HomeMy WebLinkAbout11/04/1997, C-4 - AGREEMENT FOR FINANCIAL ADVISOR SERVICES council °
j ac,Enaa Report
CITY OF SAN LUIS OBISPO
FROM: Bill Statler,Director of Finance
Prepared by: Linda Asprion,Revenue Manage
SUBJECT: AGREEMENT FOR FINANCIAL ADVISOR SERVICES
CAO RECOAEWENDATION
■ Approve the agreement with Fieldman, Rolapp & Associates to provide financial advisor
services for the City and authorize the Mayor to sign the agreement.
■ Adopt a resolution amending the Financial Plan policies regarding independent disclosure
counsel
DISCUSSION
Background
On September 2, 1997,the Council approved the distribution of the Request for Proposal(RFP) for
financial advisor services. The agreement with Evensen Dodge, the City's current financial
advisor,was first approved in March of 1988, and renewed in April 1993 and again in April 1996.
While Evensen Dodge has provided outstanding service to the City at a very competitive cost, the
City had not solicited an RFP for financial advisor services for almost 10 years, and prior to going
forward with financing key capital projects in the 1997-99 Financial Plan, it was timely for us to
issue an RFP for financial advisor services.
Proposed Evaluation Process
RFP's were provided to eleven firms and a pre-proposal conference was held on September 16,
1997. Proposals were required to be submitted on Friday, September 26, 1997 at 3:00 p.m. at .
which time proposals were received from the five following firms:
■ Evensen Dodge Inc.
IN Fieldman,Rolapp&Associates
■ Reiter Lowry Consultants
■ Public Financial Management
■ Kellig,Northcross,Nobriga
An evaluation of the written proposals was performed by a review team consisting of the Assistant
City Administrative Officer, the Director of Finance, the Accounting Manager and the Revenue
Manager based on the following criteria as outlined in the RFP:
IN Understanding of the work required by the City
0 Quality and responsiveness of the proposal
Council Agenda Report-Agreement for Financial Advisor Services
Page 2
■ Demonstrated competence and professional qualifications necessary for satisfactory
performance of the work required by the City
■ Recent experience in successfully performing similar services
■ Proposed approach in completing the work
■ References
■ Background and related experience of the specific individuals to be assigned to this project
■ Proposed compensation
After reviewing the written proposals, three firms were requested to attend finalist interviews on
October 6, 1997: Evensen Dodge, Fieldman, Rolapp & Associates, and Public Financial
Management. Based upon the proposal's response to the criteria outlined in the request for
proposal and the interview process, the review team selected Fieldman, Rolapp & Associates to
serve as the City's financial advisor. As outlined in the RFP, the term of the agreement is three
years with an option to extend the contract for an additional three years.
Scope of Services
While the specific scope of services are detailed in the RFP, they can generally be summarized as
follows:
■ Specific assistance on a case-by-case basis for project financings. These require specific
marketing and technical skills that cannot reasonably be provided by staff.
■ On-going advice and assistance on the best approach in meeting the City's capital financing
needs. This assistance is particularly beneficial to the City in preparing early assessments of
our financing options.
Disclosure Requirements
In addition to the traditional financial advisor services summarized above, an emerging area of
concern is the need for a separate disclosure counsel. In the past, the City's financing team was
generally composed of our financial advisor and bond counsel. With recent concerns regarding the
adequacy of full disclosure in financing documents (with the Orange County bankruptcy serving as
the most notable example),a new potential"team member"has emerged: disclosure counsel.
Under the appropriate circumstances, the role of the disclosure counsel is to draft the official
statement(the principal marketing document for the financing) and ensure proper disclosure of any
material items that may affect the issuer's ability to pay. In the past, this work has been the
financial advisor's responsibility (or in the case of a negotiated sale, the underwriter's
responsibility),with review by the City's bond counsel.
In reviewing the advantages and disadvantages of engaging a separate disclosure counsel (at an
added cost of between$15,000 to $50,000 per financing),we believe the need to do so depends on
the circumstances of the financing. Traditionally, in keeping with our Financial Plan policies, the
City has been very straight forward in the financing instruments we have used, and in making full
disclosure about our financial condition. Under these circumstances, we do not believe that a
Council Agenda Report-Agreement for Financial Advisor Services
Page 3
separate disclosure counsel is warranted.
However, whenever the financing is secured by an asset that the City does not manage or control
(such as a"land-based" assessment financing,tax allocation bonds or a conduit issue), or when the
financing will be directly negotiated with the underwriter,we should carefully consider engaging an
independent disclosure counsel.
The proposed agreements for both financial advisor and bond counsel services assume we will
continue our past practice of not engaging a separate disclosure counsel. However, in the event we
do so, we will modify the scope of services with the financial advisor and bond counsel
accordingly.
Amendment to Financial Plan Policies
To formalize guidelines for detennining when the use of an independent disclosure counsel would
be appropriate, attached is a resolution amending our Financial Plan policies on capital financing
and debt management.
FISCAL E%IPACT .
The method and percent of compensation presented in the proposals were reviewed as part of the
process. There are no direct fiscal impacts to this agreement; compensation is contingent on the
completion of a debt issuance and is payable solely from the proceeds of the issuance. Below is a
chart comparing the City's current compensation agreement for financial advisor services with the
proposed compensation structure from Fieldman, Rolapp & Associates for general obligation
bonds,lease revenue bonds,or certificates of participation:
Par Value of Debt Current Fee Amount Proposed Fee Amount
$0 up to$3,000,000 $19,000 $19,500
$3,000,001 to$10,000,000 $24,000 $23,500
$10,000,001 to$15,000,000 $26,500 $26,000
$15,000,001 to$20,000,000 $29,000 $28,500
ATTACE[NMNTS
■ Agreement with Fieldman,Rolapp&Associates for financial advisor services.
■ Resolution amending Financial Plan policies regarding independent disclosure counsel.
AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on this
day of by and between the CITY OF SAN LUIS OBISPO, a municipal
corporation,hereinafter referred to as City,and Fieldman, Rolapp&Associates,hereinafter referred
to as Financial Advisor.
WITNESSETH:
WHEREAS, on September 3, 1997, City requested proposals for financial advisor services
per Specification No.98-71.
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 from the date of this Agreement is made
and entered, as first written above, for a period of three years at which time,upon mutual agreement
at that time, the contract may be extended by the City Administrative Officer for another period of
three years.
2. INCORPORATION BY REFERENCE. City Specification No. 98-71, financial
advisor's proposal dated September 26, 1997, and financial advisor's addendum dated October 16,
1997,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 therefor compensation as set forth in their proposal
dated September 26, 1997 and addendum letter dated October 16, 1997.
4. CONTRACTOR'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 teras of this
Agreement shall be in writing and shall be effective only upon approval by the Council 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.
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 Paha Street
San Luis Obispo, CA 93401
Financial advisor Mr.Larry Rolapp
Fieldman,Rolapp &Associates
2100 Main Street, Suite 210
Irvine, CA 92614
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.
OCT 22 '97 1505 FIE.DMAN ROLAPP P.2
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
the day and year first above written,
ATTEST,
CrN OF SAN LUIS OBIVOI
A Municipal Corporation
City Clerk By'
Mayor
APPROVED AS TO FORM: Financial Advisor
By: L 2�_ �
Lewy Rolapp
6/L '89vd IObL i34 soe Sd_a zoxvma O'Is AiIJ 0I OI (Gast) L6 , Zt
OCT. 22 ' 97 (WED) 15:05 COMMUNICATION No :57 PAGE-2
RESOLUTION NO. (1997 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AMENDING FINANCIAL PLAN POLICIES REGARDING
INDEPENDENT DISCLOSURE COUNSEL
WHEREAS, the 1997-99 Financial Plan sets forth policies governing the City's approach
to meeting its capital financing and debt management needs; and
WHEREAS, there is a heightened awareness and concern about full disclosure in
financing documents such as Official Statements, and the possible need to engage an independent
disclosure counsel depending on the circumstances of the financing.
NOW THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
that the independent disclosure counsel policy provided in Exhibit A is hereby adopted.
On motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of 1997.
ATTEST:
City Clerk Mayor Allen Settle
APPROVED AS TO FORM:
i om
,V f Lel
04-1
Amendment to Financial Plan Policies
CAPITAL FINANCING AND DEBT MANAGEMENT Erh &A
Independent Disclosure Counsel
The following criteria will be used on a case-by-case basis in determining whether the City
should retain the services of an independent disclosure counsel in conjunction with specific
project financings:
A. The City will generally not retain the services of an independent disclosure counsel when
all of the following circumstances are present:
1. The revenue source for repayment is under the management or control of the City,
such as general obligation bonds, revenue bonds, lease-revenue bonds or
certificates of participation.
2. The bonds will be rated or insured.
B. The City will consider retaining the services of an independent disclosure counsel when
one or more of following circumstances are present:
1. The financing will be negotiated, and the underwriter has not separately engaged
an underwriter's counsel for disclosure purposes.
2. The revenue source for repayment is not under the management or control of the
City, such as land-based assessment districts, tax allocation bonds or conduit
financings.
3. The bonds will not be rated or insured.
4. The City's financial advisor, bond counsel or underwriter recommends that the
City retain an independent disclosure counsel based on the circumstances of the
financing.
G:Fhmnce/Budget 97/Policies/Amendment—Independent Disclosure Comtel
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