HomeMy WebLinkAboutContract 14801 CITY SECRETARY
CONTRACT
i
STATE OF TEXAS
KNO19, ALL' MEN BY THESE PRESENTS :
COUNTY OF TARRANT
THIS CONTRACT is entered into by and between the_ City of ,'Fort
Worth acting by and through its duly authorized City , Manaer,
Douglas Harman, herinafter called "City" , and First -Southwest
Company, acting by and through its duly authorized Executive Vice
President, James H. Kerley, Jr. , hereinafter called "Advisor" .
W I T N E S S E T H
WHEREAS, the City of. Fort Worth is a major issuer of tax-
exempt securities and desires assistance in the preparation and sale
of tax-exempt securities ; and
WHEREAS, First Southwest Company is a Financial Advisor with
great expertise and understanding in the preparation and sale of
municipal tax-exempt securities ; and
WHEREAS, the City desires to engage the services of First
Southwest Company as a financial consultant to direct and coordinate
the sale of tax-exempt securities and other evidences of indebted-
ness, hereinafter called "securities";
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements herein contained, the City and Advisor
hereby covenant, promise and agree as follows :
1 .
Advisor agrees to provide its professional services: and its-
facilities as Financial Advisors , ( such professional services and
facilities being described more fully herein and in Advisor' s
Proposal attached hereto, marked Exhibit "A" , and incorporated<
herein for all purposes incident hereto) and to ,direct and coordi-
nate the entire program of financing herein ` contemplated; and to
assume and pay the expenses hereinafter enumerated. It is understood
and agreed, however, that this obligation on Advisor's part shall
not cover the cost of any litigation , mandamus action,, test cases or
other similar actions.
2.
Advisor agrees to perform the following duties normally
performed by such advisors, , to perform such other duties as, in
Advisor's judgment, may be n,ddessary or advisable:
a.1 Advisor 'wi11 make a survey of the financial ,resources
of the City t0Ae, ermine, the', ex..teiit of its borrowing capacity. This
survey will include °an anaZysis :`of the existing debt structure as
compared to existing and projected sources of `income which may be
pledged to secure payments of=.debt service, and where appropriate ,
will include a study of the�.'trend of the assessed valuation of the
City, the City' s taxing power, and the present and estimated future
taxing requirements . If the revenues of a system or facility are to
be pledged to repayment of the securities in question, the survey
will take into account any outstanding obligations which are payable
from the net revenues thereof, additional net revenues to arise from
any proposed rate increase , and the additional net revenues as
projected by City' s consulting engineers as a result of the improve-
ments to be financed by the securities in question . Advisor will
also take into account City' s future financing needs and operations
as projected by City and/or consulting engineers and other experts
designated by City.
b. On the basis of the information developed by the survey
described in the above and foregoing paragraph, and on the basis of
other information and experience available to Advisor, Advisor will
submit its written recommendations on the financing in question.
Advisor' s plan will include recommendations as to the date of issue,
interest payment dates , schedule of principal maturities, options of
prior payment, and any other necessary additional security provi-
sions designed to make the issue attractive to investors. All recom-
mendations will be based on Advisor' s best professional judgment,
with the goal of designing securities which can be sold under terms
most advantageous to City, and at the lowest interest cost consis-
tent with all other considerations.
c. Advisor will advise City of current bond market condi-
tions, forthcoming bond issues, and other general information and
economic data which might normally be expected to influence the
interest rates or bidding conditions, so that the date for the sale
of the securities can be set at a time , which in Advisor' s opinion,
will be favorable.
d. Advisor understands City has retained, or will retain,
a firm of municipal bond attorneys ( "Bond Counsel" ) , whose fee will
be paid by City. If it is necessary to hold an election to authorize
the securities, Advisor will assist in coordinating the assembly and
transmittal to Bond Counsel of such data as may be required for the
preparation of the necessary petitions, orders, resolutions, notices
and certificates in connection with the election.
e. Advisor will recommend the method of sale of the secur-
ities that , in its opinion, is in the best interest of City, and
will proceed as directed by City with one of the following methods:
(1 ) Negotiated Sale . Advisor will recommend one
or more investment banking firms to manage an underwriting syndicate
for the purpose of negotiating the purchase of the securities, and
in no event will Advisor, participate directly or indirectly in the
underwriting of the securities. Advisor will collaborate with any
underwriter selected and their , Counsel in the preparation of an
Official Statement or Offering Memorandum.
(2) Private, Placement . . Acting on behalf of City
and upon authorization '- Y, its officials, Advisor will privately
place the securities directly with institutional investors for a
2_
placement fee of $7 .50 per $1 ,000 par value of securities issued and
placed, which fee is in addition to the fee set forth in paragraph 3
hereof. Advisor will prepare and furnish to the prospective purchas-
ers a Limited Offering Memorandum and other related documents.
(3) Advertised Sale . . . Advisor will supervise the
sale of the securities at public sale, the details of which are set
out in this contract. It is understood and agreed that Advisor will
not submit a bid, or participate in any account submitting a bid ,
for the securities offered for sale.
f. Advisor will coordinate the preparation and submission
of the Notice of Sale, the Official Statement, and such other market
documents which City may require. Advisor will also supervise prepa-
ration of the uniform bid form, containing provisions recognized by
the municipal securities industry as being consistent with the
securities offered for sale . Advisor will submit to City all such
offering documents, including the Official Statement, for City' s
proper examination, approval and certification. After such examina-
tion, approval and certification, Advisor will furnish City with a
supply of such documents and shall mail a set of the same to a list
of prospective bidders , and to banks, life, fire and casualty
insurance companies , investment counselors and other prospective
purchasers of the securities. Advisor will also supply sufficient
copies of the Official Statement to the purchaser of the securities
in accordance with the terms of the Notice of Sale. The cost of
preparing , printing and distributing these documents will be paid by
City. Advisor will arrange for such reports and opinions of recog-
nized independent consultants which Advisor deems necessary and
required in the successful marketing of the securities. The fees and
charges for such services will be paid by City. Subject to City' s
approval, Advisor will organize such information meetings as in its
judgment may be necessary, and will arrange for these meetings at
City' s expense.
g. Advisor will advise financial publications of the
forthcoming sale of City' s securities and furnish them with the
pertinent information.
h. Advisor will make recommendations to City on the matter
of a credit rating or ratings for the proposed issue and when
directed by City shall coordinate the preparation of such informa-
tion as in Advisor' s opinion is required for submission to the
rating agency or agencies. Any fees incurred in obtaining a rating
or ratings ill be paid by City. In those cases where the advisabil-
ity of personal presentation of information to the rating agency or
agencies may be indicated , Advisor will arrange for the personal
presentation. The travel expense of City representatives for such
presentation will be paid by City, and travel incurred by represen-
tatives of First Southwest Company shall be paid by Advisor.
i. Advisor will assist City at the sale for the purpose of
coordinating the receipt of bids, and the furnishing of good faith
-3-
checks where indicated , and for the purpose of tabulation and com-
parison of bids, and will advise City as to the best bid, and will
provide its recommendation as to acceptance or rejection of such
bid.
j . As soon as a bid for the securities shall be accepted
by City, Advisor will proceed to coordinate the efforts of all
concerned to the end that the securities may be delivered and paid
for as expeditiously as possible. Advisor shall assist City in the
preparation or verification of final closing figures, and when
requested, will provide suggestions on a program of temporary
investment of proceeds, in consultation with City' s architect or
consulting engineer, consistent with the construction timetable for
the project.
k. Advisor agrees to do, or cause to be done, all work
incident to printing of the securities , approval by the Attorney
General of the State of Texas, and registration by the Comptroller
of Public Accounts of the State of Texas, and delivery to the pur-
chasers, the cost of which will be paid by City. Advisor will act as
City' s agent in arranging for the printing of the securities, the
cost of which will be paid by City. Advisor will attend to their
delivery, it being understood that title to and ownership of the
printed securities shall be City' s until they are delivered to the
purchaser.
1. Advisor will maintain liaison with Bond Counsel in the
preparation of all legal documents pertaining to the authorization,
sale, issuance and delivery of the securities. Bond Counsel will
furnish an unqualified approving legal opinion on the securities at
the time of delivery.
m. After closing , Advisor will deliver to City a schedule
of annual debt service requirements on the obligations being deliv-
ered to the purchaser. Advisor will furnish to the paying agent or
paying agents a copy of the authorizing ordinance.
n. Advisor will attend any and all meetings of City' s
governing body, or any representatives thereof, as desired by City,
whenever it may be of assistance and the subject of financing is to
be discussed.
o. If so directed by City, Advisor will advise and assist
City and City' s other consultants in the preparation and submission
of any application for funding made to a State or Federal Agency.
Further, if so requested, a representative of Advisor shall accom-
pany and assist City and City' s other consultants in any meetings or
hearings before the appropriate Agency. The expenses in connection
therewith shall be borne by City. [The extent of Advisor' s services
in these matters and compensation therefor shall be mutually agreed
upon in writing on a case by case basis prior to Advisor rendering
such services. ]
-4-
3.
In consideration for the services performed hereunder, City
will pay Advisor a professional fee based upon prevailing profes-
sional rates for same or similar services. Such fee will be agreed
upon in writing by the parties hereto prior to any services being
performed or expenses incurred by Advisor.
4.
Advisor' s fee and reimbursable expenses shall become due and
payable simultaneously with the delivery of the securities to the
purchaser .
5.
In the event any bond election be necessary, if such election
shall fail, the fee due Advisor shall be nothing; however, should
the same or similar propositions again be submitted to election held
within twelve months from the date hereof, then at Advisor' s option
the agreement covered by this proposal shall apply to any such
securities.
6 .
Advisor agrees that it shall perform all work hereunder as an
independent contractor, and not as an officer , agent, or employee of
the City; that Advisor shall be solely responsible for the acts and
omissions of its officers, agents, employees and subcontractors;
that the doctrine of respondeat superior shall not apply as between
City and Advisor; and that nothing herein shall be construed as
creating a partnership or joint enterprise between City and Advisor.
7 .
Advisor covenants and agrees to indemnify, hold harmless and
defend the City, its officers, agents , servants and employees from
and against any and all claims or suits for patent or copyright
infringement, property damage or loss , and/or personal injury,
including death, arising out of or in connection with the services
performed hereunder by Advisor, its officers, agents , and employees;
Advisor assumes all liability and responsibility for such claims or
suits .
8.
Advisor covenants and agrees that it shall not assign or
sublet, in whole or in part, its rights, duties and responsibilities
under this contract without the prior written consent of the City of
Fort Worth.
-5-
9.
This agreement shall remain in effect for a period of one (1
year from the date hereof; provided, however, it may be terminated
by City upon thirty (30 ) days' written notice to Advisor . City
hereby retains the option to renew this agreement for consecutive
periods of one year each. In the event of termination, it is under-
stood and agreed that only the amount due Advisor for services or
expenses performed up to the date of termination will be due and
payable, and that no penalty for cancellation of the contract will
be allowed. It is the intent of this provision that Advisor' s ser-
vices be satisfactory and acceptable to City at all times.
10 .
Should any action, whether real or asserted, at law or in
equity, arise out of the terms and conditions of this contract and
agreement, venue for said action shall lie in Tarrant County, Texas.
IN WITNESS WHEREOF, the pares hereto have made and entered
into this agreement this the day of
4g2� , A.D. r
1986, in Fort Worth, Tarrant County, Texas.
FIRST SOUTHWEST COMPANY
By:_
Jame H. Kerlblyl , Jr. U ' V
Executive Vice President
ATTEST:
City Secretary'
APPROVED AS TO FORM AND LEGALITY:
,4;r. (rity Attorney
Date:
CITY OF FORT WORTH, TEXAS
By-, I;A44aj
City -Mana 'er:
contract Authorization
Z
IEZVE
Date
-6-
FIRST e70ut VC4t COMPANTY
INVESTMENT BANKERS
MERCANTILE DALLAS BUILDING
DALLAS, TEXAS 75201
W. C. (DECKER) JACKSON, JR. (214) 742-6461
CHAIRMAN OF THE BOARD
September 25, 1985
Mr. Douglas Harman
City Manager
City of Fort Worth
1000 Throckmorton
Fort Worth,Texas 76102
Dear Doug:
We were very pleased and proud to be recommended by the City Staff and
selected by the City Council as Financial Advisor to the City of Fort Worth. We have
enjoyed our association with the City, and look forward to our continued involvement
as we strive to finance the needs of the City at the lowest possible cost while
continually working toward another possible upgrading in the City's credit rating.
It is our understanding that Mr. William W. Wood, Assistant City Attorney,
has reviewed our contract and suggested that we include, as an attachment, a letter
proposal incorporating certain elements of our original contract submitted in 1979.
Please be advised that it is the intent of this letter to respond to Mr. Wood's request
and set out for the City additional services we will continue to perform which were
cited in our 1979 proposal.
1. Scope of Work Performed. First Southwest Company will assume the
responsibility for the overall coordination of each bond sale, thus relieving the staff of
the City of Fort Worth of substantial burdensome detail.
2. Disclosure Requirements. It is important that an issuer be aware of, and
comply with, requirements for full disclosure of its economic and financial condition.
First Southwest Company will keep the City's staff continuously informed of disclosure
requirements to insure that the Official Statement for,any issue of bonds contains all
information necessary to satisfy these requirements and to meet the needs of the
rating agencies, bond analysts and prospective purchasers.
3. Regulatory Changes. We will advise the City Officials on all changes,
proposed'or enacted, in Federal and State laws and regulations which would have an
impact upon any bond issue under consideration. The Internal Revenue Service has a
history of proposing regulatory interpretations affecting tax-exempt bond issues, and
the Securities and Exchange Commission and the Securities Board of the State of
Texas apparently are becoming increasingly interested in the area of tax-exempt
financing.
EXHIBIT A
FIRST Joabew.,e� COMPANY
Mr. Douglas Harman, City Manager
City of Fort Worth
September 25, 1985 - Page Two
4. Market Liaison. We will assist the City in its relations with the rating
agencies and bond analysts, and assure the City that all Official Statements are
distributed to an up-to-date list of bidders for, and prospective purchasers of,
municipal bonds. Our mailing list is constantly updated so that all applicable segments
of the bond market receive information on proposed bond sales.
5. Bond Structure. We will recommend a bond structure which maximizes
the interests of the City within the constraints of the marketplace. As an example, it
might be to the advantage of the City to issue interim securities with a maturity
pattern and a very short redemption feature that would permit flexibility in financing
improvements.
6. Bond Market Timing. We will advise the City's staff of the current trend
of interest rates, and at the same time, express our opinion as to the future trend of
interest rates in order that a bond sale be scheduled at the most favorable time.
7. Innovative Financings. We have the experience necessary to analyze
and/or develop appropriate solutions to difficult financing problems. All financing
contemplated will be evaluated to ensure that our recommended method of financing
is consistent with the best interests of the City.
First Southwest Company provides financial advisory services to its clients
under a team concept to insure that a number of fully qualified. people within the firm
are thoroughly familiar with each major account. As Chairman of the Board of First
Southwest Company and Director of the Municipal Division, I will personally supervise
the activities of our firm as they relate to your account. The support team assigned to
assist in all matters relating to the City of Fort Worth will include Mr. James H.
Kerley, Jr., Executive Vice President , Mr. W. Boyd London, Jr., Senior Vice President,
Mr. Milo Mike Johnson, Vice President, and Ms. Patricia M.. Drouin, Assistant Vice
President.
Again, it is an honor to be associated with the City in these matters. I will
be available to answer any questions concerning this which may arise.
Very truly yours
c A
Chair n of oard
msk
City of Fort Worth, Texas 16� -Y/,/
Mayor and Council Communication
DATE REFERENCE SUBJECT. PAGE
NUMBER
C-9162 Financial Advisory Services 1 of 1
Recommendation
It is recommended that the City Council authorize the City Manager to execute a
contract engaging First Southwest C_�.trrp.�ny as the City's financial advisor for a
one-year period.
Background
Prior to 1979, the responsibility for preparing official statements and bid
forms, structuring rating agency presentations and selling bonds for the City was
jointly exercised by various members of the City staff. Other than engaging a
law firm to issue a purchaser's opinion as to the tax-exempt status of bonds, no
other professional services were utilized.
In response to increasing complexities of the municipal bond market, on January
30, 1979 (M&C C-4502) , the Council authorized the engagement of First Southwest
Company to serve as financial advisor to the City. This agreement has now ex-
pired. The City Council Audit Committee and the staff recommend that the City
enter into an agreement to continue the services of First Southwest Company as
financial advisor for a period of one year.
Attached is a copy of the proposed agreement submitted by First Southwest. The
cost for these services are based on the size of each bond issue and, are payable
at the time of delivery out of the proceeds of the bond sale. Based on projected
bond issues, the fee for professional services would range from $26,250 to
$36,250 per sale. The City would. continue to pay other fees such as legal ,
printing, etc. as is presently done. The contract is cancellable on thirty days
written notice with no penalty clause. No charges for professional services are
incurred unless bonds actually are sold.
AJB :kcq
SUBMITTED FOR THE + DISPOSITION BY COUNCIL: PROCESSED BY
CITY MANAGER'S
nFFICE BY: ❑ APPROVED
ORIGINATING C) OTHER (DESCRIBE)
DEPARTMENT HEAD: Judson Bai 1 i ff CITY SECRETARY
FOR ADDITIONAL INFORMAT�(ON
CONTACT: /i. Judson Bailiff Ext. 818 1 DATE