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HomeMy WebLinkAboutRes 2014-04-03 Advisory Agreement eFirst Southwest Company.pdfCITY OF ANNA, TEXAS RESOLUTION NO. 2014-04-03 A RESOLUTION APPROVING A FINANCIAL ADVISORY AGREEMENT WITH FIRST SOUTHWEST COMPANY, AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAME. WHEREAS, as part of its negotiations with Centurion American on the development agreement for the Villages of Hurricane Creek, the City will need financial advisory expertise to evaluate the terms of the agreement as it relates to the creation of one or more public improvement districts ("PID") and tax increment reinvestment zones ("TIRZ"), and other financial matters related to the agreement; and WHEREAS, the fees charged by First Southwest related to the Villages of Hurricane Creek negotiation will be reimbursed directly to the City by Centurion American, or will be included in any program bonds that result from a successful negotiation; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS THAT: Section 1. Recitals Incorporated The recitals set forth above are incorporated herein for all purposes as if set forth in full. Section 2. The City Council of the City of Anna, Texas hereby approves the Financial Advisory Agreement attached hereto as Exhibit 1, and authorizes the City Manager to execute same. PASSED by the City Council of the City of Anna, Texas, on this 8th day of April, 2014. ATTEST: ) t &- 1"f 16 Z"' N a Wilkison, City Secretary w � P _ a 4p d y S�� ��rtr RES. 2014-04-03 Financial Advisory Agreement w/ First Southwest Co. PAGE 1 OF 1 04-08-14 FINANCIAL ADVISORY AGREEMENT This Financial Advisory Agreement (the "Agreement") is made and entered into by and between the City of Anna, Texas (the "Issuer") and First Southwest Company ("FirstSouthwest") effective as of the date executed by the Issuer as set forth on the signature page hereof. WITNESSETH: 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 FirstSouthwest 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 or by an entity created or authorized 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 WHEREAS, FirstSouthwest 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 FirstSouthwest, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, do hereby agree as follows: SECTION I DESCRIPTION OF SERVICES Upon the request of an authorized representative of the Issuer, FirstSouthwest agrees to perform the financial advisory services stated in the following provisions of this Section I; and for having rendered such services, the Issuer agrees to pay to FirstSouthwest the compensation as provided in Section V hereof. A. Financial Planning. At the direction of Issuer, FirstSouthwest shall: 1. Survey and Analysis. Conduct a survey of the financial resources of the Issuer to 1 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 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 engaged 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, engaged 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 FirstSouthwest's 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, FirstSouthwest 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. 2 B. Debt Management and Financial Implementation. At the direction of Issuer, FirstSouthwest 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: a. If the Debt Instruments are to be sold by an advertised competitive sale, FirstSouthwest will: (1) Supervise the sale of the Debt Instruments; (2) 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; (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, FirstSouthwest 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 negotiating 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. FirstSouthwest 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 FirstSouthwest, except to the extent specifically provided otherwise in this Agreement or assumed in writing by FirstSouthwest. 9 (3) Assist the staff of the Issuer 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. (4) 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, FirstSouthwest 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, FirstSouthwest 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, FirstSouthwest 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, Paying Agent, Re ig stray. 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 M 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 FirstSouthwest may be of assistance or service and the subject of financing is to be discussed. 9. Printing. To the extent authorized by the Issuer, coordinate all work incident to printing of the offering documents and the Debt Instruments. 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 FirstSouthwest becomes aware in the ordinary course of its business, it being understood that FirstSouthwest 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. C. Development Services. At the direction of Issuer, FirstSouthwest agrees to perform the following consulting services for any proposed Development: 1. Familiarize itself with the Development; 2. Conduct financial analysis and modeling of costs and benefits, including the effect and anticipated timing of approvals and funding of any Program based on FirstSouthwest's experience with municipalities in Texas regarding economic incentive programs; 5 3. Prepare a written analysis including recommendations for one or more Programs; 4. If the City approves a Program, prepare one or more Program proposals for the City's review and approval to be presented by FirstSouthwest to the developer, with the City's support and cooperation as reasonably requested by FirstSouthwest; and 5. Pursue the approval of each component of the Program, including attendance at meetings with governmental officials and developer representatives and negotiation of terms of a Program reasonably acceptable to the City. 6. Provide the City with general financial advice regarding the structure, timing and general amounts of funding for the components of the Program as FirstSouthwest and the City negotiate with the developer, governmental agencies, community groups and other interested parties to obtain the Program. FirstSouthwest will provide additional services to those outlined herein upon mutual agreement of the parties as to both the services to be performed and the payment of additional compensation. SECTION H OTBERAVAILABLE SERVICES In addition to the services set forth and described in Section I herein above, FirstSouthwest agrees to make available to Issuer the following services, when so requested by the Issuer and subject to the agreement by Issuer and FirstSouthwest regarding the compensation, if any, to be paid for such 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 FirstSouthwest for such services: 1. Investment of Funds. From time to time, as an incident to the other services provided hereunder as financial advisor, FirstSouthwest may purchase such investments as may be directed and authorized by Issuer to be purchased, it being understood that FirstSouthwest will be compensated in the normal and customary manner for each such transaction. In any instance wherein FirstSouthwest 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 any such compensation so that Issuer may consider the information in making its investment decision. It is understood and agreed that FirstSouthwest is a duly licensed broker/dealer and is affiliated with First Southwest Asset Management, Inc. ("FirstSouthwest Asset Management"), a duly registered 2 investment advisor. Issuer may, from time to time, utilize the broker/dealer services of FirstSouthwest and/or the investment advisory services of FirstSouthwest Asset Management 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 FirstSouthwest and/or FirstSouthwest Asset Management 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. 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 TERMINATION This Agreement may be terminated with or without cause by the Issuer or FirstSouthwest 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 FirstSouthwest 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 IV COMPENSATION AND EXPENSE RE, IlVIBURSEMENT The fees due to FirstSouthwest 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, and incorporated herein as if set forth in full. Unless specifically provided otherwise on Appendix A or in a separate written agreement between Issuer and FirstSouthwest, such fees, together with any other fees as may have 7 been mutually agreed upon and all expenses, for which FirstSouthwest is entitled to reimbursement, shall become due and payable concurrently with the delivery of the Debt Instruments to the purchaser. SECTION V MISCELLANEOUS 1. Choice of Law and Venue. This Agreement shall be construed and given effect in accordance with the laws of the State of Texas. The exclusive venue for litigation arising from or related to this Agreement shall be in a court of competent jurisdiction in Collin County, Texas. 2. Binding Effect; Assi ng ment. This Agreement shall be binding upon and inure to the benefit of the Issuer and FirstSouthwest, 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. 8 FIRST SOUTHWEST COMPANY By:_ Hill A. Feinberg, Chairman and Chief Executive Officer Jim Sabonis Managing Director By:_ Andre Ayala Vice President CITY OF ANNA, TEXAS Philip Sanders, City Manager Date: Traditional Municipal Finance Debt Instruments The fees due FirstSouthwest will not exceed those contained in the fee schedule as listed below. Base Fee — Any Issue $ 15,000.00 Plus $5.00 per $1,000 up to $ 10,000.00 Plus $3.50 per $1,000 thereafter The above charges shall be multiplied by 1.25 times for the completion of an application to a federal or state government agency or for the issuance of revenue bonds or refunding bonds, reflecting the additional services required. 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 described in Section I of the foregoing Agreement shall be contingent upon the delivery of bonds and shall be due at the time that bonds are delivered. The payment of charges for services described in Section II of the foregoing Agreement shall be due and payable in accordance with the mutual agreement therefor between FirstSouthwest and Issuer. The Issuer shall be responsible for the following expenses, if and when applicable, whether they are charged to the Issuer directly as expenses or charged to the Issuer by FirstSouthwest 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 FirstSouthwest 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 and payable upon receipt of an invoice therefor submitted by FirstSouthwest. Page 1 of 2 Development Services and Development Debt Instruments Upon request, FirstSouthwest will assist the City in structuring and securing for any development of real property within the City (the "Development") one or more economic incentive program(s) as described in a development agreement for the Development ("Development Agreement") entered into between the City and a property owner, developer, and/or development district (a "Program"). Compensation for Services Rendered: Recognizing the expertise that FirstSouthwest possesses with municipalities in Texas regarding economic incentive programs, the fee for assisting the City with reviewing, analyzing and structuring land developments and land development agreements shall be: (i) a nonrefundable upfront cash payment of $25,000, payable prior to commencement of the work outlined in the Scope of Services and not credited against any other fees due to FirstSouthwest; and (ii) a fee of 2.0% of the par of any bonds or debt issued by the City or by an entity under the City's control for the benefit of the development (this Development related financial advisory fee will apply to any General Obligation Bonds, Certificates of Obligation, Tax Notes, Waterworks and Sewer System Revenue Bonds, or Special Revenue Bonds that are issued, including any refunding bonds, as long as such Debt Instruments are related to a Program as defined above; provided, however, this fee will not apply to any "Traditional Municipal Finance Debt Instruments" for which FirstSouthwest receives fees as described on the first page of this Appendix). Notwithstanding any provision in this Agreement or in this Appendix A, the City's obligations with respect the fee of 2.0% of the par of any bonds or debt issued by the City or by an entity under the City's control for the benefit of the development as described in the immediately preceding paragraph (ii) shall terminate if no such bond or debt is issued by the City or by an entity under the City's control for the benefit of the development within three years after the effective date of the Development Agreement related to a Program. Said termination shall occur immediately upon the third anniversary date of the effective date of such Development Agreement unless the City and FirstSouthwest enter into a duly authorized written agreement extending such obligation. It is expected that the City will be reimbursed for the above -referenced fees by the developer as an expense of negotiating the economic incentive agreement(s). FirstSouthwest shall be entitled to reimbursement for reasonable expenses in connection with providing the above -referenced Development consulting services to the City. Expenses shall be reimbursed within thirty (30) days after receipt of a detailed invoice therefor submitted by FirstSouthwest. Expenses related to Development Services are not contingent upon a Program being agreed to or a transaction being Page 2 of 2 completed. Page 2 of 2