HomeMy WebLinkAboutc3approveagreementwithfinancialadvisor
FROM: Wayne Padilla, Finance Director
SUBJECT: APPROVE AGREEMENT WITH FINANCIAL ADVISOR
RECOMMENDATION
Approve the agreement with Public Financial Management, Inc. to provide advice and analysis on
short and long-term financial issues.
DISCUSSION
Background
On October 16, 2013 the City released its Request for Proposal document calling for proposals to
provide financial advisor services. In response, six firms submitted proposals. Those firms were:
KNN; Northcross, Hill and Associates; Public Financial Management, Inc.; Fieldman, Rolapp and
Associates; Magis; Springsted. A panel consisting of the Finance Director, the City Attorney and
two department heads conducted the initial screening of the proposals. The panel recommended
three proposals for further evaluation by a second interview panel.
These three finalists interviewed in person on December 16, 2013 were Northcross, Hill and
Associates, Public Financial Management, Inc. (PFM) and KNN. The panel conducting those
interviews included the City Manager, Finance Director and three department heads and
recommended that PFM was the top firm of the three interviewed. The interview panel was
impressed with PFM’s significant staff and research resources and the depth of their knowledge
about the types of financing transactions that the City is considering in the future. Reference checks
were completed by the Finance Director who called on various municipal clients of the firm. Based
on the feedback received, which included a series of questions about the integrity of the staff
assigned by PFM to the City’s account, the Finance Director is recommending that PFM should be
named as the City’s next Financial Advisor.
The proposed agreement is for a 5 year term with the option to extend the agreement for an
additional three year term upon mutual agreement by both parties.
Scope of Services
The scope of services required is determined on a case-by-case basis for project financings. In
addition to providing financial advice for the refinancing of existing debt and planning the issuance
of new debt, the City’s Financial Advisor will be called upon to assist with the analysis of other
forms of debt such as the evaluation of the City’s liability to the California Public Employees
Retirement System (CalPERS) for the $24 million public safety program side-fund obligation. This
analysis will be brought to the City Council in April.
Meeting Date
Item Number 3-4-14
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FISCAL IMPACT
The costs associated with this agreement, when the scope of services is related to bond refinancing
or the issuance of new debt will be paid from proceeds of the financing. The range of fees charged
range from $35,000 to $70,000 depending on the size, type and complexity of the financing. Out-
of-pocket costs are limited to $2,500 per transaction with receipts submitted for reimbursement.
For certain services provided that are not related to debt issuance “non-transactional services” PFM
has proposed to charge a fixed fee based on the hourly rates shown below, subject to prior approval
by the City.
Professional Hourly Rate
Managing Director
Director
Senior Managing
Consultant
Senior Analyst
Analyst
$350
$325
$300
$250
$225
ALTERNATIVES
Do not approve the contract and direct staff to select another firm from the finalists. This option
is not recommended due to the fact that one of the firms which arrived for the finalist interviews
failed to convince the interview panel that they were serious about actually wanting to serve the
City. The remaining firm left the panel feeling confused about which officer would actually be in
charge of the City’s account.
ATTACHMENTS
1. Agreement
2. Proposal submitted by PFM
3. Request for Proposal document
t:\council agenda reports\2013\2013-01-22\bond counsel contract extension (padilla-mcclure)\bond counsel and financial advisor contract extension car.docx
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AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on February 4, 2014, by and
between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and Public
Financial Management, Inc. hereinafter referred to as Contractor.
W I T N E S S E T H:
WHEREAS, the City desires to utilize consulting services for the purpose of obtaining financial advise,
recommendations and fiscal planning in a variety of capacities including but not limited to the issuance of new debt
and the refinancing of existing debt obligations.
WHEREAS, Contractor is qualified to perform this type of service specified in Request for Proposal
Document Specification #91269 and has submitted a proposal to do so which has been accepted by City.
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be from the date this Agreement is made and entered, as
first written above, for a period of 5 (five) years at which time the performance of the firm will be
evaluated. Upon mutual agreement at that time, the contract may be extended by the City
Administrative Officer for a period of up to three years.
2. INCORPORATION BY REFERENCE. City Request for Proposal Document Specification
#91269 is provided as Exhibit A and incorporated by reference herein.
3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay
and Contractor shall receive therefor compensation as specified in the Response to RFP which is shown at Exhibit A
and incorporated by reference herein. It is understood that fees for debt transactions may be negotiated based on the
size, type and complexity of the financing involved as each transaction is identified by the City. All fees for debt
transactions shall be payable upon the successful completion of the debt transaction. As shown in Exhibit A,
reimbursement for all out-of pocket expenses on an actual cost basis up to $2,500.00 per transaction shall be paid to
Contractor and such payment shall not be contingent upon the completion of the financing transaction. For “non-
transactional” services, fees will be based upon the hourly billing schedule shown in Exhibit A, plus out-of-pocket
expenses, subject to prior approval by the City.
Professional Hourly Rate
4. CONTRACTOR'S OBLIGATIONS. For and in consideration of the payments and agreements
hereinbefore mentioned to be made and performed by City, Contractor agrees with City to provide the services
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identified in their proposal which has been accepted by City and is identified in Exhibit C, which is incorporated into
this Agreement. Contractor also agrees to abide by the contract performance terms, all of which are identified in
Exhibit B attached hereto and incorporated into this Agreement.
5. AMENDMENTS. Any amendment, modification or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the City Administrative Officer of the City.
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of
any force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties
hereto.
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7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City City Clerk
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Contractor Peter Miller, Managing Director
Public Finance Management, Inc.
50 California Street, Ste. 2300
San Francisco, California 94111
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Contractor do covenant that each
individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute
Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year
first above written.
CITY OF SAN LUIS OBISPO, A Municipal Corporation
By:_____________________________________
Katie Lichtig, City Manager
CONTRACTOR
By:_____________________________________
Peter Miller, Managing Director
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Exhibit B
CONTRACT PERFORMANCE TERMS
1. Business Tax. Contractor must have a valid City of San Luis Obispo business tax certificate
prior to execution of the contract. Additional information regarding the City's business tax
program may be obtained by calling (805) 781-7134.
2. Ability to Perform. Contractor warrants that it possesses, or has arranged through subcontracts,
all capital and other equipment, labor, materials, and licenses necessary to carry out and
complete the work hereunder in compliance with any and all federal, state, county, city, and
special district laws, ordinances, and regulations.
3. Laws to be Observed. Contractor shall keep itself fully informed of and shall observe and
comply with all applicable state and federal laws and county and City of San Luis Obispo
ordinances, regulations and adopted codes during its performance of the work.
4. Payment of Taxes. The contract prices shall include full compensation for all taxes that
Contractor is required to pay.
5. Permits and Licenses. Contractor shall procure all permits and licenses, pay all charges and
fees, and give all notices necessary.
6. Safety Provisions. Contractor shall conform to the rules and regulations pertaining to safety
established by OSHA and the California Division of Industrial Safety.
7. Public and Employee Safety. Whenever Contractor's operations create a condition hazardous to
the public or City employees, it shall, at its expense and without cost to the City, furnish, erect
and maintain such fences, temporary railings, barricades, lights, signs and other devices and take
such other protective measures as are necessary to prevent accidents or damage or injury to the
public and employees.
8. Preservation of City Property. Contractor shall provide and install suitable safeguards,
approved by the City, to protect City property from injury or damage. If City property is injured
or damaged as a result of Contractor's operations, it shall be replaced or restored at Contractor's
expense. The facilities shall be replaced or restored to a condition as good as when the
Contractor began work.
9. Immigration Act of 1986. Contractor warrants on behalf of itself and all sub-contractors
engaged for the performance of this work that only persons authorized to work in the United
States pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws
shall be employed in the performance of the work hereunder.
10. Contractor Non-Discrimination. In the performance of this work, Contractor agrees that it will
not engage in, nor permit such sub-contractors as it may employ, to engage in discrimination in
employment of persons because of age, race, color, sex, national origin or ancestry, sexual
orientation, or religion of such persons.
11. Work Delays. Should Contractor be obstructed or delayed in the work required to be done
hereunder by changes in the work or by any default, act, or omission of the City, or by strikes,
fire, earthquake, or any other Act of God, or by the inability to obtain materials, equipment, or
labor due to federal government restrictions arising out of defense or war programs, then the time
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of completion may, at the City's sole option, be extended for such periods as may be agreed upon
by the City and the Contractor.
12. Payment Terms. The City's payment terms are 30 days from the receipt of an original invoice
and acceptance by the City of the services provided by Contractor (Net 30).
13. Inspection. Contractor shall furnish City with every reasonable opportunity for City to ascertain
that the services of Contractor are being performed in accordance with the requirements and
intentions of this contract. All work done and all materials furnished, if any, shall be subject to
the City's inspection and approval. The inspection of such work shall not relieve Contractor of
any of its obligations to fulfill its contract requirements.
14. Audit. The City shall have the option of inspecting and/or auditing all records and other written
materials used by Contractor in preparing its invoices to City as a condition precedent to any
payment to Contractor.
15. Interests of Contractor. Contractor covenants that it presently has no interest, and shall not
acquire any interest direct or indirect or otherwise, which would conflict in any manner or degree
with the performance of the work hereunder. Contractor further covenants that, in the
performance of this work, no sub-contractor or person having such an interest shall be employed.
Contractor certifies that no one who has or will have any financial interest in performing this
work is an officer or employee of the City. It is hereby expressly agreed that, in the performance
of the work hereunder, Contractor shall at all times be deemed an independent contractor and not
an agent or employee of the City.
16. Hold Harmless and Indemnification. Contractor agrees to defend, indemnify, protect and
hold the City and its agents, officers and employees harmless from and against any and all
claims asserted or liability established for damages or injuries to any person or property,
including injury to Contractor's employees, agents or officers which arise from or are
connected with or are caused or claimed to be caused by the acts or omissions of Contractor,
and its agents, officers or employees, in performing the work or services herein, and all
expenses of investigating and defending against same; provided, however, that Contractor's
duty to indemnify and hold harmless shall not include any claims or liability arising from the
established sole negligence or willful misconduct of the City, its agents, officers or employees.
17. Year 2000 Compliance. The Contractor warrants that the goods or services provided to the
City, including those provided through subcontractors, are “Year 2000 compliant.” For the
purpose of this contract, “Year 2000 compliant” means that goods or services provided to the
City will continue to fully function, fault-free, before, at and after the Year 2000, without
interruption or human intervention; and if applicable, any data outside of the date range 1990-
1999, including leap years, will be correctly processed in any level of computer hardware or
software, including, but not limited to, microcode, firmware, application programs, files and data
bases. This warranty supersedes all warranty disclaimers or limitations, and all limitations on
liability, otherwise provided by the Contractor.
Upon request by the City, the Contractor will provide the City with a description of its Year 2000
compliance strategy, or statement of why this is not relevant to contract performance.
18. Contract Assignment. Contractor shall not assign, transfer, convey or otherwise dispose of the
contract, or its right, title or interest, or its power to execute such a contract to any individual or
business entity of any kind without the previous written consent of the City.
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19. Termination. If, during the term of the contract, the City determines that Contractor is not
faithfully abiding by any term or condition contained herein, the City may notify Contractor in
writing of such defect or failure to perform; which notice must give Contractor a 10 (ten)
calendar day notice of time thereafter in which to perform said work or cure the deficiency.
If Contractor has not performed the work or cured the deficiency within the ten days specified in
the notice, such shall constitute a breach of the contract and the City may terminate the contract
immediately by written notice to Contractor to said effect. Thereafter, neither party shall have
any further duties, obligations, responsibilities or rights under the contract.
In said event, Contractor shall be entitled to the reasonable value of its services performed from
the beginning date in which the breach occurs up to the day it received the City's Notice of
Termination, minus any offset from such payment representing the City's damages from such
breach. "Reasonable value" includes fees or charges for goods or services as of the last
milestone or task satisfactorily delivered or completed by Contractor as may be set forth in the
Agreement payment schedule; compensation for any other work, services or goods performed or
provided by Contractor shall be based solely on the City's assessment of the value of the work-in-
progress in completing the overall workscope.
The City reserves the right to delay any such payment until completion or confirmed
abandonment of the project, as may be determined in the City's sole discretion, so as to permit a
full and complete accounting of costs. In no event, however, shall Contractor be entitled to
receive in excess of the compensation quoted in its proposal.
20. Ownership of Materials. All original drawings, plan documents and other materials prepared
by or in possession of Contractor as part of the work or services under these specifications shall
become the permanent property of the City, and shall be delivered to the City upon demand.
21. Release of Reports and Information. Any reports, information, data, or other material given
to, prepared by or assembled by Contractor as part of the work or services under these
specifications shall be the property of City, and shall not be made available to any individual or
organization by Contractor without the prior written approval of the City.
22. Copies of Reports and Information. If the City requests additional copies of reports, drawings,
specifications, or any other material in addition to what Contractor is required to furnish in
limited quantities as part of the work or services under these specifications, Contractor shall
provide such additional copies as are requested, and City shall compensate Contractor for the
costs of duplicating of such copies at the Contractor's direct expense.
23. Required Deliverable Products. Contractor will provide:
a. The number of originals required by the state for submittal and one copy of the final
claims that addresses all elements of the workscope. Any documents or materials
provided by Contractor will be reviewed by City staff and, where necessary, Contractor
will respond to staff comments and make such changes as deemed appropriate.
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24. Attendance at Meetings and Hearings. Contractor shall attend as many "working" meetings
with staff as necessary in performing workscope tasks.
25. Insurance. Contractor shall procure and maintain for the duration of the contract insurance
against claims for injuries to persons or damages to property that may arise from or in connection
with the performance of the work hereunder by Contractor, its agents, representatives, employees
or sub-contractors.
a. Minimum scope of insurance. Coverage shall be at least as broad as:
• Insurance Services Office Commercial General Liability coverage (occurrence
form CG 0001).
• Insurance Services Office form number CA 0001 (Ed. 1/87) covering
Automobile Liability, code 1 (any auto).
• Workers' Compensation insurance as required by the State of California and
Employer's Liability Insurance.
• Errors and Omissions Liability insurance as appropriate to Contractor’s
profession.
b. Minimum limits of insurance. Contractor shall maintain limits no less than:
• General Liability: $1,000,000 per occurrence for bodily injury, personal injury
and property damage. If Commercial General Liability or other form with a
general aggregate limit is used, either the general aggregate limit shall apply
separately to this project/location or the general aggregate limit shall be twice
the required occurrence limit.
• Automobile Liability: $1,000,000 per accident for bodily injury and property
damage.
• Employer's Liability: $1,000,000 per accident for bodily injury or disease.
• Errors and Omissions Liability: $1,000,000 per occurrence.
c. Deductibles and self-insured retentions. Any deductibles or self-insured retentions
must be declared to and approved by the City. At the option of the City, either: the
insurer shall reduce or eliminate such deductibles or self-insured retentions as respects
the City, its officers, officials, employees and volunteers; or Contractor shall procure a
bond guaranteeing payment of losses and related investigations, claim administration and
defense expenses.
d. Other insurance provisions. The general liability and automobile liability policies are to
contain, or be endorsed to contain, the following provisions:
• The City, its officers, officials, employees, agents and volunteers are to be
covered as insureds as respects: liability arising out of activities performed by or
on behalf of Contractor; products and completed operations of Contractor;
premises owned, occupied or used by Contractor; or automobiles owned, leased,
hired or borrowed by Contractor. The coverage shall contain no special
limitations on the scope of protection afforded to the City, its officers, official,
employees, agents or volunteers.
• For any claims related to this project, Contractor's insurance coverage shall be
primary insurance as respects the City, its officers, officials, employees, agents
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and volunteers. Any insurance or self-insurance maintained by the City, its
officers, officials, employees, agents or volunteers shall be excess of Contractor's
insurance and shall not contribute with it.
• Any failure to comply with reporting or other provisions of the policies including
breaches of warranties shall not affect coverage provided to the City, its officers,
officials, employees, agents or volunteers.
• Contractor's insurance shall apply separately to each insured against whom claim
is made or suit is brought, except with respect to the limits of the insurer's
liability.
• Each insurance policy required by this clause shall be endorsed to state that
coverage shall not be suspended, voided, canceled by either party, reduced in
coverage or in limits except after thirty (30) days' prior written notice by
certified mail, return receipt requested, has been given to the City.
e. Acceptability of insurers. Insurance is to be placed with insurers with a current A.M.
Best's rating of no less than A:VII.
f. Verification of coverage. Contractor shall furnish the City with a certificate of
insurance showing maintenance of the required insurance coverage. Original
endorsements effecting general liability and automobile liability coverage required by
this clause must also be provided. The endorsements are to be signed by a person
authorized by that insurer to bind coverage on its behalf. All endorsements are to be
received and approved by the City before work commences.
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CITY OF SAN LUIS OBISPO
Request for Proposals for Financial Advisory Services
November 15, 2013
Public Financial Management, Inc.
50 California Street, Suite 2300
San Francisco, CA 94111
(415) 982-5544
601 S. Figueroa Street, Suite 4500
Los Angeles, CA 90017
(213) 489-4075
www.pfm.com
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TABLE OF CONTENTS
PAGE
1. Cover Letter 1
2. Qualifications 3
3. Statement of Litigation, Investigations,
Conflicts of Interest and Disqualifications 13
4. References 14
5. Certificate of Insurance 15
6. Compensation 15
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November 15, 2013
Mr. Wayne Padilla
Director of Finance & Information Technology CITY OF SAN LUIS OBISPO
990 Palm Street
San Luis Obispo, CA 93401
RE: REQUEST FOR PROPOSALS FOR FINANCIAL ADVISOR FEES, SPECIFICATION NO. 91269
Dear Mr. Padilla,
Public Financial Management, Inc. (“PFM”) is pleased to present our qualifications to serve as Financial
Advisor to the City of San Luis Obispo (the “City”). We offer the City substantial experience and expertise
with California city finance and debt financings, as well as an unmatched level of staffing and technical
resources to ensure the City receives timely and responsive services. Given that the City has a variety of
potential financings it is contemplating as it undertakes this RFP process, we believe the City would be well
served by selecting a Financial Advisor with the breadth of experience and resources to advise the City in
whatever areas of municipal finance it may ultimately require during the five year term of this engagement.
As you have experienced working with PFM in the past, we seek to create a collaborative partnership with
our clients and to act as an extension of your staff.
PFM’s combined expertise delivers a team with superior qualifications on each and every aspect of the
City’s needs for this scope of work – you will not find this anywhere else. Our core staffing for this
engagement includes senior professionals with experience both as city issuers and rating analysts, and we
also offer the City PFM’s full range of experts and services outside the standard financial advisory scope.
Be it dedicated bond pricing expertise, pension and OPEB advisory services, labor negotiation support, or
arbitrage rebate and escrow verification services, PFM offers the full range of services that may be required
by a city such as San Luis Obispo.
Our proposed team offers the City the following unique strengths and capabilities:
BREADTH AND DEPTH OF EXPERIENCE
PFM offers the City a core staff that includes three senior members, Peter Miller, Sarah Hollenbeck, and
Bob Gamble, who together have nearly 30 years of experience as city finance officials, as well as team
members with bond credit rating and pricing specialties. No other financial advisor offers this wide range of
services and the personnel with decades of specialized experience in their respective fields. This breadth
and depth of experience insures the City has the most qualified advisors available to meet its unique needs
and challenges.
CREDIT
In today’s market environment, understanding municipal credit and the key drivers is critical in obtaining
lender interest, bond investor approval, and the highest ratings. PFM is uniquely qualified to help the City in
this regard by virtue of our extensive hands-on relationships with the rating agencies. Eric Espino, a
member of our proposed team, was a Director at Fitch Ratings and thoroughly understands the rating
process, as well as the financial factors that both rating analysts and bank credit analysts believe are
important. Given the considerable premium investors continue to place on strong AA-category ratings such
as those of the City’s lease revenue and water credits, choosing a Financial Advisor who understands the
factors that will allow the City to preserve those ratings and hopefully achieve similar ratings on its sewer
(415) 982-5544
(415) 982-4513 Fax
www.pfm.com
50 California Street
Suite 2300
San Francisco, CA 94111
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credit in connection with the proposed $50.55 million Water Reclamation Facility upgrade will be a
significant benefit to the City and its ratepayers.
WATER & SEWER UTILITY EXPERIENCE
Advising water and sewer utilities is a primary focus of PFM’s California practice. We have consistently
worked on more water and wastewater financings than all of our largest competitors combined, and as a
result, we bring experience and market leverage no other firm can offer. In 2013, we served as Financial
Advisor on 75 issues totaling over $3.75 billion of water, wastewater, and utility financings. We have broad
experience with State Revolving Fund (“SRF”) loans and have expertise in financial planning and the
establishment of credit ratings for utilities such as the City’s sewer enterprise, which we understand has
previously borrowed through the SFR program and the State’s Infrastructure and Economic Development
Bank, but has no existing ratings or publicly offered bonds outstanding.
MARKET PRESENCE AND PRICING
PFM has consistently been ranked the leading financial advisor in the nation, achieving this coveted
ranking once again in 2012 and year to date in 2013. This market leading experience translates into
material benefit for our clients because PFM participates in more financings than any of our competitors.
PFM maintains a fully staffed Pricing Group that functions as our ‘desk,’ even though we are not a
broker/dealer and are not engaged in the sale or trading of bonds. This group is in the market, advocating
solely and independently for our issuer clients, with, on average, five bond transactions on each of the
heavy trading days of Tuesday-Thursday.
The City has PFM’s absolute firm-wide commitment to provide a premier quality of service that will result in
tangible benefits. We appreciate the opportunity to deliver on this promise.
Thank you for your consideration.
Sincerely,
PUBLIC FINANCIAL MANAGEMENT, INC.
Sarah Hollenbeck
Director
Financial Advisor Services
The authorized representative identified above declares she:
1. Has carefully examined Specification No. 90666, which is hereby made a part of this proposal.
2. Is thoroughly familiar with its contents.
3. Is authorized to represent the proposing firm.
4. Agrees to perform the work as set forth in this proposal.
Certificate of insurance attached; insurance company’s A.M. Best rating: A / A++
Firm Name: Public Financial Management
Address: 50 California Street, Suite 2300
San Francisco, CA 94111
Contact: Sarah Hollenbeck
Phone: 415.982.5544
Authorized Representative: Date: 11/14/2013
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2. Q UALIFICATIONS
General qualifications of your firm to serve as financial advisor.
PFM is the nation’s leading provider of independent
financial and investment advisory services with over
450 employees in 32 offices throughout the United
States.
PFM’s record of participation in the field of
municipal finance is unrivaled by any other
independent financial advisor and compares favorably to the experience of the major regional and national
investment banking firms in terms of both financial sophistication and transaction experience.
PFM has been the number one ranked financial advisor in the nation for fifteen consecutive years, and is
the only financial advisory firm to offer a full array of financial services. In addition to the typical financial
advisory services associated with a bond transaction, PFM also offers the City a variety of related services
that most other financial advisory firms do not offer, such as investment advice with respect to the
investment of bond proceeds and preparation of arbitrage rebate calculations. While this proposal relates
specifically to financial advisory services, all of our clients benefit from knowledge and perspective gained
in all four of our primary business activities: financial advisory services, strategic consulting services, asset
management, and structured products. Certainly not all of our clients use all of our services, but many cities
with whom we work—especially cities with more limited staff resources—find it more efficient to have a
single firm they can call on for all these ancillary services related to debt management than it is to
coordinate the efforts of multiple outside parties.
In today's volatile economic environment, creative solutions
are required to maintain capital programs, particularly in the
face of growing fiscal pressures on public agencies. Since
1989 PFM has consistently ranked as the country’s top
ranked financial advisor. Last year, we once again achieved
this coveted ranking by advising on 900 transactions, totaling
$56.8 billion in par. While there are many ways to measure
the top financial advisor, PFM takes the approach of looking
at both the volume and par amount of transactions as
representative of the diversified experience we offer.
PFM is in the market an average of 17 times per week, more than any underwriter, though an independent
financial advisor PFM is not a broker dealer and does not underwrite bonds. PFM’s prevalence in the
market allows us to actively keep the City abreast of market tone and pricing levels. Our experience
working with many underwriters and the dedicated PFM Pricing Group gives us a sophisticated perspective
on bond pricing, structuring and general advisory considerations. In the current market environment,
having a financial advisor who can quickly and accurately survey the market is extremely important.
Experience as financial advisor to cities where services are provided on an ongoing basis.
PFM maintains the largest public finance presence of any financial advisory firm or investment bank in the
State of California and one of our core businesses is advising California cities. PFM assisted clients with 56
bond issues totaling over $4.62 billion in par amount in 2012. In the first half of 2013, PFM advised on 29
transactions in the State totaling approximately $2.2 billion in par value. PFM has 46 professionals staffed
within our three offices in California: San Francisco, Los Angeles, and Oakland.
While we work for many of the largest cities in California, mid-sized cities are a core of our practice and
their projects and financings often present complexities and challenges equal to those of larger issuers.
The PFM Group
Public Financial Management, Inc.PFM Asset Management, LLC
Financial
Advisory
Management
and Budget
Asset
Management
Structured
Products
2013 First Nine Months Overall Long Term Municipal New Issues
National Municipal Financial Advisory Ranking - Equal to Each Financial Advisor
Source: Thomson Reuters
PFM 582
Public Resources Advisory
Group 72
FirstSouthwest 515
Lamont Financial Services
Corp 29
Acacia Financial Group Inc 111
Piper Jaffray & Co 168
RBC Capital Markets 143
Estrada Hinojosa &
Company Inc 56
KNN Public Finance 43
A C Advisory Inc 36
30,907.2
18,680.6
18,143.6
5,689.3
5,573.2
4,485.3
4,286.8
3,545.3
3,422.7
3,297.8
dollars in millions# transactions
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PFM values our clients regardless of size or frequency of issuance and commits to providing each client the
attention and resources they deserve. Like most full service California cities these days, San Luis Obispo
faces a broad range of financial challenges. For example, many of the cities with whom we work confront
ever-tightening regulatory standards with respect to their water and wastewater utilities and face major
capital investment (and related rate increases) to fund the improvements needed to meet permitting
requirements. In the area of economic development, many of our city clients have turned to PFM for
support in negotiating development agreements or developing plans of finance for specific development
projects, as well as assessing funding alternatives in post-redevelopment era. With pension and OPEB
liabilities becoming major challenges to cities’
financial health and significant credit issues with
the rating agencies, PFM’s experience in these
areas is also being tapped by a growing number
of our California city clients, who are looking to
us to assist in understanding the cost
implications of their current benefits packages
and to develop reforms to achieve financial
sustainability, as well as to advise them on POB
financings. We have shown that we can
thoroughly evaluate some of the most complex
financial issues while meeting tight time
schedules. This is a result of our careful
attention to detail and our ability and willingness
to provide a high level of resources – we have a
deep bench, not just one or two people to cover
all the needs of a city the size of San Luis
Obispo and the various funds that fall within the
scope of work.
Experience in providing similar services required by the City to comparable California cities.
We have assisted both large and small cities in the development of financing plans for infrastructure and
other capital projects, the preparation of ballot measures, and the structuring and execution of various
forms of financing including General Obligation bonds, Certificates of Participation, Lease Revenue bonds,
Tax Allocation bonds, Assessment District financings, Community Facilities District financings, Bond
Anticipation Notes, Tax Revenue Anticipation Notes, and other short-term borrowings. In developing such
2012 Full Year California Long Term Municipal New Issues
National Municipal Financial Advisory Ranking - Equal to Each Financial Advisor
Source: Thomson Reuters
Public Resources Advisory
Group 39
KNN Public Finance 68
PFM 56
Montague DeRose &
Associates LLC 21
Keygent LLC 37
Fieldman Rolapp &
Associates 54
Government Financial
Strategies Inc 24
Dale Scott & Company Inc 25
Isom Advisors Inc 31
Caldwell Flores Winters Inc 21
9,442.1
5,388.6
4,618.5
2,617.9
1,361.3
1,224.3
595.6
551.1
529.8
501.9
dollars in millions# transactions
C3 - 16
plans we focus on ensuring that staff and policymakers fully understand their alternatives and the benefits
and considerations associated with different financing approaches.
As shown above, PFM is the leading financial advisor on both competitive and negotiated transactions, and
we also have significant experience in private placement and direct bond purchase for our numerous small
to mid-sized issuers. We understand that the City has used competitive sales for all if its public offerings
since at least 2004. For highly-rated issuers like the City, PFM is a strong supporter of the competitive sale
process. When managing the competitive sale process we focus on certain approaches that assure
optimal pricing: maximizing the number of bidders for an issue; developing an appropriate bond structure,
and incorporating issuer flexibility. PFM will advise the City on the best method of sale given the specific
credit, structure, and financing objectives that the City wishes to achieve for its proposed issuance, and will
manage the transaction process for any sale method the City decides to use.
As highlighted in prior section, PFM serves in an ongoing general financial advisory role to many California
cities. The case study below illustrates the broad range of services PFM has provided as general financial
advisor to one of its mid-size California city clients, the City of Santa Rosa.
PFM was hired to serve as general Financial Advisor to the City of Santa
Rosa in June 2006. With a population of 160,000, Santa Rosa, like San Luis Obispo, is a full-service city.
With outstanding indebtedness that includes General Fund COPs, water and wastewater revenue bonds,
State Revolving Fund loans, parking district bonds, taxable and tax-exempt tax allocation bonds,
Assessment District bonds, equipment leases, and Pension Obligation Bonds, Santa Rosa utilizes the full
range of PFM’s services: PFM advises the City on all its debt transactions and provides ongoing, as-
needed financial advisory services related to other financial matters as they arise; we also provide asset
management services to the City; we advised Santa Rosa on the establishment of an OPEB trust; and our
Management & Budget Consulting Group has prepared a pension reform study for the City and is currently
working on a Long-Range Financial Plan. Santa Rosa’s need for a long range financial plan is being driven
by a similar circumstance to the one San Luis Obispo faces with its Measure Y temporary sales tax expiring
in 2016.
In terms of our financing transaction experience with Santa Rosa, during the course of our relationship with
the City PFM has advised on the issuance of General Fund COPs, Water Revenue Bonds, Sewer Revenue
Bonds, Pension Obligation Bonds, Assessment District Bonds, and the establishment of a taxable Line of
Credit from a local bank in connection with various housing projects. In 2008, PFM brought to market Santa
Rosa’s first competitive issues, one of which was also the City’s first-ever water revenue bond issuance.
PFM was responsible for the credit process for this issue, which resulted in an inaugural rating for the City’s
2013 First Nine Months Competitive Long Term Municipal New Issues
National Municipal Financial Advisory Ranking - Equal to Each Financial Advisor
Source: Thomson Reuters
PFM 288
Public Resources Advisory
Group 34
FirstSouthwest 206
Piper Jaffray & Co 126
Davenport & Company LLC 36
Montague DeRose &
Associates LLC 10
KNN Public Finance 24
Springsted Incorporated 134
Acacia Financial Group Inc 21
Ehlers & Associates 208
9,161.8
6,972.6
4,241.3
2,994.2
1,773.7
1,364.3
1,270.7
1,095.6
1,060.0
973.3
dollars in millions# transactions
2013 First Nine Months Negotiated Long Term Municipal New Issues
National Municipal Financial Advisory Ranking - Equal to Each Financial Advisor
Source: Thomson Reuters
PFM 294
FirstSouthwest 309
Public Resources Advisory
Group 38
Lamont Financial Services
Corp 26
Acacia Financial Group Inc 90
RBC Capital Markets 93
Estrada Hinojosa &
Company Inc 52
A C Advisory Inc 29
Fieldman Rolapp &
Associates 59
Kaufman Hall & Associates
Inc 28
21,745.3
13,902.3
11,707.9
5,339.3
4,513.2
3,668.3
3,502.2
3,022.8
2,787.1
2,640.2
dollars in millions# transactions
C ITY OF S ANTA R OSA: G ENERAL F INANCIAL A DVISORY S ERVICES
2006 TO P RESENT
C3 - 17
water enterprise of Aa3/AA. The City competitively sold its 2008A Wastewater Revenue Bonds and 2008
Water Revenue bonds in June 2008. Drawing on the expertise of our dedicated Pricing Group, PFM crafted
the bid documents to attract the broadest investor participation while establishing parameters to protect the
value of the City’s call option and achieve the lowest cost of funds. In our premarketing efforts, PFM
focused on reaching out to a broad universe of potential bidders for the City’s Water and Wastewater
Bonds, calling over 25 underwriting firms to inform them about the upcoming sale and answer any
questions the firms may have had regarding the transactions. Bond insurance was offered at the bidders’
option, an approach that is once again becoming more common with the re-emergence of two active bond
insurers, Build America Mutual and Assured Guaranty, providing the City the most efficient pricing given
investor preferences and perception of insurance value on the day of sale. Despite a volatile market, which
was being affected by the early stages of the financial crisis and the downgrading of several municipal bond
insurers, the City was able to price both the water and wastewater bonds successfully compared with
comparable transactions sold in the same timeframe.
Most recently, PFM has in 2012 advised Santa Rosa on the fixed rate refunding of $53 million of variable
rate wastewater revenue bonds, enabling the City to take advantage of historically low fixed rates and
eliminate the utility’s exposure to interest rate risk, bank credit risk, and the administrative burden of
renewing the Letter of Credit that was required to support the variable rate bond every two to three years.
We are now working with the City to develop a long-term financing plan for the wastewater system’s next
$50 million of projects to be funded over the next four years, carefully considering the mix of debt financing
and cash funding to manage the impact on the City’s future wastewater rates, which are already among the
highest in the region.
Description of particular and interesting issues, problems or complications that arose in previous financial advisor experiences, and how these were resolved or disposed of.
In 2011, an innovative, problem-solving financing for the Sonoma-Marin Rail
Transit District (“SMART”), led by Sarah Hollenbeck, PFM’s project manager
for the City of San Luis Obispo’s engagement, was named The Bond Buyer
Deal of the Year in the Western Region. As is described below, SMART faced unique challenges that
nearly prevented it from bringing its credit to the market and halted the project. However, PFM helped
SMART identify a creative solution that overcame significant obstacles and resulted in a successful
financing to keep the project on schedule.
In 2010, PFM was hired as financial advisor to SMART, which was created in 2006 to finance, construct
and operate the two counties’ first rail transit system. PFM’s prior experience working with the District’s new
CFO, our track record of success with new and challenging credits, and our depth of resources gave the
CFO the confidence to replace his existing Financial Advisor, with whom he was dissatisfied, with PFM
even though the process to issue the District’s first series of bonds was already underway.
As the financing team (with PFM now serving as FA) was preparing for a typical sales tax bond issuance,
opponents of the SMART project filed a notice and began to circulate a petition to repeal the sales tax.
This was the first time that an existing California sales tax had been the subject of a repeal campaign. With
a formal repeal action in process, any transaction would not have Contract Clause protection, so effectively
the financing had to be postponed until the outcome of the petition was known. However, the CEO had
already led a major a construction bid and did not want to cancel the bid process and be forced to wait and
start over in what would likely be a less favorable bidding climate. In response, PFM recommended a two-
phase financing structure that would not only raise the funds necessary to construct the project, but in
doing so would indicate to the public (whom the petitioners were asking for signatures on the repeal
petition) that the project was moving forward.
C3 - 18
The structure involved the escrow of the proceeds of variable rate bonds until resolution of the repeal
petition drive. If the repeal were successful, proceeds would be used to pay the bonds, and if unsuccessful,
the transaction would be converted to a long-term fixed rate mode and the proceeds used for construction.
Interest was paid from current sales tax revenues. Further, as confirmed by bond and disclosure counsel,
once the transaction closed it would receive Contact Clause protection from any future attempts to repeal
the sales tax and that status would not change upon the mode change to long-term fixed rate bonds.
Because the SMART Board had already authorized a fixed rate financing, which was no longer a viable
option, the new variable rate transaction structure had to be explained to the Board and new documentation
approved. PFM led discussions privately with individual Board members, with the full Board in both closed
and open sessions. Ultimately the Board voted unanimously to move forward with the variable rate
financing.
Working closely with both our Structured Products and Arbitrage Rebate groups, PFM led the effort to
explain the escrow mechanism to S&P to obtain initial ratings on the transaction, which was complicated by
SMART’s uncertainty over the escrow collapse date and a pending closure of the SLGS window.
Ultimately, the initial variable rate mode of the transaction received the highest short-term rating from S&P,
A-1+, and in December 2011, SMART sold $191 million of fixed rate “put” bonds with a mandatory tender
date of January 10, 2013 and an unusual par conversion option beginning in April 2012.
The repeal failed to qualify for the ballot and SMART remarketed the bonds in April 2012 in a long-term
fixed rate mode. The long-term bonds received strong ratings for a new operating entity, including a “AA”
from S&P. The bonds were marketed to investors at levels established with the advice of PFM’s Pricing
Group and were oversubscribed, enabling the interest rates to be reduced and an additional $10 million of
funds to be generated for the project. The escrowed funds were released for construction, which began
immediately and is underway today.
SMART’s unique challenge required a customized solution, tailored to the specific demands of the District’s
circumstances. While SMART is a very different type of entity from the City of San Luis Obispo, we feel
this transaction illustrates our dedication to solving our clients’ problems, however complex and intractable
they may appear to be. While the initial reaction of the financing team upon hearing of the sales tax repeal
effort was simply to wait for the process to play out, PFM understood that that approach was unacceptable
to the client and led the efforts of the financing team to create a viable path forward for the District.
Resumes and responsibilities of the individuals who would be assigned to work with the City, their home office location, and if possible, identification of who would be the City’s lead contact.
PFM’s proposed team represents a broad and deep bench of senior professionals that draw from a variety
of specialty areas necessary to serve the City’s diverse needs. We believe this team is best suited to help
the City achieve its goals and objectives. PFM is committed to providing not only the unparalleled expertise
of this team, but also to provide direct accountability and clear communication channels.
Peter Miller, Managing Director in San Francisco, will serve as the Engagement Manager for the City.
Sarah Hollenbeck, Director in San Francisco, will serve as the Project Manager and as the primary point
of contact for the City.
Eric Espino, Senior Managing Consultant in Los Angeles, will provide project management and issuance
support, centralized resource management, accountability, as well as rating agency expertise.
Bob Gamble, Managing Director in San Francisco, will provide additional support and offer Economic
Development and land secured financing expertise.
Alex Boutyrski and Sarah Delph, Analysts, will also provide analytical and quantitative support for the engagement.
C3 - 19
PETER MILLER, MANAGING DIRECTOR – SAN FRANCISCO, CA
Peter W. Miller, a Managing Director, joined Public Financial Management, Inc. in 1991 and is currently the manager of the firm’s Western United States Practice.
Mr. Miller has structured, and managed the sale of over $20 billion of tax-exempt debt. He has advised clients regarding the issuance of many types of debt including: fixed and variable rate general airport revenue bonds (both senior and subordinate), passenger facility charge revenue bonds, general obligation bonds, sales tax revenue bonds, lease and installment purchase certificates of participation, lease revenue bonds, tax increment bonds, water and sewer revenue bonds, current and advanced refunding bonds, general, special assessment and Mello-Roos special tax bonds, and tax and revenue anticipation notes.
A sample of Mr. Miller’s clients include the City and County of San Francisco; the cities of Modesto, Folsom, Roseville, Rancho Cordova, Pittsburg, and Lincoln; Solano County; Sacramento County; San Francisco International Airport; and Contra Costa Transportation Authority, among others.
Mr. Miller was the Director of Public Finance for the City and County of San Francisco from 1986 to 1991. He was responsible for all debt issuance sold by the City. Some of the major financings and accomplishments during Mr. Miller’s tenure as Director of Public Finance include: $137 Million Lease Revenue Bonds for the expansion of the Moscone Convention Center; $60.5 million Lease Revenue Bonds refunding the 1979 Moscone Lease Revenue bonds; $145 million sewer revenue bonds used to builds secondary treatment facilities; $316 million in general obligation bonds issued in six series; the creation of San Francisco’s land-based financial plan (a series of Mello-Roos districts) to pay for the construction of the public infrastructure in the 300-acre Mission Bay multi-purpose development project; the development of San Francisco’s first equipment lease-purchase program using tax exempt bonds; assisting the San Francisco Redevelopment Agency issue its first series of Mello-Roos bonds and several series of tax increment bonds totaling approximately $70 million, and developing the first strategic plan for the purchase and construction of City office buildings.
Mr. Miller received his Bachelor of Arts degree in American Studies from Syracuse University, his Master’s Degree in Economics from Tufts University and his Masters Degree in City and Regional Planning from Harvard University, John F. Kennedy School of Government.
SARAH HOLLENBECK, DIRECTOR – SAN FRANCISCO, CA
Ms. Sarah Hollenbeck, Director, joined Public Financial Management, Inc. in 2001 after working for five years in the Mayor’s Office of the City and County of San Francisco, where she served as Public Finance Manager. In this capacity, Ms. Hollenbeck was responsible for the day-to-day management of the City’s $2.3 billion portfolio of general fund and tax supported debt. At PFM, Ms. Hollenbeck has built upon her background as a city issuer, serving as financial advisor to numerous cities and counties throughout California. In the San Francisco Bay Area, her clients include the Cities of Alameda, Novato, Santa Rosa, San Francisco, San Leandro, South San Francisco, and Vallejo. Ms. Hollenbeck also advises clients in the
Sarah Hollenbeck
Director
Project Manager
Alex Boutyrski
Analyst
Quantitative Support
Sarah Delph
Analyst
Quantitative Support
Eric Espino
Senior Managing Consultant
Project Management Support
Robert Gamble
Managing Director
Econmic Development Expert
Peter Miller
Managing Director
Engagement Manager
Todd Fraizer
Managing Director
Pricing
C3 - 20
higher education and transportation sectors, including the California Educational Facilities Authority, several community college districts, the Bay Area Toll Authority, and the Sonoma-Marin Rail Transit District.
Ms. Hollenbeck holds a Bachelor of Arts degree from Yale University and a Master of Public Policy degree
from the University of California at Berkeley.
ERIC ESPINO, SENIOR MANAGING CONSULTANT
Mr. Espino provides transaction structuring, financial planning, and rating agency advisory services to
clients in Southern California. Mr. Espino has worked with a number of Southern California clients including
the City of San Diego (2013-2014 TRAN), Eastern Municipal Water District, and Long Beach Water. He
was also a member of the team for the City of Long Beach restructuring and refunding of Aquarium related
debt to achieve significant savings for the City and the team for Long Beach’s 2012-2013 TRAN issuance.
Outside of transaction work, Eric also produced a financial analysis for the City of Long Beach on the
feasibility of the general fund transfers from the City’s gas fund and Southeast Resource Recovery Facility
fund. Mr. Espino also recently worked with Eastern Municipal Water District on two bank liquidity
substitutions as well as two refundings of outstanding variable-rate demand bonds with SIFMA index notes
to diversify the District’s debt profile and reduce counterparty risk. As a member of PFM’s Credit Rating
Taskforce, Mr. Espino has been actively involved in PFM’s responses to the numerous proposed rating
changes being promoted by the Rating Agency community. Such involvement includes Moody’s recent
proposal regarding changes to the agency’s Special Tax Credit rating criteria.
Prior to joining PFM in 2011, Mr. Espino worked as a Director in Fitch Ratings’ Public Power group in New
York serving as a credit analyst covering municipal utilities throughout the United States, Guam, and Puerto
Rico. During his time at Fitch, Eric was also the lead analyst on a variety of tax-backed and revenue
supported debt transactions (over $4 billion in new money debt rated) and played a key role in rating
criteria discussions and producing topical credit reports for publication.
Mr. Espino holds a Master’s Degree from the Massachusetts Institute of Technology and a Bachelor’s
Degree in Public Policy from the University of Southern California. He is also active in the community as a
Los Angeles County Community Development Foundation Board Member.
BOB GAMBLE, MANAGING DIRECTOR
Mr. Gamble brings over 30 years of public sector and non-profit experience, including serving as Chief
Financial Officer of the San Francisco Redevelopment Agency and as Budget Director for the City of San
Francisco. He has managed the issuance of approximately $2 billion of tax increment bonds, and is
experienced in the use of Mello-Roos bonds in both urban and suburban contexts. He also is experienced
in revenue bond and general obligation bond issuance, and in the use of both negotiated and competitive
sales. Mr. Gamble’s three decades of finance and policy experience with the City of San Francisco in
multiple roles provides him extensive insight into the policy context in which issuers operate.
Mr. Gamble’s practice at PFM is focused on a holistic approach to the development of successful public-
private partnerships supported by public financing methods. This focus is the outgrowth of his experience
developing successful projects as CFO of the San Francisco Redevelopment Agency. His practice is
unique among financial advisory firms in that he focuses on the purposes and policy rationale for these
partnerships, as well as the specific techniques required to support them. In addition to his extensive
resume in bond financing techniques, he emphasizes the importance of adapting technique to context.
Each context demands its own set of tools, and these must be adapted and dovetailed carefully in order to
achieve success.
C3 - 21
His current clients include the Cities of San Francisco, Ukiah, South Lake Tahoe, San Diego, Oakley and
Pittsburg, the Counties of Contra Costa, Los Angeles, and Sacramento, the San Francisco Public Utilities
Commission, the Ports of San Francisco and San Diego, and the Treasure Island Development Authority.
Mr. Gamble holds a B.A. degree from Duke University and a Master’s in Public Policy from the University of
California at Berkeley.
ALEX BOUTYRSKI, ANALYST,
Mr. Boutyrski joined PFM’s practice in 2013 in the firm’s Los Angeles, California office. He provides
quantitative and analytical support for PFM’s project managers and holds a B.S. degree in Business
Administration with an emphasis in Finance from the University of Southern California.
SARAH DELPH, ANALYST,
Sarah Delph joined PFM in 2013 and is currently staffed in the San Francisco office. Sarah provides
technical, analytical, and marketing support for clients nationwide. Her present duties include structuring,
sizing, and pricing new money and refunding municipal bond issues, assessing municipal issuer's
outstanding debt and performing analysis of refunding opportunities.
Ms. Delph graduated from Rhodes College, with a Bachelor of Arts degree in Economics and Political
Science.
Any other information that would assist us in making this contract award decision.
P RICING
Many financial advisory firms view the pricing of bonds as a one-day event; we do not. Rather, we view it
as the culmination of several critical decisions made throughout the financing process. The diligence
brought to each decision during the financing process will be enhanced by PFM’s dedicated in-house bond
Pricing Group, which will join the core financing team to support the pricing of the City’s bonds.
PFM takes a rigorous and quantitative approach to pricing which includes a combination of databases, and
secondary market trading information. PFM will enter the sale with an independent view of how the City’s
bonds should be structured and provide indicative scales on where it might price given prevailing market
conditions. Not only will we express our opinion of relative credit spreads on a maturity by maturity basis,
but also present alternative coupon structures and relative value of call options. We would provide the City
with updated market conditions along with comparably priced transactions and any relevant information
such as ratings, number of agencies used, etc. to better inform the team and guide how the City ultimately
decides to execute its financings.
In addition, we maintain an exhaustive database of past underwriter compensations to ensure that the City
is paying a fair market commission should you decide to sell on a negotiated basis.
Finally, our consistent presence in the capital markets provides us with insight on the latest market pricing
trends:
Preferences of the investor and the financial and credit structures that are currently best accepted;
Which investors are active buyers, the types of securities they currently prefer, and the maximum
price they are willing to pay for a given security; and
What constitutes a fair price for a bond deal and awareness of reasonable compensation levels for
other professionals
C3 - 22
This market insight, combined with live MSRB
trade data, an in-depth knowledge of different
types of securities, and an understanding of
municipal credits in general and clients’ credit
in particular, enable us to ensure the most
effective pricing of a City issuance, whether a
competitive or negotiated sale.
P ENSION AND POB F INANCING
E XPERIENCE
PFM has helped numerous cities and counties
in California develop and implement financing
strategies to address their unfunded actuarial
accrued liabilities (“UAALs”), improve their
funding ratios and, in many cases, realize
annual cashflow savings. A representative list
of the California cities and counties for whom
we have developed pension funding strategies
and/or managed pension obligation bond (“POB”) transactions is shown on the right. We have helped all of
our POB clients examine the benefits of various financing alternatives within the context of their particular
pension/retirement system.
In reviewing the City’s FY2012 CAFR, we understand that the City’s Safety
Plan was converted to the CalPERS risk pool in 2007 and that the UAAL for
the Safety Plan as of the 2011 actuarial valuation was $38.2 million. While
few Pension Obligation Bonds have been issued in recent years despite
taxable municipal interest rates being relatively attractive, due in part
concerns on the part of some municipalities about financing their UAAL and
depositing a large sum of money with CalPERS, PFM has assisted several of
our city clients who are members of CalPERS’ risk pools to evaluate the
potential benefit of POBs. Working closely with the cities and their
independent actuaries, where appropriate, we have identified opportunities
for savings. We recently advised the City of San Leandro on a $18.3 million
Safety Plan side fund refinancing, which was executed through the public
offering of POBs and achieved significant savings compared to the 7.5%
amortization rate charged by CalPERS. The NPV benefit from that
transaction was nearly $1.5 million. We are currently working on a similar transaction for the City of Eureka.
Aside from financing transactions, which clearly do not make sense in all cases, PFM’s Management &
Budget Consulting Group would also be available to assist the City if it desires to consider any further
modifications to its pension benefits beyond the recently introduced “second tier” for new hires.
Negotiated Pricing
or
Competitive Sale Process Pricing Analysis
Analyze Results
vs.
Market & Historical
Quatitative Pricing Analysis
1. Establish Pricing Strategy & Goals
2. Bond Structure Pricing Preparation
1. Current Market
2. Data Feeds
3. Analysis
4. Target Scales
Underwriter Performance Evaluation
1. Feedback to Underwriters
2. Reward Strong Performance
Program Design
Determine Mix of Competitive and Negotiated Sales & Strategy
SELECT CALIFORNIA
POB CLIENTS
County of Alameda
County of Marin
County of San Diego
County of San Luis Obispo
County of Solano
City of Oakland
City of Pittsburg
City of Long Beach
City of Oceanside
City of San Leandro
City of Santa Rosa
C3 - 23
M ANAGEMENT & B UDGET C ONSULTING (“MBC”)
The PFM Management & Budget Consulting practice brings actionable ideas to government that both
enhance public service delivery and improve the bottom line. The MBC team is the national leader in the
development of multi-year financial plans in the public sector – helping distressed governments to achieve
fiscal recovery, stable governments to ensure sustainable health and strong governments to optimize
management and budget performance. They provide services in the following areas:
B UDGETING FOR S TRUCTURAL B ALANCE C ONTAINING W ORKFORCE C OSTS
Multi-Year Financial Plans
Budget Projection Models
Budgeting for Outcomes
Budget Development
Labor Negotiation and Interest Arbitration
Support
Staffing and Overtime Control
Restructuring Retiree Benefits
R ESOURCE M AXIMIZATION G OVERNMENT R ESTRUCTURING
Agency Reviews
Fee and Cost Recovery Studies
Fleet Management
Consolidation/Merger
Shared Services
Multi-Year Financial Planning: We understand that the City’s Measure Y ½ cent sales tax, which sunsets in
March 2015, generated approximately $6.2 million in FY2012. The measure will need to be reauthorized in
November 2014. As noted above in our discussion of the services we provide to the City of Santa Rosa,
we are currently assisting them with a Long Range Financial Plan, which they are using as a tool to
educate their City Council and
begin early in their planning for
the possibility that their two
temporary sales tax measures,
Measures O and P, are not
reauthorized by the voters when
they expire in 2019 and 2025.
The chart adjacent depicts Santa
Rosa’s General Fund
expenditure projections versus
their revenues with and without
the incremental revenues
generated by their two temporary
sales taxes.
Labor Negotiation & Interest Arbitration Support: We understand that the City had agreements in place with
all of its outstanding bargaining units by the end of FY2012, according to the CAFR, but had previously
reached impasse with its largest bargaining unit, SLOCEA, which represents approximately 41% of the
City’s employees. Should the City’s needs call for it in the future, PFM’s MBC group can provide labor
costing, benchmarking, and expert testimony to support the City in its labor negotiations. PFM has
provided such services to a growing number of California cities, including Modesto, Oakland, and Vallejo.
$100
$110
$120
$130
$140
$150
$160
$170
$180
$190
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Mi
l
l
i
o
n
s
Fiscal Year ending 6/30
General Fund Forecast
Expenditures
Revenues with Measures O and P
Revenues with Measure P
Revenues
Projected deficit with
loss of Measure P
Projected deficit with loss
of Measures O and P
C3 - 24
3. STATEMENT OF LITIGATION, INVESTIGATIONS, CONFLICTS OF INTEREST AND DISQUALIFICATIONS
Statement and explanation of any instances where your firm has been removed from a project or disqualified
from proposing on a project.
Public Financial Management (PFM) has never been removed from a project for cause nor disqualified
from proposing on a project. As a nationwide firm, Public Financial Management has at any time many
hundreds of active clients across the country. Our client base has grown over the years, with new clients
replacing clients that we cease actively to serve as a result of rebidding by the client, project completions
and political changes. The firm has never been given notice by a client of failure to complete a contract,
nor has it ever been terminated by a client for cause.
Any instances within the past 24 months when your firm (and/or any of its principals) was the subject of any
investigation relating to the municipal securities industry by the SEC, NASD, NYSE or any other state or
federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry.
N/A
Any instances within the past 24 months when your firm (and/or any of its principals) was involved in any litigation, arbitration, disciplinary or other actions arising from the firm’s role in issuing municipal securities.
Public Financial Management and an affiliate (collectively “PFM”) were joined as “4th party defendants” in a
lawsuit initiated by a school district against its swap counterparty for declarative relief that the swap is
unenforceable. The swap counterparty joined the school district’s bond counsel as a defendant, and bond
counsel then joined PFM, claiming that if counsel were to be liable for any damages it would be entitled to
contribution from PFM. This suit was settled in early 2013; PFM contributed less than 1% of the amounts
agreed in settlement.
Any relationship between your firm and any other non-affiliated firm(s) or individuals involving any compensation arrangement that may be associated with your possible engagement to assist the City with
financial advisor services.
We have no relationships to disclose that would compromise our ability to assist the City as financial
advisor.
One small bag of regular M&Ms for each proposal reviewer.
Enclosed with our proposal submittal are 5 bags of regular M&Ms, one for each member of the City Review
Committee. We hope you enjoy them!
C3 - 25
4. R EFERENCES
Number of years engaged in providing the services included within the scope of the specifications under
the present business name:
C ITY AND C OUNTY OF S AN F RANCISCO
Contact:
Title:
Phone & Fax:
Address:
Nadia Sesay
Director of Public Finance
(415) 554-5956 І (415) 554-7466
1 Dr. Carlton B. Goodlett Place, San Francisco, California 94102
Client since: Early 1990s
Recent Projects:
2011 Certificates of Participation
2012ABC General Obligation Bonds
2013 Certificates of Participation
Laguna Honda Hospital Financial Model
Redevelopment Successor Agency Analysis
and 2013 CFD Bonds
Basis of Fees:
For Bond financings fees are fixed per
transaction and contingent on closing.
For non-transactional services, fees are
hourly.
C ITY OF A LAMEDA
Contact:
Title:
Phone & Fax:
Address:
Fred Marsh
Finance Director
(510) 747-4888 І (510) 865-4045
2263 Santa Clara Ave., Alameda, California 94501
Client since: 2011
Recent Projects:
2012 Sewer Revenue Bonds
2013 Certificates of Participation
2013 General Obligation Bonds
2003A&B VRDB Letter of Credit Renewal
Basis of Fees:
For Bond financings fees are fixed per
transaction and contingent on closing.
For non-transactional services, fees
are hourly.
C ITY OF S ANTA R OSA
Contact:
Title:
Phone & Fax:
Address:
Lawrence Chiu
Chief Financial Officer
(707) 543-3089 І (707) 543-3136
Revenue Division City Hall Annex, 1st Floor
90 Santa Rosa Avenue, Santa Rosa, California, 95404
Client since: 2006
Recent Projects:
2012A Wastewater Revenue Bonds
2013 Pension Obligation Refunding Bonds
2013 Fire Station Lease Financing (Private Placement)
2014 Wastewater Revenue Bonds and
Financial Planning
Pension Reform Study
Long Range Financial Plan
Basis of Fees:
For Bond financings fees are fixed
per transaction and contingent on
closing.
For non-transactional services, fees
are hourly or fixed for the specific
project/scope of work.
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6. C OMPENSATION
The City expects that compensation will be funded solely from, and solely contingent upon, the proceeds
from specific bond issues, and that fees will be related to the size of the issue. However, you may propose
an alternate compensation structure provided that it is fully explained in lay terms.
PFM proposes to provide the City with the most comprehensive financial advisory services available. For
bond issuances, we would propose a fixed fee in the range of $35,000 to $70,000 per transaction
depending upon the size, type, and complexity of the financing, to be paid contingent on the successful
closing of the bonds. In addition to our professional fees, we would request reimbursement for all out-of-
pocket expenses on an actual cost basis (PFM does not charge a multiplier on expenses). Expenses
include items such as travel, mileage, parking, meals, postage, express mail delivery services, telephone,
photocopying, outside graphics fees, etc. We would cap our expenses at $2,500 per transaction.
Appropriate documentation and third party receipts will be provided with each invoice.
For “non-transactional” services, we would propose to charge based on the following hourly billing
schedule, plus out-of-pocket expenses, subject to prior approval by the City.
Professional Hourly Rate
Managing Director $350
Director $325
Senior Managing Consultant $300
Senior Analyst $250
Analyst $225
PFM would also agree to perform non-transactional tasks at a fixed price once a specific scope of services
is determined and agreed upon by all parties, if that is preferable to the City.
5. CERTIFICATE OF INSURANCE
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990 Palm Street San Luis Obispo, CA 93401
Notice Requesting Proposals for
FINANCIAL ADVISOR SERVICES
Specification No. 91269
The City of San Luis Obispo is requesting proposals for financial advisor services pursuant to
Specification No. 91269. All proposals must be received by the City Clerk by 3:00 pm on Friday,
November 15, 2013 when they will be opened publicly in the City Hall Council Chambers, 990 Palm
Street, San Luis Obispo, CA 93401.
Proposals received after said time will not be considered. To guard against premature opening, each
proposal shall be submitted to the City Clerk in a sealed envelope plainly marked with the proposal title,
specification number, proposer name, and time and date of the proposal opening. Proposals shall be
submitted using the forms provided in the specification package.
An optional pre-proposal teleconference is tentatively scheduled for 11:00 am on Monday, November
11, 2013 to answer any questions that the prospective bidders may have regarding the City's request for
proposals.
Proposers interested in participating in the pre-proposal teleconference should contact Wayne Padilla,
Director of Finance and Information Technology at wpadilla@slocity.org or (805) 781-7125 to receive a
conference line phone number and password and to confirm the date and time.
Finalist interviews have been scheduled for Friday, December 6, 2013.
Specification packages and additional information may be obtained on the City of San Luis Obispo’s
website http://www.slocity.org/finance/bids.aspasp or by contacting Wayne Padilla, Director of Finance
& Information Technology at wpadilla@slocity.org or (805) 781-7125
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A. Description of Work 1
Overview
Upcoming Financings
About the City
City Finances
Financial Advisor Services
B. General Terms and Conditions 6
Proposal Requirements
Contract Award and Execution
Contract Performance
C. Special Terms and Conditions 10
References
Proposal Content
Proposal Length and Copies
Proposal Evaluation and Selection
Proposal Review and Award Schedule
Pre-proposal Conference
Contract Term
Release of Reports and Information
Copies of Reports and Information
Non-Exclusive Contract
D. Sample Form of Agreement 14
E. Insurance Requirements 16
F. Proposal Submittal Forms 18
Proposal Submittal Summary
References
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Overview
The City is requesting proposals for financial advisor services for a five-year term, with an option to renew
for another three years.
It is the City’s policy to establish a long-term, ongoing relationship with our financial advisor, under which
advice is available at all times as needed. On the other hand, long-term does not mean forever. Accordingly,
at the end of contract terms, it our policy to seek formal proposals in ensuring that we continue to receive
quality professional services at the best competitive price. Our current financial advisor is Fieldman, Rolapp,
who has been invited to submit a proposal.
Proposed, Future Financings
As noted above, this RFP is due to our policy of formally requesting proposals on a periodic basis, and the
desire to establish an ongoing relationship: it is not driven by the need for financial advisor services for an
impending project. However, debt financings that are likely during the next four years include:
1. Water Reclamation Facility Upgrade. The current project funding plan projects $50.55 million in
debt financing for these improvements in 2016-17. This will be supported by Sewer system revenues.
2. Palm-Nipomo Parking Structure. The 2013-15 Financial Plan projects $18 million in debt financing
for construction of a parking structure in 2017-18. This will be supported by Parking Enterprise Fund
revenues.
3. Los Osos Valley Road Interchange. The 2013-15 Financial Plan projects $8.05 million in debt
financing during late 2014 or early 2015. This will be supported by General Fund revenues and may
use impact fees as a backstop revenue source.
These are likely to be revenue or lease-backed issues (like virtually all of our other bond issues over the last
several years). However, the selected financial advisor should be capable of meeting a wide range of
financing needs, including assessment and special tax districts (land-based financing) since the city is
exploring these financing options for future use.
About the City
Detailed information about the City and its organization is available on our web site at www.slocity.org.
City Finances
Detailed information about the City’s finances, past debt financings and key fiscal policies are also available
on our web site. The 2013-2015 Financial Plan is the key source document for this information, and it is
available on the City’s web site at: www.slocity.org/finance/budget.asp.
Of particular interest in this document in terms of the scope of the work are:
1. Budget Message and Highlights (page A-1 to A-21).
2. Section F, Capital Improvement Plan.
3. Debt Service Requirements (Section G), which includes a summary of outstanding bond issues
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4. Section H especially: capital improvement management (pages H-16 to H-17); capital financing and debt
management (pages H18-H23)
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Financial Advisor Services
The financial advisor services requested include but are not limited to the following:
1. Planning and advisor services, including but not limited to the following:
a. Providing advice to the City on an ongoing basis regarding our capital financing needs.
b. Providing research and advice on aspects of tax exemption and arbitrage in cooperation with the
City's Legal Counsel and Bond Counsel as well as assistance in obtaining Internal Revenue Service
rulings as deemed necessary.
c. Preparing financing plans and assisting in the preparation and review of preliminary feasibility
studies in cooperation with City officials and administrative staff, bond attorneys, accountants,
architects and engineers as requested by the City. These studies outline the project costs, funding
alternatives and sources, existing debt, future financing, and cash flow considerations.
d. Analyzing financing alternatives to determine methods of strengthening marketability and to
recommend the best method of marketing consistent with current economic and market conditions
and increasingly stringent rating agency criteria.
e. Reviewing City plans for all financings during the calendar year to determine whether the financing
will be bank eligible under the $10 million small issue exemption and whether the City will be
exempt from arbitrage rebate requirements under the $5 million annual volume exemption.
f. Performing a comprehensive analysis to determine the best possible plan of finance, including a test
to determine its marketability as well as assistance in determining competitive vs. negotiated sale of
bonds or notes.
g. Consulting with established rating agencies regarding the proposed financing; assisting the City in
obtaining the most favorable rating possible; and providing assistance and recommendations
regarding the selection of registrar/paying agent agencies.
h. Acting as liaison with Bond Counsel and coordinating with other individuals providing information
in connection with the proposed financing.
i. Preparing a timetable of events for all concerned leading to the sale and delivery of an offering.
j. Providing general assistance and advice to the City on plans and methods of financing its capital
improvement plans and cash flow needs.
k. Attending all meetings requested by City staff to discuss the financing of the project or at which
official action will be taken by the Council on the debt financing.
2. Marketing services for competitive issues, including but not limited to the following:
a. Providing advice on the appropriate terms and conditions of the sale, such as maturity scheduling
and other requirements (such as discount, par, premium, net interest cost and true interest costs). In
conjunction with the above, consulting with the City and advising Bond Counsel concerning
necessary covenants, and advising on advantageous features such as parity provisions, reserve
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requirements, sinking fund payments and redemption provisions.
b. Recommending the timing of the bond sale, taking into consideration such factors as changing
economic conditions, current and projected market trends and convenience to the City.
c. Coordinating with Bond Counsel regarding the preparation of amendments and distribution of the
necessary contracts, authorizing resolutions and other documents involved in the sale of bonds or
other methods of financing.
d. Assist with the publicity required in advance of the debt issue with an Official Statement, Notice of
Sale, Bid Forms and such other means necessary and advisable to develop nationwide public and
institutional interest.
e. Assisting the City in meeting full disclosure requirements and conforming to suggested guidelines
when preparing the Official Statement.
f. Distributing the Official Statement to potential purchasers of the City's securities across the nation;
directly contacting those lead underwriters most likely to be syndicate managers; and maximizing
efforts to market the City's debt issuance most effectively.
g. Explaining the issue to potential investors by developing a comprehensive list of potential
purchasers of the bonds, ensuring that each potential purchaser receives copies of all relevant
financial documents, and providing information about the issue.
h. Advertising the bond sale in nationally prominent financial publications in addition to coordinating
local publication requirements.
i. Overseeing the bid/pricing sessions in order to assist with the evaluation of bids/pricing, and
recommending the most favorable terms for award.
3. Advisory services for negotiated sales, including but not limited to the following:
a. Advising on the appropriate terms and conditions of the sale, such as maturity scheduling and other
requirements (discount, par, premium, net interest cost and true interest costs. In conjunction with
the above, consulting with the City and advising Bond Counsel concerning necessary covenants,
and advising on advantageous features such as parity provisions, reserve requirements, sinking fund
payments and redemption provisions.
b. Advising on the timing of the bond sale, taking into consideration such factors as changing
economic conditions, current and projected market trends and convenience to the City.
c. Coordinating with Bond Counsel regarding the preparation of amendments and distribution of the
necessary contracts, authorizing resolutions and other documents involved in the sale of bonds or
other methods of financing.
d. Assisting in publicizing the issue in advance with an Official Statement, Notice of Sale, Bid Forms
and such other means necessary and advisable to develop nationwide public and institutional
interest.
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e. Assisting the City in meeting full disclosure requirements and conforming to suggested guidelines
when preparing the Official Statement.
f. Advising the City as to the appropriateness of the pricing being proposed by the negotiating
underwriter, including interest rate(s), underwriting spread, level of discount, distribution of orders
allocation of spread and similar pricing issues.
g. Assisting in selection of co-managers, and syndicated members and establishments of order
priorities according to MSRB Rule G-11 or other guidance in effective at the time of the financing.
4. Bond closing services including but not limited to:
a. Directing, coordinating and supervising bond closing details including proofing bond printing,
registration, and delivery in the shortest possible time.
b. Furnishing a prompt, complete reinvestment analysis so that top earnings will result from investing
bond proceeds in addition to assisting City staff and the architect/engineer in the draw-down of any
funds held in escrow accounts.
c. Directing, coordinating and supervising the organization of the transcript and provision of bond and
interest records to the City showing required semi-annual payments and other useful information.
d. Soliciting bids on investment of idle funds, if necessary.
5. Final work products relating to each financing, including but not limited to the following:
a. Sale analysis.
b. Offering statement.
c. Two bound volumes of bond issue proceedings and closing documents (if not furnished by bond
counsel).
d. Other analyses, including but not limited to an analysis of funding alternatives, cash flow
projections, and materials necessary for financial planning and bond sale purposes.
The financial advisor has no responsibility to advise the City with respect to legal requirements applicable to
the construction of any project, including but not limited to compliance with public bidding requirements,
payment of prevailing wages and other matters incident to the contract for such construction, which matters
shall be exclusively the responsibility of the City Attorney or other counsel to the City.
6. In all respects, the City expects the Financial Advisor to be mindful of all legal requirements involved in
finalizing a debt issuance, including securing in writing, all commitments from lenders, assignors and
assignees in advance of seeking approval from the City on any terms or conditions offered.
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PROPOSAL REQUIREMENTS
1. Requirement to Meet All Provisions. Each individual or firm submitting a proposal shall meet all
of the terms, and conditions of the Request for Proposals (RFP) specifications package. By virtue of
its proposal submittal, the bidder acknowledges agreement with and acceptance of all provisions of
the RFP specifications.
2. Proposal Submittal. Each proposal must be submitted in the format described in the RFP
specifications and accompanied by any other required submittals or supplemental materials. Proposal
documents shall be received by the City Clerk no later than 3:00 p.m. on November 15, 2013. The
submittal package shall include 6 (six) hardcopy versions and a thumb drive containing electronic
versions of the documents provided in hardcopy form. Each electronic document provided on the
thumb drive shall be properly labeled with regard to the order in which it appears in print. No FAX
submittals will be accepted. It is the responsibility of each firm submitting a proposal to ensure that
the electronic document(s) submitted are protected to ensure that no changes can be made to the
submittal once it is in the possession of the city. Attention to the details required by the submittal
process will be part of the overall evaluation and scoring.
3. Insurance Certificate. Each proposal must include a certificate of insurance showing:
a. The insurance carrier and its A.M. Best rating.
b. Scope of coverage and limits.
c. Deductibles and self-insured retention.
The purpose of this submittal is to generally assess the adequacy of the bidder’s insurance coverage
during proposal evaluation; as discussed under paragraph 12 below, endorsements are not required
until contract award. The City’s insurance requirements are detailed in Section E.
4. Proposal Quotes and Unit Price Extensions. The prices quoted by the proposer must be entered in
figures in the spaces provided on the Proposal Submittal Form.
5. Proposal Withdrawal and Opening. A proposer may withdraw its proposal, without prejudice prior
to the time specified for the proposal opening, by submitting a written request to the Director of
Finance & IT for its withdrawal, in which event the proposal will be returned to the proposer
unopened. No proposal received after the time specified or at any place other than that stated in the
"Notice Requesting Proposals" will be considered. All proposals will be opened and declared
publicly.
6. Submittal of One Proposal Only. No individual or business entity of any kind shall be allowed to
make or file, or to be interested in more than one proposal, except as part of an alternative proposal
when specifically requested; however, an individual or business entity that has submitted a sub-
proposal to a proposer submitting a proposal, or who has quoted prices on materials to such proposer,
is not thereby disqualified from submitting a sub-proposal or from quoting prices to other proposers
submitting proposals.
7. Cooperative Purchasing. During the term of the contract, the successful proposer will extend all
terms and conditions to any other local governmental agencies upon their request. These agencies
will issue their own purchase orders, will directly receive goods or services at their place of business
and will be directly billed by the successful proposer.
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8. Communications. All timely requests for information submitted in writing will receive a written
response from the City. Telephone communications with City staff are not encouraged, but will be
permitted, if directed to the Director of Finance and Information Technology, Wayne Padilla.
However, any such oral communication shall not be binding on the City.
CONTRACT AWARD AND EXECUTION
9. Proposal Retention and Award. The City reserves the right to retain all proposals for a period of 90
days for examination and comparison. The City also reserves the right to waive non-substantial
irregularities in any proposal, to reject any or all proposals, to reject or delete one part of a proposal
and accept the other, except to the extent that proposals are qualified by specific limitations. See the
"special terms and conditions" in Section C of these specifications for proposal evaluation and
contract award criteria.
10. Competency and Responsibility of Bidder. The City reserves full discretion to determine the
competence and responsibility, professionally and/or financially, of proposers. Proposers will
provide, in a timely manner, all information that the City deems necessary to make such a decision.
11. Contract Requirement. The proposer to whom award is made (Contractor) shall execute a written
contract with the City within ten (10) calendar days after notice of the award has been sent by mail to
it at the address given in its proposal. The contract shall be made in the form adopted by the City and
incorporated in these specifications.
12. Insurance Requirements. The Contractor shall provide proof of insurance in the form, coverages
and amounts specified in Section E of these specifications within 10 (ten) calendar days after notice
of contract award as a precondition to contract execution.
13. Business Tax. The Contractor must have a valid City of San Luis Obispo business tax certificate
before execution of the contract. Additional information regarding the City's business tax program
may be obtained by calling (805) 781-7134.
CONTRACT PERFORMANCE
14. Ability to Perform. The Contractor warrants that it possesses, or has arranged through subcontracts,
all capital and other equipment, labor, materials, and licenses necessary to carry out and complete the
work hereunder in compliance with any and all federal, state, county, city, and special district laws,
ordinances, and regulations.
15. Laws to be Observed. The Contractor shall keep itself fully informed of and shall observe and
comply with all applicable state and federal laws and county and City of San Luis Obispo ordinances,
regulations and adopted codes during its performance of the work.
16. Payment of Taxes. The contract prices shall include full compensation for all taxes that the
Contractor is required to pay.
17. Permits and Licenses. The Contractor shall procure all permits and licenses, pay all charges and
fees, and give all notices necessary.
18. Safety Provisions. The Contractor shall conform to the rules and regulations pertaining to safety
established by OSHA and the California Division of Industrial Safety.
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19. Public and Employee Safety. Whenever the Contractor's operations create a condition hazardous to
the public or City employees, it shall, at its expense and without cost to the City, furnish, erect and
maintain such fences, temporary railings, barricades, lights, signs and other devices and take such
other protective measures as are necessary to prevent accidents or damage or injury to the public and
employees.
20. Preservation of City Property. The Contractor shall provide and install suitable safeguards,
approved by the City, to protect City property from injury or damage. If City property is injured or
damaged resulting from the Contractor's operations, it shall be replaced or restored at the Contractor's
expense. The facilities shall be replaced or restored to a condition as good as when the Contractor
began work.
21. Immigration Act of 1986. The Contractor warrants on behalf of itself and all subcontractors
engaged for the performance of this work that only persons authorized to work in the United States
pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall be
employed in the performance of the work hereunder.
22. Contractor Non-Discrimination. In the performance of this work, the Contractor agrees that it will
not engage in, nor permit such subcontractors as it may employ, to engage in discrimination in
employment of persons because of age, race, color, sex, national origin or ancestry, sexual
orientation, or religion of such persons.
23. Work Delays. Should the Contractor be obstructed or delayed in the work required to be done
hereunder by changes in the work or by any default, act, or omission of the City, or by strikes, fire,
earthquake, or any other Act of God, or by the inability to obtain materials, equipment, or labor due to
federal government restrictions arising out of defense or war programs, then the time of completion
may, at the City's sole option, be extended for such periods as may be agreed upon by the City and the
Contractor. In the event that there is insufficient time to grant such extensions prior to the completion
date of the contract, the City may, at the time of acceptance of the work, waive liquidated damages
that may have accrued for failure to complete on time, due to any of the above, after hearing evidence
as to the reasons for such delay, and making a finding as to the causes of same.
24. Payment Terms. The City's payment terms are 30 days from the receipt of an original invoice and
acceptance by the City of the materials, supplies, equipment or services provided by the Contractor
(Net 30). Payment may be made from proceeds of the debt issuance if this is customary for the type
of financing, but only upon the acceptance and approval by the city of an original invoice identifying
the basis for the fees charged.
25. Inspection. The Contractor shall furnish City with every reasonable opportunity for City to ascertain
that the services of the Contractor are being performed in accordance with the requirements and
intentions of this contract. All work done and all materials furnished, if any, shall be subject to the
City's inspection and approval. The inspection of such work shall not relieve Contractor of any of its
obligations to fulfill its contract requirements.
26. Audit. The City shall have the option of inspecting and/or auditing all records and other written
materials used by Contractor in preparing its invoices to City as a condition precedent to any payment
to Contractor.
27. Interests of Contractor. The Contractor covenants that it presently has no interest, and shall not
acquire any interest—direct, indirect or otherwise—that would conflict in any manner or degree with
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the performance of the work hereunder. The Contractor further covenants that, in the performance of
this work, no subcontractor or person having such an interest shall be employed. The Contractor
certifies that no one who has or will have any financial interest in performing this work is an officer
or employee of the City. It is hereby expressly agreed that, in the performance of the work hereunder,
the Contractor shall at all times be deemed an independent contractor and not an agent or employee of
the City.
28. Hold Harmless and Indemnification. The Contractor agrees to defend, indemnify, protect and
hold the City and its agents, officers and employees harmless from and against any and all claims
asserted or liability established for damages or injuries to any person or property, including injury
to the Contractor's employees, agents or officers that arise from or are connected with or are
caused or claimed to be caused by the acts or omissions of the Contractor, and its agents, officers
or employees, in performing the work or services herein, and all expenses of investigating and
defending against same; provided, however, that the Contractor's duty to indemnify and hold
harmless shall not include any claims or liability arising from the established sole negligence or
willful misconduct of the City, its agents, officers or employees.
29. Contract Assignment. The Contractor shall not assign, transfer, convey or otherwise dispose of the
contract, or its right, title or interest, or its power to execute such a contract to any individual or
business entity of any kind without the previous written consent of the City.
30. Termination. If, during the term of the contract, the City determines that the Contractor is not
faithfully abiding by any term or condition contained herein, the City may notify the Contractor in
writing of such defect or failure to perform. This notice must give the Contractor a 10 (ten) calendar
day notice of time thereafter in which to perform said work or cure the deficiency. (The City may
also terminate the contract for convenience or financial necessity upon giving Contractor 30 days
written notice of such action.)
If the Contractor has not performed the work or cured the deficiency within the ten days specified in
the notice, such shall constitute a breach of the contract and the City may terminate the contract
immediately by written notice to the Contractor to said effect. Thereafter, neither party shall have
any further duties, obligations, responsibilities, or rights under the contract except, however, any and
all obligations of the Contractor's surety shall remain in full force and effect, and shall not be
extinguished, reduced, or in any manner waived by the termination thereof.
In said event, the Contractor shall be entitled to the reasonable value of its services performed from
the beginning date in which the breach occurs up to the day it received the City's Notice of
Termination, minus any offset from such payment representing the City's damages from such breach.
"Reasonable value" includes fees or charges for goods or services as of the last milestone or task
satisfactorily delivered or completed by the Contractor as may be set forth in the Agreement payment
schedule; compensation for any other work, services or goods performed or provided by the
Contractor shall be based solely on the City's assessment of the value of the work-in-progress in
completing the overall workscope.
The City reserves the right to delay any such payment until completion or confirmed abandonment of
the project, as may be determined in the City's sole discretion, so as to permit a full and complete
accounting of costs. In no event, however, shall the Contractor be entitled to receive in excess of the
compensation quoted in its proposal.
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1. Contract Term. The term of the contract shall be for a period of 5 (five) years at which time the
performance of the firm will be evaluated. Upon mutual agreement at that time, the contract may be
extended by the City Administrative Officer for a period of up to three years.
2. Proposal Content. Your proposal must include the following information:
Submittal Forms
a. Proposal submittal cover letter. (item 1 in submittal)
b. Certificate of insurance. (item 5 in submittal)
c. References from at least three California municipalities for whom you have provided similar
services within the past 2 (two) years. (item 4 in submittal)
Note: For ease of proposal preparation, proposers are asked to prepare their own proposal
submittal forms as long as they contain the information requested below, in the same order that
each item is listed here. .
Qualifications (item 2 in submittal)
d. General qualifications of your firm to serve as financial advisor in California.
e. Experience as financial advisor to cities where services are provided on an ongoing basis.
f. Experience in providing similar services required by the City to comparable California cities.
g. Description of particular and interesting issues, problems or complications that arose in previous
financial advisor experiences, and how these were resolved or disposed of.
h. Resumes and responsibilities of the individuals who would be assigned to work with the City,
there home office location, and if possible, identification of who would be the City’s lead contact.
i. Any other information that would assist us in making this contract award decision.
Compensation (item 6 in submittal)
j. The City expects that compensation will be funded solely from, and solely contingent upon, the
proceeds from specific bond issues; and that fees will be related to the size of the issue.
However, you may propose an alternate compensation structure provided that it is fully explained
in lay terms.
Statement of Litigation, Investigations, Conflicts of Interest and Disqualifications (item 3 in
submittal)
k. Statement and explanation of any instances where your firm has been removed from a project or
disqualified from proposing on a project.
l. Any instances within the past 24 months when your firm (and/or any of its principals) was the
subject of any investigation relating to the municipal securities industry by the SEC, NASD,
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NYSE or any other state or federal organization that oversees, regulates, licenses or is otherwise
responsible for the municipal securities industry.
m. Any instances within the past 24 months when your firm (and/or any of its principals) was
involved in any litigation, arbitration, disciplinary or other actions arising from the firm’s role in
issuing municipal securities.
n. Any relationship between your firm and any other non-affiliated firm(s) or individuals involving
any compensation arrangement that may be associated with your possible engagement to assist
the City with financial advisor services.
o. One small bag of regular M&Ms for each proposal reviewer.
3. Proposal Length Format and Copies. Proposals should meet the following guidelines.
a. Proposals should not exceed 15 pages, including attachments and supplemental materials. The
proposal should be prepared simply and economically, providing a straightforward, concise
presentation of the information requested. Please keep marketing material to a minimum and
emphasize factual material.
b. The required font size is 12 point, with minimum left and right margins of one-inch, and top and
bottom margins of 0.7 inches.
c. Six (6) copies of the proposal must be submitted.
4. Proposal Evaluation and Selection. Proposals will be evaluated by a review committee based on the
following criteria:
a. Understanding of the work required by the City
b. Quality, clarity and responsiveness of the proposal, including attention to form submittal
requirement details
c. Demonstrated competence and professional qualifications necessary for satisfactory performance
of the work required by the City
d. Recent experience in successfully performing similar services for comparable cities
e. Proposed approach in completing the work
f. References
g. Background and related experience of the specific individuals to be assigned to this work
h. Proposed compensation
As reflected above, contract award will not be based solely on price, but on a combination of factors as
determined to be in the best interest of the City. After evaluating the proposals and discussing them
further with the finalists or the tentatively selected financial advisor, the City reserves the right to further
negotiate the proposed work and/or method and amount of compensation.
City Review Committee Members
Wayne Padilla, Director of Finance & Information Technology
Christine Dietrick, City Attorney
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Carrie Mattingly, Utilities Director
Daryl Grigsby, Public Works Director
Derek Johnson, Community Development Director
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5. Proposal Review and Award Schedule. The following is an outline of the anticipated schedule for
proposal review and contract award:
a. Issue RFP 10/16/13
b. Conduct pre-proposal teleconference 11/11/13
c. Receive proposals 11/15/13
d. Complete proposal evaluation 11/29/13
e. Conduct finalist interviews 12/6/13
f. Finalize award recommendation 12/20/13
g. Execute contract 12/31/13
6. Pre-Proposal Teleconference. To answer any questions that prospective proposers may have
regarding this RFP, an optional pre-proposal teleconference is tentatively scheduled for:
Monday, November 11, 2013
11:00 AM
While not mandatory, proposers are strongly encouraged to participate in this teleconference.
Proposers interested in participating in the pre-proposal teleconference should contact Wayne Padilla,
Finance Manager at (805) 781-7125 or wpadilla@slocity.org to receive a phone number and
password and to confirm the date and time.
7. Release of Reports and Information. Any reports, information, data, or other material given to,
prepared by or assembled by the firm as part of the work or services under these specifications shall be
the property of City and shall not be made available to any individual or organization by the firm
without the prior written approval of the City.
8. Copies of Reports and Information. If the City requests additional copies of reports, drawings,
specifications, or any other material in addition to what the firm is required to furnish in limited
quantities as part of the work or services under these specifications, the firm shall provide such
additional copies as are requested, and City shall compensate the firm for the costs of duplicating of
such copies at the firm's direct expense.
9. Non-Exclusive Contract. The City reserves the right to contract with other financial advisor firms
during the contract term.
10. Attendance at Meetings and Hearings. As part of the workscope and included in the contract price
is attendance at as many public meetings as needed to present and discuss your findings and
recommendations; and attendance at as many “working” meetings with staff as necessary in
performing workscope tasks.
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THIS AGREEMENT is made and entered into in the City of San Luis Obispo on
_________________________, 2013, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation,
hereinafter referred to as City, and [ ], hereinafter referred to as Financial Advisor.
W I T N E S S E T H:
WHEREAS, on October 16, 2013, City requested proposals for financial advisor services per Specification
No. 91269.
WHEREAS, pursuant to said request, Financial Advisor submitted a proposal, which was accepted by City for
said services.
NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be for a period of 5 years, from the date this Agreement is
made and entered, as first written above. This agreement may be extended by mutual written concurrence of both
parties for an additional period of up to three (3) years.
2. INCORPORATION BY REFERENCE. City Request for Proposal Document for Specification
No. 91269 and Financial Advisor’s proposal dated _________________, are hereby incorporated in and made a part of
this Agreement.
3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay and
Financial Advisor shall receive therefore compensation as set forth in Exhibit A of this Agreement.
4. FINANCIAL ADVISOR'S OBLIGATIONS. For and in consideration of the payments and
agreements hereinbefore mentioned to be made and performed by City, financial advisor agrees with City to do
everything required by this Agreement.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the Director of Finance & Information Technology of
the City.
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6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any
force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto.
7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City City Clerk
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Financial Advisor [ ]
[ ]
[ ]
[ ]
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Financial Advisor do covenant
that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to
execute Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first
above written.
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
By:
City Clerk City Administrative Officer
APPROVED AS TO FORM: Financial Advisor
By:
City Attorney
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The Contractor shall procure and maintain for the duration of the contract insurance against claims for
injuries to persons or damages to property which may arise from or in connection with the performance of
the work hereunder by the Contractor, its agents, representatives, employees or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1
(any auto).
3. Workers' Compensation insurance as required by the State of California and Employer's Liability
Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage.
If Commercial General Liability or other form with a general aggregate limit is used, either the
general aggregate limit shall apply separately to this project/location or the general aggregate limit
shall be twice the required occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $1,000,000 per occurrence.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared
to and approved by the City. At the option of the City, either: the insurer shall reduce or eliminate such
deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers;
or the Contractor shall procure a bond guaranteeing payment of losses and related investigations, claim
administration and defense expenses.
Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be
endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, agents and volunteers are to be covered as insureds as
respects: liability arising out of activities performed by or on behalf of the Contractor; products and
completed operations of the Contractor; premises owned, occupied or used by the Contractor; or
automobiles owned, leased, hired or borrowed by the Contractor. The coverage shall contain no
special limitations on the scope of protection afforded to the City, its officers, official, employees,
agents or volunteers.
2. For any claims related to this project, the Contractor's insurance coverage shall be primary insurance
as respects the City, its officers, officials, employees, agents and volunteers. Any insurance or self-
insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be
excess of the Contractor's insurance and shall not contribute with it.
3. The Contractor's insurance shall apply separately to each insured against whom claim is made or suit
is brought, except with respect to the limits of the insurer's liability.
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4. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be
suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30)
days' prior written notice by certified mail, return receipt requested, has been given to the City.
Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no
less than A: VII.
Verification of Coverage. Contractor shall furnish the City with a certificate of insurance showing
maintenance of the required insurance coverage. Original endorsements effecting general liability and
automobile liability coverage required by this clause must also be provided. The endorsements are to be
signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be
received and approved by the City before work commences.
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Financial Advisor Services
The authorized representative identified below declares that she or he:
1. Has carefully examined Specification No. 90666, which is hereby made a part of this proposal.
2. Is thoroughly familiar with its contents.
3. Is authorized to represent the proposing firm.
4. Agrees to perform the work as set forth in this proposal.
Certificate of insurance attached; insurance company’s A.M. Best rating: __________________.
Firm Name and Address
Contact Phone
Authorized Representative
Date
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Number of years engaged in providing the services included within the scope of the specifications under the
present business name: .
Describe fully the work completed for 3 (three) California clients within the last 2 years that demonstrate
your ability to provide the services required by the scope of the specifications. Attach additional pages if
required. The City reserves the right to contact each of the references listed for additional information
regarding your firm's qualifications. Below, please provide current contact information for each of these
three clients.
Reference No. 1
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 2
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 3
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
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