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HomeMy Public PortalAbout2003-26 Agreement with First Southwest Company for Financial ServicesRESOLUTION NO. 2003-26 A RESOLUTION OF THE VILLAGE OF KEY BISCAYNE, FLORIDA; AUTHORIZING THE VILLAGE MANAGER TO APPROVE THE ATTACHED AGREEMENT ON BEHALF OF THE VILLAGE WITH FIRST SOUTHWEST COMPANY FOR FINANCIAL SERVICES; PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the Village wishes to conduct ongoing analytical reviews of its financial reports and 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 ongoing analytic reviews and the authorization, sale, issuance and delivery of such indebtedness, Village desires to retain an independent financial advisor; and WHEREAS, the Village desires to obtain the professional services of First Southwest Company to perform ongoing analytical reviews of the Village's financial reports and to advise the Village 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 Village (hereinafter referred to collectively as the "Debt Instruments") from time to time during the period in which this Agreement shall be effective; and NOW, THEREFORE, BE IT RESOLVED BY THE VILLAGE COUNCIL OF KEY BISCAYNE AS FOLLOWS: Section 1. That the Village Manager is hereby authorized to execute the attached agreement with First Southwest Company. Section 2. The Consultant shall perform ongoing analytical reviews of the Village's financial reports and advise the Village 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 Village. The analytical reviews and advisements will be accomplished in a manner to strengthen the Village's financial and long-term planning capabilities. Section 3. This resolution shall take effect immediately upon adoption. PASSED AND ADOPTED this 1st day of July , 2003. AT agiN° CHITA H. ALVAREZ, CMC, VILLAGE CLERK APPROVED AS TO FO VILLAGE ATT • ' Y LEGAL SUFFICIENCY t & t .,1 L___ MAYOR ROBERT OLDAKOWSKI 1 FINANCIAL ADVISORY AGREEMENT This Financial Advisory Agreement (the "Agreement") is made and entered into by and between the Village of Key Biscayne, Florida ("Village") and First Southwest Company ("FSC") effective as of the date executed by the Village as set forth on the signature page hereof. WITNESSETH: WHEREAS, the Village wishes to conduct ongoing analytical reviews of its financial reports and 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 ongoing analytic reviews and the authorization, sale, issuance and delivery of such indebtedness, Village desires to retain an independent financial advisor; and WHEREAS, the Village desires to obtain the professional services of FSC to perform ongoing analytical reviews of the Village's financial reports and to advise the Village 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 Village (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 the ongoing analytical review of the Village's financial reports and all programs of financing as may be considered and authorized by Village during the period in which this Agreement shall be effective. NOW, THEREFORE, the Village 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 Scope of Services FSC agrees to perform the financial advisory services stated in the following provisions of this Section I; and for having rendered such services, the Village agrees to pay to FSC the compensation as provided in Section V hereof. 1. Services Related to Ongoing Analytical Review On a monthly basis, FSC will perform a top -side review of the Village's financial reports and other financial information to advise the Village Manager on areas of opportunity or concern. These analytical reviews and advisements will be accomplished in a manner to strengthen the Village's financial and long-term planning capabilities. 2. Services Related to Debt Issuances A) Financial Planning. At the direction of Village, FSC shall: 1. Survey and Analysis. Conduct a survey of the financial resources of the Village 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 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 Village. In the event revenues of existing or projected facilities operated by the Village 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 Village, 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 Village's staff and consulting engineers or other experts, if any, employed by the Village. 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 Village 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 Village. All 2 recommendations will be consistent with the goal of designing the Debt Instruments to be sold on terms which are advantageous to the Village, including the lowest interest cost consistent with all other considerations. 4. Market Information. Advise the Village 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, 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 Village. B) Debt Management and Financial Implementation. At the direction of the Village, FSC shall: 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: 1. If the Debt Instruments are to be sold by an advertised competitive sale, FSC will: (a) Supervise the sale of the Debt Instruments, reserving the right, alone or in conjunction with others, to submit a bid for any Debt Instruments issued under this Agreement which the Village advertises for competitive bids; however, in keeping with the provisions of Rule G-23 of the Municipal Securities Rulemaking Board, FSC will request and obtain written consent to bid prior to submitting a bid, in any instance wherein FSC elects to bid, for any installment of such Debt Instruments; 3 (b) 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; (c) Assist the staff of the Village in coordinating the receipt of bids, the safekeeping of good faith checks and the tabulation and comparison of submitted bids; and (d) Advise the Village regarding the best bid and provide advice regarding acceptance or rejection of the bids. 2. If the Debt Instruments are to be sold by negotiated sale, FSC will: (a) Recommend for the Village'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. (b) 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 Village'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. (c) Assist the staff of the Village 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. (d) Advise the Village as to the fairness of the price offered by the underwriters. C. 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 Village for examination, approval and certification. After such examination, approval and certification, FSC shall provide the Village 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. D. Credit Ratings. Make recommendations to the Village as to the advisability of obtaining a credit rating, or ratings, for the Debt Instruments and, when directed by the Village, 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 Village as may be finally approved or directed by the Village. E. Trustee, Paying Agent, Registrar. Upon request, counsel with the Village 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. F. Financial Publications. When appropriate, advise financial publications of the forthcoming sale of the Debt Instruments and provide them with all pertinent information. G. Consultants. After consulting with and_receiving directions from the Village, arrange for such reports and opinions of recognized independent consultants as may be appropriate for the successful marketing of the Debt Instruments. H. 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. I. Village Meetings. Attend meetings of the governing body of the Village, 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. J. Printing. To the extent authorized by the Village, coordinate all work incident to printing of the offering documents and the Debt Instruments. K. 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. L. Changes in Laws. Provide to the Village 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 Village. M. Delivery of Debt Instruments. As soon as a bid for the Debt Instruments is accepted by the Village, 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 Village in the preparation or verification of final closing figures incident to the delivery of the Debt Instruments. N. Debt Service Schedule; Authorizing Resolution. After the closing of the sale and delivery of the Debt Instruments, deliver to the Village a schedule of annual debt service requirements for the Debt Instruments and, in coordination with Bond Counsel, assure that the paying Trustee and/or Paying Agent/Registrar has been provided with a copy of the authorizing ordinance, order or resolution. SECTION II OTHER AVAILABLE SERVICES In addition to the services set forth and described in Section I herein above, FSC agrees to make available to Village the following services, when so requested by the Village and subject to the agreement by Village and FSC regarding the compensation, if any, to be paid for such 6 services, it being understood and agreed that the services set forth in this Section II shall require further agreement as to the compensation to be received by FSC for such services: 1. Investment of Funds. From time to time, as an incident to the other services provided hereunder as financial advisor, FSC may purchase such investments as may be directed and authorized by the Village to be purchased, it being understood that FSC will be compensated in the normal and customary manner for each such transactions. In any instance wherein FSC 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 the Village, we will disclose to the Village the nature and, to the extent such is known, the amount of any such compensation so that the Village may consider the information in making its investment decision. It is understood and agreed that FSC is a duly licensed broker/dealer and is affiliated with First Southwest Asset Management, Inc. ("FSAMI"), a duly registered investment advisor. The Village may, from time to time, utilize the broker/dealer services of FSC 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 FSC and/or FSAMI to provide such services shall be determined by mutual agreement at the time such services are requested. 2. Interest Rate Swap or Synthetic Financing Structures. Provide advice and assistance with regard to interest rate swaps or synthetic financing structures. 3. Arbitrage Rebate Calculation Services. Provide advice and assistance through FSAMI regarding arbitrage rebate calculations. Provide advice and assistance regarding arbitrage rebate calculations. The terms and conditions of engagement for these services will require execution of a separate agreement with the Arbitrage Rebate division of FSAMI. 4. Continuing Disclosure Services. Provide assistance in complying with continuing disclosure undertakings. The terms and conditions of engagement for these services will require execution of a separate agreement with the Disclosure Services division of FSC. 5. Investment Advisory Services. Provide investment management and other investment advisory services through FSAMI. The terms and conditions of engagement for these services will require execution of a separate agreement with FSAMI. 7 1 6. Exercising Calls and Refunding. Provide advice and assistance with regard to exercising any call and/or refunding of any outstanding Debt Instruments. 7. Capital Improvements Programs. Provide advice and assistance in the development of any capital improvements programs of the Village. 8. Long -Range Planning. Provide advice and assistance in the development of other long- range financing plans of the Village. 9. Post -Sale Services. Subsequent to the sale and delivery of Debt Instruments, review the transaction and transaction documentation with legal counsel for the Village, Bond Counsel, auditors and other experts and consultants retained by the Village 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 Village 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 one (1) year from such date. Unless FSC or the Village shall notify the other party in writing at least thirty (30) days in advance of the expiration date that this Agreement will not be renewed, this Agreement will be automatically renewed on the first anniversary of the effective date hereof for an additional one (1) year period and thereafter may be further renewed upon mutual written agreement. SECTION IV TERMINATION This Agreement may be terminated with or without cause by the Village 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. SECTION V COMPENSATION AND EXPENSE REIMBURSEMENT 1. In connection to the services rendered by FSC in providing ongoing analytical reviews of the Village's financial reports as described in Section I of this Agreement, FSC will be paid compensation of $2,000.00 per month except for the first month of such services whereby FSC will be paid $10,000.00 to allow for preparation work. The fees for the month shall be due at the end of each month and payable within 30 days after receipt of an invoice therefor submitted by FSC. FSC shall be reimbursed for reasonable and necessary expenses for postage, copying, long distance telephone calls, and travel authorized by Village, subject to the approval of the Village Manager. 2. 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. SECTION VI MISCELLANEOUS 1. Choice of Law. This Agreement shall be construed and given effect in accordance with the laws of the State of Florida. 2. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the Village 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 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. 9 FIRST SOUTHWEST COMPANY OW- : B �-�." Y Hill A. Feinberg, Chairman and Chief xecutive Offi - r By: Edward Marquez e •r.' Vice resident VILLAGE OF KEY BISCAYNE, FLORIDA 10 APPENDIX A FEE SCHEDULE Compensation related to the issuance of Debt Instruments The fees due to FSC for the services set forth and described in 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 below. Fee(l) Size of Debt Instrument $1.25 per $1,000 For $0 - $20,000,000 of debt instruments issued $1.00 per $1,000 For $20 - $40,000,000 of debt instruments issued $0.75 per $1,000 Over $40,000,000 (1) Minimum $17,000 per transaction In addition, FSC will act as sole bidding agent for the structuring and investment of certain Debt Instrument proceeds. FSC agrees to structure and conduct all bids for any of the funds authorized by the Debt Instrument documents and to comply with Treasury Regulation 1.148-5 that applies to computing the yield and value of such investments and determine required documentation. The successful investment provider shall pay FSC a fee equal to 0.05 percent of the weighted average dollar amount reasonably expected to be invested each year of the investment agreement. The fee paid by the winning provider will be the only compensation received by FSC in connection with its engagement of a bidding agent. The payment of fees for financial advisory services related to Debt Instruments shall be contingent upon the delivery of the debt instruments and shall be due at the time the Debt Instruments are delivered. The payment of fees for other services shall be due and payable in accordance with the mutual agreement therefor between FSC and Village. The Village shall be responsible for the following ancillary expenses, if and when applicable, whether they are charged to the Village directly as expenses or charged to the Village by FSC as reimbursable expenses: Bond counsel Disclosure counsel Bond printing Bond ratings Computer structuring Credit enhancement CPA fees for refunding Official statement preparation and printing Paying agent/ registrar/ trustee 11 1 Travel expenses Underwriter and underwriters counsel Miscellaneous, including copy, delivery, and phone charges The charges for ancillary expenses, 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 Village. The payment of reimbursable expenses that FSC has assumed on behalf of the Village shall NOT be contingent upon the delivery of bonds and shall be due at the time that services are rendered and payable within 30 days after receipt of an invoice therefor submitted by FSC. Ti the Village obtains financing from the Florida Municipal Loan Council (FMLC) Pool Program, FSC will provide the Village with a credit on the above referenced fees related to the issuance of Debt Instruments. The amount of the credit will be determined by taking the Village's percentage of the overall bond issue and multiplying it by the financial advisory fee obtained by FSC in conjunction with the total FMLC bond issue. Other Available Services In addition to the services described in Section I hereof, FSC agrees to make available to the Village the following services, when so requested and pursuant to separate compensation agreements. 1) Interest Rate Swap or Synthetic Financing Structures The Financial Product Provider would be notified, prior to any transaction execution, of the obligation to pay FSC a structuring and negotiating fee, as the Village's agent, equal to the net present value of 5 basis points (.05%) on the notional principal face of the transaction, to be paid within three business days of the closing date of the transaction. FSC will quantify anticipated fee with the Village prior to any transaction execution, and Financial Products Provider(s) will be required to certify in writing the structuring agent fee paid to the Village. 2) Arbitrage Rebate Calculation Services For each year of calculations, the Village will be charged $2,000 per bond issue. This service requires a separate contractual arrangement with the Arbitrage Rebate division of FSC's affiliate, FSAMI. 3) Continuing Disclosure Services i Full continuing disclosure services are billed at $2,500 per year per pledged revenue stream. 4) Investment Advisory Services This service entails the ongoing review of investment policies, development of cash flows for the Village, placement and management of Agency investments, and monthly reports on investment activity. The charge for this service is 10 basis points (0.10%) per investment transaction, applied against the yield of the investment being purchased. This service requires a separate contractual arrangement with FSC's registered investment advisor affiliate, FSAMI. 5) Other Miscellaneous Work For other non -bond related services beyond those provided for in Section I (1) and compensated for in Section V (1), compensation will be paid on an hourly basis plus reimbursement of expenses. FSC's hourly fee schedule, is as follows: Position Rate per Hour Senior Vice President and above: $195.00 Vice President: $170.00 Assistant Vice President: $150.00 Analyst: $100.00 Administrative Staff: $ 40.00 Due to the nature of financial advisory services and our business, FSC bills in half-hour increments. Fees for non -bond related services will be payable within 30 days of receipt of an invoice therefor by FSC.