HomeMy WebLinkAboutAgenda Report - June 6, 2012 C-10AGENDA ITEM C W I D
'• CITY OFLODI
COUNCIL COMMUNICATION
• N
AGENDA TITLE: Adopt Resolution Authorizing the City Managerto Engagethe Professional
Services of Lamont Financial Services, Jones -Hall, Stone and Youngberg, LLC
and JP Morgan Related to Refinancing the 2002 General Fund Certificates of
Participation (COPS), the 2003B CSCDA Wastewater COPS and the 2004
Wastewater COPS
MEETING DATE: June 6,2012
PREPARED BY: Deputy City Manager
RECOMMENDEDACTION: Adopt Resolution authorizing the City Managerto engage the
professional services of Lamont Financial Services, Jones -Hall,
Stone and Youngberg, LLC and JP Morgan related to refinancing
the 2002 General Fund Certificates of Participation (COPS), the 2003B CSCDA Wastewater COPS and
the 2004 Wastewater COPS.
BACKGROUND INFORMATION: The City has been presented with an opportunity to refinance a
number of its outstanding bond issues at attractive interest rates
and savings. In the current bond market, the existing 2002 General
Fund COPS, 2003B CSCDA Wastewater COPS and the 2004 Wastewater COPS appear to be
economically viable refinancings. Due to the different natures of the underlying credits associated with
these existing debt issues (General Fund vs. Wastewater Fund), the City will structure the refinancings in
such a mannerto maximize the potential savings. As such, the refinancings will be handled as two
separate transactions, running on parallel timelines. Preliminary indications show that the City can
harvest net present value savings of approximately $2.6 million on the General Fund refinancing and
approximately $1.3 million on the Wastewater refinancing.
In order to complete these refinancings, the City must assemble a financial team to handle various parts
of these transactions.
Lamont Financial Services has worked as a financial advisorfor the City on a number of debt issuances
over the years. Staff has been pleased with the expertise and services provided by Lamont and
recommends that Council approve a contract for services related to the subject refinancings. Lamont has
proposed a not -to -exceed fee of $100,000 for the combined refinancings. Typically, financial advisor
fees are paid with the proceeds from bond issues, resulting in no out-of-pocket costs to the City.
Jones -Hall served as bond counsel for the City on its last debt issuance, the Water Treatment Plant.
Jones -Hall proved to be a very responsive, responsiblefirm and provided services at a cost much lower
than competing firms. Staff recommends that Jones -Hall be awarded a contract to act as bond counsel
for these re -financing transactions. Jones -Hall has proposed a fee of $95,000 for the work associated
with both refundings and will be paid from bond proceeds at closing, resulting in no out-of-pocket costs
for the City.
APPROVED:
Ko_nradt Bartlam, City Manager
Lamont has received proposals for underwriting services from Stone and Youngberg, LLC and from JP
Morgan. After evaluating the proposals, Lamont and staff are recommending that we engage Stone and
Youngberg, LLC as the senior underwriterfor the Wastewater refinancing and as the co -underwriter for
the General Fund refinancing. Lamont and staff are recommending that JP Morgan be engaged as the
senior underwriterfor the General Fund refinancing and also act as the co-underwriterfor the
Wastewater refinancing. Total underwriter costs, which will be negotiated close to the closing date of the
issues, are estimated to be approximately $200,000 and will be paid from bond proceeds.
FISCAL IMPACT: Preliminary estimates of net presentvalue savings of approximately $2.6 million on
the General Fund refinancing and $1.3 million on the Wastewater refinancing.
FUNDING AVAILABLE: Refinancing bond proceeds.
Jordan Akers
Deputy City Manager
JArjja
Attachments
RESOLUTION NO. 2012-77
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING
THE CITY MANAGERTO ENGAGE THE PROFESSIONAL
SERVICES OF LAMONT FINANCIAL SERVICES, JONES -HALL,
STONE AND YOUNGBERG, LLC, AND JP MORGAN RELATED
TO REFINANCINGTHE 2002 GENERAL FUND CERTIFICATES
OF PARTICIPATION (COPS), THE 2003B CSCDA
WASTEWATER COPS, AND THE 2004 WASTEWATER COPS
__-_ _-____ as _ ---- _ _--ss®asaa_o ansa _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ aaa�aa
WHEREAS, the City has an opportunity to refinance three existing debt issues at
attractive interest rates resulting in savings to the City and its ratepayers; and
WHEREAS, the City must assemble a financial team to handle various parts of the
refinancing transactions; and
WHEREAS, Lamont Financial Services is recommended for selection as the Financial
Advisor for this transaction; and
WHEREAS, Jones -Hall is recommended for selection as Bond Counsel for this
transaction; and
WHEREAS, Stone and Youngberg, LLC is recommended for selection as the Senior
Underwriter for the refinancing of the two Wastewater issues and as co -underwriter for the
General Fund refinancing issue; and
WHEREAS, JP Morgan is recommended for selection as the Senior Underwriter for the
refinancing of the General Fund refinancing issue and as co -underwriter for the two
Wastewater issues.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lodi does
hereby authorize the City Manager to engage the professional services of Lamont Financial
Services, Jones -Hall, Stone and Youngberg, LLC, and JP Morgan related to refinancing the
2002 General Fund COPS, the 2003B CSCDA Wastewater COPS, and the 2004 Wastewater
COPS.
Dated: June 6, 2012
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hereby certify that Resolution No. 2012-77 as passed and adopted by the City Council
of the City of Lodi in a regular meeting held June 6, 2012, by the following votes:
AYES: COUNCIL MEMBERS — Hansen, Johnson, Katzakian, Nakanishi, and
Mayor Mounce
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS— N
RANDI JOHL
City Clerk
2012-77