HomeMy WebLinkAboutFin Major Facilities Construction Financial Advisory Servicesc►rr of Agenda Item No:
4.f
n. &. Meeting Date: April 7, 2014
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Mark Moses
Finance Director
City Manager Approval / ►/h°'
SUBJECT: A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE
AN AGREEMENT WITH PUBLIC FINANCIAL MANAGEMENT, INC.
FOR FINANCIAL ADVISORY SERVICES RELATED TO MAJOR
FACILITIES CONSTRUCTION AND IMPROVEMENTS
RECOMMENDATION: ADOPT RESOLUTION
BACKGROUND: In November 2013, the local voters passed Measure E, a three-quarter cent
transactions and use tax with a term of twenty years. Effective April 1, 2014, this tax supplanted
that of Measure S, a one-half cent transactions and use tax. The City Council has prioritized the
additional funds from Measure E (i.e., the amounts collected in excess of the former transactions
and use tax), approximately $3.6 million/year, for public safety facilities construction and
improvements, and to address other critical public facilities infrastructure. The City Council
Facilities Subcommittee is beginning the process to identify these projects and determine their
respective priorities and costs. This process is expected to be completed during fiscal year 2014-
2015.
The City has historically been conservative with debt issuance. Most debt has been supported by
funds with dedicated revenue sources (i.e., redevelopment and parking). The one exception is the
2010 Pension Obligation Bonds ($4.5 million), which is funded mostly through the general fund.
In anticipation of new revenues from Measure E, the City has a need for a financial advisory firm
to work with the City's Facilities Subcommittee, infrastructure team of engineers, bond counsel
and management staff to provide the following services:
Financial planning- Pre -issuance
• Assist in general financial planning including a combination of debt financing and pay as
you go
• Assist in the analysis of capital financing alternatives, including general debt issuance and
private placement, available to the City and make recommendations on specific strategies
FOR CITY CLERK ONLY
File No.: La- -,:5b
Council Meeting: //. ®it
Disposition:����
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
Debt issuance preparation
• Provide City staff and City Council with initial debt issuance plan
• Provide analysis of current and upcoming events and trends related to the municipal bond
market
• Work with staff to prepare initial rating agency package providing information on current
rating agency concerns
• Prepare request for underwriter services
• Assist in evaluating underwriter proposals
• Assist in evaluating and implementing alternative funding strategies, if applicable (i.e.,
private placement, bridge financing, etc.)
Issuance
• Assist with rating agency presentations
• Assist in negotiations with underwriters
• Assist in preparation of the Official Statement and all other disclosure documents to be
used for the sale of bonds
• Assist with the risk analysis of various financial products and strategies proposed by the
underwriters
• Assist with negotiating fees of financing team
• Perform pre -pricing analysis using recent comparable issuances to assist with opening
pricing structure
• Confirm reasonableness of pricing in connection with sale of bonds
• Assist with investor relations
• Assist in evaluating the effectiveness of remarketing agents
• Provide on-going services as needed
ANALYSIS: In February 2014, the City issued a Request for Qualifications to five qualified
financial advisory firms with positive reputations and a strong presence in northern California.
Four of the five firms responded to the request. Of these four, three were selected by City staff to
be interviewed by the Facilities Subcommittee on March 11, 2014.
The interviews focused on the firms' relevant capital financing -related consultative resources,
experience and approach to assisting the City with its specific financing issues related to the
major facility construction and improvements with general fund resources made possible by
Measure E.
Following the three interviews, the Facilities Subcommittee selected Public Financial
Management, Inc. as the City's financial advisor to be recommended to the full City Council for
approval.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
FISCAL IMPACT: The proposed contract with Public Financial Management, Inc. has a limit
of $35,000. Prior to exceeding this threshold, staff will report back to the Facilities
Subcommittee and the City Council on the progress related to the financing of the projects
included in the scope of this activity, and request additional authority as needed to complete any
outstanding facilities financing work.
There are sufficient resources appropriated in the General Fund for these services.
RECOMMENDATION: Adopt Resolution.
ATTACHMENTS
Resolution Authorizing the City Manager to Execute an Agreement with Public Financial
Management, Inc.
Agreement with Public Financial Management, Inc.
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A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT WITH PUBLIC FINANCIAL MANAGEMENT, INC. FOR FINANCIAL
ADVISORY SERVICES
WHEREAS, the passage of Measure E provides additional transactions and use tax
revenues over a twenty-year period, effective April 1, 2014; and
WHEREAS, the City Council has prioritized the use of some of these funds for the
purpose of major public facilities construction and improvements; and
WHEREAS, the Facilities Subcommittee and City staff have identified a need for
specialized, advisory services to assist the City in developing and executing financing strategies,
including the potential issuance of debt; and
WHEREAS, the Facilities Subcommittee and City staff have completed a selection
process and recommended the firm Public Financial Management, Inc., to provide such financial
advisory services.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
HEREBY RESOLVES AS FOLLOWS:
The City Council of the City of San Rafael hereby approves and authorizes the City
Manager to execute an Agreement between the City of San Rafael and Public Financial
Management, Inc. for financial advisory services with an initial not -to -exceed amount of
$35,000, in a final form approved by the City Attorney's Office and effective upon contract
execution.
I, Esther C. Beirne, Clerk of the City of San Rafael, hereby certify that the foregoing
Resolution was duly and regularly introduced and adopted at a regular meeting of the San Rafael
City Council held on the 7`h day of April, 2014, by the following vote to wit:
AYES: Councilmembers: Bushey, Colin, Connolly and Mayor Phillips
NOES: Councilmembers: None
ABSENT: Councilmembers: McCullough
ESTHER C. BEIRNE, City Clerk
AGREEMENT FOR FINANCIAL ADVISORY SERVICES
This Agreement made and entered into dais ay of r- , by and between the
City of San Rafael (die "City") and Public Financial Management, Inc., (the "Financial Advisor" or
"PFM") sets forth the terms and conditions under which the Financial Advisor shall provide
services.
WHEREAS, City wishes to engage a financial advisor to develop and assist in implementing
the City's strategies to meet its current and long-term financial obligations and capital financing
needs and to render assistance in respect to debt transactions, and;
WHEREAS, PFM is capable of providing the necessary financial advisory services;
NOW, THEREFORE?, in consideration of the above mentioned premises and intending to
be legally bound hereby, City and PFM agree as follows:
I. SCOPE OF SERVICES
PFM shall provide, upon request of the City, services related to financial planning, strategic
advice, policy development, and debt issuance, as described in Exhibit A to this Agreement.
II. WORK SCHEDULE
The services of the Financial Advisor are to commence as soon as practicable after the
execution of this Agreement and upon request by the City for such service.
III. FINANCIAL ADVISORY COMPENSATION
For the services described, PFM's professional fees and expenses shall be paid as follows:
1. For non -transactional services related to financial planning, policy development and
financial analysis, PFM shall receive hourly rates as listed below. Fees for support staff are included
in the hourly rates for professionals.
Tide Hourly Rate
Managing Director $350.00
Director $325.00
Senior Managing Consultant $300.00
Senior Analyst $250.00
Analyst $225.00
2. It is understood by the parties that in the event that, and at such time as, the City
desires PFM to perform services related to the issuance of bonds or other financing transactions,
either or both parties may deem it to be appropriate and/or preferable for City to compensate PFM
on a different basis than that set forth in subsection 1 above. In such event, the parties intend that
they will negotiate a mutually agreeable basis for compensating PFM in connection with the
circumstances of each transaction.
3. Reimbursable Expenses
In addition to fees for services, PFM will be reimbursed for necessary, reasonable, and
documented out-of-pocket expenses incurred, including travel, meals, lodging, telephone, mail, and
other ordinary cost and any actual extraordinary cost for graphics, printing, and data processing that
are incurred by PFM. Appropriate documentation will be provided.
4. The fees and reimbursable expenses to be paid pursuant to this Agreement shall not
exceed $35,000.00, which amount may be increased by written amendment to this algreement
approved by the City Council.
IV. TERMS AND TERMINATION
This agreement shall remain in effect unless canceled in writing by either party upon thirty
(30) days written notice to the other party.
V. NON -ASSIGNABILITY
PFM shall not assign any interest in this Agreement or subcontract any of the work
performed under the Agreement without the prior written consent of the City.
VI. INFORMATION TO BE FURNISHED TO THE FINANCIAL ADVISOR
All information, data, reports, and records in the possession of the City necessary for
carrying out the work to be performed under this Agreement shall be furnished to the Financial
Advisor and the City shall cooperate with the Financial Advisor in all reasonable ways.
VII. NOTICES
All notices given under this Agreement shall be in writing, sent by registered United States
mail, with return receipt requested, addressed to the party for whom it is intended, at the address
designated below. The parties designate the following as the respective places for giving notice, to -
wit:
CITY OF SAN RAFAEL
1400 Fifth Avenue, Room 204
San Rafael, CA 94915-1560
Attention: Mark Moses, Finance Director
PUBLIC FINANCIAL MANAGEMENT, INC.
50 California Street, Suite 2300
San Francisco, CA 94111
Attention: Sarah Hollenbeck, Managing Director
VIII. TITLE TRANSFER
All materials, except functioning or dynamic financial models, prepared by PFM pursuant
exclusively to this Agreement shall be the property of the City. Subject to the exception described
above, upon termination of this Agreement, Financial Advisor shall deliver to the City copies of any
and all material pertaining to this Agreement.
IX. FINANCIAL ADVISOR'S REPRESENTATIVES
The City has the right to request, for any reason, PFM to replace any member of the
advisory staff. Should the City make such a request, PFM shall promptly suggest a substitute for
approval by the City.
X. INDEMNIFICATION
1. Financial Advisor shall, to the fullest extent permitted by law, indemnify, release,
defend and hold harmless the City, its officers, employees, and agents, from and against any claim,
demand, suit, judgment, loss, liability or expense of any kind, including but not limited to
attorney's fees, expert fees and all other costs and fees of litigation (collectively "Claims"), that
arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of Financial
Advisor in the performance of its duties and obligations under this Agreement or its failure to
comply with any of its obligations contained in this Agreement, except such Claims which are
caused by the sole negligence or willful misconduct of City.
2.. The defense and indemnification obligations of this Agreement are undertaken in
addition to, and shall not in any way be limited by, the insurance obligations contained in this
Agreement, and shall survive the terinination or completion of this Agreement for the full period of
time allowed by lay.
XI. INSURANCE
PFM shall maintain insurance coverage with policy limits not less than as stated in Exhibit B.
XII. INDEPENDENT CONTRACTOR
The Financial Advisor, its employees, officers and representatives at all times shall be
independent contractors and shall not be deemed to be employees, agents, partners, servants and/or
joint venturers of City by virtue of this Agreement or any actions or services rendered under this
Agreement.
XIII. NONDISCRIMINATION
The Financial Advisor shall not discriminate, in any way, against any person on the basis of age,
sex, race, color, religion, ancestry, national origin or disability in connection with or related to the
performance of its duties and obligations under this Agreement.
1.2
XIV. COMPLIANCE WITH ALL LAWS
The Financial Advisor shall observe and comply with all applicable federal, state and local laws,
ordinances, codes and regulations, in the performance of its duties and obligations under this
Agreement. The Financial Advisor shall perform all services under this Agreement in accordance with
these laws, ordinances, codes and regulations. The Financial Advisor shall release, defend, indemnify
and hold harmless City, its officers, agents and employees from any and all damages, liabilities, penalties,
fines and all other consequences from any noncompliance or violation of any laws, ordinances, codes or
regulations.
XV. CITY BUSINESS LICENSE / OTHER TAXES
The Financial Advisor shall obtain and maintain during the duration of this Agreement, a City
business license as required by die San Rafael Municipal Code. The Financial Advisor shall pay any and
all state and federal taxes and any other applicable taxes. City shall not be required to pay for any work
performed under this Agreement, until the Financial Advisor has provided City with a completed
Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and Certification).
XVI. APPLICABLE LAW
The laws of the State of California shall govern this Agreement.
XVII. ENTIRE AGREEMENT
This Agreement represents the entire agreement between City and PF1V1 and may not be
amended or modified except in writing signed by both parties.
IN WITNESS THER.I,OF, the City and PFM have executed this Agreement as of the day and year
herein above written.
ATTEST: CITY OF SAN RAFAEL ATTEST:
By:
Nancy Mackle, dity Manager
Date: G I mht
Esther Beirne, City Clerk
APPROVED AS TO FORM:
L j, -
Robert F. Epstein, City Attor y
ATTEST: PUBLIC FINANCIAL MANAGEMENT, INC.
By:S—?
(Witness) Name, Title v
Date: ��
EXHIBIT A
1. Services to be provided by PFM in connection with financial planning and analysis and
policy development may include, but not be limited to:
• Assist the City in the formulation of financial and debt policies and administrative
procedures.
• Assist the City with the development of the City's financial planning efforts and
process by assessing capital needs, identifying potential revenue sources, analyzing
financing alternatives such as pay as -you -go, lease/purchasing, short-term vs. long-
term financings, assessments, user fees, impact fees, developer contributions,
public/private projects, and grants and provide analysis of each alternative as
required as to the budgetary and financial impact.
• Analyze future debt capacity and review current debt structure, identifying strengths
and weaknesses of structure so that future debt issues can be designed to maximize
ability to finance future capital needs.
• Analyze opportunities to refund the City's outstanding debt.
• Review the reports of accountants, independent engineers and other consultants;
provide bond market assumptions if necessary for financial projections included in
such studies.
• Attend meetings with City officials and staff, consultants and other professionals.
• Undertake any and all other financial planning and policy development assignments
made by the City regarding bond and other financings, and financial policy including
budget, tax, cash management issues and related fiscal policy and programs.
• Assist the City in preparing financial presentations for City Council meetings and/or
other meetings and public hearings.
2. Services to be provided by PFM in connection with debt transactions may include, but not
be limited to:
• Develop a financing plan in concert with City's staff which would include
recommendations as to the optimal combination of cash funding and debt financing,
the type and structure of any borrowings, timing and number of financings, etc.
• Advise as to the various financing alternatives available to the City.
• Develop alternatives related to debt transaction including evaluation of revenues
available, maturity schedule and cash flow requirements.
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• Assist the City by recommending die best method of sale for any bonds, either as a
negotiated sale, competitive sale, or private placement. In die event of a negotiated
sale, assist in the solicitation, review and evaluation of any investment banking
proposals, and provide advice and information necessary to aid in such selection. In
a competitive sale, make recommendation as to the determination of the best bid.
• If appropriate, develop credit rating presentation and coordinate with the City the
overall presentation to rating agencies.
• Assist the City in the procurement of other services relating to debt issuance such as
printing, paying agent, registrar, etc.
• Identify key bond covenant features and advise as to the financial consequences of
provisions to be included in bond resolutions regarding security, creation of reserve
funds, flow of funds, redemption provisions, additional parity debt tests, etc.
• Provide regular updates of tax-exempt bond market conditions and advise the City as
to the timing of its debt issuances.
• Advise the City on the condition of the bond market at the time of sale, including
volume, timing considerations, competing offerings, and general economic
considerations.
• Assist and advise the City in negotiations with underwriters regarding fees, pricing of
the bonds and final terms of any security offering.
• Assist in the closing of dze transaction.
If the transaction is competitively sold, the services of the financial advisor will be modified
to reflect that process.
N
EXHIBIT B
INSURANCE REQUIREMENTS
A. Scope of Coverage. During the term of this Agreement, PFM shall maintain, at no
expense to City, the following insurance policies:
1. A commercial general liability insurance policy in the minimum amount of
one million dollars ($1,000,000) per occurrence/two million dollars ($2,000,000) aggregate, for
death, bodily injury, personal injury, or property damage.
2. An automobile liability (non -owned, and hired vehicles) insurance policy in
the minimum amount of one million dollars ($1,000,000) dollars per occurrence.
3. If any licensed professional performs any of the services required to be
performed under this Agreement, a professional liability insurance policy in the minimum amount
of two million dollars ($2,000,000) per occurrence/four million dollars ($4,000,000) aggregate, to
cover any claims arising out of the PFM's performance of services under this Agreement. Where
PFM is a professional not required to have a professional license, City reserves the right to require
PFM to provide professional liability insurance pursuant to this section.
4. If it employs any person, PFM shall maintain worker's compensation and
employer's liability insurance, as required by the State Labor Code and other applicable laws and
regulations, and as necessary to protect both PFM and City against all liability for injuries to PFM's
officers and employees. PFM' S worker's compensation insurance shall be specifically endorsed to
waive any right of subrogation against City.
B. Other Insurance Requirements. The insurance coverage required of the PFM in
subparagraph A above shall also meet the following requirements:
1. Except for professional liability insurance, the insurance policies shall be
specifically endorsed to include the City, its officers, agents, employees, and volunteers, as
additionally named insureds under the policies.
2. The additional insured coverage under PFM' S insurance policies shall be
primary with respect to any insurance or coverage maintained by City and shall not call upon City's
insurance or self-insurance coverage for any contribution. The "primary and noncontributory"
coverage in PFM'S policies shall be at least as broad as ISO form CG20 0104 13.
3. Except for professional liability insurance, the insurance policies shall
include, in their text or by endorsement, coverage for contractual liability and personal injury.
4. The insurance policies shall be specifically endorsed to provide that the
insurance carrier shall not cancel, terminate or otherwise modify the terms and conditions of said
insurance policies except upon ten (10) days written notice to the City.
5. If the insurance is written on a Claims Made Form, then, following
termination of this Agreement, said insurance coverage shall survive for a period of not less than
five years.
6. The insurance policies shall provide for a retroactive date of placement
coinciding with the effective date of this Agreement.
7. The limits of insurance required in this Agreement may be satisfied by a
combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall
contain or be endorsed to contain a provision that such coverage shall also apply on a primary and
noncontributory basis for the benefit of City (if agreed to in a written contract or agreement) before
City's own insurance or self-insurance shall be called upon to protect it as a named insured.
8. It shall be a requirement under this Agreement that any available insurance
proceeds broader than or in excess of the specified minimum insurance coverage requirements
and/or limits shall be available to City or any other additional insured party. Furthermore, the
requirements for coverage and limits shall be: (1) the minimum coverage and limits specified in this
Agreement; or (2) the broader coverage and maximum limits of coverage of any insurance policy or
proceeds available to the named insured; whichever is greater.
C. Deductibles and SIR's. Any deductibles or self-insured retentions in PFM's
insurance policies must be declared to and approved by City's City Attorney, and shall not reduce
the limits of liability. Policies containing any self-insured retention (SIR) provision shall provide or
be endorsed to provide that the SIR may be satisfied by either the named insured or City or other
additional insured party. At City's option, the deductibles or self-insured retentions with respect to
City shall be reduced or eliminated to City's satisfaction, or PFM shall procure a bond guaranteeing
payment of losses and related investigations, claims administration, attorney's fees and defense
expenses.
D. Proof of Insurance. PFM shall provide to City all of the following: (1) Certificates
of Insurance evidencing the insurance coverage required in this Agreement; (2) a copy of the policy
declaration page and/or endorsement page listing all policy endorsements for the commercial
general liability policy, and (3) excerpts of policy language or specific endorsements evidencing the
other insurance requirements set forth in this Agreement. City reserves the right to obtain a full
certified copy of any insurance policy and endorsements from PFM. Failure to exercise this right
shall not constitute a waiver of the right to exercise it later. The insurance shall be approved as to
form and sufficiency by City's City Attorney.
9
CITY OF SAN RAFAEL
ROUTING SLIP / APPROVAL FORM
INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OFA CONTRACT, AGREEMENT,
ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL /AGENCY.
SRRA / SRCC AGENDA ITEM NO. 4. f
DATE OF MEETING: April 7, 2014
FROM:
DEPARTMENT
DATE:
Mark Moses
Finance
March 25, 2014
TITLE OF DOCUMENT:
A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH PUBLIC
FINANCIAL MANAGEMENT, INC. FOR FINANCIAL ADVISORY SERVICES
1 f -n ( f ( ,.." /0r4- o c L rr d
ft V v( t vrN 4 C z"'.iYt-r- 1—
Department Head (signature)
(LOWER HALF OF FORM FOR APPROVALS ONLY)
APPROVED AS COUNCIL / AGENCY
AGENDA ITEM:
City Ma ger (signature)
NOT APPROVED
REMARKS:
APPROVED AS TO FORM:
p
........... LA6 -
City Attorney (signature)