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HomeMy WebLinkAboutPR 15307: FIRST SOUTHWEST COMPANY CONTRACT - CONTINUING DISCLOSURE SERVICESMemorandum City of Port Arth ur, Texas Finance Department To: Steve Fitzgibbons, City M From: Deborah Echols, Director Date: June 4, 2009 Subject: Proposed Resolution 15307 First Southwest Company Contract -Continuing Disclosure Services RECOMMENDATION I recommend that the City Council approve PR15307 which authorizes the City Manager to execute a contract with First Southwest company to provide Disclosure Services at an annual cost of $3,500. 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 aze ever changing and complex. In order to effectively meet these requirements the City engaged FSC Disclosure Services, a division of First Southwest Company, to perform this service for us. This two year contract is very advantageous for the City and I am recommending another rivo year contract. P. R. NO. 15307 JJA - 6/4/09 RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO A CONTRACT FOR DISCLOSURE SERVICES WITH FSC DISCLOSURE SERVICES, A DIVISON OF FIRST SOUTHWEST COMPANY 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 FSC Disclosure Services, a Division of First Southwest, in accordance with the attached agreement described in Exhibit "A"; and THAT the contract is approved for two yeazs. 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 June, 2009, AD, at a Regulaz Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: NOES: Mayor ATTEST: Terri Hanks, City Secretary APPROVED AS TO FORM: Mazk Sokolow, City Attorney APPROVED FOR ADMINISTRATION: Steve Fitzgibbons, City Manager APPROVED AS TO THE AVAILABILITY OF FUNDS: ~lwt~s Deborah H. Ec ols, Finance Director e:wor~'ennyold/resolulians~rst soulhwes! disclosure Service Canbacl. EXHIBIT "A" AGREEMENT FOR CONTINUING DISCLOSURE SERVICES BY AND BETWEEN CITY OF PORT ARTHUR, TEXAS (HEREINAFTER REFERRED TO AS THE "ISSUER") AND FSC DISCLOSURE SERVICES, A DIVISION OF FIRST SOUTHWEST COMPANY 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 FSC Disclosure Services, a Division of First Southwest Company ("Disclosure Services"), to assist it with these continuing disclosure obligations, for the consideration and on the terms and conditions set forth herein, including the prepazation and submission of annual reports (the "annual reports") and the reporting of certain specified events (the "Events"), which aze set forth in the Issuer's undertakings, the Rule and in Subsection 2c. below. This agreement (the "Agreement") between the Issuer and the Disclosure Services shall become effective at 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 particulaz issue does not qualify for exceptions to the continuing disclosure requirements of the Rule. 2. Disclosure Services agrees to perform the following duties 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 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 event affecting the tax-exempt status of the security 7) Modifications to rights of security holders 8) Bond calls 9) Defeasances 10) Release, substitution, or sale of property securing repayment of the securities 11) Rating changes 12) 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 Nationally Recognized Municipal Securities Information Repositories (`TIRMSIR's"), the Municipal Securities Rulemaking Board, 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. 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: (i) $2,500 per yeaz for assistance in prepazation and distribution of each annual report and assistance in distribution of audited annual financial statements, if Issuer is exempt from requirements other than filing with the SID, or $3,500 per yeaz 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 the NRMSIR's, plus (ii) $100 minimum fee for assistance in preparation and distribution of each notice 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 prepazation and distribution of each notice concerning occurrence of an Event or noncompliance with the Rule. b. Issuer will provide to Disclosure Services, and 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 sepazate contract or agreement; annual financial information and operating data of the type provided in the fmal official statement, information concerning the occurrence of an 2 Event or noncompliance with the Rule; and any other information necessary in connection with preparing continuing disclosure reports. c. Issuer will provide to Disclosure Services, and 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 Disclosure Services all information required for prepazation of each annual report, including financial information and operating data of the type provided in the fmal 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 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, and the Issuer shall review and provide approval of the content and form of all continuing disclosure reports and notices. In the event of a disagreement between the Issuer and Disclosure Services regazding the disclosure to be made, either the Issuer or 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 prepazed and distributed for each type of security pledge in effect for outstanding financing issues or Bonds of the Issuer. i. Issuer will inform 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 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 Disclosure Services to seek legal advice from independent counsel regazding the disclosure. The Issuer agrees that it shall be responsible for the fees and expenses of its own counsel. The Issuer agrees to reimburse Disclosure Services the fees and expenses of independent counsel, if paid by Disclosure Services, for advice rendered pursuant to authorization by the Issuer. ~. The fees and expenses due to 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 eazlier, 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. 3 In addition, the Issuer agrees to reimburse Disclosure Services for the following expenses: (i) legal fees and expenses of counsel incurred by Disclosure Services pursuant to the terms of Section 4. above; and (ii) other out-of-pocket expenses reasonably incurred by Disclosure Services in performing its obligations hereunder. The Issuer shall remit payment for expenses to Disclosure Services within 30 days of receipt of invoice. Bonds Issued Subsequent to Agreement 6. 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 Disclosure Services of any municipal bonds and fmancing (including fmancing lease obligations) issued by the Issuer during any fiscal year of the Issuer during the term of this Agreement, and will provide Disclosure Services with such information as shall be necessary in order for Disclosure Services to perform the services contracted for hereunder. Effective Dates of Agreement 7. This Agreement shall become effective at the date of acceptance by the Issuer as set out below and remain in effect thereafter for a period of two (2) yeazs from the date of acceptance. This agreement may be terminated with or without cause by the Issuer or 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 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 to 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 Disclosure Services. shall have no continuing obligation to the Issuer regazding any service contemplated herein. 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, Texas 444 Fourth Street Port Arthur, Texas 77640 Ms. Rebecca Underhill Director of Finance Phone: (409) 983-8150 E-mail: rbecca@portarthur.net 4 FSC Disclosure Services, a Division of First Southwest Company 325 North St. Paul Street, Suite 800 Dallas, Texas 75201 Attention: Julie James Assistant Vice President for Continuing Disclosure Telephone: (214)953-8701 Facsimile: (214) 953-4050 Email: jjames@firstsw.com Acceptance of Agreement 9. This Agreement is submitted in triplicate originals. When accepted by the Issuer, it will constitute the entire Agreement between the Issuer and Disclosure Services for the purposes and the consideration specified above. Acceptance will be indicated on all conies and returned to Disclosure Services. An executed original will be returned for your files. Respectfully submitted, FSC Disclosure Services, a Division of First Southwest Company L sy Hill A. Feinberg Chairman and Chief Executive Officer Julie s Assistant Vice President Date ACCEPTANCE CLAUSE The above and foregoing is hereby in all things accepted and approved by the City of Port Arthur, Texas, on this the day of , 2009. By Authorized Representative Title 5