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HomeMy WebLinkAboutRes 0562 - Bonding Agent to Negotiate Sale of Bonds for Purchase of Foster Golf CourseCITY OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DOES RESOLVE AS FOLLOWS: That Foster Marshall, Inc. are hereby designated as the Bonding Agent for the City of Tukwila to negotiate sale of bonds for the purchase of the Foster Golf Course. Further, that the Mayor is hereby authorized to execute such an agreement, a copy is attached for reference. PASSED BY THE CITY OF TUKWILA, WASHINGTON, at the regular meeting thereof this 6th day of December 1976. RESOLUTION NO 562 RESOLUTION DESIGNATING FOSTER MARSHALL, INC. AS THE BONDING AGENT FOR THE CITY OF TUKWILA AND AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT. Edgar D. Bauch Mayor Maxine Anderson City Clerk MEMBERS NEW YORK STOCK EXCHANGE, INC. AMERICAN STOCK EXCHANGE. INC PACIFIC STOCK EXCHANGE, INC. MICWEST STOCK EXCHANGE, INC. CHICAGO BOARD OPTIONS EXCHANGE Mayor City Council City of Tukwila 14475 59th Ave. Tukwila, Washington 98067 RE: Investment Banking Services Dear Mayor Members of the Council: FOSTER MARSHALL INC. INVESTMENT BANKERS AND BROKERS 205 COLUMBIA STREET SEATTLE, WASHINGTON 98104 (206) 344.3500 November 22, 1976 �. OFFICES IN THE PRINCIPAL CITIES OF THE PACIFIC NORTHWEST AND ALASKA Congratulations on the recent approval of the City's golf course purchase proposition which was submitted to voters on November 2nd. As you may recall, we have analyzed the over -all financing of this program and concluded (last year) that the Golf Course could be purchased with a $1,850,000 Tax Supported General Obligation Bond and a $500,000 (plus legal, financial, printing, etc. fees) Revenue Bond issue. Now, since so much time has elapsed, it would be strongly recommended that a review of the financial condition of the Golf Course be accomplished to determine that Revenue bonds can still be sold. We would recommend that before any agreement with the existing owners be entered into or General Obligation bonds sold, that this analysis be performed. Although our agreement with the City for providing financial services dates back to May, 1972, our fee schedule for services in connection with the over- all financing of the Golf Course are still in line with that original schedule. We would propose to provide the following services for total financing of the existing program: 1) $1,850,000 Unlimited Tax General Obligation Bonds This bond issue will be the first major piece of financing sold by the City of Tukwila; therefore, we would strongly recommend that a comprehensive Official Statement be prepared and distributed nationally to potential bidders and buyers of this type municipal bond. This will not only aid in selling this issue, but will be a significant factor in the bond ratings assigned to these bonds (recieved from Moody's Investors Services and Standard Poors), and additionally, will lay the groundwork for future financing by the City of Tukwila. Samples of our recommended format are enclosed. An alternative to this complete Official Statement is a summary Official Statement. This form is generally adequate for a municipality who has an accepted name in the market and has already established a relationship with the bond rating agencies. An example of this summary form (6 page fold -out) is also enclosed. Our services relating to G.O. bonds are as follows: City of Tukwila November 22, 1976 Page Two a) Work closely with the City's bond counsel and other consultants in coordinating activities relating to the Bond Ordinance and other items of information which would be required by legal counsel. b) Work closely with the City Treasurer, Clerk and other staff members in compiling the necessary pertinent information which will be utilized in the Official Statement. c) Coordinate all activities relating to the printing of the Official Statement, insuring that all necessary data is available. d) Work closely with City officials in establishing the bond sale date taking into consideration the need for funds and the payment schedule arranged with the existing golf course owner. e) Recommend terms and conditions which provide flexibility for the City to retire debt and also to insure that other financial considerations are reviewed so as to attract the lowest interest rate available in the market, consistent with terms and conditions established. f) Distribute the completed Official Statement nationally to investment bankers, bidders, and institutions which might be the ultimate holder of the City's bonds. This national distribution will insure that the City receives exposure to bond buyers who are interested in the existing financing and also any future debt. 2) $500,000 (plus). Golf Course Revenue Bonds Unlike G.O. bonds, this debt is to be paid exclusively from revenues derived from the Golf Course operation. Therefore, it is important that a comprehensive review of the existing Golf Course operations be performed. Typically, this type of "high risk" municipal bond is placed with an institution or selected investors who are capable of analyzing this type of debt. We have found the best method of placing this debt is through a negotiated sale of the bonds. The City would agree to sell these bonds to Foster Marshall and we, in turn, would market these bonds to our investor clients. The fee due Foster Marshall for services performed in accordance with 1) above would be $2,250. For underwriting of Revenue bonds, there would be no fee due us for services performed; however, payment would be provided through the underwriting and sale of such Revenue bonds. Our anticipated underwriting spread on such revenue debt would range between 3% and 3 -3/4% depending upon municipal bond market conditions existing at the time of sale and requirements dictated by potential Revenue Bond purchasers. City of Tukwila November 22, 1976 Page Three The above outline for Investment Banking Services describes our proposed relation- ship with the City of Tukwila for managing and underwriting the sale of the approved $1,850,000 Unlimited Tax General Obligation Bonds and the proposed $500,000 (plus) Golf Course Revenue Bonds. If the foregoing meets with your approval and you desire this to constitute the agreement between the City of Tukwila and Foster Marshall Inc. upon the terms and conditions set forth, please indicate your acceptance below. Upon acceptance we will immediately commence to perform the services described above. Very truly yours, FOSIE MARSHALL INC. Roland C. McLaughlin Vice President Municipal Consulting Department ACCEPTED this 7 day of at dey 1976 By: RCM:db CC: Mae Harris, City Treasurer IV0}„qA: I