TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Libby Bretthauer, Acting Finance Director
SUBJECT:Title
Consideration of a Resolution Approving Amendment No. 1 to the Agreement with Stradling, Yocca, Carlson & Rauth for Bond and Disclosure Counsel Services Through June 30, 2028 (No Immediate Budget Impact) (Finance Director Bretthauer).
ADOPT RESOLUTION NO. 25-0056
Body
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RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 25-0056 approving Amendment No. 1 to the agreement with Stradling, Yocca, Carlson & Rauth for bond and disclosure counsel services through June 30, 2028.
FISCAL IMPLICATIONS:
There are no fiscal implications associated with the approval of this contract. Typically, compensation for these services is contingent upon the successful issuance of debt by the public agency; there is no fee until and unless debt is issued. Necessary funds will be appropriated with each debt issuance.
BACKGROUND:
The City has historically utilized bond counsel services to provide legal advice on all aspects of financing (contractual, tax-exempt status, etc.). The same firm has also served as disclosure counsel to provide advice on City disclosure obligations and to prepare the official statement and/or continuing disclosure agreement.
The firm of Stradling, Yocca, Carlson & Rauth (SYCR) has served in this dual role for several of the City's past financings, including:
• Certificates of Participation for Police/Fire, Metlox, Water/Wastewater, Marine Avenue Sports Fields, and Fire Station #2;
• Pension Obligation Bonds; and
• Utility Underground Assessment Districts.
DISCUSSION:
As the City Council contemplates various high-priority and significant capital improvements, the issuance of debt is likely to spread the costs over multiple years for affordability. As the City prepares for these projects and financing options, it is prudent to confirm the financing team that will help guide the funding options and decisions over the next few years.
The City has utilized Stradling, Yocca, Carlson & Rauth (SYCR) for Bond/Disclosure Counsel services and their attorney, Kevin Civale, for several years. Before SYCR, Mr. Civale's services were obtained through Hawkins, Delafield and Wood. Working through both firms, Mr. Civale assisted the City with the successful issuances of debt for the Police/Fire Facility, the Metlox Project, Marine Avenue Sports Fields, underground assessment districts, pension obligation bonds, Fire Station #2 and the refinancing of several of these issues at or near historically low interest rates.
Additionally, SYCR and Mr. Civale have provided excellent service and are well-familiar with the City's past financings and continuing disclosure facts with which they continuously monitor and assist the City. The latter service is critical in ensuring the City properly discloses any significant financial matters that may affect the investment community (investors, rating agencies, etc.).
Bond/Disclosure Counsel will perform all customary duties, including:
• Specific project review, participation in negotiation and drafting of legal agreements (including credit enhancement documents);
• Preparation of the official statement and all other necessary marketing documents and other documents supporting the transaction (e.g., lease agreements for lease backs et al.);
• Advise and consult with City representatives; participate at finance team meetings, assist with reviews by the rating agencies; issuance of unqualified approving opinions and tax opinions;
• Appear at and make presentations to the City's Finance Subcommittee and City Council with regard to each issuance;
• Undertake any necessary research into legal matters, including tax matters relative to issuing documents, opinions and obligations;
• Seek, on behalf of the City, any necessary opinions, letter rulings or other documentation from the Internal Revenue Service or other bodies;
• Provide legal advice after the close of a particular financing on issues that may arise in connection with the transaction; and
• Consult on continuing disclosure reporting and compliance.
Staff recommends that the City Council approve Amendment No. 1 with SYCR to extend their services while the City considers new debt issuances for significant capital improvements, including potential future redevelopments of Lot 3 (12th & Morningside Drive) and 400 Manhattan Beach Boulevard.
The Amendment extends the term through June 30, 2028, and includes updated costs for services. Bond and disclosure counsel services were increased to $60,000 and $30,000, respectively, which are payable only upon the successful issuance of debt. Additionally, hourly rates were added in the case that the City needs additional support for finance-related general services and advice at rates of $600 per hour for partners and $375 to $475 per hour for associates (depending on seniority).
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this issue.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution 25-0056
2. Amendment No. 1 - Stradling, Yocca, Carlson & Rauth
3. Agreement - Stradling, Yocca, Carlson & Rauth