Installment Financing Bid Opportunity

Request for Proposal 2019-005

$1,000,000* Installment Financing Agreement

Bids due by: Monday, March 25, 2019 @ 12:00 pm

The Town of Montreat, North Carolina (the “Town”), is requesting proposals from financial institutions with respect to a commercial loan to be evidenced by an estimated $1,000,000* Installment Financing Agreement (the “Agreement”).  The estimated loan amount is based on projected need, but is subject to change as the agreement is finalized. Your response to the RFP would be greatly appreciated. The following key assumptions are to be utilized in preparing your proposal:

Issuer:                         Town of Montreat, North Carolina

Use of Proceeds:        The proceeds of the Agreement will be used to fund (1) the construction and equipping of a Town Hall facility; and (2) the construction of landscaping and sidewalk connections at the Town Hall site. 

Tax Treatment:           Tax–Exempt

Bank Qualified:          Yes

Audit:                          The Town’s audited financial statements are available from the Town’s website at the following link: https://townofmontreat.org/wp-content/uploads/2019/03/Town-of-Montreat-2018-CAFR.pdf

Security:                     As security for its obligations under the Agreement, the Town will execute and deliver a deed of trust granting a first lien of record on the Town Hall and the property.  The Town’s obligation to make the debt service payments under the Agreement does not constitute a pledge of the Town’s full faith, credit and taxing power but will be subject to annual appropriation by Town Council.

Authorization:            The Town is entering into the Agreement under the provisions of Section 160A-20 of the General Statutes of North Carolina, as amended.  Town Council is expected to approve the winning bank bid and authorize the execution and delivery of the Agreement at its meeting on April 11, 2019.  It is anticipated that the Local Government Commission (the “LGC”) will approve this transaction at its meeting on May 7, 2019.  The execution and delivery of the Agreement is subject to the approvals by Town Council and the LGC.

Rating:                        No rating is expected to be obtained for the Agreement.

Issue Size:                  $1,000,000*

Debt Structure:          The Town anticipates a straight-line amortization over either a fifteen-year, or twenty-year, period. Please note that bidders are not required to bid on each option. The Town will consider either annual or semi-annual principle payment structures, and relative or a single fixed rate for the entire term of the amortization.

Optional Prepayment:               The Town is seeking flexibility with respect to prepayment provisions. The agreement should include the option to pay off this loan prior to maturity without penalty or additional fees. Please specify the redemption structure(s) that would provide the Town with flexibility at the lowest cost of funds.  Proposals with multiple redemption options are permitted.

Counsel/Documentation:         Susan Taylor Rash will serve as counsel to the Town in connection with the Agreement. The lender’s counsel will prepare the necessary legal documentation for the Town’s review and approval. By submitting a proposal, the bank waives any conflict of interest with respect to Susan Taylor Rash serving as counsel to the Town in connection with the Agreement and with respect to her firm, Patla, Straus, Robinson & Moore, P.A.  All loan documents must meet the requirements of N.C.G.S. Section 160A-20 and other applicable North Carolina statutes.

Closing Costs:             None anticipated to be paid to or on behalf of the bank. Please specify any exceptions.

Annual/Ongoing Costs:                          None anticipated to be paid to or on behalf of the bank. Please specify any exceptions.

Increased Cost:          The Town will not consider any proposals that include future interest rate adjustments relating to the bank’s increased costs, changes in tax rate, capital adequacy, capital requirements, etc.

Conditions:                 Please specify any conditions to the closing of the transaction (other than finalizing acceptable documents) and any rights reserved to withdraw the proposal.

Closing:                       Closing is anticipated to take place on May 10, 2019. The interest rate bid must be held firm until this date.

Ongoing Disclosure: In accordance with its customary practice, the Town will post its annual financial statements to the Town’s website on an annual basis.  The Town will also provide these documents in electronic format to the bank upon request.

Award:                         The Town reserves the right to request additional information from the bidders and to waive any irregularity or informality and to negotiate provisions and covenants directly with any bidder. The Town also reserves the right to reject all proposals for any reason. Although the selection will be based substantially on lowest total financing cost (including both interest cost and upfront fees and expenses), the Town reserves the right to select the bidder that best meets the needs of the Town. Final award is subject to the approval of Town Council.

Delivery:                      The Agreement is expected to be delivered on May 10, 2019.  The loan proceeds must be paid in federal funds or other immediately available funds.  All proceeds from the issuance of the Agreement will be disbursed to the Town at closing.

Representations:       The winning bidder will be required to execute a letter to the Town acknowledging, among other things, that (1) no official statement or other offering material has been furnished other than the Request for Proposals; (2) the winning bidder had an opportunity to make inquiries of, and receive answers from such officials, employees, agents and attorneys of the Town; (3) the winning bidder has knowledge and experience in financial and business matters and that it is capable of evaluating the merits and risks of making the loan to be evidenced by the Agreement and is financially able to bear the economic risk of holding the Agreement; (4) the winning bidder is issuing the Agreement as a vehicle for making a commercial loan and without a present view to the distribution or resale thereof (subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be under its control) within the meaning of the Federal securities laws; and (5) the winning bidder is issuing the Agreement solely for its own account and no other person now has any direct or indirect beneficial ownership or interest therein.

Loan Treatment:         By submitting a bid in response to this RFP, each bidder acknowledges and represents to the Town and its Financial Advisor that (1) no official statement or other offering material will be furnished other than this RFP; (2) the bidder has knowledge and experience in financial and business matters and that it is capable of evaluating the merits and risks of making the commercial loan to be evidenced by the Agreement and is financially able to bear the economic risk of holding the Agreement; (3) no CUSIP number will be obtained for the Agreement; and (4) the bidder intends to enter into the Agreement solely for its own account as a vehicle for making a commercial loan and with no present intention to distribute or resale the Agreement or any portion thereof.

To be considered, a proposal must be received by 12:00 p.m. on Monday, March 25, 2019. Email submission of the proposal to the following persons is preferred and please include “Town Hall Facility Financing RFP” in the subject line.

Acarmichael@townofmontreat.org

Dcarrisquillo@townofmontreat.org

Questions may be addressed to the Town through Acarmichael@townofmontreat.org.

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