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:
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N a Wilkison, City Secretary
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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
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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.
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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.
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(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
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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;
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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
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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
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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.
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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.
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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
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completed.
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