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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 seven 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 seven (7) 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 through G).
DISCUSSION
Background
To support its debt issuances, the City periodically establishes a pool of bond and disclosure counsel firms. The City requires professional legal services to ensure the format and content of legal documents used in the issuance of debt comply with regulatory requirements and needs to be certain that it is issuing 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 May 15, 2018, via Council Resolution 2018-05-15-1102 which authorized the execution of agreements with bond and disclosure counsels for the issuance of municipal debt.
Present Situation
On September 25, 2023, the City released a Request for Statement Of Qualifications (RSOQ) 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, 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 seven interested bond and disclosure counsel firms, and all seven 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 seven of the firms that submitted proposals:
• Jones Hall
• Hawkins Delafield & Wood
• Orrick, Herrington, and Sutcliffe
• Norton Rose Fullbright US
• Arent Fox Schiff
• Richards Watson & Gershon
• Stradling Yocca Carlson & Rauth
The seven firms selected to establish the City’s bond and disclosure counsel pool can provide services for all types of financing 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. All agreements are for an initial term of five years, and as extended by the City Attorney thereafter.
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 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 Arent Fox Schiff
Attachment D - Contract with Hawkins Delafield & Wood
Attachment E - Contract with Norton Rose Fulbright US
Attachment F - Contract with Richards Watson & Gershon
Attachment G - Contract with Stradling Yocca Carlson & Rauth