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AUTHORIZE THE CITY ATTORNEY TO EXECUTE AGREEMENTS WITH BOND AND DISCLOSURE COUNSEL 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 resolution authorizing the City Attorney to execute agreements with five bond and disclosure counsel firms to establish 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.
It is also recommended that the resolution authorize the City Attorney 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, depending on development and potential refunding opportunities. These issuances typically include capital leases, 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 five (5) selected bond and disclosure counsel firms will create a pool of pre-qualified firms that can provide legal services to support City debt issuances (Attachments A-E).
DISCUSSION
Background
To support its debt issuances, the City periodically established a pool of bond and disclosure counsel firms. The City requires professional legal services to effectively ensure the format and content of legal documents used in the issuance of debt are complying with regulations pertaining to the issuance of debt and needs to be certain that it is issuing 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 bond and disclosure counsel pool was established February 24, 2004, by adopting Resolution 04-0120 that authorized the execution of agreements with bond and disclosure counsels for the issuance of municipal debt.
Present Situation
On January 18, 2018, the City released a Request for Proposals for bond and disclosure counsel services. The City sought qualified bond and disclosure counsel firms with the ability to:
• Provide high-quality legal services for issuing debt to construct capital facilities and infrastructure, and refinancing existing debt, and the formation of special taxing and assessment districts.
• Take the lead in the development of a myriad of legal documents necessary in the process of issuing debt and in the formation of a district.
• Assist and advise the City as to the most cost-effective legal plan for the debt that is being considered and recommend innovative alternatives.
The City received responses from ten interested bond and disclosure counsel firms, and all ten firms met the minimum qualifications. After careful review of each firm’s capabilities and ability to meet the City’s financing needs, the City’s selection committee recommended the City enter into agreements with five of the ten firms that submitted proposals:
• Jones Hall
• Norton Rose Fulbright US
• Orrick, Herrington, and Sutcliffe
• Quint and Thimmig
• Schiff Hardin
Five firms lacked the requisite experience and ability to provide services of a nature that would offer value across a broad spectrum of different types of debt issuances. The five firms selected to establish the City’s bond and disclosure counsel pool can provide services for all the types of financing that the City may pursue. With the establishment of this pool, the City will have a diverse group of highly-qualified legal firms available to help support City debt issuances and refundings.
FINANCIAL SUMMARY
Except for district formations, which the City pays from funds placed on deposit for this purpose by developers, all bond and disclosure counsel fees are paid from bond proceeds and are contingent upon the successful closing of bond transactions.
Staff will negotiate fees for bond and disclosure counsel services and bring those fees to Council for approval 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 Jones Hall
Attachment B - Contract with Orrick, Herrington, and Sutcliffe
Attachment C - Contract with Schiff Hardin
Attachment D - Contract with Quint and Thimmig
Attachment E - Contract with Norton Rose Fulbright US