HomeMy WebLinkAboutContract 27654 05-03-0 -ITY SECRETARY
e A09:42 IN-
-ACT NO.
FINANCIAL ADVISORY AGREEMENT
This Financial Advisory Agreement (the "Agreement") is made and entered into by and
between the City of Fort Worth and its non-profit corporations and authorities("Issuer") and Estrada
I-finojosa, and Company ("EHC") effective as of the date executed by the Issuer as set forth on the
signature page hereof.
WITNESSETEI:
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 EHC 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
WIIEREAS, EHC 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 EHC, in. consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration,do hereby agree as follows:
SECTION
DESCRIPTION OF SERVICES
Upon the request of an authorized representative of the Issuer, EHC agrees to perform the
financial advisory services stated in the following provisions of this Section 1; and for having rendered
such services,the Issuer agrees to pay to EHC the compensation as provided in Section V hereof.
A. Financial Planning.At the direction of Issuer,EHC 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 De
contemplated. This survey will include an analysis of any existing debtu FAI CAR 14 CU'00-R D
compared with the existing and projected sources of revenues which may beoffs
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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 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 our 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, EHC 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,EHC 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:
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a. If the Debt Instruments are to be sold by an advertised competitive sale, EHC
will:
(1) Supervise the sale of the Debt Instruments. EHC will not, alone or in
conjunction with others, submit a bid for any Debt Instruments issued under
this Agreement;
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(2) Disseminate information to prospective bidders, organize such
informational meetings as may be necessary,and facilitate prospective bidders'
efforts in malting 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,EHC 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 ndgotiating 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. EHC 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 EHC, except to the extent specifically provided otherwise in this
Agreement or assumed in writing by EHC.
(3)Assist the staff of the Issuer in the safekeeping of any good-faith checks,to
the extent thdre are any such,and provide a cost comparison,for both expenses
and interest which are suggested by the underwriters, to the then current
market.
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(Al 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
required and submit all such documents to the Issuer for examination, approval and
certification. After such examination, approval, and certification, EHC 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, EHC 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,
EHC 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 EHC may be of assistance or
service and the subject of financing is to be discussed.
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9. Printing. To the extent authorized by the Issuer, coordinate all work incident to
printing of the offering documents and the Debt Instruments.
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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.
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 EHC becomes aware in the ordinary course
of its business,it being understood that EHC 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,assure that
the paying agent/registrar and/or trustee has been provided with a copy of the authorizing
ordinance,order or resolution.
SECTION H
OTHER AVAILABLE SERVICES
In addition to the services set forth and described above,EHC agrees to make available to Issuer
the following services, when so requested by the Issuer and subject to the agreement by Issuer and
EHC regarding the compensation,if any,to be paid for such services,it being understood and agreed
that the services set forth in this Section H shall require further agreement as to the compensation to be
received by EHC for such services: .
1. Investment of Funds. From time to time,as an incident to the other services provided hereunder
as financial advisor,EHC may purchase such investments as may be directed and authorized by Issuer
to be purchased, it being understood that EHC will be compensated in the normal and customary
manner for each such transaction. In any instance wherein EHC may become entitled to receive fees
or other compensation in any form from a third party with respect to these investment activities on
behalf of Issuer,we will disclose to Issuer the nature and,to the extent such is known,the amount of
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any such compensation so that Issuer may consider the information in making its investment decision.
It is understood and agreed that EHC is a duly licensed broker/dealer and is affiliated with First
Southwest Asset Management, Inc: (`TSAMI"), a duly registered investment advisor. Issuer may,
from time to time,utilize the broker/dealer services of EHC and/or the investment advisory services of
FSAMI with respect to matters which do not involve or affect the financial advisory services
referenced in this Agreement. The terms and conditions of the engagement of EHC and/or FSAIVII to
provide such services shall be determined by mutual agreement at the time such services are requested.
2. Exercising Calls and Refunding. Provide advice and assistance with regard to exercising any
call and/or refunding of any outstanding Debt Instruments.
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3. Capital Improvements Programs. Provide advice and assistance in the development of any
capital improvements programs of the Issuer.
4. Long-Range Planning. Provide advice and assistance in the development of other long-range
financing plans of the Issuer.
5. Post-Sale Services. Subsequent to the sale and delivery of Debt Instruments, review the
transaction and transaction documentation with legal counsel for the Issuer, Bond Counsel, auditors
and other experts and consultants retained by the Issuer and assist in developing appropriate responses
to legal processes,audit procedures,inquiries,internal reviews and similar matters.
SECTION III
TERM OF AGREEMENT
This Agreement shall become effective as of the date executed by the Issuer as set forth on the
signature page hereof and,unless terminated by either party pursuant to Section IV of this Agreement,
shall remain in effect thereafter for a period of three(3)years from such date. Unless EHC 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 on the
third anniversary of the date hereof for an additional one(1)year period with a maximum of two such
one(1)year renewals.
SECTION IV
TERNIINATION
This Agreement may be terminated with or without cause by the Issuer or EHC 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 EHC for services provided and expenses incurred to
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.the date of termination will be due and payable. No penalty will be assessed for termination of this
Agreement.
SECTION V
COMPENSATION AND EXPENSE REMBURSEMENT
The fees due to EHC 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 EHC, such fees,
together with any other fees as may have been mutually agreed upon and all expenses for which EHC
is entitled to reimbursement, shall become due and payable concurrently with the delivery of the Debt
Instruments to the purchaser.
SECTION VI
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 EHC, 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 contains the entire agreement between the parties relating to
the rights herein granted and obligations herein assumed. Any oral or written representations or
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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
By.
Chairman and Chief Executive Officer
i
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By:
Senior Vice President
THE CITY OF FORT WORTH
By: 1
Approved r-Fo and Legality: Title: g . Cep �
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u Cfornc - Date: /02.
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A ST:
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City Secre
Contract Authorization
Date
�FRUAd RECORD
APPENDIX A
Size of Bond Issue Fee
First$15,000,000 $25,000
Over$15,000,000 $35 per$1,000 Bonds
The above charges shall be multiplied by 1.25 times for the completion of an application to a
federal or state government agency, reflecting the additional services required. As co-firiancial
advisor,EHC is entitled to 35%of the above charges.
The charges for ancillary services,including computer structuring and official statement printing,
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 shall be contingent upon the delivery of
bonds and shall be due at the time that bonds are delivered.
The Issuer shall be responsible for the following expenses,whether they are charged to the Issuer
directly as expenses or charged to the Issuer by the Company as reimbursable expenses:
Bond counsel
Bond printing
Bond ratings
Computer structuring
Credit enhancement
CPA fees for refunding
Official statement preparation and printing
Paying agent/registrar/trustee
Travel expenses
Underwriter and underwriters counsel
Miscellaneous,including copy, delivery,and phone charges
The payment of reimbursable expenses that the Company 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.
HOURLY CONIPENSATION RATES
For related assignments not associated with the issuance of Debt Instruments, the Issuer may
request EHC to provide additional services, to be mutually agreed upon by the Issuer and EHC.
With respect to such additional services, the following compensation rates will apply:
IIourly Rates
Senior Vice President $ 250.00
Vice President 200.00
Assistant Vice President 150.00
Associate 125.00
Administrative Assistant 75.00 ----
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City of Fort Worth, Texas
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DATE REFERENCE NUMBER LOG NAME PAGE
4/30/02 C-19072 13ADVISORY 1 of 2
SUBJECT CONTRACTS WITH FIRST SOUTHWEST COMPANY AND ESTRADA HINOJOSA
FOR FINANCIAL ADVISORY SERVICES
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize the City Manager to enter into contracts with First Southwest Company and Estrada
Hinojosa for financial advisory services; and
2. Authorize these agreements to begin May 21, 2002, and expire May 20, 2005, with two one-year
options to renew.
DISCUSSION:
First Southwest Company and Estrada Hinojosa have been the City's co-financial advisors for the past
five years, working well together and performing satisfactorily throughout the term of the contracts.
After reviewing the qualifications, capabilities and experience of four firms which responded to a
Request for Qualifications earlier this year, staff is recommending that the City continue its relationships
with First Southwest Company as its lead financial advisor and Estrada Hinojosa, a minority-owned
firm, as a co-financial advisor. The work and fees on bond transactions will be split 65/35 between the
two firms, respectively.
The fee structure per transaction under these new agreements is the same as it has been for bond
issues up to $30 million. Fees on transactions in excess of $30 million will increase by $250 per $1
million. The fee schedule is outlined below:
Size of Bond Issue Fee
First $15,000,000 $25,000
Over $15,000,000 $0.75 per $1,000 bonds
Typically, no charges for financial advisory services related to bond transactions are incurred unless
bonds are actually sold. However, these agreements also provide for either or both of the financial
advisors to be compensated on an hourly basis for special financial consulting work not directly related
to a bond sale. Engagement letters will be executed for each special project compensated on an hourly
basis.
As noted above, these contracts will be for a period of three years, with two one-year renewal options.
They may be terminated, with or without cause, upon 30 days written notice by either party to the
contract.
City of Fort Worth, Texas
qtnvor and -4"-uncil Communication
40;40
DATE REFERENCE NUMBER LOG NAME PAGE
4/30/02 C-19072 13ADVISORY 2 of 2
SUBJECT CONTRACTS WITH FIRST SOUTHWEST COMPANY AND ESTRADA HINOJOSA
FOR FINANCIAL ADVISORY SERVICES
FISCAL INFORMATION/CERTIFICATION:
The Finance 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.
CB:k
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Submitted for City Manager's FUND ACCOUNT I CENTER AMOUNT CITY SECRETARY
Office by: (to)
GD06 553010 0132000
Charles Boswell 8511 PE47 553010 0132000
Originating Department Head:
Jim Keyes 8517 (from) APPROVED 04/30/02
Additional Information Contact:
Jim Keyes 8517