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R-95-07-13-10F - 7/13/1995July 17, 1995 Mr. Bob Bennett City Manager City of Round Rock 221 E. Main Street Round Rock, Texas 78664 Dear Bob: We would like to thank you and the City Council for giving First Southwest Company the opportunity to work with you for another three years. We feel privileged to have been a part of Round Rock's team through some very interesting times. The folks we get to work with at the City are the most capable and professional in the business, and our role working in support of City staff has been made easy as a result. We look forward to each and every challenge we will share over the next three years. cc: Charles Culpepper David Kautz RECEIVED Jul_ 1 9 1995 4)5.Of1_ !3 /ar mor FIRST SOUTHWEST COMPANY Garry R. !Cornball INVESTMENT BANKERS 370 San Jacinto Center • 98 San Jacinto Boulevard • Austin, Texas 78701 - 4039.512- 476 1372 • FAX 512 -476 -4597 Mayor Charles Culpepper Mayor Pro-tem Earl Palmer Council Members Robert Straka Rod Morgan Rick Stewart Martha Chavez Jimmy Joseph City Manager Robert L Benner?, Jr. City Attorney Stephan L Sheers July 17,1995 George Janning - - First Southwest Company 98 San Jacinto Boulevard, Suite 370 Austin, TX 78701 Dear Resolution No. R- 95- 07- 13 -10F was approved by the Round Rock City Council on July 13, 1995. Enclosed is a copy of the resolution, an original proposal and agreement for your files. If you have any questions, please do not hesitate to call. g: Joanne Land Assistant City Manager/ City Secretary Enclosure(s) THE CITY OF ROUND ROCK 221 East Main Street Round Rock, Texas 78664 512-255-3612 Fax 512-255-6676 1 -800- 735 -2989 (TDD) 1 -800- 735 -2988 (Voice) ATTEST: fld AA. KS /RESOLUTION RS50713F RESOLUTION NO. R- 95- 07- 13 -10F WHEREAS, the City of Round Rock, Texas, will, from time to time, consider the authorization and issuance of indebtedness in amounts and forms which cannot presently be determined, and WHEREAS, First Southwest Company ( "First Southwest ") has been requested to submit a proposal to provide professional services to the City in the capacity of Financial Advisor, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed on behalf of the City to enter into an agreement with First Southwest to provide professional services to the City in the capacity of Financial Advisor, a copy of said agreement being attached hereto and incorporated herein for all purposes. RESOLVED this 13th day of July, 1995. QM LAND, City Secretary 4i CHARLES CIILF ER, Mayor City of Roun Rock, Texas PROPOSAL AND AGREEMENT For FINANCIAL ADVISORY SERVICES By and Between CITY OF ROUND ROCK, TEXAS And FIRST SOUTHWEST COMPANY It is understood that the City of Round Rock, Texas (the "Issuer "), will have under consideration from time to time the authorization and issuance of indebtedness in amounts and forms which cannot presently be determined and that in connection with the authorization, sale, issuance and delivery of such indebtedness of the Issuer, First Southwest Company ( "FSWC ") has been requested to submit a proposal to provide professional services to the Issuer in the capacity of Financial Advisor ( "Financial Advisor "). FSWC is pleased to comply with this request and submit the following proposal for consideration. This proposal, if accepted by the Issuer, shall become the agreement (the "Agreement ") between the Issuer and FSWC effective at the date of its acceptance as provided for herein below. 1. This agreement shall apply to any and all evidences of indebtedness or debt obligations that may be authorized and issued or otherwise created or assumed by the Issuer (hereinafter referred to collectively as the "Debt Instruments ") from time to time during the period in which this Agreement shall be effective. 2. FSWC agrees to provide its professional services and its facilities as Financial Advisor and agree to direct and coordinate all programs of financing as may be considered and authorized during the period in which this Agreement shall be effective and to assume and pay those expenses set out in Appendix A, provided, however, that FSWC's obligations to pay expenses shall not include any costs incident to litigation, mandamus action, test case or other similar legal actions. 3. FSWC agrees to perform the following duties normally performed by such financial advisors and all other duties as, in our judgment, may be necessary or advisable: a. FSWC will conduct a survey of the financial resources of the Issuer to determine the extent of its capacity to authorize, issue and service debt. This survey will include an analysis of the existing debt structure as compared with the existing and projected sources of revenues which may be pledged to secure payment of debt service and, where appropriate, will include a study of the trend of the assessed valuation, taxing power and present and future taxing requirements of the Issuer. In the event revenues of existing or projected facilities operated by the Issuer are to be pledged to repayment of the Debt Instruments then under consideration, the survey will take into account any outstanding indebtedness payable from the revenues thereof additional revenues to be available from any proposed rate increases and additional revenues, as projected by consulting engineers employed by the Issuer, resulting from improvements to be financed by the Debt Instruments under consideration. FSWC will also take into account future financing needs and operations as projected by the Issuer's staff and consulting engineers or other experts, if any, employed by the Issuer. b. On the basis of the information developed by the survey described above, and other information and experience available to FSWC, FSWC will submit to the Issuer its recommendations on the Debt Instruments under consideration including such elements as the date of issue, interest payment dates, schedule of principal maturities, options of prior payment, security provisions, and any other additional provisions designed to make the issue attractive to investors. All recommendations will be based upon the professional judgment of FSWC with the goal of designing Debt Instruments 1 which can be sold under terms most advantageous to the Issuer and at the lowest interest cost consistent with all other considerations. c. FSWC will advise the Issuer of current bond market conditions, forthcoming bond issues and other general information and economic data which might normally be expected to influence interest rates or bidding conditions so that the date of sale of the Debt Instruments may be set at a time which, in our opinion, will be favorable. d. FSWC understands the Issuer has retained, or will retain, firms of municipal bond attorneys (the "Bond Counsel') whose fees will be paid by the Issuer. In the event it is necessary to hold an election to authorize the Debt Instruments then under consideration, FSWC will assist in coordinating the assembly and transmittal to Bond Counsel of such data as may be required for the preparation of necessary petitions, orders, resolutions, ordinances, notices and certificates in connection with the election. e. FSWC will recommend the method of sale of the Debt Instruments that, in its opinion, is in the best interest of the Issuer and will proceed, as directed by the Issuer, with one of the following methods: 1. Advertised Sale: FSWC will supervise the sale of the Debt Instruments at a public sale in accordance with procedures set out herein. FSWC reserves the right, alone or in conjunction with others, to submit a bid for any Debt Instruments issued under this Agreement which the Issuer advertises for competitive bids. In compliance with Rule G-23 of the Municipal Securities Rulemaking Board, FSWC will request consent to bid in writing, in any instance wherein FSWC elects to bid, prior to submitting a bid for each installment of Debt Instruments. 2. Negotiated Sale: FSWC will recommend one or more investment banking firms as managers of an underwriting syndicate for the purpose of negotiating the purchase of the Debt Instruments and in no event will FSWC participate either directly or indirectly in the underwriting of the Debt Instruments. FSWC will collaborate with any managing underwriter selected and counsel to the underwriters in the preparation of the Official Statement or Offering Memorandum. FSWC will cooperate with the underwriters in obtaining any Blue Sky Memorandum and Legal Investment Survey, preparing Bond Purchase Contract, Underwriters Agreement and any other related documents. The costs hereof including the printing of the documents other than the Official Statement or Offering Memorandum, will be paid by the underwriters. f When appropriate, FSWC will advise financial publications of the forthcoming sale of the Debt Instruments and provide them with all pertinent information. g. FSWC will coordinate the preparation of the Notice of Sale and Bidding Instructions, Official Statement, Official Bid Form and such other documents as may be required. FSWC will submit to the Issuer all such documents for examination, approval and certification. After such examination, approval and certification, FSWC will provide the Issuer with a supply of all such documents sufficient to its needs and will distribute by mail sets of the same to prospective bidders and to banks, life, fire and casualty insurance companies, investment counselors and other prospective purchasers of the Debt Instruments. FSWC will also provide sufficient copies of the Official Statement to the purchaser of the Debt Instruments in accordance with the Notice of Sale and Bidding Instructions. h. FSWC will, after consulting with the Issuer, arrange for such reports and opinions of recognized independent consultants FSWC deems necessary and required in the successful marketing of the Debt Instruments. i. Subject to the approval of the Issuer, FSWC will organize and make arrangements for such information meetings as, in its judgment, may be necessary. j. FSWC will make recommendations to the Issuer as to the advisability of obtaining a credit rating, or ratings, for the Debt Instruments and, when directed by the Issuer, FSWC will 2 coordinate the preparation of such information as, in its opinion, is required for submission to the rating agency, or agencies. In those cases where the advisability of personal presentation of information to the rating agency, or agencies, may be indicated, FSWC will arrange for such personal presentations, which will include at least two representatives from the Issuer. k. FSWC will assist the staff of the Issuer at any advertised sale of Debt Instruments in coordinating the receipt and tabulation and comparison of bids and FSWC will advise the Issuer as to the best bid. FSWC will provide the Issuer with its recommendation as to acceptance or rejection of such bid. 1. As soon as a bid for the Debt Instruments is accepted by the Issuer, FSWC will proceed to coordinate the efforts of all concerned to the end that the Debt Instruments may be delivered and paid for as expeditiously as possible. FSWC will assist the Issuer in the preparation or verification of final closing figures incident to the delivery of the Debt Instruments. m. FSWC will maintain contact with Bond Counsel in the preparation of all legal documents pertaining to the authorization, sale and issuance of the Debt Instruments. It is presumed that Bond Counsel will provide an unqualified legal opinion as to the legality of the issuance of the Debt Instruments at the time of delivery. n. If requested, FSWC will counsel the Issuer with respect to the selection of a Paying Agent/Registrar for the Debt Instruments, and FSWC will assist in the preparation of agreements pertinent to these services and the fees incident thereto. o. In the event formal verification by an independent auditor of any calculations incident to the Debt Instruments is required, FSWC will make arrangements for such services. p. FSWC agrees to do, or cause to be done, all work incident to printing of the Debt Instruments, obtaining approval, as may be required by the Attomey General, registration by the Comptroller of Public Accounts and delivery to the purchaser. q. After the closing of the sale and delivery of the Debt Instruments, FSWC will deliver to the Issuer a schedule of annual debt service requirements on the Debt Instruments. In coordination with Bond Counsel, FSWC will assure that the Paying Agent/Registrar has been provided with a copy of the authorizing ordinance, order or resolution. r. FSWC will be represented at any and all meetings of the governing body of the Issuer, its staff; representatives or committees as requested at all times when FSWC may be of assistance or service and the subject of financing is to be discussed. s. FSWC will advise the Issuer and its staff of changes, proposed or enacted, in Federal and State laws and regulations which would effect the municipal bond market. t. FSWC will work with the Issuer, its staff and any consultants employed by the Issuer in developing financial feasibility studies and analyzing alternative financing plans. 3. In addition to the services set out above, FSWC agrees to provide the following services when so requested: a. FSWC will provide its advice as to the investment of certain funds of the Issuer. FSWC will, when so directed, purchase those investments authorized to be purchased and FSWC will charge a normal and customary commission for each such transaction. b. FSWC will provide its advice and assistance with regard to exercising any call and/or refunding of any outstanding Debt Instruments. c. FSWC will provide its advice and assistance in the development of and financing for, any capital improvements programs of the Issuer. 3 d. FSWC will provide its advice and assistance in the development of the long -range financing plan of the Issuer. Issuer. e. FSWC will provide any other financing planning services as may be requested by the 4. The fee due to FSWC in accordance with Appendix A attached hereto, any other fees as may be mutually agreed and all expenses for which FSWC is entitled to reimbursement, shall become due and payable concurrently with the delivery of the Debt Instruments to the purchaser. 5. This Agreement shall become effective at the date of acceptance by the Issuer set out herein below and remain in effect thereafter for a period of three years from the date of acceptance provided, however, this Agreement may be terminated with or without cause by the Issuer upon thirty (30) days written notice. In the event of such termination, it is understood and agreed that only the amount due to FSWC for services provided and expenses incurred to date oftermination will be due and payable. No penalty will be assessed for termination of this Agreement. This Agreement is submitted in duplicate originals. When accepted by the Issuer, it, together with Appendix A attached hereto, will constitute the entire Agreement between the Issuer and FSWC for the purposes and the considerations herein specified. Acceptance will be indicated by the signature of authorized officials of the Issuer together with the date of acceptance on both copies and the return of one executed copy to FSWC. ATTEST: tie f� ssismbrr CIry mMA& ¢/ ee s&Ceeraey (SEAL) Respectfully submitted, FIRST SOUTHWEST COMPANY ACCEPTANC ACCEPTED pursuant to Ordinance adopted by the City Council of the City of Round Rock, Texas on this 13 , of J U L y , 1995. 4 Base Fee - Any Issue Plus $12.50 per $1,000 up to Plus $11.50 per $1,000 next Plus $ 7.00 per $1,000 next Plus $ 4.65 per $1,000 next Plus $ 2.75 per $1,000 next Plus $ 2.50 per $1,000 next Plus $ 1.95 per $1,000 next Plus $ 1.35 per $1,000 next Plus $ 1.30 per $1,000 next Plus $ 1.25 per $1,000 over APPENDIX A FINANCIAL ADVISORY FEE SCHEDULE AND EXPENSE ITEMS $3,000 $ 250,000 or a total of $ 6,125 $ 250,000 or a total of $ 9,000 $ 500,000 or a total of $12,500 $ 1,500,000 or a total of $19,475 $ 2,500,000 or a total of $26,350 $ 5,000,000 or a total of $38,850 $10,000,000 or a total of $58,350 $10,000,000 or a total of $71,850 $20,000,000 or a total of $97,850 $50,000,000 Bonds Fees for Advance Refunding Issues shall be the amount shown plus 10% additional charge. EXPENSES for $ 250,000 Bonds for $ 500,000 Bonds for $ 1,000,000 Bonds for $ 2,500,000 Bonds for $ 5,000,000 Bonds for $10,000,000 Bonds for $20,000,000 Bonds for $30,000,000 Bonds for $50,000,000 Bonds The following expenses pertaining to any debt issue will be paid by the Issuer. On a competitive sale, First Southwest Company will initially pay all related expenses except bond counsel and election costs and bill the Issuer for such expenses along with the Financial Advisory Fee after successful delivery of the bond proceeds. On a negotiated sale, expenses will be deducted from the proceeds at the time of delivery. Expenses shall include: Bond counsel fees and charges Election expenses Computer charges Bond rating fees and any related travel to rating meetings Any travel in connection with a debt issue Printing, preparation and distribution costs of offering documents and securities Reports of independent consultants Publishing cost of any legally required notices Escrow and paying agent fees, along with other costs necessary to close a negotiated issue Miscellaneous transaction expense DATE: July 11, 1995 SUBJECT: City Council Meeting, July 13, 1995 ITEM: 10. F. Consider a resolution authorizing the Mayor to execute proposed agreement for Financial Advisory Services between the City of Round Rock and First Southwest Company. STAFF RESOURCE PERSON: David Kautz STAFF RECOMMENDATION: First Southwest provides highly expert advice and service in the issuance of the City's bonded debt. Service provided is "turn —key" and includes all aspects of debt issuance from planning the sale to conducting bids and negotiations with potential investors. The company's knowledge and experience in the financial markets have proven highly beneficial to the City in obtaining the lowest and best costs on its bonds. The agreement is for a three year term and staff recommends approval.