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AUTHORIZE AGREEMENTS WITH MUNICIPAL ADVISOR FIRMS TO ESTABLISH A POOL FOR THE ISSUANCE OF MUNICIPAL DEBT AND FOR INDEPENDENT REGISTERED MUNICIPAL ADVISOR SERVICES
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Authorize the City Manager to execute agreements with four municipal advisor firms for the purpose of forming a vendor pool to issue bonds and other municipal debt instruments for the financing of capital facilities and infrastructure, and the refinancing of existing debt issuances. The term of the contracts are five years with no option to extend.
2. Authorize the City Manager to execute an agreement with Del Rio Advisors, LLC, an Independent Registered Municipal Advisor, for a term of five years with no option to extend.
3. 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 refinance existing debt when it is advantageous to do so. The frequency varies from year to year; however, the City typically issues or refinances existing debt two to five times per year. The City usually issues several types of debt including 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 four recommended firms will create a pool of pre-qualified firms to provide municipal advisor services to support City debt issuances.
In addition, staff recommends selection of an Independent Registered Municipal Advisor (IRMA) to provide day-to-day financial advisory services and act as a liaison between City staff and the financing team. The IRMA is also expected to assist in the development of capital facility or infrastructure financial plans and assist and advise the City as to the most cost-effective financing plan for the debt that is being considered.
DISCUSSION
Background
On November 28, 2006, the City Council adopted Resolution 06-0567 authorizing agreements with seven financial (municipal) advisor firms to form a vendor pool to issue bonds and other municipal debt instruments for the financing of capital facilities and infrastructure, and the refinancing of existing debt. The pool expired on December 31, 2011.
Since March 2011, Del Rio Advisors, LLC served as the City’s IRMA and provided the City with financial advice throughout its bankruptcy proceedings, various debt issuances and debt refunding transactions.
Present Situation
On April 13, 2017, the City released a Request for Proposals (RFP) for municipal advisor services. The objective of the RFP was to ensure a fair, competitive procurement of municipal advisor services and identify firms capable of meeting the City’s needs.
The City received four responses from interested municipal advisor firms. All four firms met the minimum qualifications and were invited to be interviewed with the selection committee that was formed to review the proposals. The interview performance was ranked based on the overall experience in providing municipal advisory services, quality of service, and overall presentation.
The committee recommended agreements be offered to all four firms that submitted proposals. The firms that are recommended to form the City’s Municipal Advisor vendor pool all demonstrated a wide range of experience and expertise related to debt issues in California. It is anticipated the City will have a highly qualified pool of municipal advisors available for all types of financing that the City may pursue. It is recommended the City enter agreements with the following firms:
• Columbia Capital Management, LLC
• Del Rio Advisors, LLC
• Fieldman, Rolapp & Associates, Inc.
• KNN Public Finance, LLC
The committee also recommends that the City enter an agreement with Del Rio Advisors, LLC, as the City’s IRMA to provide day-to-day financial advisory services and act as a liaison between City staff and financing teams. Del Rio Advisors, LLC will also assist in the development of capital facility and infrastructure financial plans, and advise the City as to the most cost-effective financing plan for debt being considered.
FINANCIAL SUMMARY
The cost for municipal advisor services related to bond financings are reimbursed or paid directly from proceeds generated from the bond sale. In cases of land based district formation work (CFD and 1915 Act Districts), costs for municipal advisor services are paid from developer deposits placed with the City.
Compensation for the City’s IRMA for work not directly related to bond financings will be paid as part of the City’s debt program using account 201-2001-510.20-65. Sufficient funds are budgeted in this account to cover estimated costs for these services. The City’s debt program is supported through an annual allocation of costs to the funds that are responsible for making payments on the City’s outstanding debt.
Attachment A - Contract with Columbia Capital Management, LLC
Attachment B - Contract with Del Rio Advisors, LLC
Attachment C - Contract with Fieldman, Rolapp & Associates, Inc.
Attachment D - Contract with KNN Public Finance, LLC
Attachment E - Agreement with Del Rio Advisors, LLC for Independent Registered Municipal Advisor Services