2018-30622 Resolution RESOLUTION NO., 2018-30622
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF
THE CITY MANAGER AND APPROVING THE SELECTION OF THE
FOLLOWING INVESTMENT BANKING FIRMS TO PROVIDE
UNDERWRITING SERVICES FOR THE MIAMI BEACH SERIES 2019
GENERAL OBLIGATION BONDS THAT THE CITY ANTICIPATES WILL
BE ISSUED IN 2019, NAMELY JP MORGAN, AS THE SENIOR
MANAGER; BANK OF AMERICA MERRILL LYNCH, AS CO-MANAGER;
JEFFRIES FINANCIAL GROUP, AS CO-MANAGER; AND PNC
FINANCIAL SERVICES GROUP, AS CO-MANAGER.
WHEREAS, on April 14, 2010, the Mayor and City Commission accepted the City
Manager's recommendation to award RFP 15-09-10 for Underwriter Services and, as a result,
created a pool of 15 firms to provide underwriting services, on an as needed basis. The award
was valid through April 13, 2018; and
WHEREAS, to seek proposals for a replacement pool of underwriters, on June 7, 2017,
the Mayor and City Commission authorized the issuance of Request for Qualifications (RFQ)
2017-163-WG for Underwriter Services. The RFQ sought statements of qualifications from
underwriting firms to establish a team of underwriters to provide Underwriter Services to the City
for the issuance of various municipal bonds. On June 8, 2017, RFQ No. 2017-163-WG for
Underwriter Services was issued. RFQ responses were received on July 13, 2017. On January
17, 2018, the Mayor and City Commission approved a resolution authorizing the Administration
to establish a pool of 14 underwriters to provide underwriting services to the City for the
issuance of bonds; and
WHEREAS, the selected firms participate in the bond issues by assisting the City, its
Chief Financial Officer, and its Financial Advisor, Julie Santamaria with RBC Capital Markets,
with the development of financing structures, preparation of preliminary and final official
statements, bond resolutions, and other documentation, as may be required. The underwriters
price, market, and sell the bonds to investors in municipal securities; and
WHEREAS, additionally, firms appointed as the senior managing underwriter are
required to provide the services listed below throughout the bond issuance process. Co-
managing underwriters provide assistance as requested and support in the marketing,
distribution and underwriting of the assigned transactions. The City, at its sole discretion, may
select one or more firms to serve as senior manager or co-manager from the underwriting team
for each of its bond financings. The City reserves the right to assign less than all of the
members of the underwriting pool for a particular financing, and reserves the right to remove
any underwriter from participation in the underwriting syndicate if the underwriter and the City
are unable to agree on any provision of the bond purchase contract. All fees are contingent
upon the issuance of the proposed bonds. The required services include, but are not limited to,
the following:
1. Participate in drafting of all bond documents, including the Official Statement;
2. Assist in preparation and discussions with rating agencies and bond insurers, if
requested;
3. Make recommendations for the proposed financing, including, but not limited to, the
timing of the sale, the overall sales approach, the structure of the bonds, the call
provisions, and the use of credit enhancement;
4. Lead the underwriting team in marketing and distributing the bonds to both retail and
institutional investors;
5. Underwrite the financing based upon terms and conditions agreed to by both the City,
the financial advisor, and the underwriters in the Bond Purchase Agreement;
6. Assist with the closing of the financing, including reviewing all closing documents and
providing a post-financing report to the City which highlights the key characteristics of
the financing; and
WHEREAS, the process to select firms to serve as a senior or co-manager for a
particular issue involves a review of work assigned to the firms in recent years, experience in
and commitment to Florida municipal finance, the capability of a firm to senior manage large
and/or complex credit structures, the size of the bond issue to be sold, and the various markets
that the firm has access to for marketing and distribution. For example, certain firms have
greater capabilities to sell new issue bonds to retail investors, such as the City's residents and
taxpayers, and other firms' primary distribution channels are to institutional investors. A firm's
response to other business requests, such as the City's Line of Credit and Equipment Line of
Credit, and resulting commitment to the City is also considered; and
WHEREAS, the team of firms for a particular issue is recommended by the City
Manager following consultation with the City's Chief Financial Officer and Financial Advisor.
Pursuant to this process, the City Manager recommended the selection of the following firms to
provide underwriting services for the City of Miami Beach Series 2019 General Obligation bonds
that the City anticipates will be issued in 2019, namely JP Morgan, as the senior manager; Bank
of America Merrill Lynch, as co-manager; Jeffries Financial Group, as co-manager; and PNC
Financial Services Group, as co-manager.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby accept the recommendation of the City Manager and approve the selection
of the following underwriting firms to provide underwriting services for the Miami Beach Series
2019 General Obligation bonds that the City anticipates will be issued in 2019, namely JP
Morgan, as the senior manager; Bank of America Merrill Lynch, as co-manager; Jeffries
Financial Group, as co-manager; and PNC Financial Services Group, as co-manager.
PASSED AND ADOPTED this 42- day of twember, 2018.
ATTEST:
4 r
12. Dan Gelber, Mayor
Rafael E. Grarado, Cites'
\\ APPROVED AS TO
°- •i. .y FORM & LANGUAGE
INCORP ORATED & FOR EXECUTION
S � , �e> `< ' City Attorney 40( Dote
Resolutions - C7 E
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Jimmy L. Morales, City Manager
DATE: December 12, 2018
SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY
MANAGER AND APPROVING THE SELECTION OF THE FOLLOWING
INVESTMENT BANKING FIRMS TO PROVIDE UNDERWRITING SERVICES FOR
THE MIAMI BEACH GENERAL OBLIGATION BONDS THAT THE CITY
ANTICIPATES WILL BE ISSUED IN 2019, NAMELY JP MORGAN, AS THE SENIOR
MANAGER; BANK OF AMERICA MERRILL LYNCH, AS CO-MANAGER; JEFFRIES,
AS CO-MANAGER;AND PNC,AS CO-MANAGER.
RECOMMENDATION
Approve the resolution.
ANALYSIS
The City's issuance of $439 million in General Obligation Bonds ("GO Bonds") over the next 10
years was approved by voter referendum on November 6, 2018. The projects funded by the GO
Bonds will address critical infrastructure needs for the city's parks, recreation facilities and cultural
facilities ($169 million); neighborhood and infrastructure ($198 million); and police, fire and public
safety($72 million).
Municipal bond underwriting firms assist the City through the bond issuance process and serve as a
liaison between the City and investors in the sale of its bonds. The underwriters' main role is to
generate investor demand and to market, price and sell the City's GO Bonds to retail and institutional
investors. The first issuance in March 2019 (the "Series 2019 GO Bonds") is expected to provide
$150 million in proceeds for various projects, which will be selected by the City Commission prior to
the sale of the Series 2019 GO Bonds. This Resolution is only to select the underwriters from the
City's underwriting pool for the Series 2019 GO Bonds.
On April 14, 2010, the Mayor and City Commission accepted the City Manager's recommendation to
award RFP 15-09-10 for Underwriter Services and as a result created a pool of 15 firms to provide
underwriting services on an as needed basis. The award was valid through April 13, 2018.
To seek proposals for a replacement pool of underwriters, on June 7, 2017, the Mayor and City
Commission authorized the issuance of Request for Qualifications (RFQ) 2017-163-WG for
Underwriter Services. The RFQ sought statements of qualifications from underwriting firms to
establish a team of underwriters to provide Underwriter Services to the City for the issuance of
various municipal bonds. On June 8, 2017, RFQ No. 2017-163-WG for Underwriter Services was
issued. RFQ responses were received on July 13, 2017. On January 17, 2018, the Mayor and City
Page 401 of 1751
Commission approved a resolution authorizing the Administration to establish a pool of 14
underwriters to provide underwriting services to the City for the issuance of bonds.
The selected firms participate in the bond issues by assisting the City, its Chief Financial Officer and
its Financial Advisor, Julie Santamaria with RBC Capital Markets, with development of financing
structures, preparation of preliminary and final official statements, bond resolutions, and other
documentation as may be required.
A firm appointed as the senior managing underwriter is required to provide the services listed below
throughout the bond issuance process. Co-managing underwriters provide assistance as requested
and support in the marketing, distribution and underwriting of the assigned transaction. The City, at
its sole discretion, may select one or more firms to serve as senior manager or co-manager from the
underwriting team for each of its bond financings. The City reserves the right to assign less than all of
the members of the underwriting pool for a particular financing, and reserves the right to remove any
underwriter from participation in the underwriting syndicate if the underwriter and the City are unable
to agree on any provision of the bond purchase contract. All fees are contingent upon the issuance
of the proposed bonds. The required services include, but are not limited to, the following:
1. Participate in drafting of all bond documents, including the Official Statement.
2. Assist in preparation and discussions with rating agencies and bond insurers, if requested.
3. Make recommendations for the proposed financing, including, but not limited to, the timing of the
sale, the overall sales approach, the structure of the bonds, the call provisions, and the use of
credit enhancement.
4. Lead the underwriting team in marketing and distributing the bonds to both retail and
institutional investors.
5. Underwrite the financing based upon terms and conditions agreed to by both the City, financial
advisor, and the underwriters in the Bond Purchase Agreement.
6. Assist with the closing of the financing, including reviewing all closing documents and providing
a post-financing report to the City which highlights the key characteristics of the financing.
The underwriters in a negotiated sale pre-market the bonds to retail and institutional investors in the
weeks prior to pricing. A negotiated sale process enables the underwriters to premarket as they know
that they are part of the underwriting team and will have bonds to sell to investors. For an issuer
such as Miami Beach, which has many residents who would likely be interested in purchasing the
GO Bonds, premarketing allows retail investors to prepare for the bond sale and be ready to place
orders for the bonds. The City can instruct the underwriters for the bonds to fill resident orders
before orders from other investors in a negotiated sale. For example, the City posted information on
its website prior to the pricing for the convention center bonds and orders from residents were filled
first before other retail and institutional orders. The City can post information on the GO bond sale
on its website and place advertisements in local newspapers to inform residents of the upcoming
negotiated sale. During a negotiated new issue order period, all investors pay the same price for the
bonds, whether they are an individual purchasing a $5,000 bond or an institutional investor
purchasing millions of dollars in bonds. The negotiated sale ensures that City taxpayers and
residents who place orders for the bonds during the new issue order period will have the highest
priority to purchase the bonds.
The process to select firms to serve as a senior or co-manager for a particular issue involves a
review of work assigned to the firms in recent years, experience in and commitment to Florida
municipal finance, the capability of a firm to senior manage large and/or complex credit structures, the
size of the bond issue to be sold, and the various markets that the firm has access to for marketing
Page 402 of 1751
and distribution. For example, certain firms have greater capabilities to sell new issue bonds to retail
investors, such as the City's residents and taxpayers, and other firms' primary distribution channels
are to institutional investors. A firm's response to other business requests, such as the City's Line of
Credit and Equipment Line of Credit, and resulting commitment to the City is also considered. The
team of firms for a particular issue is recommended by the City Manager following consultation with
the City's Chief Financial Officer and Financial Advisor.
The City anticipates the issuance of GO Bonds in March 2019 to provide funds for capital projects
and refund outstanding obligations if market conditions allow. The firms recommended for the Series
2019 GO Bonds, based on a combination of the above considerations, are as follows:
Senior Manager - J.P. Morgan
Co-Manager - Bank of America Merrill Lynch
Co-Manager - Jeffries
Co-Manager - PNC
A list of the underwriters' recent transactions with the City and the resulting total participation in the
City's bond financings based on this recommendation are provided in attachment "1". The timing of
and underwriters for additional issuances of GO Bonds will be recommended in additional resolutions
over the next 8-10 years on a transaction basis once the size of and timing for each issue is
determined. Pursuant to Federal tax law, the City can only issue tax-exempt bonds in an amount that
it reasonably expects to spend over 3 years from the date of issuance.
The City and its Financial Advisor will work with the underwriters to provide information on how City
taxpayers and residents can purchase the GO Bonds through the new issue order period.
CONCLUSION •
The Administration recommends that the Mayor and City Commission of the City of Miami Beach,
Florida approve the City Manager's recommendation of underwriters for the Series 2019 GO Bonds.
FINANCIAL INFORMATION
The cost of the related services, determined upon successful negotiations and subject to market
conditions at the time of the pricing and sale of the Series 2019 GO Bonds, will be funded from
proceeds of the Series 2019 GO Bonds. All estimated costs related to the issuance of the GO
Bonds were included in the$439 million referendum authorization.
Legislative Tracking
Finance
ATTACHMENTS:
Description
❑ Resolution
❑ Attachment"1"
Page 403 of 1751
Attachment 1
City of Miami Beach,Florida
Current Team of Investment Banking Firms
As of 11/28/19
Underwriting History w/City
Proposed 2019
2015-2017 Transactions Transaction Total After Proposed 2019 Transaction
Senior Senior Co
1
Firm Manager Co Manager IManager Manager Senior Manager Co Manager Total
# #
Issues Year Issues Year #Issues #Issues I#Issues Year #Issues Year #Issues
2019,
1 Bank of America Merrill Lynch 1 2015 1 2015 - 1 1 2015 2 2015, 3
2 Citigroup 1 2017 1 2015 - - 1 2017 1 2015 2
-- — t- —
2017, 2017,
3 Estrada Hinojosa - - 2 2015 - - - - 2 2015 2
4 Goldman` - - -
I I
•
5 Hilltop"` - - - - � - - -
6 Jeffries` -
1 _ 1 2019 1
2019,
7 JP Morgan 1 2015 1 2015 1 - 2 2015 1 2015 3
2017, 2017,
8 Loop Capital Markets 2_ 2015 - - - 2 2015 2
9 Morgan Stanley 1 2015 1 2015 - - 1 2015 1 2015 2
10 PNC` - 1 1 2019 1
I i
11 Raymond James Morgan Keegan 1 2017 1 2015 _ - 1 2017 1 2015 2
12 Siebert Brandford Shank - 2 2015 - - - 2 2015 2
13 Stifel,Nicolaus&Company,Inc"i - 1 2017 - - - _ _1 2017 1
1 + I
2017, 2017,
14 Wells Fargo Securities � 1 2015 2 2015 I_._ __ 1 2015 2 2015 3
*New to pool in 2018.
**Was previously Steme Agee. Stifel acquired Steme Agee in 2015.
"`Was previously First Southwest. First Southwest resigned from Citys underwriting pool during the Investment Advisor procurement process in 2014.
Page 406 of 1751