HomeMy WebLinkAboutContract 45144 (2)FINANCIAL ADVISORY AGREEMENT crrr�CT
This Financial Advisory Agreement (the "Agreement") is made and entered into by and between
City of Fort Worth, a home -rule municipal corporation of the State of Texas ("Issuer") and First
Southwest Company, a Delaware corporation ("FSC") effective as of August 1, 2013.
WITNESSETH:
WHEREAS, 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, in connection
with the authorization, sale, issuance and delivery of such indebtedness, Issuer desires to retain an
independent financial advisor; and
WHEREAS, the Issuer desires to obtain the professional services of FSC to advise the Issuer
regarding the issuance and sale of certain 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;
and
WHEREAS, FSC is willing to provide its professional services and its facilities as financial advisor
in connection with all programs of financing as may be considered and authorized by Issuer during the
period in which this Agreement shall be effective.
NOW, THEREFORE, the Issuer and FSC, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, do hereby agree as follows:
SECTION I
DESCRIPTION OF SERVICES
Upon the request of an authorized representative of the Issuer, FSC agrees to perform the financial
advisory services stated in the following provisions of this Section I; and for having rendered such
services, the Issuer agrees to pay to FSC the compensation as provided in Section IV hereof.
A. Financial Planning. At the direction of Issuer, FSC shall:
1. Survey and Analysis. Conduct a survey of the financial resources of the Issuer to
determine the extent of its capacity to authorize, issue and service any Debt Instruments
contemplated. This survey will include an analysis of any exis.kagrilebte=straettnai
compared with the existing and projected sources of revenues whcb frPpTd- aRRC:
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Financial Advisory Agreement — CFW and First Southwest Compa yC�� !;
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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 Issues 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.
2. Future Financings. Consider and analyze future financing needs as projected by the
Issuer's staff and consulting engineers or other experts, if any, employed by the Issuer.
3. Recommendations for Debt Instruments. On the basis of the information developed by
the survey described above, and other information and experience available, submit to the
Issuer recommendations regarding 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 such other provisions as may be appropriate in
order to make the issue attractive to investors while achieving the objectives of the Issuer.
All recommendations will be consistent with the goal of designing the Debt Instruments to be
sold on terms which are advantageous to the Issuer, including the lowest interest cost
consistent with all other considerations.
4. Market Information. Advise the Issuer of FSC's interpretation of current bond market
conditions, other related forthcoming bond issues and general information, with 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 favorable time.
5. Elections. In the event it is necessary to hold an election to authorize the Debt
Instruments then under consideration, FSC will assist in coordinating the assembly of such
data as may be required for the preparation of necessary petitions, orders, resolutions,
ordinances, notices and certificates in connection with the election, including assistance in the
transmission of such data to a firm of municipal bond attorneys ("Bond Counsel") retained by
the Issuer.
B. Debt Management and Financial Implementation. At the direction of Issuer, FSC shall:
1. Method of Sale. Evaluate the particular financing being contemplated, giving
consideration to the complexity, market acceptance, rating, size and structure in order to
make a recommendation as to an appropriate method of sale, and:
Financial Advisory Agreement — CFW and First Southwest Company
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a. If the Debt Instruments are to be sold by an advertised competitive sale, FSC will:
(1) Supervise the sale of the Debt Instruments;
(2) Disseminate information to prospective bidders, organize such informational
meetings as may be necessary, and facilitate prospective bidders' efforts in making
timely submission of proper bids;
(3) Assist the staff of the Issuer in coordinating the receipt of bids, the safekeeping
of good faith checks and the tabulation and comparison of submitted bids; and
(4) Advise the Issuer regarding the best bid and provide advice regarding
acceptance or rejection of the bids
b. If the Debt Instruments are to be sold by negotiated sale, FSC will:
(1) Recommend for Issuer's final approval and acceptance one or more investment
banking firms as managers of an underwriting syndicate for the purpose of
negotiating the purchase of the Debt Instruments.
(2) Cooperate with and assist any selected managing underwriter and their counsel
in connection with their efforts to prepare any Official Statement or Offering
Memorandum. FSC will cooperate with and assist the underwriters in the
preparation of a bond purchase contract, an underwriters agreement and other
related documents. The costs incurred in such efforts, including the printing of the
documents, will be paid in accordance with the terms of the Issuer's agreement
with the underwriters, but shall not be or become an obligation of FSC, except to
the extent specifically provided otherwise in this Agreement or assumed in writing
by FSC.
(3) Assist the staff of the Issuer in the safekeeping of any good faith checks, to the
extent there are any such, and provide a cost comparison, for both expenses and
interest which are suggested by the underwriters, to the then current market.
(4) Advise the Issuer as to the fairness of the price offered by the underwriters.
2. Offering Documents. Coordinate the preparation of the notice of sale and bidding
instructions, official statement, official bid form and such other documents as may be
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required and submit all such documents to the Issuer for examination, approval and
certification. After such examination, approval and certification, FSC shall provide the Issuer
with a supply of all such documents sufficient to its needs and distribute by mail or, where
appropriate, by electronic delivery, sets of the same to prospective purchasers of the Debt
Instruments. Also, FSC shall provide copies of the final Official Statement to the purchaser of
the Debt Instruments in accordance with the Notice of Sale and Bidding Instructions.
3. Credit Ratings. 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,
coordinate the preparation of such information as may be appropriate 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, FSC will arrange for such
personal presentations, utilizing such composition of representatives from the Issuer as may
be finally approved or directed by the Issuer.
4. Trustee, Paving Agent, Registrar. Upon request, counsel with the Issuer in the selection
of a Trustee and/or Paying Agent/Registrar for the Debt Instruments, and assist in the
negotiation of agreements pertinent to these services and the fees incident thereto.
5. Financial Publications. When appropriate, advise financial publications of the
forthcoming sale of the Debt Instruments and provide them with all pertinent information.
6. Consultants. After consulting with and receiving directions from the Issuer, arrange for
such reports and opinions of recognized independent consultants as may be appropriate for
the successful marketing of the Debt Instruments.
7. Auditors. In the event formal verification by an independent auditor of any calculations
incident to the Debt Instruments is required, make arrangements for such services.
8. Issuer Meetings. Attend meetings of the governing body of the Issuer, its staff,
representatives or committees as requested at all times when FSC may be of assistance or
service and the subject of financing is to be discussed.
9. Printing. To the extent authorized by the Issuer, coordinate all work incident to printing
of the offering documents and the Debt Instruments.
10. Bond Counsel. Maintain liaison with Bond Counsel in the preparation of all legal
documents pertaining to the authorization, sale and issuance of the Debt Instruments.
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11. Changes in Laws. Provide to the Issuer copies of proposed or enacted changes in
federal and state laws, rules and regulations having, or expected to have, a significant effect
on the municipal bond market of which FSC becomes aware in the ordinary course of its
business, it being understood that FSC does not and may not act as an attorney for, or provide
legal advice or services to, the Issuer.
12. Delivery of Debt Instruments. As soon as a bid for the Debt Instruments is accepted by
the Issuer, coordinate the efforts of all concerned to the end that the Debt Instruments may be
delivered and paid for as expeditiously as possible and assist the Issuer in the preparation or
verification of final closing figures incident to the delivery of the Debt Instruments.
13. Debt Service Schedule; Authorizing Resolution. After the closing of the sale and
delivery of the Debt Instruments, deliver to the Issuer a schedule of annual debt service
requirements for the Debt Instruments and, in coordination with Bond Counsel, ensure that
the paying agent/registrar and/or trustee has been provided with a copy of the authorizing
ordinance, order or resolution.
SECTION II
TERM OF AGREEMENT
This Agreement shall become effective on August 1, 2013, and, unless terminated by either party
pursuant to Section III of this Agreement, shall remain in effect until July 31, 2014. Unless FSC or Issuer
shall notify the other party in writing at least thirty (30) days in advance of the applicable anniversary date
that this Agreement will not be renewed, this Agreement will be automatically renewed beginning August
1, 2014 for two additional one (1) year periods.
SECTION III
TERMINATION
This Agreement may be terminated with or without cause by the Issuer or FSC upon the giving of
at least thirty (30) days' prior written notice to the other party of its intention to terminate, specifying in
such notice the effective date of such termination. In the event of such termination, it is understood and
agreed that only the amounts due FSC for services provided and expenses incurred to the date of
termination will be due and payable. No penalty will be assessed for termination of this Agreement.
Financial Advisory Agreement — CFW and First Southwest Company
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SECTION IV
COMPENSATION AND EXPENSE REIMBURSEMENT
The fees due to FSC for the services set forth and described in Section I of this Agreement with
respect to each issuance of Debt Instruments during the term of this Agreement shall be calculated in
accordance with the schedule set forth on Appendix A attached hereto. Unless specifically provided
otherwise on Appendix A or in a separate written agreement between Issuer and FSC, such fees, together
with any other fees as may have been mutually agreed upon and all expenses for which FSC is entitled to
reimbursement under the terms of Exhibit A, shall become due and payable concurrently with the delivery
of the Debt Instruments to the purchaser.
SECTION V
MISCELLANEOUS
1. Choice of Law. This Agreement shall be construed and given effect in accordance with the laws of
the State of Texas.
2. Binding Effect Assignment. This Agreement shall be binding upon and inure to the benefit of the
Issuer and FSC, their respective successors and assigns; provided however, neither party hereto may
assign or transfer any of its rights or obligations hereunder without the prior written consent of the other
party.
3. Entire Agreement. This instrument (including all exhibits attached hereto) contains the entire
agreement between the parties relating to the rights herein granted and obligations herein assumed. Any
oral or written representations or modifications concerning this Agreement shall be of no force or effect
except for a subsequent modification in writing signed by all parties hereto.
FIRST SOUTHWEST COMPANY
By: 4Th.,fr
David K. Medanich
Vice Chairman
By: Lea., Jacez-,le„..
Laura B. Alexander
Managing Director
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ATTEST:
Secretary
CITY OF FORT WORTH, TEXAS
By:
Title:--/ kSs E
Date: 1 t la 5� t ��
APPROVED AS TO
FQR APp LEGALITY:
AS SI 'TAWTTY ATTORNEY
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Financial Advisory Agreement — CAW and First Southwest Comp
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OFFICIb!L RECORD
CITY SECRETARY
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APPENDIX A
Base Fee Per Issue $35,000
Plus $0.75 per 1,000 Bonds
As co -financial advisor, FSC is entitled to 65% of the above charges.
The charges for ancillary services, including official statement printing and preparation, shall be levied
only for those services which are reasonably necessary in completing the transaction and which are
reasonable in amount, unless such charges were incurred at the specific direction of the Issuer.
The payment of charges for financial advisory services described in Section I of the foregoing Agreement
shall be contingent upon the delivery of bonds and shall be due at the time that bonds are delivered. The
payment of charges for services described below under "Hourly Compensation Rates" shall be due and
payable in accordance with the mutual agreement therefore between FSC and Issuer.
The Issuer shall be responsible for the following expenses, if and when applicable whether they are
charged to the Issuer directly as expenses or charged to the Issuer by FSC as reimbursable expenses:
Bond counsel
Publication of notices
Bond ratings
Credit enhancement
CPA fees
Official statement preparation and printing
Paying agent/registrar/trustee
Travel expenses
Underwriter and underwriters counsel
Miscellaneous expenses, including copy, delivery, and phone charges
The payment of reimbursable expenses that FSC has assumed on behalf of the Issuer shall NOT be
contingent upon the delivery of bonds and shall be due at the time that services are rendered and payable
upon receipt of an invoice therefor submitted by FSC.
HOURLY COMPENSATION RATES
For related assignments not associated with the issuance of Debt Instruments, the Issuer may request FSC
and/or its co -financial advisor to provide additional services to be mutually agreed upon. With respect to
such additional services, the following hourly rates would apply
Managing Director/Executive Vice President/Senior Vice President $250
Vice President 200
Assistant Vice President/Associate 150
Administrative Assistant 75
The hourly rate structure will be implemented only with prior approval of the Issuer and only at the point
when the actual services going forward can be clearly identified
M&C - Council Agenda Page 1 of 2
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 7/23/2013
DATE: Tuesday, July 23, 2013
LOG NAME: 1313 FA CONTRACT
SUBJECT:
REFERENCE NO.: **C-26350
Authorize Necessary and Related Agreements with First Southwest Company, First Southwest Asset
Management, Inc., and Estrada Hinojosa & Company, Inc., for the Provision of Financial Advisory,
Arbitrage Rebate and Continuing Disclosure Services (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize the execution of necessary and related Agreements with First Southwest Company, First
Southwest Asset Management, Inc., and Estrada Hinojosa & Company, Inc., for the provision of financial
advisory, arbitrage rebate and continuing disclosure services; and
2. Authorize a commencement date of August 1, 2013 and expiration date of July 31, 2014 with two one-
year renewal options for each Agreement.
DISCUSSION:
First Southwest Company and Estrada Hinojosa & Company, Inc. (Estrada Hinojosa), have satisfactorily
served as the City's co -financial advisors for over a decade. During this same period, First Southwest
Asset Management, Inc., and First Southwest Company's FSC Disclosure Services Division have
provided arbitrage rebate compliance services and continuing disclosure services to the City.
Staff is recommending that the City continue these relationships with First Southwest Company serving as
lead financial advisor and Estrada Hinojosa, a minority -owned firm, acting as co -financial advisor.
Approval of the Agreements will ensure continuity as the City enters its traditional debt -issuance season.
The fee structure for financial advisory services will be a base fee in the amount of $35,000.00 plus $0.75
per $1,000.00 denomination for each series of bond issues. As in the current contract, the fee will be split
65/35 between the two firms, respectively.
First Southwest Company, the lead financial advisor, and Estrada Hinojosa, a certified minority -owned firm
and the co -financial advisor, are in compliance with the City's BDE Ordinance by committing to the work
fees on bond transactions being split 65/35 between the two firms respectively on this project.
Typically, no charges for financial advisory services related to bond transactions are incurred unless
bonds are actually sold. The Agreements will also provide for the financial advisors to provide special
financial consulting work not directly related to a bond sale with compensation paid based on an hourly
rate ranging from the amount of $75 00 for work performed by administrative assistants to the amount of
$250.00 per hour for work performed by managing directors, executive vice presidents or senior vice
presidents. An individual engagement letter will be executed for each special project compensated on an
hourly basis.
Arbitrage rebate compliance services will be provided by First Southwest Asset Management, Inc., and
FSC Disclosure Services, a Division of First Southwest Company, will provide continuing disclosure
services. Disclosure services will be compensated at a rate of $2,500.00 per year for assistance in
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M&C - Council Agenda Page 2 of 2
preparation and distribution of each annual report and the amount of $3,500.00 per year for distribution of
audited financial statements. Arbitrage rebate compliance services will be compensated at a rate of
$1,400.00 per computation year. Additional fees would apply for specialized arbitrage -related services, if
needed, in connection with an IRS refund request of commercial paper calulations. The costs for those
services are reflected in the fee schedule, which is attached.
FISCAL INFORMATION / CERTIFICATION:
The Financial Management Services Director certifies that funds required to pay financial advisory fees
will be available from proceeds of bond sales, appropriate debt service funds, and/or appropriate
operating funds.
FUND CENTERS:
TO Fund/Account/Centers
CERTIFICATIONS:
Submitted for City Manager's Office bv:
Originating Department Head:
Additional Information Contact:
ATTACHMENTS
1. CFW 2013 Fee Schedule.pdf (Public)
2. example.pdf (CFW Internal)
FROM Fund/Account/Centers
PE47 554010 0132000
GDO6 554010 0132000
Susan Alanis (8180)
Jay Chapa (8517)
Lisa Parks (6630)
$0.00
$0.00
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