Loading...
HomeMy WebLinkAbout01-22-2013 c3 extension of bond counsel & financial advisor contractsA counci l aGEnOa nepoRt Meeting Dat e 1-22-13 !Item Number C 3 C I T Y O F S A N L U I S O B I S P O FROM : Wayne Padilla, Interim Finance Directo r Prepared By :Rachel McClure, Administrative Analys t SUBJECT :EXTENSION OF FINANCIAL ADVISOR AND BOND AND DISCLOSURE COUNSEL CONTRACTS FOR ONE YEA R RECOMMENDATIO N Approve a contract extension for Financial Advisor services with Fieldman Rolapp, and Bon d Counsel and Disclosure Counsel services with Jones Hall for one year and authorize City Manage r to execute contract amendments . DISCUSSIO N Backgroun d Following an extensive request for proposals (RFP) process in 2006, contracts were awarded o n • December 6, 2006 to Fieldman Rolapp for financial advisor services, and Jones Hall for bon d counsel and disclosure counsel services . As set forth in the agreement, the terms were for thre e years, with an option to renew for another three years . Based on the excellent work both firm s provided the City, on May 26, 2010, the City Manager approved a three-year contract extension fo r both contracts (Attachment 1). Staff has been satisfied with the work performed by both firms . During this time, the firms hav e performed well in assisting the City with several financings, including the 2008 Tank Farm Lift Station and the Public Safety Communications Center and Radio System Upgrade . In May 2012 , the firms assisted the City with the refinancing of lease revenue refunding bonds which will resul t in savings of approximately $62,000 annually . One-Year Contract Extensio n Both contracts expired in December 2012 . However, due to staffing transitions and workloa d priorities in the Finance Department, an RFP process for new contracts has been delayed . Therefore , staff is requesting a one-year extension to the current contracts until December 6, 2013 . Both firms have agreed to the extension with no changes to existing terms and conditions . The new contracts would cover any transactions that commence before December 6, 2013 . Staff plans to begin an RFP process for both financial advisor and bond counsel services in th e summer of 2013 to allow new contracts to be in place prior to the expiration of the current contracts . This will ensure that the City continues to receive quality professional services at the bes t •competitive price . Extension of Financial Advisor and Bond and Disclosure Counsel Contracts Page 2 •Scope of Service s The scope of services required is provided on a case-by-case basis for project financings . Thes e require specific technical skills that cannot reasonably be provided by staff . In its role as bond counsel, Jones Hall drafts the legal documents necessary to issue and secure th e bonds, and advises the City regarding state law and federal tax issues . Jones Hall also gives th e legal opinion delivered with the bonds confirming that the bonds are valid and binding obligation s and that interest on the bonds is exempt from federal and state income taxes . In its role as disclosure counsel, Jones Hall drafts the disclosure document (known as the "Officia l Statement") used to market the bonds to investors as well as the City's continuing disclosur e agreement under which it provides annual disclosures to the secondary market regarding it s outstanding bonds . The firm also advises the City on securities law issues as they arise . As financial advisor, Fieldman Rolapp advises and assists the City in formulating and executing it s financing plans, helps to structure the City's bond issues, and assists in the competitive sales of th e City's bonds to underwriting banks . Additionally, these firms provide on-going advice and assistance on the best approach in th e meeting the City's capital financing needs . This assistance is particularly beneficial to the City i n preparing early assessments of financing options . There are several upcoming debt financing projects that will require the services of these advisors : the Los Osos Valley Road interchange and the Energy Conservation Project at the Wate r Reclamation Facility. Both firms are capable of meeting the City's financing needs for thes e projects . FISCAL IMPAC T There is no direct fiscal impact to this agreement ; compensation will be funded solely from, an d solely contingent upon, the proceeds from specific bond issues . Fees will be related to the size o f the issue . The compensation structure that was approved under the original 2006 agreements with eac h consultant, which are described below, will remain the same during the one-year contrac t extensions . Below is a table showing the compensation structure for general obligation bonds, lease revenu e bonds or certificates of participation for Fieldman Rolapp . Par Value of Debt Fieldman Rolapp Fe e $0 up to $10,000,000 $29,50 0 $10,000,001 to $20,000,000 $34,500 Jones Hall's bond counsel fee formulas are generally based on the principal amount of the bond s being issued, using a percentage that grows smaller as the principal amount is larger. For example, • • • • Extension of Financial Advisor and Bond and Disclosure Counsel Contracts Page 3 for a lease revenue bond of $10 million, the fee would be 0 .5% of the first $5 million ($25,000), plus 0 .25% of the next $5 million ($12,500), for a total fee of $37,500 . Jones Hall's fees as disclosure counsel range from $12,500 to $20,000, and are negotiated with th e City depending on the size and complexity of the particular bond financing . ALTERNATIVES Do not approve contract extensions and direct staff to issue an RFP now.This option is no t recommended since the current contracts expired in December 2012 and the City would not hav e contracted financial advisor or bond counsel while completing the RFP and contract award process . Additionally, due to the staffing shortages in Finance and the workload associated with critica l projects such as the 2013-15 Financial Plan, this would not be the best use of limited staffin g resources . ATTACHMENT S 1.City Manager Report for three-year contract extension dated May 26, 2010 (original agreements attached ) 2.Amendment for one-year contract extension – Financial Adviso r 3.Amendment for one-year contract extension – Bond Counse l t :kounal agenda repMS1201312013-01-22tond counsel contract e#ension (padlla-n bjre)kbcnd counsel antl firunrlal atlnsor contract etlenson car doc x • Attachment 1 ss'city o f san Luls OBIS o CITY MANAGER REPOR T May 24, 201 0 FROM :Bill Statler, Director of Finance & Information Technolog y SUBJECT : EXTENSION OF FINANCIAL ADVISOR AN D BOND COUNSEL CONTRACTS FOR THREE YEAR S City Manager .Approval t Atpp E e ..Nan e Date Approved City Administration *Wt o RECOMMENDATIO N As provided in our agreements with them, extend th contracts for Financial Advisor services wit h Fieldman Rolapp and Bond Counsel services with Jones Hall for three years, retaining all existing term s and conditions. DISCUSSION Following an extensive request for proposals (RFP) process in 2006, contracts were awarded o n December 6, 2006, to Fieldman Rolapp for financial advisor services and Jones Hall for bond counsel services . As set forth in the attached, the terms were for three years, with an option to renew for anothe r three years . (Note: Consistent with the City policy, the executed agreements reference the RFP fo r contract terms and conditions .) Since then, both firms have performed well in assisting the City with two financings : •2008 Tank Farm Lift Statio n •Dispatch Center/Fire Storage Facility/Radio System Upgrad e Additionally, under a separate contract, Fieldman Rolapp assisted the City in 2009 with a fiscal analysi s of the Parking Fund, which was well received by both the community task force that they worked closel y with as well as the Council . We also plan to have both firms work with us as part of the financing team that will assist with th e Ca1PERS safety plan "side pool" pension obligation bonds . Based on the excellent work the have provided the City, I recommend that contracts with both firms b e extended for three years . ATTACHMENT S •Agreement and Term Excerpt: Fieldman Rolapp (Financial Advisor ) • Agreement and Term Excerpt: Jones All (Bond Counsel) • C3-4 Attachment 1 • AGREEMEN T THIS AGREEMENT is made and entered into in the City of San Luis Obispo on December 6, 2006, by an d between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and JONE S .HALL, hereinafter refereed to as Bond Counsel . WHEREAS, on October 25, 2006, City requested proposals for Bond Counsel services per Specification No . 90667 . WHEREAS, pursuant to said request, Bond Counsel submitted a proposal, which was accepted by City fo r said services . NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafte r 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, until acceptance or completion of said services . 2.INCORPORATION BY REFERENCE .,,City Specification No . 90667 and Bond Counsel's proposal dated November 13, 2006, 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 Bond Counsel shall receive therefore compensation as set forth in the proposal dated November 13, 2006 . 4.BOND COUNSEL'S OBLIGATIONS .For and in consideration of the payments and agreement s hereinbefore mentioned to be made and performed by City, bond counsel agrees with City to do everything required b y this Agreement 5.AMENDMENTS .Any amendment, modification, or variation from the terms of this Agreemen t shall be in writing and shall be effective only upon approval by the Director of Finance & Information Technology o f 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 ora l ftt~ L - WITNESSETH : ~~ c)Vr' C5`1 ,1-©la Attachment 1 agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of an y force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto . 7.NOTICE. AU written notices to the parties hereto shall be sent by United States mail, postag e prepaid by registered or certified mail addressed as follows : City Cler k City of San Luis Obisp o 990 Palm Stree t San Luis Obispo, CA 9340 1 Charles F . Adams 650 California Street, 18 th Floor San Francisco, CA 9410 8 8.AUTHORITY TO EXECUTE AGREEMENT .Both City and Bond Counsel do covenant tha t each individual executing this agreement on behalf of each party is a person duly authorized and empowered to execut e Agreements for such party . IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year firs t above written . City Bond Counsel • • ATTEST :CITY OF SAN LUIS OBISPO , A Municipal Corporation By:3vuI•%Lu ~t F City Administrative Offi Bond Counsel B APPROVEQ AS TO FORM : • • Attachment 1 AGREEMEN T THIS AGREEMENT is made and entered into in the City of San Luis Obispo on December 6, 2006, by an d 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 October 25, 2006, City requested proposals for financial advisor services per Specificatio n No . 90666 , 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 hereinafte r 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, until acceptance or completion of said services . 2.INCORPORATION BY REFERENCE .City Specification No . 90666 and Financial Advisor's proposal dated November 14, 2006, 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 an d Financial Advisor shall receive therefore compensation as set forth in the proposal dated November 14, 2006 . 4.FINANCIAL ADVISOR'S OBLIGATIONS . For and in consideration of the payments an d agreements hereinbefore mentioned to be made and performed by City, financial advisor agrees with City to d o everything required by this Agreement . 5.AMENDMENTS. Any amendment, modification, or variation Lour the terms of this Agreemen t shall be in writing and shall be effective only upon approval by the Director of Finance & Information Technology o f the City. • Attachment 1 6 .COMPLETE AGREEMENT.This written Agreement, including all writings specifically • incorporated herein by reference, shall constitute the complete agreement between the parties hereto . No ora l agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of an y 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, postag e prepaid by registered or certified mail addressed as follows : City City Clerk City of San Luis Obisp o 990 Palm Stree t San Luis Obispo, CA 9340 1 Financial Advisor James V. Fabian, Principa l 19900 MacArthur Blvd., Suite 1100 Irvine, CA 9261 2 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 firs t above written . A11EST:CITY OF SAN LUIS OBISPO , A Municipal CO ration Financial Advisor • Attachment 1 Section C SPECIAL TERMS AND CONDITION S 1 .CcaulGac~- Na he,tennAf the contract shall--be for :a .period . o£ three :years,at which time th e performance :of the firm will be evaluated . Upon mutual agreement . at. that time, the contract-may b e .;tenSled-by,:theCity Administrative ..Officer for another period of three years ; 2 .Proposal Content .Your proposal must include the following information : Submittal Form s a.Proposal submittal summary . b.Certificate of insurance . c.References from at least three firms for whom you have provided similar services . Note: For ease of electronic preparation, proposers may prepare their own proposal submitta l forms as long as they contain the same information in a similar format . Qualifications d.General qualifications of your firm to serve as and ; oupselan California . e.Experience as bond counsel 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 previou s bond counsel 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 , 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 . Compensatio n J .The City expects that compensation will be funded solely from, and solely contingent upon, th e proceeds from specific bond issues ; and that fees will be related to the size of the issue . However, you may propose an alternative compensation structure . Statement of Litigation, Investigations, Conflicts of Interest and Disqualification s k . Statement and explanation of any instances where your firm has been removed from a project o r disqualified from proposing on a project . 1 . Any instances within the past 24 months where your firm (and/or any of its principals) was th e • 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 otherwis e responsible for the municipal securities industry . • • Attachment 2 AMENDMENT NO . 2 TO AGREEMEN T THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on Januar y 22, 2013, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to as City, and Fieldman Rolapp, hereinafter referred to as Contractor . WITNESSETH : WHEREAS, on December 6, 2006 the City entered into an Agreement with Contractor for Financia l Advisor services per Specification No .90666 ;an d WHEREAS, the City extended the terms of this Agreement for three additional years in May 2010, a s provided in the original Agreement ; and WHEREAS, the City desires to extend the term of this Agreement for one additional year and Contracto r has mutually agreed . NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafte r contained, the parties hereto agree as follows : 1.The term of this Amendment shall be for an additional one year from the date the Agreement was made an d entered, therefore expiring December 6, 2013 . 2.All other terms and conditions of the Agreement remain in full force and effect . IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and yea r first written above . ATTEST : CITY OF SAN LUIS OBISP O By : City Clerk City Manage r APPROVED AS TO FORM : CONTRACTOR By: C3-1 0 City Attorney • • • • • • Attachment 3 AMENDMENT NO .2 TO AGREEMEN T THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on Januar y 22, 2013, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to a s City, and Jones Hall, hereinafter referred to as Contractor . WITNESSETH : WHEREAS, on December 6, 2006 the City entered into an Agreement with Contractor for Bond Counse l services per Specification No . 90667 ; and WHEREAS, the City extended the terms of this Agreement for three additional years in May 2010, a s provided in the original Agreement ; and WHEREAS, the City desires to extend the term of this Agreement for one additional year and Contracto r has mutually agreed . NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows : 1.The term of this Amendment shall be for an additional one year from the date the Agreement was made an d entered, therefore expiring December 6, 2013 . 2.All other terms and conditions of the Agreement remain in full force and effect . IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and yea r first written above . ATTEST : CITY OF SAN LUIS OBISP O By: City Clerk City Manage r APPROVED AS TO FORM : CONTRACTOR By : C3-1 1 City Attorney Page intentionally left 0 blank . •