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AUTHORIZE THE CITY MANAGER TO EXECUTE AGREEMENTS WITH UNDERWRITER FIRMS TO ESTABLISH A POOL FOR THE ISSUANCE OF MUNICIPAL DEBT
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RECOMMENDATION
It is recommended that the City Council approve a motion to authorize the City Manager to execute agreements with nine underwriter firms to establish a vendor pool, for the purpose of issuing bonds and other municipal debt instruments to finance capital facilities and infrastructure, and to refinance existing debt issuances.
It is also recommended that the motion authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of the motion.
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Summary
The City, on an as-needed basis, issues debt to finance the construction of capital facilities and infrastructure, and to refinance existing debt when it is advantageous to do so. The frequency varies from year to year; however, the City typically will issue debt or refinance existing debt from two to five times per year. The City usually issues several types of debt, including but not limited to: Lease Revenue Bonds, Certificates of Participation, Revenue Bonds, and Land-secured debt (1913/15 Act assessment bonds, Mello-Roos or Marks-Roos bonds).
Entering into agreements with the nine selected underwriter firms will create a pool of pre-qualified firms that will provide investment banking and underwriting services to support City debt issuances.
DISCUSSION
Background
The City periodically establishes a pool of underwriters to support debt issuances. The City requires professional investment banking and underwriting services to effectively market and issue its debt at the lowest cost. By establishing a pool, the City can react quickly to financing needs based on favorable market conditions to finance projects and refinance existing debt.
The City’s most recent Underwriter Pool was established July 25, 2017, by Motion 2017-07-25-1101, which authorized the execution of five-year agreements with underwriters for the issuance of municipal debt.
Present Situation
On December 18, 2021, the City released a Request for Proposals (RFP) for financial underwriting services. The RFP ensured a fair and competitive procurement of underwriting services. The City sought qualified underwriting firms with the ability to:
• Provide high-quality underwriting services for issuing debt to construct capital facilities and infrastructure and refinancing existing debt.
• Assist in the development of a sound financing plan for the capital facility or infrastructure that is planned to be financed and assist in the establishment of a district.
• Assist and advise the City as to the most cost-effective financing plan for the debt that is being considered and recommend innovative alternatives.
The City received responses from nine interested underwriting firms and all nine firms met the minimum qualifications. A selection committee was formed to review the submitted proposals. After careful review of each firm’s capabilities and ability to meet the City’s financing needs, the selection committee recommended the City enter agreements with all nine firms that submitted proposals. All nine firms in the City’s Underwriter Pool can provide services for type of financing the City may pursue. With the establishment of this Pool, the City will have a diverse group of highly qualified underwriting firms available when needed.
Based on the submitted proposals and evaluations by the selection committee, it is recommended the City enter agreements with the following firms: Blaylock Van, LLC; Citigroup Global Markets, Inc.; D.A. Davidson & Co.; Hilltop Securities, Inc.; Oppenheimer & Co., Inc.; Piper Sandler & Co.; RBC Capital Markets, LLC; Stifel, Nicolaus & Company, Inc.; and Wells Fargo Bank, N.A.
FINANCIAL SUMMARY
All underwriting fees are paid from bond proceeds contingent upon the successful closing of bond transactions.
Fees for services will be negotiated by staff and approved by the City Council on a per transaction basis, in accordance with the provisions of the City’s Land-Based and Capital Financing Policy, and Debt Management Policy.
Attachment A - Contract with Blaylock Van LLC
Attachment B - Contract with Citigroup Global Markets Inc.
Attachment C - Contract with D.A. Davidson & Co.
Attachment D - Contract with Hilltop Securities Inc.
Attachment E - Contract with Oppenheimer & Co. Inc.
Attachment F - Contract with Piper Sandler & Co.
Attachment G - Contract with RBC Capital Markets, LLC
Attachment H - Contract with Stifel, Nicolaus & Company, Inc.
Attachment I - Contract with Wells Fargo Bank, N.A.