HomeMy WebLinkAboutAgenda Report - May 4, 1988 (75)C0u.4CIL C 0 M M U N I C A T ON
TO: THE CITY COUNCIL
FROM: THE CITY MANAGER'S OFFICE
COUNCIL MEETING DATE
W 4, 1988
SUBJECT: APPROVE AGREEMENT WITH SEIDLER-FITZGERALD PUBLIC ENANCE TO PROVIDE FIlVANCIAL
SFIRVICES AND APPROVE AGREEMENT WITH JONES HALL HILL AWD WHITE TO PROVIDE LEGAL
SERVICES ASSOCIATED WITH THE 230 KV -INTERCONNECTION PROJECT.
PREPARED BY:
City Manager
RECOMMENDED ACTION: That the City Council adopt Resolution No. 88-63
authorizing the approval of agreements for financial
services with Seidler -Fitzgerald Publ is Finance, and
legal services with Jones Hall Hill and White
associated with the 230 -KV Interconnection project.
BACKGROUND INFORMATION: At the "Shirtsleeve" session. of April 26, 1988, the
City Council heard presentations from Mr. John
Fitzgerald, of the finance consulting firm of
Seidler -Fitzgerald Public Finance, and Me Brian
Quint, of the law firm of Jones Hall Hill and White
concerning certain services each would provide in regard to the proposed
230 -KV Interconnection project. Attached (Exhibit A) is a copy of the
resolution authorizing City Council approval of these agreements. Also
attached (Exhibit B and C) are copies of the agreements themselves. Both
agreements are standard for these kinds of professional services. The fee for
financial services will be i n the vicinity of $112,500. The fee for legal
services will be approximately $45,000. The payment of these fees are
included in total amount of the Certificates of Participation to be sold and
is included in the estimated issuance cost of $200,000 as presented.
The issuance cost will represent only about 2% of
what will be the total issue. Combined with the 1% discount rate, this
results in a total issuance cost/discount rate of approximately 3% of the
issue. This is the result of the unusual strength of this electric utility
issue. This compares with the normal total cost in this area of 5-6%, which
i s probably what vie can look to at the time of the financing of the White
Slough wastewater treatment plant expans i on.
TAP :b r
Attachments
TXTA.07A COUNC354
Respectfully submitted,
Thomas A. Peterson
City Manager
22028-02 JHHW:BD6:k!a 03.^ti88
04'2.'.'88
CITY OF L O D I
RESOLUTION NO. 88-63
A RESOLUTION APPOINTING SPECIAL LEGAL COUNSEL AND
A FINANCIAL ADVISOR, APPROVING, AUTHORIZING AND
DIRECTING EXECUTION OF AN AGREEMENT FOR LEGAL
SERVICES, AND AN AGREEMENT FOR FINANCIAL ADVISORY
SERVICES ALL IN CONNECTION WITH THE PROPOSED 1988
ELECTRIC SYSTEM DIRECT INTERCONNECTION PROJECT
Z3340
WHEREAS, the City oF Lodi (the "City") plans to finance the construction cf certain
improvements to its municipal electric system by entering into such agreements as may
be necessary and to authorize the execution, delivery and sale of certificates of
participation in payments to be made under such agreements, and it is desirable to
appoint special legal counsel and a financial advisor in connectior?therewith;
NOW, THEREFORE, BE Tf RESOLVED by the City Council cf the City oF Lodi,'as
follows:
Section 7. The law firm of Jones Hall Hill & White, A Professional Law
Corporation. San Francisco, California ("Jones Hall") is hereby appointed to act as
special legal counsel in connection with said financing proceedings.
Section 2. That certain Agreement for Legal Services by and between the City
and Jones Hall for special legal services in connection with said financing proceedings, a
copy cf which is on file with the City Clerk, is hereby approved. The Mayor, the City
Manager or the Finance Director is hereby authorized and directed in the name and on
behalf cf the City to execute said Agreement and the City Clerk to hereby authorized and
directed to attest to such official's signature.
Section 3. The firm cf Seidler -Fitzgerald Public Finance, Los Angeles, California
("Seidler -Fitzgerald") is hereby appointed to act as financial advisor to the City in
connection with said financing proceedings.
Section 4. That certain Agreement for Financial Advisory Services by and
between the City and Seidler -Fitzgerald for financial advisory services in connection with
said financing proceedings, a copy oF which is on file with the City Clerk, is hereby
approved. The Mayor, the City Manager or the Finance Director is hereby authorized and
directed in the name and OR behalf cf the City to execute said Agreement and the City
Clerk is hereby authorized and directed to attest to such official's signature.
Section 5. Appropriate officers oF the City are hereby authorized and directed, in
association with Jones Hall and with Seidler -Fitzgerald, to take such actions and to
prepare such documents as shall be necessary and appropriate in connection with such
financing proceedings.
Section &_ This Resolution shall take effect upon its adoption by this City Council.
t hereby certify that the foregoing resolution was duly adopted at a meeting of the
City Council of the City of Lodi duly held on the 4th day of May, 1988, by the following
vote:
AYES, and in favor of, Councilmembers:
NOES. Councilmembers:
ABSENT, Councilmembe.s:
[S E A Lj
ATTEST:
COClerk
Approved as to Foran:
mo
Bobby W. McNatt —
City Attorney
Hinchman, Olson, Reid t Snider (Mayor
Pro Tempore)
None
Pinkerton
CITY OF LODI
Mayor Pro Tempore
AGREEMENT FOR LEGAL SERVICES
(1988 Electric System Improvement Project)
THIS AGREEMENT FOR LEGAL SERVICES is made and entered into this 4th
day cf May , 1488, by and between the CITY OF LODI, CALIFORNIA (the "City"),
and JONES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION, San
Francisco. California ("Attorneys").
WITN ESSETH:
VMERFAS, the City proposes to finance the construction of certain improvements
to its electric system by entering into such agreements as may be necessary and to
authorize the execution, delivery and sale cf certificates of participation in payments to
be made under such agreements (the "Certificates"); and
WHEREAS. the City has determined that Attorneys are specially trained and
experienced to provide services for the financing and the execution and delivery Cf the
Certificates; and
WHEREAS, the public interest, economy and general welfarewill be served by this
Agreement for Legal Services;
NOW, THEREFORE. IT IS HEREBY AGREED, as follows:
1. Duties cf Attorneys. Attorneys shall prov;de legal services in connection with
the authorization, issuance and consummation ri the financing proceedings relating to
execution and delivery of the Certificates. Such services shall include the following:
a. Confer and consult with the officers and administrative staff cf the City
as to matters relating to the financing proceedings;
b. Attend a# meetings of the City Council and any administrative meetings
at which any financing proceedings relating to the Certificates are to be
discussed, deemed necessary by Attorneys for the proper planning cf the
financing proceedings or when specifically requested to attend;
c. Prepare any required installment sale agreements, trust agreements,
assignment agreements, agency agreements, amendments to existing financing
documents, indentures, ordinances and all resolutions, notices and legal
documents necessary forthe proper conduct cf the financing proceedings relating
to the execution and delivery cf the Certificates;
d. Review all financial documents for legal sufficiency;
e. Review, without undertaking an independent investigation, any official
statement or other disclosure document prepared in connection with the financing
proceedings to assure correctness cf disclosure relating to the legal documents;
f. Prepare and provide a signature and no -litigation certificate. an
arbitrage certificate and any and all other closing documents required to
accompany delivery cf the Certificates;
g. Prepare and provide a complete transcript of the conduct cf the
proceedings necessary to accompany delivery cf the Certificates;
h. Subject to the completion of proceedings to the satisfaction Cf
Attorneys, provide the legal opinion cf Attorneys that the interest due with respect
to the Certificates is excludable from gross income for purposes of federal income
taxation and that such interest is exempt from California personal income
taxation;
i. Subject to the completion of proceedings to the satisfaction cf
Attorneys, provide the legal opinion cf Attorneys approving in all regards the
legality cf all proceedings relating to the execution and delivery cf the Certificates;
and
i. Conferand consult with City officials and agents with regard to problems
which may arise during the servicing and payment of principal and interest due
with respect to the Certificates.
2. Compensation. For the services set forth under Section 1, Attorneys shall be
paid the percentage compensation set forth below:
a. One percent (1%) cf the principal amount of the Certificates to a
principal amount of $1,000,000 (with a minimum fee of $15,000 in the event of
issuance cf a principal amount cf less than $1,000,000), plus;
b. One-half percent (1/2%) of the principal amount cf the Certificates in
excess cf $1,000,000,but less Vian or equal to $5,000,000, plus;
c. One-quarter percent (1/4%) cf the principal amount of the Certificates
in excess of $5.000.000. but less than or equal to $10,000,000, plus;
d. One-eighth percent (1/8%) cf the principal amount cf the Certificates in
excess cf $10,000,000, but less than or equal to $20,000,000, p!us;
e. One -sixteenth percent (1/16%) of the principal amount cf the
Certificatesin excess cf $20,000,000.
In addition, Attorneys shall be reimbursed for any costs advanced by Attorneys on
behalf of the City, including delivery and messenger services, closing costs, duplication
costs, transcript binding costs and expenses for travel outside the State of California, if
any, but specificallyexcluding travel expenses within the State of California.
•
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Payment of said fees and expenses shall Ue entirel contingent. shall be due and
payable upon the TeTyery of the Certificates and shall e payable so e ym e
proceeds of the Certificates or other available monevs cf the Citv.
3. Exceptions. Any services rendered in any litigation involving the City or the
financing proceedings relating to t h e Certificates are excepted from the services to be
rendered for the above compensation. For such services which Attorneys are directed to
render for and on behalf cf the City, compensation shall be on the basis CC reasonable
feesto be agreed upon by the City and Attorneys.
4. Termination of Agreement. This Agreement for Legal Services shall h e
indefinite as to term but may be terminated at any time by the City, with or without
cause, upon ninety (90) days' written notice to Attorneys. In the event of such
termination, ai! finished and unfinished documents shall, at the option of the City,
become its property and shall be delivered by Attorneys.
IN WITNESS WHEREOF. the parties hereto have caused these presents to be
executed by their respective officersthereunto duly authorized as of the day and year
first above written.
Approved as to Form:
Bobby w. l�Icivatt "
City Attorney
23319
CITY OF L.ODI, CALIFORNIA
By���L�
Title jonn 7_ (Randy) Snider
:,a -or Pro Tempore
,l
j;
Attest
City C:erk
JONES HALL HILL &WHITE,
A Professional Law Corporation
By
Bnrioj KD.Cruint
A G R E E M E N T
THIS AGREEMENT is made and entered into this 4th day
of INlay , 1988, by and between the
CITY OF LODI, a political subdivision of the
State of California, hereinafter referred to as
"CITY,"
A
N
D
SEIDLER-FITZGERALD PUBLIC FINANCE, a division of
SEIDLER AMDEC SECURITIES INC., hereinafter referred
to as "ADVISOR."
W I T N E S S E T H:
WHEREAS, CITY has determined it will be necessary to
issue Certificates of Participation (COP) in the amount of
approximately $9,000,000 to construct an Electrical Transmission
Line, Substation and Transformer; and
WHEREAS, it is necessary for CITY to employ a financial
advisor to aid in the preparation of the COP issue; and
WHEREAS, ADVISOR is qualified to Serve as financial
advisor to assist CITY with the proposed issuance of the COP's to
finance said plant expansion; and
ADVISOR.
WHEREAS, it is in the" best interest of CITY to hire
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, THE PARTIES
HERETO AGREE AS FOLLOWS:
A. The services of ADVISOR shall consist of the following:
1. Together with the CITY, bond counsel, trustee,
develop a financing plan consistent with the goals and
objectives established by the CITY.
2. Upon request of the CITY, participate in any
contract negotiations with the private sector participants
related to a financing to assure contracts that will bear up
under investor scrutiny.
3. Size the issue taking into account project costs,
including any architect and engineering fees, interest
during construction, accounting costs, rating fee and other
cost of issuance items while minimizing the principal
amount.
4. Explore possible use of insurance to replace a
COP reserve -fund.
5. In cooperation with bond counsel, review all
documents necessary to implement the proposed financing
plan, including the supportive documents providing security
to the individual financing form.
6. Structure those terms and conditions such as maturi-
ties, coupon rates, call features and security features for
the COP issue which most advantageously meet demands of
current market conditions and meet the objectives of the
CITY and ensure the lowest possible net interest cost.
7. Provide technical support in defining disclosure
issues necessary to meet GFOA guidelines.
8. Develop and write official statement for the com-
petitive sale of necessary certificates of participation.
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10. Explore possibility and benefits of insuring the
issue.
11. Assist with marketing the CITY's issue, including
obtaining rhe best rating possible from the rating agencies
and arranging rating agency trips if necessary.
12. Participate on behalf )f the CITY in meetings and
negotiations with bond rating agencies or municipal bond
insurance firms, as necessary.
13- Arrange for the printing of the preliminary and
final official statements.
14. Advise the CITY on the timing of the sale in
relation to the market conditions and financing needs, to
ensure maximum savings.
15. Continuously monitor the tax-exempt market and keep
the CITY apprised of market movements, trends and develop-
ments.
15. Organize and participate in information meetings, if
needed, to create investor interest in the COP issue for
strong competitive bidding.
17. Attend the public opening of proposals submitted for
the purchase, evaluate the bids, and assist with tabulation
and award of the bids submitted.
18. Arrange for distribution of the final official
statements to members of the winning syndicate.
19. Arrange for the printing, and assist in the signing
and delivery.
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20. Advise as to the best method of investing the
proceeds of the sale.
21. Create in the market a continuing demand for sub-
sequent issues that will be marketed from time to time.
22. Maintain a continuity of representation at all
meetings of the issue which involve discussion of the trans-
actions, as well as representation at working group meetings.
23. Mr. John C. Fitzgerald, or such other officer of
ADVISOR as is approved by CITY, shall be available to advise
CITY and attend meetings where needed.
B. For and in consideration of the services to be performed
hereunder, CITY shall pay to ADVISOR, and ADVISOR shall accept
from CITY, a fee`of 1.25 percent of the gross project cost plus
out-of-pocket expenses not exceeding $5,000 relating to travel,
including a rating agency trip to New York City, if needed, which
sum shall become due and payable to ADVISOR only if, and when,
the hereinabove described COP issue is sold and the proceeds
received therefrom. If, for any reason, said COP issue does not
sell, ADVISOR shall receive no fee whatsoever..
CITY shall pay and be responsible for the following
costs incident to the COP issue:
1. Bond counsel fees and expenses.
2. First Year Trustee Fee, including the first year's
administration fee, acceptance fee and out-of-pocket
expenses.
3. Printing costs of Preliminary and Final Official
Statements and Notice of Sale.
4. Printing costs of the COP's.
5. Rating fee for Moody's Investors Service.
6. Rating fee for Standard & Poor's Corporation
7. Consent letter from outside auditor.
8. Title Insurance, if needed.
9. Overlapping Debt Statement.
10. Publishing the sale.
IN WITNESS WHEREOF, the parties hereof have executed
this Agreement on the day and year first hereinabove written.
CITY OF LODI, a political
subdivision of the State of
California
Attests .h, r.�t�
Alice M. Reimche
City Clerk
Approved as to fonn:
Bobby W. McNatt
City Attorney
John R. (Randy) Snider
N7ayor- Pro Tenmore
SEIDLER-FITZGERALD PUBLIC FINANCE
( a division of SEIDLER AMDEC
SECURITIES INC.)
By
n