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HomeMy WebLinkAboutPR 13030:FIRST SOUTHWEST CO.To~ From: Date: Re: City of Port Arthur Finance Department Memorandum Steve Fitzgibbons, City Manage~ ~ e[~ Rebecca Underhill, CPA, Direc~rX~/tt~ ~n~n~ February 7, 2005 ~'~ PR 13030 Recommendation Presented for City Council consideration and approval is PR 13030 which authorizes the City Manager to execute a Financial Advisory Agreement with First Southwest Company. Background First Southwest Company has served as financial advisors to the City of Port Arthur for many years. As such, they advise and assist the City in all major long term financing projects, such as the issuance of bonds and the study and evaluation of proposed financing opportunities. Due to the longstanding relationship, the firm has a background and understanding of the issues in Port Arthur. The CiW has been very satisfied with their services, and wishes to enter into another two year agreement with ~em. Budgetary Effect Financial advisory fees are typically paid through bond issuance costs. At this time, the only issue being considered is the refunding proposal on today's agenda. The fees are stated in the contract in Section I. P. R. NO. 13030 RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A FINANCIAL ADVISORY AGREEMENT WITH FIRST SOUTHWEST COMPANY WHEREAS, the City of Port Arthur requires the service of financial advisors to assist in the issuance of debt; and WHEREAS, the City has a very longstanding relationship with First Southwest Company; and WHEREAS, the City has been satisfied with the performance of First Southwest Company, and WHEREAS, the City Council deems it is in the best interest of the City to continue the relationship with a fim~ that is entirely familiar with the background and circumstances of the City's finances. NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are tree and correct. Section 2. That the City Cotmcil hereby authorizes the City Manager to execute the financial advisory contract with First Southwest Company as attached hereto as Exhibit A. Section 3. That a copy of the caption of this Resolution shall be spread upon the Minutes of the City Council. READ, ADOPTED, AND APPROVED, this 15th day of February, 2005, 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: Evangeline Green. City Secretary APPROVED AS TO FORM: Mark Sokolo%. City Attorney (o~ APPROVED FOR ADMINISTRATION: ;~_Fitzgibbons, City Manager Rebecca Onderhill. CPA. Finance Director EXHIBIT "A" FINANCIAL ADx, qSORY AGREEMENT This Financial Advisory Agreement (the "Agreement") is made and entered into by and between the City of Pon Arthur, Texas ("Issuer") and First Southwest Company I"FSC"/effective as of the date executed by the Issuer as set forth on the signature page hereof· WITNESSETH: WHEREAS, the Issuer will have under consideration from time to time the authorization and issuance of indebtedness ha amounts and forms which cannot prcsently be determined and. in connection with the authorization, sale, issuance and delivery of such indebtedness. Issuer desires te retain an independent financial advisor; and WHEREAS, the Issuer desires to obtain the professional services of FSC to advise the Issuer regarding the issuance and sale of certain evidences of indebtedness or debt obligations that may be authorized and issued or otherwise created or assumed by the Issuer (hereinafter referred to collectively as the "Debt Instrmnents") from time to time during the period in which this Agreement shall be effective: and WHEREAS, FSC is willing to provide its professional services and its facilities as financial advisor in connection with all programs of financing as may be considered and authorized by Issuer during the period in which this Agreement shall be effective. NOW, THEREFORE, the Issuer and FSC, in consideration of the mutual covenants and agreements heroin contained and other good and valuable consideration, do hereby agree as follows: SECTION I DESCRIPTION OF SER~*qCES Upon the request of an authorized representative of the Issuer, FSC agrees to perform the fmancial advisory services stated in the following provisions of this Section I: and for having rendered such services, the Issuer agrees to pay to FSC the compensation as provided in Section V hereof A. Financial Plaanin~. At the direction of Issuer, FSC shall: 1. Survey and Analysis. Conduct a survey of the financial resources of the Issuer to deternnne the extent of its capacity to authohze, issue and service any Debt Instruments contemplated· This survey will include an analysis of any existing debt structure as compared with the existing and projected gources of revenues which may be pledged to secure payment of debt service and, where appropriate, will include a study of the trend of the assessed valuation, taxing power and present and future taxing requirements of the Issuer. In the event revenues of existing or projected facilities operated by the Issuer are to be pledged to repayment of the Debt Instruments then under consideration, the survey will take into account any outstanding indebtedness payable from the revenues thereof, additional revenues to be available from any proposed rate increases and additional revenues, as projected by consulting engineers employed by the Issuer, resulting from improvements to be financed by the Debt Instruments under consideration. 2. Future Financings. Consider and analyze future financing needs as projected by the Issuer's staff and consulting engineers or other experts, if any, employed by the Issuer. 3. Recommendations for Debt Instruments. On the basis of the information developed by the sur~ey described above, and other information and experience available, submit to the Issuer recommendations regarding the Debt Instruments under consideration, including such elements as the date of issue, interest payment dates, schedule of principal maturities, options of prior payment, security provisions, and such other provisions as may be appropriate in order to make the issue attractive to investors while achieving the objectives of the Issuer. All recommendations will be consistent with the goal of designing the Debt Instruments to be sold on terms which are advantageous to the Issuer, including the lowest interest cost consistent with all other considerations. 4. Market Information. Advise the Issuer of our interpretation of current bond market conditions, other related forthcoming bond issues and general information, with economic data, which might normally be expected to influence interest rates or bidding conditions so that the date of sale of the Debt Instruments may be set at a favorable time. 5. Elections. In the event it is necessary to hold an election to authorize the Debt Instruments then under consideration, FSC will assist in coordinating the assembly of such data as may be required for the preparation of necessary petitions, orders, resolutions, ordinances, notices and certificates in connection with the election, including assistance in the transmission of such data to a firm of mtmicipal bond attorneys ("Bond Counsel") retained by the Issuer. B. Debt Management and Financial Implementation. At the direction of Issuer, FSC shall: 1. Method of Sale. Evaluate the particular financing being contemplated, giving consideration to the complexity, market acceptance, rating, size and structure in order to make a recommendation as to an appropriate method of sale, and: 2 If the Debt Instruments are m be sold by an advertised competitive sale, FSC will: (1) Supervise the sale of the Debt Instnunents. reserving the right, alone or m conjuncnon with others, to submit a bid for any Debt Instruments issued under this Agreement which the Issuer advertises for competitive bids; however, in keeping with the provismns of Rule G-23 of the Municipal Securities Rulemaking Board. FSC will request and obtain written consent to bid prior to submitting a bid. in any instance wherein FSC elects to bid. for any installment of such Debt Instrun~ents: (2) Disseminate information to prospective bidders, orgamze such informational meetings as may be necessary, and facilitate prospective bidders' efforts in making timely submission of proper bids; (3) Assist the staffofthe Issuer in coordinating the receipt of bids. the safekeeping of good faith checks and the tabulation and comparison of submitted bids: and (4) Advise the Issuer regarding the best bid and provide advice regarding acceptance or rejection of the bids. b. If the Debt Insmanents are to be sold by negotiated sale. FSC will: (1) Recommend for Issuer's final approval and acceptance one or more investment banking firms as managers of an underwriting syndicate for the purpose of negotiating the purchase of thc Debt Instruments. (2) Cooperate with and assist any selected managing underwriter and their counsel in connection with their efforts to prepare any Official Statement or Offering Memorandum. FSC will cooperate with and assist the underwriters in the preparation o£a bond purchase contract, an underw'riters agreement and other related documents. The costs incurred in such efforts, including the printing of the documents, will be paid in accordance with the terms of the Issuer's agreement with the underwriters, but shall not be or become an obligation of FSC, except to the extent specifically provided otherwise in this Agreement or assumed in writing by FSC. (3) Assist the staff of the Issuer in the safekeeping of any good faith checks, to the extent there are any such, and provide a cost comparison, for both expenses and interest which are suggested by the underwriters, to the then current market. (4) Advise the Issuer as to the fairness of the price offered by the underwriters. 2. Offering Documents. Coordinate the preparation of the notice of sale and bidding instructions, official statement, official bid form and such other documents as may be required and submit all such docmncnts to the Issuer for examination, approval and certification. After such exanfination, approval and certification, FSC shall provide the Issuer with a supply of all such documents sufficient to its needs and distribute by mail or, where appropriate, by electronic delivery, sets of the same to prospective purchasers of the Debt Instruments. Also, FSC shall provide copies of the fmat Official Statement to the purchaser of the Debt Instruments in accordance with the Notice of Sale and Bidding Instructions. 3. Credit Ratings. Make recommendations to the Issuer as to the advisability of obtaining a credit rating, or ratings, for the Debt Instruments and, when directed by the Issuer, coordinate the preparation of such information as may be appropriate for submission to the rating agency, or agencies. In those cases where the advisability of personal presentation of information to the rating agency, or agencies, may be indicated, FSC will arrange for such personal presentations, utilizing such composition of representatives from the Issuer as may be finally approved or directed by the Issuer. 4. Trustee, Paying Aeent, Registrar. Upon request, counsel with the Issuer in the selection of a Trustee and/or Paying AgenffRegistrar for the Debt Instruments, and assist in the negotiation of agreements pertinent to these services and the fees incident thereto. 5. Financial Publications. When appropriate, advise financial publications of the forthcoming sale of the Debt Instxurnents and provide them with all pertinent information. 6. Consultants. After consulting with and receiving directions from the Issuer, arrange for such reports and opinions of recognized independent consultants as may be appropriate for the successful marketing of the Debt Instruments. 7. Auditors. In the event formal verification by an independent auditor of any calculations incident to the Debt Instroments is required, make arrangements for such services. 8. Issuer Meetings. Attend meetings of the governing body of the Issuer, its staff, representatives or committees as requested at all times when FSC may be of assistance or service and the subject of financing is to be discussed. 4 9. Printing. To the extent authorized by the Issuer. coordinate all work incident to printing of the offering documents and the Debt Instruments. 10. Bond Counsel. Maintain liaison with Bond Counsel and the City Attorney m the preparation of all legal documents pertaining to the authorization, sale and issuance of the Debt Instruments. 11 ~n Laws. Provide to the Issuer copies of proposed or enacted changes in federal and state laws. rules and regulations having, or expected to have. a significant effect on the mun~cipal bond market of which FSC becomes aware in the ordinary course of its business, it being understood that FSC does not and may not act as an anomey for, or provide legal advice or services to. the Issuer. 12. Deliver~ of Debt Instruments. As soon as a bid for the Debt Instruments is accepted by the Issuer. coordinate the efforts of all concerned tc the end that the Debt Instruments may be delivered and paid for as expeditiously as possible and assist the Issuer in the preparation or verification of final closing figures incident to the delivery o£the Debt Instruments. 13. Debt Service Schedule~ Authorizing Resolution Af~er the closing ofthe sale and delivery of the Debt Instruments. deliver te the Issuer a schedule of annual debt service reqmrements for the Debt Instruments and. in coordination with Bond Counsel. assure that the paying agent]regisurar and/ox trustee has been provided with a copy of the authorizing ordinance, order or resolution. SECTION H OTHER AVAILABLE SERVICES In addition to the services set forth and described in Section I herein above. FSC agrees to make available m Issuer the following services, when so requested b) the Issuer and subject to the agreement by Issuer and FSC regarding the compensanon, if any, to be paid for such services, it being understood and agreed that the services set forth in this Section II shall require further agreement as to the compensation to be received by FSC for such services: 1. Investment of Funds. From time to time, as an incident to the other services provided hereunder as financial advisor, FSC may purchase such investments as may be directed and authorized by Issuer to be purchased, it being understood that FSC will be compensated in the no~rnal and customary mariner for each such transaction. In any instance wherein FSC may become entitled to receive fees or other compensation in any form from a third party with respect to these investment activities on behalf of Issuer, we will disclose to Issuer the nature and, to the extent such is known, the amount of any such compensation so that Issuer may consider the information in making its investment decision. It is understood and agreed that FSC is a duly licensed brokeffdealer and is affiliated with First Southwest Asset Management, Inc. ("FSAMI"), a duly registered investment advisor. Issuer may, from time to time, utilize the broker/dealer services of FSC and/or the investment advisory services of FSAMI with respect to matters which do not involve or affect the financial advisor)' services referenced in this Agreement. The terms and conditions of the engagement of FSC and/or FSAMI to provide such services shall be determined by mutual agreement at the time such services are requested. 2. Exercising Calls and Refunding. Provide advice and assistance with regard to exercising any call and/or refunding of any outstanding Debt Instraments. 3. Capital Improvements Programs. Provide advice and assistance in the development of any capital improvements programs of the Issuer. 4. Long-Range Planning. Provide advice and assistance in the development of other long-range financing plans of the Issuer. 5. Post-Sale Services. Subsequent to the sale and delivery of Debt Instntments, review the transaction and transaction documentation with legal counsel for the Issuer, Bond Counsel, auditors and other experts and consultants retained by the Issuer and assist in developing appropriate responses to legal processes, audit procedures, inquiries, internal reviews and similar matters. SECTION m TERM OF AGREEMENT This Agreement shall become effective as of the date executed by the Issuer as set forth on the signature page hereof and, unless terminated by either party pursuant to Section IV of this Agreement, shall remain in effect thereafter for a period of two (2) years from such date. Upon concurrence by both parties, this agreement may be renewed for a period of time, to be determined at the anniversary date. 6 SECTION IV TERMINATION This Agreement may be terminated with or without cause by the Issuer or FSC upon the giving of at least thirty (30) days' prior written notice to the other party of its intention to terminate, specifying in such notice the effective date of such termination. In the event of such termination, it is understood and agreed that only the amounts due FSC for services provided and expenses incurred to the date of termination will be due and payable. No penalty will be assessed for termination of this Agreement. SECTION V COMPENSATION AND EXPENSE REIMBURSEMENT The fees due to FSC for the services set forth and described in Section I of this Agreement with respect to each issuance of Debt Instruments during the term of tlxis Agreement shall be calculated in accordance with the schedule set forth on Appendix A attached hereto. Unless specifically provided otherwise on AppendLx A or in a separate written agreement between Issuer and FSC, such fees, together with any other fees as may have been mutually agreed upon and all expenses for which FSC is entitled to reimbursement, shall become due and payable concurrently with the delivery of the Debt Instruments to the purchaser. SECTION VI MISCELLANEOUS 1. Choice of Law. This Agreement shall be construed and given effect in accordance with the laws of the State of Texas. 2. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the Issuer and FSC, their respective successors and assigns; provided however, neither party hereto may assign or transfer any of its rights or obligations hereunder without the prior written consent of the other party. 3. Entire Agreement. This instrument contains the entire agreement between the parties relating to the rights herein granted and obligations herein assumed. Any oral or written representations or modifications concerning this Agreement shall be of no force or effect except for a subsequent modification in writing signed by all parties hereto. 7 FIRST SOUTHWEST COMPANY By: Hill A. Feinberg. Chairman and Chief Execuuve Officer ATTEST: By: Joseph W. Morrow Vice Presidem CITY OF PORT ARTHUR, TEXAS By: Tide: Date: 8 APPENDIX A The fees due FSC will not exceed those contained in our customary fee schedule as listed below. $10,000 for the fa'st $ 1,000,000 of bonds issued plus $ 4.00 per $1,000 for the next $ 4,000,000 of bonds issued plus $ 2.00 per $1,000 for the next $ 5,000,000 of bonds issued plus $ 1.00 petS1,000 forthenext $ 40,000,000 ofbundsissued plus $ .75 per $1,000 thereafter The above charges shall be multiplied by 1.25 times for the completion of an application to a federal or state government agency or for the issuance of revenue bonds or refunding bonds, reflecting the additional services required. The charges for ancillary services, including computer structuring and official statement printing, shall be levied only for those services which are reasonably necessary in completing the transaction and which are reasonable in amount, unless such charges were incurred at the specific direction of the Issuer. The payment of charges for financial advisory services described in Section I of the foregoing Agreement shall be contingent upon the deliver)' of bonds and shall be due at the time that bonds are delivered. The payment of charges for services described in Section II of the foregoing Agreement shall be due and payable in accordance with the mutual agreement therefor between FSC and Issuer. The Issuer shall be responsible for the following expenses, if and when applicable, whether they are charged to the Issuer directly as expenses or charged to the Issuer by FSC as reimbursable expenses: Bond counsel Bond printing Bond ratings Computer structuring Credit enhancement CPA fees for refunding Official statement preparation and printing Paying agent/registrar/trustee Travel expenses Underwriter and underwriters counsel Miscellaneous, including copy, delivery, and phone charges The payment of reimbursable expenses that FSC has assumed on behalf of the Issuer shall NOT be contt'ngent upon the deh'very of bonds and shall be due at the time that services are rendered andpayable upon receipt of an invoice therefor submitted by FSC.