TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
SUBJECT:Title
Approve Contract for Bond and Disclosure Counsel Services with Stradling, Yocca, Carlson & Rauth (Finance Director Moe)
APPROVE
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council approve a contract with Stradling, Yocca, Carlson & Rauth for bond and disclosure counsel services.
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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. The amount to be paid for these contingent services is included in the proposed contract (attached).
BACKGROUND:
The City has historically utilized bond counsel services to provide legal advice on all aspects of financings (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 the original and refinancing of Police/Fire, Metlox; refinancing of water-wastewater; pension obligation bonds; Marine Avenue Sports Fields; and underground utility districts.
DISCUSSION:
As the City Council contemplates various high-priority capital improvements, a corresponding funding plan needs to be developed. While some smaller projects may be funded with existing resources, larger, more costly and significant projects may require the issuance of debt in order to spread the costs over multiple years for affordability.
As the City prepares for potential projects and financing options, it is prudent to begin assembling the financing team which will help guide the funding options and decisions. The professional services needed for this endeavor include a Financial Analyst, Bond/Disclosure Counsel, Underwriter, and Trustee among others. As a result, at this time, staff recommends retaining the services of the FA and Bond/Disclsoure Counsel to get started. The contract for each service is presented separately on tonight’s agenda.
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
• Perform continuing disclosure
The City has utilized the Bond/Disclosure counsel services of SYCR, and their attorney Mr. Kevin Civale, for at least the past 10 years. Before then, 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, and 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.).
In fact, with Mr. Civale’s assistance, two years ago, the City created and implemented a “Bond Disclosure” section of the Comprehensive Annual Financial Report (CAFR) that provides continuing disclosure in a complete and easy to access format. This information is also shared on-line with the investment community via the Electronic Municipal Market Access (“EMMA”) system created and operated by the Municipal Securities Rulemaking Board.
Because of their excellent and reliable legal advice and the services of Mr. Civale, staff recommends that the City Council approve a new contract with SYCR. The new contract includes updated costs for services (bond and disclosure counsel services were increased $5,000 to $45,000 and $25,000 respectively) which are payable only upon the successful issuance of debt.
The contract is attached and has been approved as to form by the City Attorney.
Attachment