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HomeMy WebLinkAboutContract 45274 (2)CITY SECRETARY CONTRACT: ,, FINANCIAL ADVISORY AGREEMENT 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 Estrada Hinoj osa & Company, Inc. a Texas corporation ("EH") 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 EH 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, EH 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 EH, 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, EH 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 EH the compensation as provided in Appendix A hereof A. Financial Planning. At the direction of Issuer, EH 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 existing debt structure as compared with the existing and projected sources of revenues which may be pledged to Financial Advisory Agreement — CFW and Estrada Hino'osa & Company Pagel • f7 OFFICIAL RECOR�� CITY SECRETARY FT. WORTH, TX CE; VEO BAN 0 8 2074 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 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 EH'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, EH 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. Debt Management and Financial Implementation. At the direction of Issuer, EH 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 Estrada Hinojosa & Company Page 2 of 7 a. If the Debt Instruments are to be sold by an advertised competitive sale, EH 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, EH 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. EH 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 EH, except to the extent specifically provided otherwise in this Agreement or assumed in writing by EH. (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. Offerina Documents. Coordinate the preparation of the notice of sale and bidding instructions, official statement, official bid form and such other documents as may be Financial Advisory Agreement— CFW and Estrada Hinojosa & Company Page 3 of 7 required and submit all such documents to the Issuer for examination, approval and certification. After such examination, approval and certification, EH 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, EH 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, EH 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 EH 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. Financial Advisory Agreement — CFW and Estrada Hinojosa & Company Page4of7 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 EH becomes aware in the ordinary course of its business, it being understood that EH 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 EH 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 EH 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 EH 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 Estrada Hinojosa & Company Page 5 of 7 SECTION IV COMPENSATION AND EXPENSE REIMBURSEMENT The fees due to EH 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 EH, such fees, together with any other fees as may have been mutually agreed upon and all expenses for which EH 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 EH, 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. ESTRADA HINOJOSA & COMPANY, INC. By: Robert A. Estrada Senior Managing Director B U.S. Williams, Jr. Executive Vice President Financial Advisory Agreement — CFW and Estrada Hinoj osa & Company Page 6 of 7 ATTEST: CITY OF FORT WORTH, TEXAS By: Title s s t . CA:wirsy Date: 5114 APPROVED AS TO FARM ANP LEGALITY: ASthSTAN$9C ITY ATTORNEY tAk Q -2-)Cp Financial Advisory Agreement — CFW and Estrada Hinojosa & Compa Page 7 of 7 OFFICIAL RECORD YCI'Rtt SECRETARY FT. WORTH,' APPENDIX A Base Fee Per Issue $35,000 Plus $0.75 per 1,000 Bonds As co -financial advisor, EH is entitled to 35% 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 EH 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 EH 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 EH 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 EH. HOURLY COMPENSATION RATES For related assignments not associated with the issuance of Debt Instruments, the Issuer may request EH 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 http://apps.cfwnet.org/ecouncil/printmc.asp?id=18709&print=true&DocType=Print 12/24/2013 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. CAN 2013 Fee Sched u le. 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 http://apps.cfwnet.org/ecouncil/printmc.asp?id=18709&print=true&DocType=Print 12/24/2013