive Jacksonville, FL 32224 Proposals should also be emailed to UNFFC s Independent Registered Municipal Advisor ( IRMA ), Public Financial Management Inc. at the email addresses shown below: Steven Hass at hasss@pfm.com Emily Abrantes at abrantese@pfm.com Each proposal must address all pertinent areas and be specific. The ability to meet all specified requirements, particularly that of time constraints should be addressed in the affirmative. Any conditions or exceptions should be clearly stated. Please note the following: a) UNFFC reserves the right to reject any or all proposals, to waive any informalities or irregularities not involving price in any proposals received, and to make the sole determination as to which proposal is deemed to be in the best interest of UNFFC. b) All proposals become the property of UNFFC. c) UNFFC will not reimburse proposers for any costs associated with the preparation and submission of any proposal. d) Proposals and other correspondence and materials may constitute public records within the meaning of Chapter 119, Florida Statutes. UNFFC is governed by Florida s Government-in-the- Sunshine Law. e) Proposers, their agents and/or associates shall refrain from contacting or soliciting any University or UNFFC employee or board member regarding this RFP during the selection process. Failure to comply with this provision may result in disqualification of the Proposer, at the option of UNFFC. f) UNFFC s acceptance of or notification of acceptance of a proposal shall not constitute acceptance of an offer to contract. Neither UNFFC nor the Proposer of the accepted proposal shall be bound in Page 4 of 7
the absence of a separate agreement in writing duly executed by the parties. Such written agreement may contain additional terms. Any request for clarification or additional information should be directed to UNFFC s financial advisor, as shown below. The reply or additional information will be forwarded in writing to all firms that we have asked to respond to this Request for Proposals. Evaluation Criteria Steven Hass Emily Abrantes hasss@pfm.com abrantese@pfm.com 646-561-0719 617-388-2820 UNFFC will evaluate the proposals to determine which firm best meets the needs of UNFFC for underwriting and/or direct loan services. Evaluation criteria will include, but not be limited to, professional experience, general reputation, ability to perform the required services, and cost to UNFFC. UNFFC at its option may request oral presentations, or discussions with any or all firms for the purpose of clarification or to amplify the material presented in any part of the technical proposal. However, firms are cautioned that UNFFC is not required to request clarification; therefore, all proposals should be complete and concise and reflect the most favorable terms available from the firm. UNFFC shall not be bound by oral explanations or instructions given at any time during the competitive process prior to award. PROPOSAL REQUIREMENTS I. Description of Firm and Finance Team II. III. a. Provide a brief description of your firm and overview of its general capabilities. b. Provide a description of the proposed finance team. Please specify which person will be the lead banker and have overall responsibility for the financing and the day-to-day contact, if different from the lead banker. You may specify different leads and team for underwriting and direct loan purposes, if applicable. Brief resumes may be provided in an appendix. c. Please discuss the availability of the lead banker to work with UNFFC. Higher Education Experience a. Describe the firm s higher education experience nationally and in Florida, including any comparable underwriting transactions or loans in terms of security, credit quality, structure or any other aspect you consider relevant. b. Provide a listing of your firm s senior managed and direct loan higher education experience since January 1, 2013 in an appendix. For each transaction provide the date, name of borrower, par/loan amount, ratings, if applicable (specify if based on credit enhancement), and purpose of the issue (e.g. new money, refunding, restructuring). If the name of the borrower is confidential for loan transactions you may provide a generic name (e.g. Florida private university, etc.) c. Provide the name, title, email address, and phone number of three higher education clients that UNFFC or its financial advisor may contact as references. Plan of Finance Page 5 of 7
IV. UNFFC is considering refunding its Series 2007 (Housing Project) and Series 2007 (Student Union Project) Bonds, as well as refunding The Flats at Kernan bank loan. UNFFC will consider a public bond sale or direct loan for all or a part of the refinancing plan. You may respond to just the underwriting or direct loan questions or both. Underwriting a. The Series 2007 Bonds are rated A with a stable outlook from S&P. Do you think the rating will be affirmed or revised? Should UNFFC get a second rating? If so, from which rating agency? Would there by a rate penalty if UNFFC just had a single rating? b. Provide a table showing proposed rates for UNFFC assuming an A rating from S&P. If you think there would be an improvement in rates with two ratings, please provide those rates as well. Include maturity, coupon, yield-to-call, yield-to-maturity and spread to MMD. Please use Wednesday, February 17th as the reference date for MMD and assumptions. If you think bond insurance may be economical please indicate that as well. c. Provide a summary of your refunding analysis of the Series 2007 Bonds assuming uniform savings. For the Series 2007 (Housing Project) Bonds also include an analysis assuming level debt but no extension of the final maturity. Please describe any structuring considerations that may impact savings. Supporting number runs or schedules may be included as an appendix. d. Provide a summary of the refunding analysis for The Flats at Kernan bank loan. Assume a level debt structure and final maturity of November 1, 2034. Supporting number runs or schedules may be included as an appendix. e. The Board of Governors Debt Management Guidelines state that an advance refunding should generate present value savings at least equal to 5% of refunded par. How should UNFFC evaluate the timing of a refunding considering market conditions and the call date of 11/1/2017 for the Series 2007 Bonds? f. Please review the security, coverage requirements and other terms of the Series 2007 Bonds. Do you recommend any changes? UNFFC intends to not fund a debt service reserve fund for the refunding bonds. Do you agree or would UNFFC receive more attractive pricing if it funded a debt service reserve fund? Direct Loan g. Please indicate the maximum loan amount that the bank will consider. Also state if the loan applies only to a specific credit (e.g. housing system vs. student union) or component of the financing. h. UNFFC is interested in fixed rate loan proposals. UNFFC has a preference for loans with a term equal to the final maturity of the bonds if possible. Shorter loans for a portion of the amortization structure or loans with a bank put feature may be considered if the economics are compelling. Please state the rate and term of your proposal, as well as all applicable fees and expenses. Also include any security requirements, covenants, prepayment provisions and any other conditions required of UNFFC or the University. You may also include this information in a term sheet. i. Please refer to questions c, d and e from the underwriting questions above. You may provide any additional analysis or information that you would like UNFFC to consider. Marketing Plan and Underwriting/ Sales Qualifications (Underwriting Only) Page 6 of 7
a. Please describe your firm s retail and institutional sales capabilities nationally and in Florida. b. Describe your marketing plan for the proposed financing, including anticipated distribution between retail and institutional investors. c. Please comment on recommended syndicate structure including type and number of comanagers, if any. V. Legal Proceedings VI. VII. VIII. a. Disclose specific details of any pending legal proceedings (criminal or civil), or regulatory or disciplinary actions by any state or federal regulatory agency, involving your firm or members of your firm related to municipal securities; or any convictions, judgments, or settlements resulting from such proceedings or actions within the past five years. Conflicts a. The firm must certify that it does not have any actual or potential conflicts of interest with UNFFC or UNF, any of its officers or employees. During the course of the contractual relationship formed pursuant to this solicitation, any such conflict of interest, whether newly arising or newly discovered, must be disclosed to UNFFC. Fee Proposal Underwriting a. Propose a gross spread and include a breakout of the components of underwriters discount including management fee, average takedown and takedown by maturity, as well as expenses. Please note that UNFFC reserves the right to select one or more co-managers. b. Provide the name of the law firm that you would propose to hire as underwriters counsel for this transaction and specify a not-to-exceed fee. Please note that UNFFC will engage its own disclosure counsel. Direct Loan c. Please provide any bank fees and expenses, including bank counsel. d. Provide the name of the law firm that you would propose to hire as bank counsel for this transaction and specify a not-to-exceed fee. Summary a. Why is your firm best qualified to serve as senior managing underwriter or direct loan bank for the proposed transaction? Page 7 of 7