HomeMy WebLinkAboutPR 20729: HILLTOP SECURITIES, INC. DISCLOSURE SERVICES Memorandum
City of Port Arthur, Texas
Finance Department
To: Harvey Robinson, Interim City Manager
From: Rebecca Underhill, Assistant City Manager/Administration
Date: March 14, 2019
Subject: Proposed Resolution 20729
BACKGROUND
The City is required, by bond documents and federal law, to make annual disclosures related to the
financial operations of the City. These disclosure requirements and regulations have been in place since
1996. These rules are ever changing and complex. In order to effectively meet these requirements the City
previously contracted with HTS Continuing Disclosure Services (formerly First Southwest Company) to
perform these services for us.
The terms of this proposed contract is similar to the pervious one. The period is five years. The fee is
$3,500 per year for the services that the City typically requires. Additional services and fees are included
in the contract in the event the City's filing requirement should change.
BUDGETARY EFFECT
The annual cost for these services is approximately $3,500 per year and is provided for in the Finance
Department budget account 001-1031-515.54-00.
P. R. NO. 20729
RU 03/14/19
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE CITY MANAGER
TO EXECUTE A CONTRACT FOR CONTINUING
DISCLOSURE SERVICES WITH HTS CONTINUING
DISCLOSURE SERVICES, A DIVISION OF HILLTOP
SECURITIES, INC., WITH A PROJECTED ANNUAL
BUDGETARY IMPACT OF $3,500.00; ACCOUNT 001-1031-
515.54.00
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR:
THAT the City Manager of the City of Port Arthur is hereby authorized and directed to execute
on behalf of the City of Port Arthur a contract for disclosure services between the City of Port Arthur and
HTS Continuing Disclosure Services, A Division of Hilltop Securities, Inc., in accordance with the
attached agreement described in Exhibit"A"; and
THAT the contract is approved for a period of five years.
THAT a copy of said contract is attached hereto and made a part hereof as Exhibit "A"; and
THAT a copy of the action of this Resolution be spread upon the Minutes of the City Council.
READ, ADOPTED, AND APPROVED, this day of March, 2019 AD, at a Regular
Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES: Mayor:
Councilmembers:
NOES:
Mayor
ATTEST:
Sherri Bellard—City Secretary
APPROVED AS TO FORM:
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Val Tizeno, City orney
APPROVED FOR ADMINISTRATION:
Harvey Robinson, Interim City Manager
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Rebecca Underhill, Assistant City Manager
Acting Director of Finance
EXHIBIT"A"
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HTS Conti n u i n g D isclosu reServices
A Division of Hilltop Sewrlties..
Tanya Calvit
Director
March 1,2019
Ms.Rebecca Underhill
Assistant City Manager-Administration
City of Port Arthur
444 4'h Street
P.O. Box 1089
Port Arthur, TX 77641.
Dear Ms. Underhill:
As an Issuer of bonds,the City of Port Arthur,Texas(the"ISSUER")is obligated to file certain annual
continuing disclosure information,pursuant to SEC Rule 15c2-12(the"Rule"). I would like to provide
you with the following information about HTS Continuing Disclosure Services,A Division of Hilltop
Securities Inc. ("Continuing Disclosure Services") for the Issuer. Our annual and ongoing services
consist of the following:
1. Determine all continuing disclosure filing requirements and perform the initial set-up of
all required data.
2. Update any disclosure requirements as necessary, in the event of future bond issuances.
3. Assist the Issuer in compiling the information required for the annual filing.
4. Disseminate the required disclosure filings, including the proper identifying information
(description, maturities, CUSIP numbers, etc.) to the Municipal Securities Rulemaking
Board("MSRB") via our confirmed account on the Electronic Municipal Market Access
("EMMA")system,by the required filing deadline.
5. Provide the Issuer with a copy of the report.
6. Monitor for certain material events and provide periodic material events questionnaires to
the Issuer.
7. Prepare and submit material event notices within ten business days of their occurrence.
8. According to the Rule, required material events include, but are not limited to the
following:
a. Principal and interest payment delinquencies
direct 214.953.4037
Hilltop Securities Inc. toll free 800.678.3792
1201 Elm St. fax 214.953.4050
Suite 3500 Tanya.Calvit@HilltopSecurities.com
Dallas,Texas 75270-2180 HilltopSecurities.com
b. Non-payment related defaults
c. Unscheduled draws on debt service reserves reflecting financial difficulties
d. Unscheduled draws on credit enhancements reflecting financial difficulties
e. Substitution of credit or liquidity providers,or their failure to perform
f. Adverse tax opinions or event affecting the tax-exempt status of the security
g. Modifications to rights of security holders
h. Bond calls and tender offers
i. Defeasances
j. Release,substitution,or sale of property securing repayment of the securities
k. Rating changes
1. Bankruptcy, insolvency,receivership or similar proceeding
m. Mergers, consolidations, acquisitions, the sale of all or substantially all of the
assets of the obligated person or their termination,if material
n. Appointment of a successor or additional trustee or the change of the name of a
trustee,if material
o. Incurrence of a financial obligation of the obligated person, or agreement to
covenants, events of default, remedies,priority rights,or other similar terms of a
financial obligation,any of which affect security holders
p. Default, event of acceleration, termination event, modification of terms, or other
similar events under the terms of a financial obligation of the obligated person,
any of which reflect financial difficulties
9. Assist the Issuer with any ongoing disclosure concerns.
10. Keep informed of any changes in industry regulations that might affect the Issuer.
SEC Rule 15c2-12 was originally put in place to improve disclosure practices among municipal issuers.
In today's economic climate, the Rule has only increased in visibility and importance. The SEC
continues to call for greater transparency and increased enforcement efforts against those who have not
complied. The Rule prohibits underwriters from buying an issuer's bonds if they do not file required
disclosure information. Therefore, non-compliance can limit access to the capital markets. To help
with this process, we have a separate, dedicated continuing disclosure department committed to
assisting issuers with their disclosure obligations.
The Issuer's current disclosure requirements include filing certain data and audited financial
statements, as well as any applicable material event notices with the MSRB. Our annual fee for this
service is $3,500 per debt type(of which the Issuer has one,General Obligation),for a total of$3,500
annually. If you have any questions,please do not hesitate to contact me. We would greatly appreciate
the opportunity to continue serving as the Issuer's disclosure agent.
Sincerely yours,
Tanya Calvit
Director
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AGREEMENT
FOR
CONTINUING DISCLOSURE SERVICES
BY AND BETWEEN
CITY OF PORT ARTHUR, TEXAS
(HEREINAFTER REFERRED TO AS THE"ISSUER")
AND
HTS CONTINUING DISCLOSURE SERVICES,
A DIVISION OF HILLTOP SECURITIES INC.
In connection with the sale and delivery of certain bonds,notes,certificates,or other municipal obligations
(the"Bonds"), the Issuer has made certain undertakings to disclose to the investing public,on a periodic
and continuing basis,certain information,as more fully set forth in such undertakings and as contemplated
by the provisions of Securities and Exchange Commission Rule 15c2-12, as amended(the"Rule").
The Issuer has agreed to engage HTS Continuing Disclosure Services, a Division of Hilltop Securities
Inc. ("Continuing Disclosure Services"), to assist it with these continuing disclosure obligations, for the
consideration and on the terms and conditions set forth herein, including the preparation and submission
of annual reports (the "Annual Reports") and the reporting of certain specified events (the "Events"),
which are set forth in the Issuer's undertakings, the Rule and in Subsection 2c. below.
This agreement (the "Agreement") between the Issuer and the Continuing Disclosure Services shall
become effective as of the date of its acceptance as provided for below.
The parties agree as follows:
1. This Agreement shall apply to all issues of Bonds delivered subsequent to the effective date of the
continuing disclosure requirements as specified in the Rule,to the extent that any particular issue
does not qualify for exceptions to the continuing disclosure requirements of the Rule.
2. Continuing Disclosure Services agrees to perform the following in connection with providing
services relating to the Issuer's continuing disclosure obligations:
a. assist the Issuer in compiling data determined or selected by the Issuer to be disclosed;
b. assist the Issuer in identifying other information to be considered by Issuer for continuing
disclosure reporting purposes;
c. assist the Issuer in preparing the presentation of such information, to include Annual
Reports containing financial information and operating data of the type provided in the
final official statement of applicable issues, and Material Event Notices concerning the
occurrence of the specified Events and other items listed below:
1) Principal and interest payment delinquencies
2) Non-payment related defaults
3) Unscheduled draws on debt service reserves reflecting financial difficulties
4) Unscheduled draws on credit enhancements reflecting financial difficulties
5) Substitution of credit or liquidity providers, or their failure to perform
6) Adverse tax opinions or events affecting the tax-exempt status of the security
7) Modifications to rights of security holders
8) Bond calls and tender offers
9) Defeasances
10) Release,substitution,or sale of property securing repayment of the securities
11) Rating changes
12) Bankruptcy, insolvency, receivership or similar proceeding
13) Mergers,consolidations,acquisitions,the sale of all or substantially all of the
assets of the obligated person or their termination
14) Appointment of a successor or additional trustee or the change of the name
of a trustee
15) Incurrence of a financial obligation of the obligated person, or agreement to
covenants, events of default, remedies,priority rights, or other similar terms
of a financial obligation, any of which affect security holders
16) Default, event of acceleration, termination event, modification of terms, or
other similar events under the terms of a financial obligation of the obligated
person, any of which reflect financial difficulties
17) Noncompliance with the Rule
d. assist the Issuer in distributing or filing,in the Issuer's name,the above mentioned Annual
Reports, notices and audited annual financial statements to the Municipal Securities
Rulemaking Board's ("MSRB") Electronic Municipal Market Access ("EMMA"),
appropriate State Information Depository ("SID"), rating agencies, and other entities, as
required by the Issuer's continuing disclosure obligations.
e. provide to the Issuer confirmation of distribution or dissemination of reports and notices.
3. Issuer acknowledges and agrees to the following:
a. Continuing Disclosure Services will be compensated for the performance of services with
respect to assisting the Issuer with preparation and submission of continuing disclosure
reports in accordance with the schedule as set forth below:
1. $5,000 per year for assistance in preparation and distribution of each annual
and quarterly report and assistance in distribution of audited annual
financial statements, if Issuer is not exempt from filing reports with
EMMA, and Material Event Notice Filings, or
2. $3,500 per year for assistance in preparation and distribution of each annual
report and assistance in distribution of audited annual financial statements, if
Issuer is not exempt from filing reports with EMMA, and Material Event
Notice Filings, or
3. $1,500 per year for assistance in distribution of audited annual financial
statements, if Issuer is not exempt from filing with EMMA, and Material
Event Notice Filings,or
4. $500 minimum fee for assistance in preparation and distribution of each notice
Material Event Notice Filing concerning occurrence of an Event or
noncompliance with the Rule; in addition, a fee of$125 per hour for all time
in excess of five(5) hours spent in assisting with preparation and distribution
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of each Material Event Notice concerning occurrence of an Event or
noncompliance with the Rule.
b. Issuer will provide to Continuing Disclosure Services,and Continuing Disclosure Services
shall be entitled to rely upon, all information regarding the issuance of the Bonds,
including the final official statement and the Issuer's commitment or undertaking
regarding continuing disclosure as contained in the resolution authorizing issuance of the
Bonds or separate contract or agreement; annual financial information and operating data
of the type provided in the final official statement; information concerning the occurrence
of an Event or noncompliance with the Rule; and any other information necessary to
prepare continuing disclosure reports.
c. Issuer will provide to Continuing Disclosure Services,and Continuing Disclosure Services
shall be entitled to rely upon, annual written confirmation of all outstanding Bond issues
for which the Issuer has a continuing disclosure obligation.
d. Issuer will provide to Continuing Disclosure Services all information required for
preparation of each Annual Report, including financial information and operating data of
the type provided in the final official statement and other information deemed necessary
by Issuer, no later than 45 days prior to the date on which each Annual Report is due.
e. Issuer will provide full and complete copies of the audited annual financial statement no
later than ten (10)days prior to the date on which it is due.
f. Issuer will notify Continuing Disclosure Services immediately upon the occurrence or
immediately upon the Issuer's knowledge of the occurrence of each Event or
noncompliance with the Rule, and the Issuer will immediately provide all information
necessary for preparation of the notice of occurrence of each such Event or noncompliance
with the Rule.
g. Issuer shall have the sole responsibility for determining the disclosure to be made in all
cases. The Issuer shall review and provide approval of the content and form of all
continuing disclosure reports and notices,with the exception of the following, which will
be filed automatically on the Issuer's behalf, unless the Issuer has notified Continuing
Disclosure Services otherwise in writing: bond calls,defeasances,and rating changes. In
the event of a disagreement between the Issuer and Continuing Disclosure Services
regarding the disclosure to be made, either the Issuer or Continuing Disclosure Services
may, but neither is obligated to, terminate this Agreement by written notice to the other
party.
h. A separate Annual Report will be prepared and distributed for each type of security pledge
in effect for outstanding financing issues or Bonds of the Issuer.
i. Issuer will inform Continuing Disclosure Services of the retirement of any Bonds included
under the scope of this Agreement within 30 days of such retirement.
4. In the event that Continuing Disclosure Services and the Issuer determine that advice of counsel
is appropriate with respect to any question concerning disclosure, then(i) the Issuer may consult
with its counsel, or (ii) the Issuer may authorize Continuing Disclosure Services to seek legal
advice from independent counsel regarding the disclosure. The Issuer agrees that it shall be
responsible for the fees and expenses of its own counsel. The Issuer agrees to reimburse
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Continuing Disclosure Services the fees and expenses of independent counsel, if paid by
Continuing Disclosure Services, for advice rendered pursuant to authorization by the Issuer.
5. The Issuer agrees to hold harmless and to indemnify Continuing Disclosure Services and its
employees,affiliates,officers,directors,and agents from and against any and all claims,damages,
losses, liabilities, reasonable costs and expenses whatsoever, including attorneys' fees and
expenses("Losses and Expenses")that Continuing Disclosure Services may incur by reason of or
in connection with the distribution of information in the disclosure reports in accordance with this
Agreement, except to the extent such Losses and Expenses result directly from Continuing
Disclosure Services' willful misconduct or gross negligence in the distribution of such
information.
In the event that such Losses and Expenses are attributable to the concurrent negligence or other
fault of both the Issuer and Continuing Disclosure Services, each party shall bear proportionate
responsibility for the degree of negligence or other fault attributable to each. Notwithstanding the
foregoing, Continuing Disclosure Services, shall not be obligated to contribute any amount
hereunder that exceeds the amount of fees previously received by Continuing Disclosure Services
pursuant to this Agreement.
6. The fees and expenses due to Continuing Disclosure Services in providing Continuing Disclosure
Services shall be calculated in accordance with Section 3a. of this Agreement. The fees will be
invoiced each year during the term of the Agreement, unless terminated earlier, and fees will be
payable within 30 days of receipt of invoice, except that the fees for the first year's service will
be invoiced and be payable upon acceptance of this Agreement.
In addition, the Issuer agrees to reimburse Continuing Disclosure Services for the following
expenses: (i) legal fees and expenses of counsel incurred by Continuing Disclosure Services
pursuant to the terms of Section 4. above, and (ii) other out-of-pocket expenses reasonably
incurred by Continuing Disclosure Services in performing its obligations hereunder. The Issuer
shall remit payment for expenses to Continuing Disclosure Services within 30 days of receipt of
invoice.
7. Bonds Issued Subsequent to Agreement: The provisions of this Agreement will include
additional municipal bonds and financings (including financing lease obligations) issued during
the stated term of this Agreement, if such bonds are subject to the continuing disclosure
requirements. In this connection, the Issuer agrees that the Issuer will notify Continuing
Disclosure Services of any municipal bonds and financing(including financing lease obligations)
issued by the Issuer during any fiscal year of the Issuer during the term of this Agreement, and
will provide Continuing Disclosure Services with such information as shall be necessary in order
for Continuing Disclosure Services to perform the services contracted for hereunder.
8. Effective Dates of Agreement: This Agreement shall become effective as of the date of
acceptance by the Issuer as set out below and remain in effect thereafter for a period of five (5)
years from the date of acceptance. This agreement may be terminated with or without cause by
the Issuer or Continuing Disclosure Services upon thirty (30) days' written notice to the other
party. In the event of such termination, it is understood and agreed that only the amounts due to
Continuing Disclosure Services for services provided and expenses incurred to and including the
date of termination will be due and payable. No penalty will be assessed for termination of this
Agreement. In the event this Agreement is terminated prior to its stated term,all records provided
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to Continuing Disclosure Services by the Issuer shall be returned to the Issuer as soon as
practicable. In addition, the parties hereto agree that upon termination of this Agreement
Continuing Disclosure Services shall have no continuing obligation to the Issuer regarding any
service contemplated herein. Notwithstanding the foregoing, all indemnification, hold harmless
and/or contribution obligations, pursuant to Section 5 of this Agreement, shall survive any
termination, regardless of whether the termination occurs as a result of the expiration of the term
hereof or the Agreement is terminated sooner by either the Issuer or Continuing Disclosure
Services under this Section 8, pursuant to Subsection 3.g., or otherwise.
9. Provision of Notices
Provision of information,delivery of certification and notices of Events and noncompliance with
the Rule,unless directed otherwise in writing, shall be sent to:
City of Port Arthur
444 4th Street
P.O. Box 1089
Port Arthur, TX 77641
Ms. Rebecca Underhill
Assistant City Manager-Administration
Phone: (409) 983-8143
Email: Rebecca.underhill@portarthurtx.gov
HTS Continuing Disclosure Services, a Division of Hilltop Securities Inc.
1201 Elm Street, 35th Floor
Dallas, Texas 75270
Attention: Tanya Calvit
Director for Continuing Disclosure
Phone: (214) 953-4037
Fax: (214) 953-4050
Email: tanya.calvit@hilltopsecurities.com
10. Choice of Law: This Agreement shall be construed and given effect in accordance with the laws of
the State of Texas.
11. Acceptance of Agreement
This Agreement is submitted in triplicate originals. When accepted by the Issuer,it will constitute
the entire Agreement between the Issuer and Continuing Disclosure Services for the purposes and
the consideration specified above.
Acceptance will be indicated on all copies and returned to Continuing Disclosure Services. An
executed original will be returned for your files.
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Respectfully submitted,
HTS Continuing Disclosure Services, a Division of
Hilltop Securities Inc.
By
Lou Ann Heath
Director
By
Tanya Calvit
Director
Date
ACCEPTANCE CLAUSE
The above and foregoing is hereby in all things accepted and approved by the Issuer, on this the
day of , 2019.
By
Authorized Representative
Title
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