HomeMy WebLinkAboutAgenda Report - January 20, 2016 I-02AGENDA ITEM
CITY OF LODI
COUNCIL COMMUNICATION
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AGENDA TITLE: Adopt Resolution Authorizing the City Manager to Engage the Professional
Services of Lamont Financial Services, Jones Hall, and JP Morgan Related to a
Partial Advance Refunding of the 2007 Series A Wastewater Certificates of
Participation (COPS)
MEETING DATE:
PREPARED BY:
January 20, 2016
Deputy City Manager
RECOMMENDED ACTION: Adopt Resolution authorizing the City Manager to engage the
professional services of Lamont Financial Services, Jones Hall, and
JP Morgan related to a partial advance refunding of the 2007 Series
A Wastewater Certificates of Participation (COPS).
BACKGROUND INFORMATION: The City has been presented with an opportunity to refinance a
portion of its 2007 Series A Wastewater COPS at attractive interest
rates and savings. In the current bond market, the existing COPS
appear to be an economically viable refinancing. A partial refunding is proposed at this time to capture
savings. A full refunding of these bonds is not possible until October 2017 under the terms of the original
issue. If the City waits until October 2017, there is a significant risk that the savings that can be captured
now will evaporate due to changes in market conditions. Preliminary indications show that the City can
harvest net present value savings of approximately $3.2 million.
In order to complete this refinancing, the City must assemble a financial team to handle various parts of
this transaction.
Lamont Financial Services has worked as a financial advisor for 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 refinancing. Lamont has
proposed a not -to -exceed fee of $50,000 for their services. Typically, financial advisor fees are paid with
the proceeds from bond issues, resulting in no out-of-pocket costs to the City.
Jones Hall has served as bond counsel for the City on a number of its last debt issuances. Jones Hall
has proven to be a very responsive, responsible firm 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. Jones
Hall has proposed a fee of $52,500, including out-of-pocket expenses of up to $2,500, for the work
associated with this transaction and will be paid from bond proceeds at closing, resulting in no out-of-
pocket costs for the City.
JP Morgan brought forward an unsolicited proposal for this transaction. JP Morgan was the senior
underwriter on the City's 2012 General Fund Refunding transaction and the co -underwriter on the City's
2012 Wastewater Refunding transaction. JP Morgan handled those transactions in an exemplary
manner and staff is recommending that they be engaged to complete this proposed refinancing. Total
underwriter costs, which will be negotiated close to the closing date of the issue, are estimated to be
approximately $55,140 and will be paid from bond proceeds.
FISCAL IMPACT: Preliminary estimates of net present value savings of approximately $3.2 million
can be captured on the partial advance refunding. Savings from this transaction would accrue to the
Wastewater fund.
FUNDING AVAILABLE: Refinancing bond proceeds.
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Jordan Ayers
Deputy City Manager
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Attachments
RESOLUTION NO. 2016-12
A RESOLUTION OF THE LODI CITY COUNCIL
AUTHORIZING THE CITY MANAGER TO ENGAGE THE
PROFESSIONAL SERVICES OF LAMONT FINANCIAL
SERVICES, JONES HALL, AND JP MORGAN RELATED TO
A PARTIAL ADVANCE REFUNDING OF THE 2007 SERIES A
WASTEWATER CERTIFICATES OF PARTICIPATION
WHEREAS, the City has an opportunity to refinance an existing debt issue 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, JP Morgan is recommended for selection as the Underwriter for the
refinancing.
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, and JP Morgan related to the partial advance refunding
of the 2007 Series A Wastewater COPS.
Dated: January 20, 2016
I hereby certify that Resolution No. 2016-12 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held January 20, 2016, by the following
votes:
AYES: COUNCIL MEMBERS — Johnson, Kuehne, Nakanishi, and
Mayor Chandler
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Mounce
ABSTAIN: COUNCIL MEMBERS — None
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tNIFER FERRAIOLO
City Clerk
2016-12