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1995-186E:\~PDOCS\ORD\FINAN.ORD ORDINANCE NO. ~ AN ORDINANCE APPROVING THE CITY MANAGER TO EXECUTE A FINANCIAL ADVISORY AGREEMENT BETWEEN THE CITY OF DENTON AND FIRST SOUTHWEST COMPANY; AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT; APPROVING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING FOR AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. That the City Council hereby approves the Financial Advisory Agreement, attached hereto, between the City of Denton and First Southwest Company, and the Mayor is hereby authorized to execute the agreement on behalf of the City. SECTION II. That the City Council approves the expenditure of funds for said agreement as authorized in the attached agreement. SECTION III. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the /~day of~, 1995. ATTEST: JENNIFER WALTERS, CITY SECRETARY BY:~ APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY FINANCIAL ADVISORY AGREEMENT By and Between CITY OF DENTON, TEXAS (Herein referred to as the "City") and FIRST SOUTHWEST COMPANY R is understood that the City will have under consideration from time to time the authorization and issuance of indebtedness in amounts and forms which cannot presently be determined and that in connection with the authorization, sale, issuance and delivery of such indebtedness of the City, we have been requested to submit a proposal to provide professional services to the City in the capacity of Financial Advisor. We are pleased to comply with this request and submit the following proposal for consideration. This proposal, if accepted by the City, shall become the agreement (the "Agreement") between the City and First Southwest Company effective at the date of its acceptance as provided for herein below. A. This Agreement shall apply to any and all evidences of indebtedness or debt obligations that may be authorized and issued or otherwise created or assumed by the City (here'mafter referred to collectively as the "Debt Instruments") from tune to time during the period in which this Agreement shall be effective. B. We agree to provide our professional services and our facilities as Financial Advisor and agree to direct and coordinate all programs of financing as may be considered and authorized during the period in which this Agreement shall be effective and to assume and pay those expenses set out in Appendix A, provided, however, that our obligations to pay expenses shall not include any costs incident to litigation, mandamus action, test case or other similar legal actions. C. We agree to perform the following duties normally performed by such financial advisors and all other duties as, in our judgment, may be necessary or advisable: 1. We will conduct a survey of the financial resources of the City to determine the extent of its capacity to authorize, issue and service debt. This survey will include an analysis of the 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 City. In the event revenues of existing or projected facilities operated by the City 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 City, resulting from improvements to be financed by the Debt Instruments under consideration. We will also take into account future financing needs and operations as projected by the City's staff and consulting engineers or other experts, if any, employed by the City. 2. On the basis of the information developed by the survey described above, and other information and experience available to us, we will submit to the City our recommendations on 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 any other additional provisions designed to make the issue attractive to investors. All recommendations will be based upon our professional judgment and marketing experience with the goal of designing Debt Instruments which can be sold under terms most advantageous to the City and at the lowest interest cost consistent with all other considerations. 3. We will advise the City of current bond market conditions, forthcoming bond issues and other general information and 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 time which in our opinion, and yours, will be favorable. 4. We understand the City has retained, or will retain, a firm of municipal bond attorneys ("Bond Counsel") whose fees will be paid by the City. In the event it is necessary to hold an election to authorize the Debt Instruments then under consideration, we will assist in coordinating the assembly and transmittal to Bond Counsel of such data as may be required for the preparation of necessary petitions, orders, resolutions, ordinances, notices and certificates in connection with the election. 5. We will recommend the method of sale of the Debt Instruments that, in our opinion, is in the best interest of the City and will proceed, as directed by the City, with one of the following methods: a. Advertised Sale: We will supervise the sale of the Debt Instruments at a public sale in accordance with procedures set out herein. We reserve the right, either acting alone or in conjunction with others, to submit a bid for any debt Instruments issued under this Agreement which the City advertises for competitive bids. b. Negotiated Sale: We will recommend one or more investment banking finns as managers of an underwriting syndicate for the purpose of negotiating the purchase of the Debt Instruments and in no event will we participate either direct or indirectly in the underwriting of the Debt Instruments. We will collaborate with any managing underwriter selected and Counsel to the underwriters, in the preparation of the Official Statement or Offering Memorandum. We will cooperate with the underwriters in obta'ming any Blue Sky Memorandum and Legal Investment Survey, preparation of the Bond Purchase Contract, Underwriters Agreement and any other related documents. The costs thereof, including the printing of the documents, will be paid by the underwriters. 6. When appropriate, we will advise financial publications of thc forthcoming sale of the Debt Instruments and provide them with all pertinent information. 7. We will coordinate the preparation of the Notice of Sale and Bidding Instructions, Official Statement, Official Bid Form and such other documents as may be required. We will submit to the City all such documents for examination, approval and certification. After such examination, approval and certification, we will provide the City with a supply of all such documents sufficient to its needs and will distribute by mail sets of the same to prospective bidders and to banks, life, fire and casualty insurance companies, investment counselors and other prospective purchasers of the Debt Instruments. We will also provide sufficient copies of the final Official Statement to the purchaser of the Debt Instruments in accordance with the Notice of Sale and Bidding Instructions. 8. We will, af[er consulting with the City, arrange for such reports and opinions of recognized independent consultants we deem necessary and required in the successful marketing of the Debt Instruments. 9. Subject to the approval of the City, we will organize and make arrangements for such investor information meetings as, in our judgment, may be necessary. 10. We will make recommendations to the City as to the advisability of obtaining a credit rating, or ratings, for the Debt Instruments and, when directed by the City, we will coordinate the preparation of such information as, in our opinion, is required 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, we will arrange for such personal presentations, including representatives from the City. 11. We will assist the staff of the City at any advertised sale of Debt Instruments in coordinating the receipt and tabulation and comparison of bids and we will advise the City as to the best bid. We will provide the City with our recommendation as to acceptance or rejection of such bid. 12. As soon as a bid for the Debt Instruments is accepted by the City, we will proceed to coordinate the efforts of all concerned to the end that the Debt Instruments may be delivered and paid for as expeditiously as possible. We shall assist the City in the preparation or verification of final closing figures incident to the delivery of, and payment for, the Debt Instruments. 13. We will maintain liaison with Bond Counsel in the preparation of all legal documents pertaining to the authorization, sale and issuance of the Debt Instruments. Bond Counsel will provide an unqualified legal opinion as to the legality of the issuance of the Debt Instruments at the time of delivery. 14. If requested, we will counsel with the City in the selection of a Trustee and Paying Agent/Registrar for the Debt Instruments, and we will assist in the preparation of agreements pertinent to these services and the fees incident thereto. 15. In the event formal verification by an independent auditor of any calculations incident to the Debt Instruments is required, we will make arrangements for such services. 16. We agree to coordinate all work incident to printing and execution of the Debt Instruments. 17. After the closing of the sale and delivery of the Debt Instruments, we will deliver to the City a schedule of annual debt service requirements of the Debt Instruments. In coordination with Bond Counsel, we will assure that the Paying Agent/Registrar has been provided with a copy of the authorizing ordinance, order or resolution. 18. We will attend any and all meetings of the governing body of the City, its staff, representatives or committees as requested at all times when we may be of assistance or service and the subject of financing is to be discussed. 19. In concert with Bond Counsel we will advise the City and its staff of changes, proposed or enacted, in Federal and State laws and regulations which would affect the municipal bond market. 20. We will work with the City, its staff and any consultants employed by the City in developing financial feasibility studies and analyzing alternative financing plans. D. In addition to the services set out above, we agree to provide the following services when so requested. 1. We will provide our advice as to the investment of certain funds of the City. We will, when so directed, purchase those investments authorized to be purchased and, except for investment of the proceeds of Debt Instruments, we will charge a normal and customary commission, to be mutually agreed upon, for each such transaction. 2. We will provide our advice and assistance with regard to exercising call and/or refunding of any outstanding Debt Instruments. 3. We will provide our advice and assistance in the development of, and financing for, any capital improvements programs of the City. 4. We will provide our advice and assistance in the development of the long-range financing plan of the City. 5. We will provide any other financing planning services as may be requested by the City. E. The fee due to First Southwest Company calculated in accordance with Appendix A attached hereto, any other fees as may be mutually agreed upon and all expenses for which First Southwest Company is entitled to reimbursement, shall become due and payable concurrently with the delivery of the Debt Instruments to the purchaser. F. First Southwest Company agrees to hold harmless and indemnify the City from and against any and all suits, actions, legal or administrative proceedings, claims, demands, liability, monetary loss, and interest arising from any negligent acts, errors or omissions or willful misconduct of First Southwest Company in performing services or failing to perform services pursuant to this Agreement. G. This Agreement shall become effective at the date of acceptance by the City set out herein below and shall remain in effect thereafter for a period of five (5) years from the date of acceptance. This Agreement will be automatically renewed for successive one (1) year periods on each anniversary date unless othenvise terminated, in writing, by either party. This Agreement may be terminated without cause by the City or First Southwest upon thirty (30) days' written notice to the other party. In the event of such termination, it is understood and agreed that only the amount due First Southwest 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. This Agreement is submitted in duplicate originals. When accepted by the City, it, together with Appendix A attached hereto, will constitute the entire Agreement between the City and First Southwest Company for the purposes and considerations herein specified. Acceptance will be indicated by the signature of authorized officials of the City together with the date of acceptance on both copies and the return of one executed copy to First Southwest Company. Respectfully submitted, % .~ledanich ector President ~d C~ef Executive Officer ACCEPTANCE CLAUSE The above ~df~regoirtg is hereby in all things accepted and approved by the City. of DENTON, Texas on this the _~_ ~tay o~ 19 ~,~y action of the~~]. / Title ATI"EST: APPENDIX A CITY OF DENTON, TEXAS FEE SCHEDULE AND EXPENSE ITEMS In consideration for the services rendered by us, it is understood and agreed that our fee for each issue of Debt Instruments will be as follows: Base Fee - Any Issue $ 5,000 Plus $7.50 Per $1,000 up to 500,000 Plus 5.00 per $1,000 next 500,000 Plus 3.00 per $1,000 next 1,500,000 Plus 2.50 per $1,000 next 2,500,000 Plus 1.75 per $1,000 next 5,000,000 Plus 1.00 per $1,000 next 10,000,000 Plus 0.75 per $1,000 next 10,000,000 Plus 0.50 per $1,000 next 20,000,000 Plus 0.40 per $1,000 next 50,000,000 The above charges shall be increased by an additional charge, mutually agreeable to the City and the Company for the issuance of refunding bonds, reflecting additional services and expenses required. The City will be responsible for the payment of the expenses listed below. The payment of reimbursable expenses that the Company has assumed on behalf of the City shall not be contingent upon the Delivery of the Debt Instruments. · Bond counsel · Bond printing · Bond ratings · Credit enhancement · Official statement printing and postage · Paying agent/registrar/trustee · Travel expenses of City personnel · Travel expenses of Company's personnel, with prior approval · Miscellaneous, including copy, delivery Normally associated with Refunding Bond Issues · Computer structuring · Underwriter and underwhters counsel