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HomeMy WebLinkAboutFIN 2017-10-17 Item 2C - Contract Amendment - Financial Advisor with PFM Financial AdvisorsCity of Tukwila INFORMATIONAL MEMORANDUM Allan Ekberg, Mayor TO: Finance Committee FROM: Peggy McCarthy, Finance Director CC: Mayor Ekberg DATE: October 11, 2017 SUBJECT: Approve Contract Amendment with PFMFA, the City's Financial Advisor ISSUE Approve a contract amendment with PFM Financial Advisors LLC (PFMFA) increasing the not to exceed amount and the term. BACKGROUND A contract for municipal advisor services was signed with Public Finance Management Inc. (PFM), on June 30. 2014. The contract amount was $40,000 and the term was two years, with an expiration date of June 1, 2016. Under this contract, the following fees were paid through proceeds of the bond issues: Invoice Date Bond Issue Description of Services / Fees Amount 1/13/2015 Urban renewal bonds, two issues, 2014 Taxable Financial advisory fee plus mileage $15,209.12 4/28/2015 Arterial Street bonds, 2015 LTGO Financial advisory and Official Statement preparation fees $23,500.00 Cumulative Contract Total TOTAL $38,709.12 In December 2015, the contract was amended to increase the contract amount to $130,000 and the contract term to December 31, 2017. Under this contract amendment, the following fees were paid through the bond proceeds. 12/22/2016 Public Safety Plan, 2016 UTGO Financial Advisory Fee, Disclosure Fee, Financial Advisory expenses $48,402.55 7/26/2017 Residential Streets, 2017 LTGO Financial Advisory Fee, Disclosure Fee, Financial Advisory expenses 23,629.03 TOTAL $72,031.58 Cumulative Contract Total $110,740.70 In June 2017, the City assigned the PFM contract to PFM's newly formed financial advisory arm PFM Financial Advisors LLC. DISCUSSION The City's future financing plans include refinancing the 2014 urban renewal short term debt in November 2017 and issuing bonds for the Public Safety Plan in 2018 or 2019. PFMFA services have benefited the City by providing general professional guidance, assisting with financing strategies, optimizing debt structures, and obtaining favorable interest rates on the bond issues. 35 INFORMATIONAL MEMO Page 2 It is in the best interest of the City to continue to use their services. Accordingly, revised contract terms are recommended to extend the contract amount and service term, as follows: Contract Terms Original Amendment 1 Amendment 2 Expiration date June 1, 2016 December 31, 2017 December 31, 2020 Amount $40,000 $130,000 $300,000 FINANCIAL IMPACT The financial advisory fees will be paid for from bond proceeds. RECOMMENDATION The Council is being asked to approve the contract amendment and consider this item at the November 6, 2017 Regular Meeting Consent Agenda. ATTACHMENTS Contract amendment 14-086(b) Original contract 14-08 36 City of Tukwila Contract Number: 14-086(b) Council Approval 6200 Southcenter Boulevard, Tukwila WA 98188 CONTRACT FOR SERVICES Amendment # 2 Between the City of Tukwila and PFM Financial Advisors LLC (PFMFA) That portion of Contract No. 14-086 between the City of Tukwila and PFM Financial Advisors LLC (PFMFA) is amended as follows: Section 2. Compensation and Method of Payment. The City shall pay the Contractor for services rendered according to the rate set forth on Exhibit B attached hereto and incorporated herein by this reference. The total amount to be paid shall not exceed $300,000. Section 4. Duration of Agreement: This agreement shall be in full force and effect for a period commencing June 1, 2014 and ending December 31, 2020, unless sooner terminated under the provisions hereinafter specified. All other provisions of the contract shall remain in full force and effect. Dated this day of , 20 CITY OF TUKWILA CONTRACTOR Allan Ekberg, Mayor Susan Musselman, Director ATTEST/AUTHENTICATED APPROVED AS TO FORM City Clerk City Attorney Page 1 of 1 37 38 City of Tukwila 6200 Southcenter Boulevard, Tukwila WA 98188 Contract Number14-086 Council Approval N/A CONTRACT FOR SERVICES This Agreement is entered into by and between the City of Tukwila, Washington, a non -charter optional municipal code city hereinafter referred to as "the City," and Public Financial Management, Inc. , hereinafter referred to as "the Contractor" or "PFM" whose principal office is located at 1200 Fifth Ave. Seattle, WA 98101. WHEREAS, the City has determined the need to have certain services performed for its citizens but does not have the manpower or expertise to perform such services; and WHEREAS, the City desires to have the Contractor perform such services pursuant to certain terms and conditions; now, therefore, IN CONSIDERATION OF the mutual benefits and conditions hereinafter contained, the parties hereto agree as follows: 1. Scope and Schedule of Services to be Performed by Contractor. The Contractor shall perform those services described on Exhibit A attached hereto and incorporated herein by this reference as if fully set forth. In performing such services, the Contractor shall at all times comply with all Federal, State, and local statutes, rules and ordinances applicable to the performance of such services and the handling of any funds used in connection therewith. The Contractor shall request and obtain prior written approval from the City if the scope or schedule is to be modified in any way. 2. Compensation and Method of Payment. The City shall pay the Contractor for services rendered according to the rate and method set forth on Exhibit B attached hereto and incorporated herein by this reference. The total amount to be paid shall not exceed $40,000 at a rate of $295. 3. Contractor Budget. The Contractor shall apply the funds received under this Agreement within the maximum limits set forth in this Agreement. The Contractor shall request prior approval from the City whenever the Contractor desires to amend its budget in any way. 4. Duration of Agreement. This Agreement shall be in full force and effect for a period commencing June 1, 2014 , and ending June 1, 2016 , unless sooner terminated under the provisions hereinafter specified. 5. Independent Contractor. Contractor and City agree that Contractor is an independent contractor with respect to the services provided pursuant to this Agreement. Nothing in this Agreement shall be considered to create the relationship of employer and employee between the parties hereto. Neither Contractor nor any employee of Contractor shall be entitled to any benefits accorded City employees by virtue of the services provided under this Agreement. The City shall not be responsible for withholding or otherwise deducting federal income tax or social security or contributing to the State Industrial Insurance Program, or otherwise assuming the duties of an employer with respect to the Contractor, or any employee of the Contractor. CA Revised 2012 Page 1 of 9 39 6. Indemnification. The Contractor shall defend, indemnify and hold the City, its officers, agents, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or in connection with the performance of this Agreement, except for injuries and damages caused by the sole negligence of the City. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Contractor and the City, its officers, officials, employees, and volunteers, the Contractor's liability hereunder shall be only to the extent of the Contractor's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the Contractor's waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. 7. Insurance. The Contractor shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Contractor, their agents, representatives, employees or subcontractors. Contractor's maintenance of insurance, its scope of coverage and limits as required herein shall not be construed to limit the liability of the Contractor to the coverage provided by such insurance, or otherwise limit the City's recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance. Contractor shall obtain insurance of the types and with the limits described below: 1. Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $1,000,000 per accident. Automobile liability insurance shall cover all owned, non -owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage. 2. Commercial General Liability insurance with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate and $2,000,000 products -completed operations aggregate limit. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors, products - completed operations, stop gap liability, personal injury and advertising injury, and liability assumed under an insured contract. The Commercial General Liability insurance shall be endorsed to provide the Aggregate Per Project Endorsement ISO form CG 25 03 11 85 or an equivalent endorsement. There shall be no endorsement or modification of the Commercial General Liability Insurance for liability arising from explosion, collapse or underground property damage. The City shall be named as an insured under the Contractor's Commercial General Liability insurance policy with respect to the work performed for the City using ISO Additional Insured endorsement CG 20 10 10 01 and Additional Insured -Completed Operations endorsement CG 20 37 10 01 or substitute endorsements providing equivalent coverage. 3. Workers' Compensation coverage as required by the Industrial Insurance laws of the State of Washington. CA Revised 1-2013 Page 2 of 9 40 B. Other Insurance Provision. The Contractor's Automobile Liability and Commercial General Liability insurance policies are to contain, or be endorsed to contain that they shall be primary insurance with respect to the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Contractor's insurance and shall not contribute with it. C. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A: VII. D. Verification of Coverage. Contractor shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Contractor before commencement of the work. E. Subcontractors. The Contractor shall have sole responsibility for determining the insurance coverage and limits required, if any, to be obtained by subcontractors, which determination shall be made in accordance with reasonable and prudent business practices. F. Notice of Cancellation. The Contractor shall provide the City and all Additional Insureds for this work with written notice of any policy cancellation, within two business days of their receipt of such notice. G. Failure to Maintain Insurance. Failure on the part of the Contractor to maintain the insurance as required shall constitute a material breach of contract, upon which the City may, after giving five business days notice to the Contractor to correct the breach, immediately terminate the contract or, at its discretion, procure or renew such insurance and pay any and all premiums in connection therewith, with any sums so expended to be repaid to the City on demand, or at the sole discretion of the City, offset against funds due the Contractor from the City. 8. Record Keeping and Reporting. A. The Contractor shall maintain accounts and records, including personnel, property, financial and programmatic records which sufficiently and properly reflect all direct and indirect costs of any nature expended and services performed in the performance of this Agreement and other such records as may be deemed necessary by the City to ensure the performance of this Agreement. B. These records shall be maintained for a period of seven (7) years after termination hereof unless permission to destroy them is granted by the office of the archivist in accordance with RCW Chapter 40.14 and by the City. 9. Audits and Inspections. The records and documents with respect to all matters covered by this Agreement shall be subject at all times to inspection, review or audit by law during the performance of this Agreement. 10. Termination. This Agreement may at any time be terminated by the City giving to the Contractor thirty (30) days written notice of the City's intention to terminate the same. Failure to provide products on schedule may result in contract termination. If the Contractor's insurance coverage is canceled for any reason, the City shall have the right to terminate this Agreement immediately. 11. Discrimination Prohibited. The Consultant, with regard to the work performed by it under this Agreement, will not discriminate on the grounds of race, religion, creed, color, national origin, age, veteran status, sex, sexual orientation, gender identity, marital status, political affiliation or the presence of any disability in the selection and retention of employees or procurement of materials or supplies. CA Revised 1-2013 Page 3 of 9 41 12. Assignment and Subcontract. The Contractor shall not assign or subcontract any portion of the services contemplated by this Agreement without the written consent of the City. 13. Entire Agreement; Modification. This Agreement, together with attachments or addenda, represents the entire and integrated Agreement between the City and the Contractor and supersedes all prior negotiations, representations, or agreements written or oral. No amendment or modification of this Agreement shall be of any force or effect unless it is in writing and signed by the parties. 14. Severability and Survival. If any term, condition or provision of this Agreement is declared void or unenforceable or limited in its application or effect, such event shall not affect any other provisions hereof and all other provisions shall remain fully enforceable. The provisions of this Agreement, which by their sense and context are reasonably intended to survive the completion, expiration or cancellation of this Agreement, shall survive termination of this Agreement. 15. Notices. Notices to the City of Tukwila shall be sent to the following address: City Clerk, City of Tukwila 6200 Southcenter Blvd. Tukwila, Washington 98188 Notices to the Contractor shall be sent to the address provided by the Contractor upon the signature line below. 16. Applicable Law; Venue; Attorney's Fees. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. In the event any suit, arbitration, or other proceeding is instituted to enforce any term of this Agreement, the parties specifically understand and agree that venue shall be properly laid in King County, Washington. The prevailing party in any such action shall be entitled to its attorney's fees and costs of suit. DA'ThD this 304- day of C , 20 /4. CITY OF TUKWILA r, Jim H/ire TTEST/AUTHENTICATED: ef}t (4,4113 City Clerk, Christy O'Flaherty APPROVED AS TO FORM: t/127 -"C\ Office of the Cit At CA Revised 1-2013 42 to y CO TRACTOR B: Y Susan Musselman, Director Address: 1200 Fifth Avenue. Suite 1220 Seattle. WA 98101-3132 Page 4 of 9 Fxh4-194 -A- Services related to the Financial Planning and Policy Development : • Assist the City in the formulation of Financial and Debt Policies and Administrative Procedures. • Review current debt structure, identifying strengths and weaknesses of structure so that future debt issues can be designed to maximize ability to finance future capital needs. This will include, reviewing existing debt for the possibility of refunding that debt to provide the City with savings. • Analyze future debt capacity to determine the City's ability to raise future debt capital. • Assist the City with the development of the City's financial planning efforts and process by assessing capital needs, identifying potential revenue sources, analyze financing alternatives such as pay-as-you-go, lease/purchasing, short-term vs. long-term financings, assessments and provide analysis of each alternative as required as to the budgetary and financial impact. • Develop, manage and maintain computer models for long-term capital planning which provide for inputs regarding levels of ad valorem and non -ad valorem taxation (if relevant), growth rates by operating revenue and expenditure item, timing, magnitude and cost of debt issuance, and project operating and capital balances, selected operating and debt ratios and other financial performance measures as may be determined by the City. • Attend meetings with City's staff, consultants and other professionals and the City. • Review underwriter's proposals and provide analysis of same to the City. • financial planning and policy development assignments made by the City regarding bond and other financings, and financial policy including budget, tax, enterprise rates, cash management issues and related fiscal policy and programs. • Assist the City in preparing financial presentations for public hearings and/ or referendums. • Provide special financial services as requested by the City. • Services Related to Debt Transactions (Includes short term financings, notes, loans, letters of credit, line of credit and bonds). Upon the request of the City: • • Analyze financial and economic factors to determine if the issuance of debt is appropriate. • Advise as to the various financing alternatives available to the City. • Develop a financing plan in concert with City's staff which would include recommendations as to the approach to and timing series of borrowing. • Assist the City by recommending the best method of sale, either as a negotiated sale, private placement or a public sale. In a public sale, make recommendation as to the determination of the best bid. In the event of a negotiated sale, assist in the solicitation, review and evaluation of any investment banking proposals, and provide advice and information necessary to aid in such selection. • Develop alternatives related to debt transaction including evaluation of revenues available, maturity schedule and cash flow requirements. • Evaluate benefits of bond insurance and/or security insurance for debt reserve fund, if applicable. • Develop credit rating presentation and coordinate with the City the overall presentation to rating agencies, which applicable. • Assist the City in the procurement of other services relating to debt issuance such as printing, paying agent, registrar, etc. CA Revised 1-2013 Page 5 of 9 43 • Identify key bond covenant features and advise as to the financial consequences of provisions to be included in bond resolutions regarding security, creation of reserve funds, flow of funds, redemption provisions, additional parity debt tests, etc.; review and comment on drafts of documents relating to authorization of financing. • Review the requirements and submit analysis to bond insurers, rating agencies and other professionals as they pertain to the City's obligation. • Review the terms, conditions and structure of any proposed debt offering undertaken by the City and provide suggestions, modifications and enhancements where appropriate and necessary to reflect the constraints or current financial policy and fiscal capability. • Coordinate with City's staff and other advisors as respects the furnishing of data for offering documents, it being specifically understood that Financial Advisor is not responsible for the inclusion or omission of any material in published offering documents. • Provide regular updates of tax-exempt bond market conditions and advise the City as to the most advantageous timing for issuing its debt. • Advise the City on the condition of the bond market at the time of sale, including volume, timing considerations, competing offerings, and general economic considerations. • Assist and advise the City in negotiations with underwriters regarding fees, pricing of the bonds and final terms of any security offering, and make in writing definitive recommendations regarding a proposed offering to obtain the most favorable financial terms based on existing market conditions. • Assist the City in selecting an underwriter for a negotiated sale of bonds. Review and oversee the Underwriter's bond marketing plan, review the interest rates, reoffering yields, Underwriter's compensation and other terms and conditions of the sale, and advise the City on the reasonableness of the Underwriter's purchase proposal. • For any competitive sale of bonds, prepare official notice of sale, recommend sale parameters, take steps necessary to ensure broad market exposure of the issue, through the use of newswire services and official statement distribution, and perform additional steps necessary and customary for competitive bond sales. • Coordinate parties to the closing, and ensure wire instructions and transfer amounts are confirmed. • Review (or upon request, prepare) Preliminary Official Statements and final Official Statements prepared on behalf of the City for use in marketing any bonds and meeting regulatory requirements. Other PFM Services. Upon request of the City and subject to separate, mutually acceptable fee structures PFM or its affiliates may provide other services which may include the following: a. Impact fee financial analysis b. Grantsmanship c. Rate analysis d. Management analysis e. Referendum assistance f. Legislative initiatives g. Project assessment analysis h. Implementation of revenue enhancement programs i. Arbitrage and rebate services j. Financial analysis of projects being developed by engineer/ architect / specialized consultant studies k. Negotiate on behalf of the City for proposed projects 1. Services for acquisition of Private Utility m. Public -Private Partnership advisory services n. Investment of bond proceeds, including escrow structuring and procurement o. Arbitrage rebate and post -issuance compliance CA Revised 1-2013 Page 6 of 9 44 Interest rate swap advisory services Management and Budget Consulting services, including: • Multi-year Plan — Provide general analytical support as needed for annual budgetary development, multi-year financial planning, and other various policy initiatives as requested by the City; • Collective Bargaining Support — Provide quantitative and analytical support for the City in collective bargaining through such services as the development of costing models for compensation scenarios, development of workforce cost containment strategies, and delivery of expert testimony in employee interest arbitration proceedings; • Revenue Enhancement — Assist the City in evaluating the fiscal and policy impacts of revenue enhancement options such as tax policy reforms and non -tax revenue adjustments; • Economic Development — Assist the City in evaluating transportation, infrastructure, and general economic development financing options in support of the City's goals; • Cash Flows — Review cash flow projections produced by the City, and, as necessary, suggest and support improvements to the City's cash flow model; and • Performance Enhancement — Deliver additional strategic management consulting services as may be requested by the City in areas related to fiscal improvement, management/productivity reforms, and governmental performance. Such services may include, 'without limitation, assisting the City with the development of analyses and narrative with regard to overall strategy and assumptions, revenue forecasts, and/or expenditure reduction initiatives. Such support may include quantitative analysis, identification of best practices, and/or technical review and quality assurance. CA Revised 1-2013 Page 7 of 9 45 EXHIBIT B - FINANCIAL ADVISORY COMPENSATION For the services described, PFM's professional fees and expenses shall be paid as follows: 1. For services related to financial planning, policy development and financial analysis, PFM shall receive hourly rates as listed below. Fees for support staff are included in the hourly rates for professionals. Services will be billed monthly. Experience Level Hourly Rate Director/Managing Director $295 Senior Managing Consultant $275 Senior Analyst $225 Analyst $195 Associate $175 2. For services related to the issuance of Bonds, PFM will be paid a fee in accordance with the following schedule, based on a rate per $1,000 of financing, for each separate bond issue: For financing up to $20 million: $1.50 per $1,000, with a $15,000 minimum For financing up to $75 million: $30,000 plus $0.75 per $1,000 over $20 million Reimbursable Expenses In addition to fees for services, PFM will be reimbursed for necessary, reasonable, and documented out- of-pocket expenses incurred, including travel, telephone conferencing service, overnight mail, and other ordinary cost and any actual extraordinary cost for graphics, and printing which are incurred by PFM. Appropriate documentation will be provided. Other PFM Services Other PFM Services described in Exhibit A will be subject to separate, mutually acceptable fee structures and may require a separate contract with PFM or its affiliates. Official Statements. The Advisor will coordinate and prepare bond official statements, with compensation based on an additional fee which will depend on the estimated time involved in preparation of the official statement. This cost is estimated at approximately $7,500 to $8,500, depending on complexity of the transaction. Although the Advisor may prepare official statements, the City is primarily responsible for the providing accurate and complete information for inclusion in the official statement, and will be responsible for reviewing the official statement. CA Revised 1.2013 Page 8 of 9 46 EXHIBIT C — INSURANCE STATEMENT Public Financial Management, Inc. ("PFM") has a complete insurance program, including property, casualty, comprehensive general liability, automobile liability and workers compensation. PFM maintains professional liability and fidelity bond coverages which total $15 million and $10 million, respectively. Our Professional Liability policy is a "claims made" policy and our General Liability policy claims would be made by occurrence. Deductibles/SIR: General Liability $0 Automobile $250 comprehensive $500 collision Professional Liability (E&O) $500,000 Financial Institution Bond $75,000 Insurance Company & AM Best Rating Professional Liability (E&O): Financial Institution Bond: General Liability: Automobile Liability: Excess /Umbrella Liability: Workers Compensation & Employers Liability Indian Harbor Insurance Company; (A) Federal Insurance Company; (A++) Great Northern Ins. Company; (A++) Federal Insurance Company Federal Insurance Company Pacific Indemnity Company; (A++) CA Revised 1-2013 Page 9 of 9 47