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2002-25055 Reso RESOLUTION NO. 2002-25055 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER PERTAINING TO THE RANKING OF PROPOSALS RECEIVED PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 38- 01/02 FOR PROVIDING FINANCIAL ADVISORY SERVICES TO THE CITY OF MIAMI BEACH; AUTHORIZING THE ADMINISTRATION TO ENTER INTO NEGOTIATIONS AND CONTRACT WITH THE TOP-RANKED FIRM OF WILLIAM R. HOUGH & CO.; AND SHOULD THE ADMINISTRATION NOT BE ABLE TO NEGOTIATE AN AGREEMENT WITH THE TOP- RANKED FIRM, AUTHORIZING THE ADMINISTRATION TO NEGOTIATE WITH THE SECOND-RANKED FIRM OF RBC DAIN RAUSCHER, INC. WHEREAS, every five years the City issues a Request for Proposal (RFP) seeking competitive pricing for financial advisory services involving the financial planning, project financial analysis, investment management, debt issuance, reporting, evaluation of proposals, development of financial strategy for capital projects; and WHEREAS, the cost of these services will be paid from the issuance of bonds; and WHEREAS, a Request for Proposals (RFP) No. 38-01/02 was issued on May 21, 2002, with a deadline for the receipt of proposals of June 24, 2002, resulting in the receipt of four responsive proposals from the following firms: . First Southwest Company . Public Financial Management, Inc. . RBC Dain Rauscher, Inc, . William R. Hough & Co. WHEREAS, an Evaluation Committee was appointed by the City Manager consisting of the following individuals: * Larry Herrup, (Chairperson), Budget Advisory Committee, Independent CPA Jeryl (Deede) Weithorn, Budget Advisory Committee, Independent CPA Tony Rodriguez, Budget Advisory Committee. Investment Banker Georgina p, Echert, Assistant Finance Director Jim Sutter, Internal Auditor * * * * WHEREAS, the Evaluation Committee convened on October 22, 2002 and unanimously voted to recommend that the Administration be authorized to commence negotiations and contract with the top ranked firm; and WHEREAS, the City Manager has reviewed the Evaluation Committee's recommendation, and herein recommends that the Mayor and City Commission enter into negotiations with the top-ranked firm of William R. Hough & Co; and if unsuccessful, negotiate with the second-ranked firm of RBC Dain Rauscher. NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Miami Beach City Commission accept the recommendation of the City Manager pertaining to the Request for Proposal (RFP) 38-01/02 received for provision of Financial Advisory services to the City of Miami Beach; authorizing the Administration to enter into negotiations and contract with the top ranked firm, William R. Hough & Co.; and if unsuccessful in negotiations with the top ranked firm, authorizing the Administration to enter into negotiations with the second ranked firm, Dain Rauscher, Inc. PASSED and ADOPTED this mth~ day of No e e ,2002. ATTEST: ,c~ ~v f CITY CLERK . . F:\PURC\$ALLIJOHNICOMMIFINANCIAL RESQ,doc AfIIPRfN!,O AlTO FORM & t,ANGUAGE a FOR PEQUTION A J J /Mi'J/jL (1- ~rd)/ (~...- ate ~ ~: ~ w~ ~ ,J;"I~~HJ~ r;n~ June 24, 2002 Mr, Gus Lopez, CPPO Procurement Director City of Miami Beach 1700 Convention Center Drive, Third Floor Miami Beach, Florida 33139 Dear Mr, Lopez: William R. Hough & Co. is pleased to submit a proposal to serve as Financial Advisor to the City of Miami Beach, The team that we present in this proposal combines an outstanding blend of financial advisory experience, education and innovative ideas in implementing capital improvement fInancing and the planning of general government infrastructure improvements, With 40 years of experience in structuring innovative and cost-effective financing programs throughout Florida, our firm provides the highest level of experience, conunitment and technical expertise in Florida governmental finance, Florida's Letuling FintlllcitJl Advisor: For the period 1996-2000, William R. Hough & Co, ranked as the number one Financial Advisor and the munber one Senior Managing Underwriter of mWlicipal debt in the State of Florida based on the number of transactions, William R. Hough & Co, has achieved expertise in all aspects of governmental fmancing, including capital improvement and financial planning, debt policy development, bank loans, pooled fmancing programs, the issuance of tax-exempt and taxable, fixed and variable rate bonds and other debt instrwnents including derivatives and investments, Our firm cwrently serves as Financial Advisor to state agencies, coWlties, cities and school districts in several states. In 200 1, our fIrm served as Financial Advisor to 29 governmental entities in Florida, and completed 54 financings in addition to serving as Senior Managing Underwriter for 73 transaction totaling $937 million, Florida's Letuling Underwriter: As a Florida-based investment banking firm, William R, Hough & Co, has been a leading managing Wlderwriter of Florida municipal bonds since 1966, underwriting more Florida bond issues than any other firm in the United States (approximately twice as many issues as the second ranked firm). Our fIrm is active in the national municipal market on a daily basis through our extensive secondary market trading, From 1995 through the first quarter of2oo2, William R. Hough & Co. has ranked first as Senior Manager based on number of Florida negotiated transactions, For the first quarter of2oo2, our fIrm ranked ninth nationally as Senior Manager for negotiated transactions based on par amoWlt and tenth as Senior Manager for both competitive and negotiated transactions. Our lUIderwriting desk has extensive Wlderwriting experience which allows us to assist our financial advisory clients in obtaining the most cost- effective financing in light of a client's long-term objectives and prevailing market conditions, Commitment to Miami Beach: Over the past three years, Richard Montalbano has presented a number of Wlique and creative financings to the City which resulted in immediate savings in fInancing cost in excess of $1.5 million, in addition to signifIcant annual interest rate savings resulting from creating tax-exempt financings for projects which would otherwise have required fmancing using taxable debt. In each of these situations our firm presented these limited resources to the City of Miami Beach prior to discussing such resources with other clients, While serving in his role as lead banker to the City, Mr. Montalbano has always taken a hands on approach in serving the City by attending all meetings, even upon short notice, and has been 3 i J Brickell Bayview Centre, 80 SW 8th St" Suite 2520, Miami, FL 33130-3036 Toll Free: 866563-1426 Local: 305 423-6800 Fax: 305 423-6801 MEMBER, NASD/SIPC known to show up in person, without being asked, when situations arise which needed to be resolved, Our continuing commitment to the City is reflected by the presentation delivered on April 3, 2002 contained as Appendix 0 herein, We presented two separate ideas which should result in significant increase in the City's investment of surplus funds and a swap to reduce the cost of outstanding taxable debt related to the tax increment financings, In Section J, we have updated such infonnation to reflect current market conditions, We bave identified opportunities for the City to receive approximately $3.5 million now without impacting future debt service. Financial Advisory Team: The City will be served by an experienced team representing some of Florida's most senior professionals. Richard Montalbano. Senior Vice President and Manager of Public Finance, will serve as Project Manager responsible for the daily activities as Financial Advisor to the City, Mr, Montalbano has over 21 years of investment banking experience, Richard Montalbano, served the City of Miami Beach as Financial Advisor from 1986 through the early 1990's when he became an Underwriter for the City, William R. Hough & Co, served as Senior Managing Underwriter on the City's $52,170,000 Stonnwater Revenue Bond, Series 2000, the $30 million General Obligation financings in August 2000 and the $47,145,000 annual appropriations financings completed in 2001 through the Gulf Breeze Pooled Loan Program, Mr, Montalbano served as lead banker on these transactions, While serving the City, as Senior Manager on these transactions, Mr, Montalbano has gained vast experience regarding the intricacies of each City financing having actively participated in the development of the engineering and rate studies and negotiations with bond insurers regarding credit/security issues, Since 1997, our firm has served as Financial Advisor, Underwriter or Private Placement Agent for 18 storm water transactions nationally of which 8 were in Florida and 33 special assessment districts in Florida, Commitment to Florida Public Finance: William R, Hough & Co, has demonstrated a commitment to Florida public finance that is rare in the industry today, Our finn currently has 12 offices nationwide. including eight in Florida, William R, Hough & Co, offers the City the largest public finance department in the State of Florida, with over 20 experienced bankers dedicated to Florida public finance. Our intimate knowledge of the structuring and credit issues of Florida governments will result in the most cost-effective financing for the City. No other national or regional firm has made such an extensive commitment of resources to Florida issuers. The depth of resources created by the combination of our finn's departments will provide the best possible financial advisory services to the City of Miami Beach, William R, Hough & Co, is known by credit enhancers, rating agencies and investors as the most knowledgeable of Florida market participants, Local presence, in-depth knowledge and national reputation are hallmarks of William R. Hough & Co" a name and reputation developed over 40 years in business, Please feel free to contact me should you have any questions or need any clarifications, Sincerely, WILLIAM R, HOUGH & CO, ~?/~,. ----- f'A .- R' hilrd ontalbano Senior Vice President (800) 800-0061 4 I HISTORY OF FIRM I b. Brief history of firm. William R. Hough & Co" a Florida corporation, was formed in 1962 with the principal objective of providing complete financial advisory and underwriting services to municipal issuers in the State of Florida, the fourth largest market for municipal bonds in the United States. During the 40 years our firm has been in business, we have become a recognized industry leader for our work in the Florida municipal market and ~ nationwide, Headquartered in St. Petersburg, Florida, William R, Hough & _ · ......It.. Co, is well-positioned to meet the needs of _ .. our clients from 12 offices throughout the United States, Underwriting, trading * WRH OffIces activities and back-office operations are centralized in St. Petersburg with public finance and sales professionals located throughout the United States, This structure enables William R. Hough & Co, to provide personalized service to issuers throughout Florida, and ensures access to all potential investors in Florida municipal debt. Commitment to Public Finance: William R. Hough & Co, has demonstrated a commitment to municipal finance that is rare in the industry today, While many firms have either removed themselves from the municipal bond business or gone out of business entirely, William R. Hough & Co. has aggressively added public finance, retail sales and institutional sales personnel, opening offices in Miami, Naples, Charleston, Baltimore, Phoenix, Dallas and Cincinnati. William R, Hough & Co, continues to hire investment bankers with the intent of expanding our Public Finance Department in targeted markets, This growth into other regions allows our firm to monitor developments and new ideas, which may benefit our clients, Our growth has been based on strong capitalization, sound management and our ability to find creative solutions for our client's financing and investment needs. No other national or regional finn has made such an extensive commitment of resources to Florida issuers, Public Finance Services: The City's primary contact with the services and resources of William R, Hough & Co, is through our Public Finance Department. The Public Finance Department is the major focus within our finn, The Department is composed of27 professionals, 21 of which are Florida-based, plus three quantitative analysts, making us the largest public finance operation in the State of Florida. William R. Hough & Coo's public finance investment bankers are experienced in the complimentary disciplines of accounting, banking, finance, law, government and computer analysis, From eight Florida offices, our Florida-based bankers perfonn all financial advisory services to state, local and special district governments, Our daily inv&lvement in all aspects of Florida governmental finance enables us to offer superior service and financing solutions to our 5 ~:~W~~I~.!~?~~Hl~~. clients, Our public finance staff has ongoing training to assist in keeping current on changes in Florida law, federal tax law and other regulations that may affect municipal issuers, We have been able to establish this long-tenn standard of excellence because we maintain one of the largest and best-qualified public finance departments in the State of Florida comprised of specialized practice areas in: water & sewer, electric utilities, aviation & transportation, special assessment & community development districts, school districts, health care, higher educati01' and housing, Our Public Finance Department works closely with the other departments of our finn to ensure that our clients are well-served, I: William R. Hough & Co.'s Public Finance Department serves as an ongoing resource for our clients' financing issues, As a full-service investment bank, we pride ourselves on being client focused, rather than transaction oriented, We regard our client relationships as long-tenn commitments and strive to provide superior service in both strategic financial planning before and after the financing is complete, Our primary goal in any assignment is to structure and execute finance plans that deliver the required capital to our clients at the lowest cost. , In-House Technical Capabilities: Located at our corporate headquarters in St. Petersburg, William R, Hough & Co, has sophisticated computer modeling capabilities and one of the most experienced technical structuring staffs in the State of Florida. While many finns utilize entry-level associates to run numbers, William R. Hough & Co.'s technical staff is comprised of seasoned professionals who have been involved in billions of dollars of bond issues over the past 20 years, Our analytical professionals have combined municipal finance experience of more than 50 years; and are available to provide analytical assistance to the City, This experience has enabled us to stay on the cutting edge of the evolution of various financing structures as legal and market conditions have changed, and has directly resulted in our finn's development of many innovative financing structures for our clients, This expertise will be used to provide the City the most innovative and cost effective financing strategies possible. William R, Hough & Co.'s Analytical Department has a large library of cash flow modeling software which includes both commercial programs and software which has been developed in-house, These programs address a broad range of public finance applications from generating arbitrage earnings reports to structuring refunding escrows and minimizing transferred proceeds penalties to perfonning sensitivity analysis on projected revenues, The above-described computer software is additionally invaluable to an issuer, because of the fact that assessments, of necessity, must be structured so that bonds will be redeemed early, Our software predicts, under various assumptions, the dates upon which certain bonds will be redeemed, This allows an issuer to make disclosure of the likelihood of early redemption and the approximate date of redemption based upon certain assumed variables in an official statement, This disclosure can assist in defeating the likelihood of litigation in the event bonds are redeemed early pursuant to the bond resolution, Underwriting and Trading: William R, Hough & Co, has earned the reputation as one of the most aggressive finns in the United States in the pricing and trading of Florida bonds, We carry the largest daily inventory of Florida municipal securities in the nation averaging over $70 million daily, making us the leading market maker and supplier of Florida bonds to Wall Street. Our finn's variable rate desk has underwritten variable rate transactions ranging in size from $3 million to $500 million since 1994, We presently serve as remarketing 6 t ~'W~l~; 1I;I~?cHl~~' agent for variable rate issues totaling in excess of$5.1 billion. William R, Hough & Co, has been involved in every type of bond issue for virtually every project need, participating in issues ranging in size from $50,000 in notes to over $1 billion in bonds, Our credibility and access to investors in Florida governmental debt enables us to secure the most cost-effective financing possible, regardless of the issue type or size, This uQderwriting and trading expertise is extremely beneficial to our financial advisory clients, With input from our underwriting and sales professionals, we are able to structure bond issues to match investor demands and preferences, This could enable our financial advisory clients to lower their interest cost by several basis points resulting in substantial debt service savings. This added dimension of our firm provides our financial advisory clients with a resource not available with financial advisory-only firms who do not trade bonds in the market. Hough Capital Advisors: William R. Hough & Co, offers clients portfolio management and investment consulting services through its Hough Capital Advisors ("HCA") division, HCA provides personalized, fee based, professional portfolio management services to meet investors' stated objectives by utilizing in-depth fundamental research and analysis, Portfolio managers and account executives confer with each investor to develop the appropriate customized program that meets their specific goals and objectives, Portfolio management services are offered for equity, fixed income and balanced accounts, Hough Capital Advisors assumes responsibility for managing a client's portfolio using information provided by each client. Decisions are made by a team comprised of portfolio managers, analysts and other WRH professionals. Our clients range from high net worth individuals to the Florida Windstorm Underwriting Association (FWUA), We serve as financial advisor to FWUA having advised this client on their investment guidelines and selection of money managers, we provide quarterly performance measurement services and continuous oversight of the money managers for an investment portfolio of approximately $2 billion in investments. III Taxable Fixed IncomelU.s' Government Securities: The Taxable Fixed Income Department of William R. Hough & Co, consists of a team of professionals who specialize in the trading and sales of taxable fixed income securities, The Taxable Fixed Income Department provides direct market knowledge and market making capabilities in V,S, Treasuries and agencies, Mortgage Backed Securities, Derivatives, Asset Backed Securities, and Corporate Bonds, In addition to secondary market trading, this department provides portfolio analysis, bond risk analysis, and horizon analysis of asset/liability positions for institutional customers, The sales force, traders, and analysts in this department are in constant contact with a wide range of buyers of taxable fixed income securities including corporations, insurance companies, mutual funds, domestic and international banks, portfolio managers, investment managers and other institutional investors, II -- - - Structured Finance: William R, Hough & Co,'s Structured Finance Department has participated in over $7,9 billion in taxable and tax exempt debt transactions since the spring of 1996, The investment bankers comprising our firm's Structured Finance Department possess a breadth of experience spanning nearly four decades, including the completion of $10 billion in structured finance transactions during the past 7 years, Located in Charleston, South Carolina, this department maintains a national practice in asset-backed finance and lease securitizations, including a specialty practice in Student Loan Finance. The diversity of taxable and tax-exempt fixed income products generated by the Structured Finance Department enhances William R, Hough & Co.'s strengths in these markets and provides our investors with additional taxable and tax-exempt products, including LIBOR floaters, treasury-bill floaters, auction rate bonds, variable rate demand bonds, and fixed rate notes, bonds and certificates, 7 t:~W~'~'t~?~~Hl~~' Municipal Research: William R. Hough & Co. maintains a high level of expertise in municipal research, portfolio strategy and technical analysis supported by 10 full time professionals, William R. Hough & Co,'s Director of Research, Stefan Haberer, was selected as one of the nation's top analysts by Institutional Investor Magazine, Having previously analyzed many Florida credits as a lead analyst at Standard and Poor's, Mr, Haberer's insight from a rating agency's perspective provides invaluable feedback before any actual contact with the rating ~encies, Derivative Product Expertise: As financial advisor and underwriter to many issuers in the State of Florida, William R. Hough & Co. has advised clients and performed cost benefit analysis on all derivative products available in the marketplace and provides recommendations as to the best alternative for our clients given their financial and political situation, Because local governments are charged with safeguarding public finds, caution should be exercised in the consideration of any derivative instrument. The products that our firm has analyzed include inverse floaters, forward purchase agreements, tender option programs, forward/warrant refundings, Dutch Auction transactions and various interest rate swap and cap products. In 1998, William R, Hough & Co, served as financial advisor on a $180 million interest rate swaption for Hillsborough County which was competitively bid, Prior to the bid date, William R, Hough & Co. spent months negotiating with several providers to ensure that the documents were structured to the County's benefit. The swaption enabled the County to realize over $20 million in net present value savings, We also served as financial advisor to the Florida Windstorm Underwriting Associates since 1997 which issued $1.9 billion of taxable debt during this period, As financial advisor and swap agent we structured a $300 million swap executed by competitive sale in the first quarter of 2000, In the summer of 2001 we recommended that our client unwind this swap, The results were a cash payment to Florida Windstorm of approximately $21 million, We actively monitor our clients' swap positions and can provide valuations, Variable Rate Expertise: William R. Hough & Co, currently serves as remarketing agent for approximately 151 variable rate issues ranging in size from $3 million to $500 million and totaling in excess of $5,1 billion. These issues are comprised of a variety of variable rate structures, including daily, weekly, AMT, taxable and 52 Dutch Auction bond issues with 7-day, 28-day and 35-day resets, Four variable rate remarketing specialists in St. Petersburg, Florida direct the efforts of institutional sales representatives and retail sales representatives covering 77 offices, These professionals are actjve in the tax-exempt market on a daily basis due to our firm's substantial volume of business as both financial advisor and underwriter, Capital Position: There are few firms in the securities industry today with the record of William R, Hough & Co, in committing capital in difficult market conditions, William R. Hough & Co, routinely carries an average daily inventory in excess of $70 million, Our capital is sufficient to allow William R. Hough & Co. to underwrite a transaction with a par amount of$315 million as sole manager, The evaluation ofa firm's capital sufficiency is not limited to the total amount of a firm's capital. More importantly, the evaluation must include a review of a firm's consistent willingness to utilize its capital to support clients both in the secondary market and in difficult market conditions, We have built our firm on the concept of being willing to risk our capital if the risk/reward ratio is appropriate, and we are more willing to commit capital for our issuing clients than most of our Wall Street based competitors, Our largest senior managed book-running issue in 200 I was $400 million and we completed a $500 million senior managed issue in May 2002, f I I 'I I ! j '~ ~ 8 ~:~W~,~tI:I?~~Hl~~' , , I I - - -- -- ~ , \ Coo""';O", Today, Willi... R. Hough & Co. i, . maio< rurti"",1 full '''''ou ,,,,,,1m"" b"oo., linn with extensive financing, research, underwriting, trading, and securities sales capabilities, We provide a bm.d ""ge of i",,"Im'ot baokiog "",i"', In''wI'o. p.bli< '"" ,o<ponrte fma'ou ,.""tmoot baoki.~ IImmd.1 wi""'''' "",i,.", "u"""itln. ood m"'"'''' of ""'" i.oom' ood oq.i", ",,,iti,,, IIxoJ ,",om' ood ,qui", ",oamh. ,,'" m.oogemoot, ood ,..' ,- ood oq.ipmoot 1100",'. 0" "",wtb outside the State of Florida has been based on strong capitalization, sound management, and our ability to find creative s&lutions for our client's financing and investment needs, 9 t}' W~,~; 1I:I9~?;rl~~' i ! i I I , I l I I I I I I I I II - II 1 t , I i , I l FLORIDA TRANSACTIONS AS FINANCIAL ADVISOR OR UNDERWRITER c. List of (Ill transactions for which jirm served as Financial Advisor or Underwriter, tIS follows (sepafate transactions by roles): 1. Separately list aI/ transactions nationally. 1. Separate{v list aI/ transactioltS within Florida. 3. Limit list to transactions closed after January 1, 1999. 4. Include tlrefol/owing details for each refunding Iistedfor the last twelve (11) months include: Date of Sale Principal Amount Issuer 5, Highlight T(u: Increment jinancings on these lists. From 1996-2000, William R, Hough & Co, ranked as the number one financial advisor of municipal debt in the State of Florida based on the number of transactions, Since 1999, our finn has served as Financial Advisor on 168 transactions totaling over $6.2 billion, Our finn currently serves as Financial Advisor to 68 clients including: states, state agencies, counties, cities and school districts in several states. As a Florida based investment banking finn, William R. Hough & Co, has been the leading managing underwriter of Florida municipal bonds since 1966, underwriting more Florida bond issues than any other firm in the United States. Since 1966 William R. Hough & Co. has senior managed 1,558 bond issues with a par value of$19,675 billion, William R, Hough & Co, is active in the national municipal market on a daily basis through our extensive secondary market trading. Since January 1, 1999, William R. Hough & Co. has served as Senior Managing Underwriter or Co-Managing Underwriter on 1,262 financings totaling over $30 billion, . Included as Appendix C are five lists containing the above requested infonnation, . All financings where William R. Hough & Co, served as Financial Advisor nationally since January 1,1999, . All financings where William R, Hough & Co, served as Underwriter nationally since January I, 1999. . All Florida financings where William R, Hough & Co. served as Financial Advisor since January 1, 1999. This list reflects a total of 102 transactions with a par value of over $ 4 billion, . All Florida financings where William R. Hough & Co. served as Underwriter since January I, 1999 for a total of 489 transactions with a par value of over $11 billion, . All refunding issues William R, Hough & Co. has participated in over the last twelve months, This list reflects a total of 131 transactions with a par value of over $3 billion, 10 ~~'W~~1~;I~?~?}11~~' -- I PROPOSED FEES AND PRICING SCALES e, Submit proposed fees and firm's analysis of what pricing scales would have been on three hypotlleticpl transactions, assuming a $50 Mil/ion General Obligation, Special Obligation and Tax Increment Revenue Issue were marketed on June 12, 2002. Inelude interest rate scales, assuming both an AlBaaI rated issue and a MAlAAA rated issue. Assume a pur offering in both scenarios. William R. Hough & Co, proposes to be compensated for work perfonned for the City as follows: a, In connection with the issuance of debt, the Financial Advisor shall be paid at closing in accordance with the following schedule with a minimum fee of$15,000 per transaction: Par Amount of Bonds Issued Fee per $1,000 $0- $50,000,000 $50,000,000 - $100,000,000 $100,000,000 and more $1.25 $1.00 $0,75 b, For special projects unrelated to the issuance of debt, alternative financial products or investments the Financial Advisor shall be paid on an hourly basis for all time expended by its personnel, as follows: Senior Vice President Vice President Assistant Vice President and Financial Analyst Support Staff $165 per hour $150 per hour $100 per hour no charge Alternatively, the City may wish to negotiate a fixed price for such special projects, c, The City and the Financial Advisor acknowledge that there will be special projects for which the services of the Financial Advisor may be requested which are not appropriately compensated for on an hourly rate and which do not result in the issuance of bonds as more specifically referenced below, Fees for these special services shall be negotiated on a case by case basis and shall be agreed to in writing by both parties, d, In the capacity of placement and/or pricing agent of interest rate swaps or other derivative products, William R, Hough & Co, will charge a fee of 0,05% of the weighted average balance to be swapped each year, discounted at a taxable yield, with a cap to be negotiated on each transaction reflecting the complexity and risk associated with such transactions, For the reinvestment of bond proceeds we will charge a fee of 3 basis points computed on the same 17 t;~W~~:t~?~~Hl~~' I ~ ; il Ii; . I, U basis as described in the previous sentence, e, For conduit financings proposed to be issued through the City, the Financial Advisor shal1 be paid on the same fee schedule as set forth above in paragraph (a) by the Borrower, In the event that no bonds are actual1y issued, the Financial Advisor shal1 receive a fee from the 4 Borrower, such fee subject to negotiation between the Financial Advisor and the Borrower, but in no event less than the dol1ar amount for the hours expended on the project to compensate the Financial Advisor for the preparation and presentation to the City of a report analyzing the credit, the proposed marketing plan, and analyzing the City's protection from any risk of default on the fmancing and making a recommendation regarding the issuance of the proposed bonds, f. The Financial Advisor shal1 be reimbursed for al1 out-of-pocket expenses, Travel expense reimbursement shal1 comply with the City's policy for reimbursement of City employees, I ! I II I Ii Ii Ii 18 ~: ~ Wp;,~~~: tJ:19~~H]~~. i ~ j' II II I. i! .JJ Below is our analysis of the yields curve for the various $50,000,000 transactions pricing on June 12, 2002, As requested, all bonds are assumed to be issued at par with serial amortization for 30 years, 4 General Oblil! tion Soecial OblilzationffIF AAA NBaal AAA NBaal 2003 1.68 2.03 1.70 2,13 2004 2,17 2,52 2.19 2,62 2005 2.66 3,08 2,68 3.18 2006 2,96 3.43 2,98 3,53 2007 3.24 3,76 3.26 3,86 2008 3,52 4.09 3.54 4.19 2009 3,71 4.33 3.73 4.43 2010 3.90 4,52 3,92 4.63 2011 4,00 4.62 4,02 4,72 2012 4.10 4,72 4.12 4.82 2013 4.24 4.95 4.26 5,05 2014 4.37 5,07 4.39 5.17 2015 4,48 5.17 4.50 5,27 2016 4.59 5.27 4.61 5.37 2017 4,69 5.37 4.71 5.47 2018 4.78 5.46 4,80 5.57 2019 4.87 5.55 4.89 5.65 2020 4,96 5.64 4.98 5.74 2021 5,01 5,69 5,03 5.79 2022 5,05 5.73 5.07 5.83 2023 5,09 5.77 5.11 5,87 2024 5.12 5,80 5.13 5.90 2025 5,15 5.83 5.17 5.93 2026 5.16 5.84 5.18 5.94 2027 5.17 5,85 5.19 5,95 2028 5.18 5,86 5.20 5.96 2029 5.19 5,87 5.21 5.97 2030 5.20 5,88 5.22 5.98 2031 5.21 5,89 5.23 5,99 2032 5.21 5,89 5,23 5,99 19 t:~W~~l~'I~?~~Hl~~' -' I INDIVIDUALS RESPONSmLE FOR THE ENGAGEMENT I j IdentifY and prm'ide a resume for the individual who would have overall responsibility for your firm's financial advisory engagement with the City. Also, please identifY and prOl.ide resumes for two other primary individuals who wi/I participate in the engagement with the City. The team of professionals from William R, Hough & Co, committed to the City of Miami Beach provide an exceptional level of experience and expertise in governmental finance, All of these professionals are located in Florida and have in-depth understanding of the structuring of Florida bonds, Richard Montalbano, Senior Vice President and Manager of Public Finance, will serve as Project Manager, Mr. Montalbano will manage the daily activities relative to the City's financings and coordinate our firm's resources in our role as Financial Advisor for the City, Either Bonnie Wise, Senior Vice President or Sonya Coleman Little, Vice President, will "serve as Co-Project Managers with Mr, Montalbano depending on the specific transaction and will assist in all aspects of processing the City's transactions, In addition, Mr, Montalbano, will be directly supported by Elizabeth Tannebaum, Assistant Vice President located in our Miami office, and Tom Greene, Assistant Vice President. Prior to joining our firm in 1997, Ms, Tannebaum practiced public finance law with Squire, Sanders and Dempsey in their Miami office, where she participated in all areas in which the finn served as Bond Counselor Underwriter's Counsel for numerous Florida issuers, including Miami Beach. Ms, Tannebaum's legal experience provides her with the legal perspective needed to fully understand the documents and the structuring of those documents required for a bond issuance. Thomas Greene brings extensive governmental experience having served as Senior Policy Advisor to U. S, Senator Bob Graham in Washington, D,C, from 1993 - 1998 and then as Central Florida Regional Director, representing Senator Graham in 26 counties from 1998 - 2001, Mr, Greene monitors the progress of legislation in Tallahassee and Washington, D,C. in order to ensure that the views of our clients are accurately represented, In addition to other resources of William R, Hough & Co, that will be available to the City, Andy Mathes, Vice President and Senior Analyst, will provide quantitative analysis, Mr, Mathes specializes in interest rate swaps and alternative investment products, 20 ~:~W~'~'tI;I?~~Hl~~' The team members assigned to serve the City of Miami Beach have extensive experience with various debt finimcings, encompassing all aspects of these financings, including rating agency/insurance presentations, validation proceedings, document structuring, and investment of bond proceeds, Our team approach assures that one or more of our bankers will always be available to attend all meetings, presentations and workshops related to the City's financing for which our flnTI is assigned as financial advisor, In addition, our team approach and our expertise in all aspects of municipal fmance further assures that our team will be able to complete time-sensitive transactions while interacting effectively with the City and other professionals involved in the City's financings, The selection of a fmancial advisor with experienced professionals will provide the City with the most efficient and cost-effective service, Richard Montalbano has 21 years of investment banking experience, including 14 with national investment banking firms, He joined William R. Hough & Co, in September, 1994 to manage our finn's South Florida public finance activities and opened our public finance office in Miami. In February, 1997 he was named Manager of William R. Hough & Coo's Public Finance Department. He has served as financial advisor or senior manager Richard Montalbano Senior Vice President Manager oCPubIic Finance 'I!J "I responsible for coordinating the structuring and marketing of various tax-exempt and taxable, fIXed and variable rate transactions totaling more than $6 billion, He has managed individual transactions ranging in size from $5 million to $432 million, Mr, Montalbano has served as lead underwriter or financial advisor to a wide range of clients including Dade, Broward and Duval Counties and the cities of Miami Beach, Miami, North Miami, Homestead, Miramar, Hol1ywood, Pembroke Pines, Sunrise, Naples, Tallahassee, Orlando, Jacksonville, and l"ampa on numerous general obligation, non-ad valorem including tax increment and special assessments transactions, water and sewer, stonnwater, solid waste, transportation and hospital financings, He has also served as senior manager to the Miami Sports and Exhibition Authority for its original transaction in 1985 and refunding in 1993 and as financial advisor for the Miami-Dade County/Homestead Motorsports Complex, He has continuously served as financial advisor to the City of Miami Department of Off street Parking since 1982, I 21 ~~'W~~I~}:~?~l~~. Specifically related to recent experience with the City of Miami Beach, Mr, Montalbano has presented over the past three years, a number of unique and creative financings to the City which resulted in immediate savings in financing cost in excess of $1,5 million, in addition to significant annual interest rate savings, William R, Hough & Co, served as Senior Managing Underwriter on the City's $52,170,000 Stonnwater Revenue Bond, Series 2000, the $30 million General Obligation financings in August 2000 and the $47,145,000 annual appropriations financings completed in 2001 through the Gulf Breeze Pooled Loan Program, Mr, Montalbano served as lead banker on these transactions, Mr, Montalbano received his M,BA in Finance and he is a Certified Public Accountant, having worked eight years with a national accounting firm. He has a thorough understanding of municipal accounting and budgeting having served as Finance Director for the City of St. Petersburg and Miami-Dade County, He has been a frequent speaker on municipal finance topics and has been an adjunct professor at the University of Miami, Florida International University and the University of South Florida teaching accounting and finance courses, Mr, Montalbano has served on the Board of Mercy Hospital for 20 years and continues to attend al1 Finance Committee and Board meetings in Miami. He also previously served on the Board of Viscaya for eight years, He is a NASD Registered General Securities Representative, a Registered Municipal Securities Principal, and a member of the Florida Institute and American Institute of Certified Public Accountants. Bonnie Wise joined William R, Hough & Co, in 1995 after spending eight years with Raymond James & Associates, lnc, She has served as Financial Advisor or Underwriter for numerous Florida issuers, In addition, Ms, Wise has served as an expert witness in validation proceedings at the circuit court level for a stormwater assessment financing, Ms, Wise's current financial advisory clients include the City of Hollywood, Tampa Bay Water, the City ofSt. Petersburg, the City of Fort Myers, the City of Cape Coral, the City of Pinellas Park and Pinellas County and the State of Florida Division of Bond Finance, Bonnie M. Wise Senior Vice President Ms, Wise has been an innovator in the electronic bidding of competitive sales as well as the electronic distribution of Preliminary Official Statements, Ms, Wise has utilized all three electronic competitive bid methods for various bond sales, As Financial Advisor to the City of St. Petersburg, Ms, Wise competitively sold the first issue in Florida under the Bloomberg System, In addition, as financial advisor to Pinellas County, Ms, Wise utilized the frrst electronic distribution of a Florida Preliminary Official Statement through the 22 ~ ~, w~~~,~; tl!?~C:;\~ ~. Thomson Prospectus System, Ms, Wise has been utilizing technology to best assist her financial advisory clients in obtaining the best bids for their bonds, resulting in the lowest possible interest rates. Ms, Wise graduated from the University of Florida in 1984 with honors in finance, She continued her education at the University of Florida Graduate School of Business where she received a fellowship for women in non-traditional fields and earned a masters of business administration with concentration in finance. She is a Registered General Securities Representative. Ms, Wise served as a member and past Chainnan of the Housing Finance Authority of Hillsborough County, Prior to her investment banking career, Ms. Wise served as an intemal auditor for a large Florida bank and also worked at a pension consulting finn where she analyzed returns and maintained a data base of pension funds, Sonya Coleman Little joined William R. Hough & Co. in 1994 and has worked on a variety of financings for municipal issuers. She has been involved in a number of financings and refinancings for programs in the areas of water and sewer, solid waste, stonnwater, p~b\ic education, natural resources, university system improvement, parking facilities, general obligation, various non-ad valorem and housing, Ms, Little's experience includes creating structures and developing financial plans for various bond issues including credit enhancement and rating agency presentations, In addition, she has technical experience in new money financings, refinancings and escrow structuring. Ms, Little served as the project support professional working with Mr, Montalbano on the City of Miami Beach Gulf Breeze loans and the stonnwater transaction, which our finn senior managed, in 2000, Sonya Coleman Little Vice president . Prior to joining William R, Hough & Co" Ms. Little worked as a Bond Development Specialist with the State of Florida, Division of Bond Finance, She earned a B, S, degree in Business from the University of South Florida and is a NASD Registered General Securities Representative. ~ . III . III . I I LOCATION OF PRICING DESKlRESUME OF UNDERWRITER g. Provide the location of the pricillg desk that would review the price of the City's Bonds, Illclude a 4resume of the firm's ullderwriter at this locatioll, with particular emphasis on relemllt experiellce pricing Florida municipal bonds. William R. Hough & Coo's underwriting desk is located at our headquarters in St. Petersburg, Florida. During the pricing phase of the financing, William R, Hough & Co.'s Underwriting Department will work closely with the City's staff and Underwriter to ensure that the City's financings are offered at an aggressive level. Our underwriting desk has more experience in the pricing and marketing of Florida bonds than any other finn in the United States, and is frequently contacted by "financial advisory only finns" to find out if their deals are being appropriately priced. Scott Johnston, Florida's most seasoned underwriter, will have primary responsibility for any pricing and marketing infonnation, For the period 1996-2000, William R, Hough & Co. ranked as the number one Senior Managing Underwriter of municipal debt in the State of Florida based on the number of transactions, William R, Hough & Co. has been a leading managing underwriter of Florida municipal bonds since 1966, underwriting more Florida bond issues than any other firm in the United States (approximately twice as many issues as the second ranked firm). Our firm is active in the national municipal market on a daily basis through our extensive secondary market trading, From 1995 through the first quarter of 2002, William R, Hough & Co, has ranked first as Senior Manager based on number of Florida negotiated transactions, For the first quarter of 2002, our firm ranked ninth nationally as Senior Manager for negotiated transactions based on par amount and tenth as Senior Manager for both competitive and negotiated transactions, This added dimension of our firm being the leading Senior Manager of Florida municipal bonds provides our financial advisory clients with a resource not available with financial advisory-only firms who do not trade bonds in the market. Scott Johnston, one of the leading underwriters in the United States, will provide pricing and marketing information for the City's financings, Mr. Johnston has been involved as managing underwriter in many large bond issues involving syndicates of several investment banking firms, and is responsible for managing an average daily bond inventory of $70 to $80 million, He has served as senior managing underwriter on transactions ranging in size from $50,000 in notes to over $1 billion in bonds, Mr, Johnston also manages our firm's variable rate desk which has underwritten 151 variable rate transactions ranging in size from $3 million to $500 million and currently serves as remarketing agent for 151 variable rate bond issues totaling in excess of$5,1 billion, Because of his daily contact with all sectors of the bond market, he is thoroughly knowledgeable on market conditions and the demand for specific kinds of securities, As the senior underwriter in the State, other firms frequently seek his opinion on pricing levels of Florida bonds at their initial marketing, Scott G. Johnston, Sr. Vice President Underwriting.'fradinglSales Department St. Petersburg, Florida Mr, Johnston holds a B,A, degree in Economics from Tulane University, He has been actively involved in the underwriting, trading, and selling of municipal bonds for over 20 years, He is also an NASD Registered 23 t~'W~'~'IJ;l?~~HI~~' . II t. '. . . . , . III . . II II General Securities Representative, Registered General Securities Principal, Registered Municipal Securities Principal and a Registered Municipal Securities Representative. 4 24 t~,w~~n~;(~?~?~I~YO' CITY OF MIAMI BEACH COMMISSION ITEM SUMMARY ~ ...... Condensed Title: Acceptance of the Manager's recommendation relative to the ranking of the firms proposals pursuant to Request for Proposals (RFP) No, 38-01/02 for Providing Financial Advisory Services, Issue: Whether to approve the Manager's recommendation relative to the ranking of the firms proposals, Item Summarv/Recommendatlon: Request for Proposals (RFP) No, 38-01/02 was issued on May 21,2002, with an opening date of June 24, 2002, A pre-proposal conference was held on June 12, 2002, to provide information to firms considering submitting a proposal. Four (4) proposals were received from the following firms: * First Southwest Company * Public Financial Management, Inc, * RBC Dain Rauscher, Inc, * William R. Hough & Co, An Evaluation Committee selected by the City Manager convened on October 22, 2002, to rank the four proposals received, During deliberation, the Committee members discussed their individual ranking of the four firms and arrived at the following Committee ranking: * First: William R. Hough & Co, * Second: RBC Dain Rauscher, Inc, ACCEPT THE MANAGER'S RECOMMENDATION AND AUTHORIZE NEGOTIATIONS Advisory Board Recommendation: I Financial Information: Amount to be expended: The cost of these services is oaid from Bond oroceeds, Source of Amount Account Approved Funds: 1 IF~1 2 3 4 Total City Clerk's Office Legislative Tracking: I Patricia Walker nt Director Manager City Manager GL POW JMG AGENDA ITEM DATE Co 7:T /I-If -() L CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 www.ci.miami-beach.fl.us To: From: Subject: COMMISSION MEMORANDUM Mayor David Dermer and Members of the City Commission Date: November 13, 2002 Jorge M, GOnzalezR.~ City Manager . U A RESOLUTIO OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER PERTAINING TO THE RANKING OF PROPOSALS RECEIVED PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 38- 01/02, FOR PROVIDING FINANCIAL ADVISORY SERVICES; AUTHORIZING THE ADMINISTRATION TO ENTER INTO NEGOTIATIONS AND CONTRACT WITH THE TOP RANKED FIRM OF WILLIAM R. HOUGH & CO. ; AND SHOULD THE ADMINISTRATION NOT BE ABLE TO NEGOTIATE AN AGREEMENT WITH THE TOP RANKED FIRM; AUTHORIZING THE ADMINISTRATION TO NEGOTIATE WITH THE SECOND RANKED FIRM OF DAIN RAUSCHER, INC. ADMINISTRATION RECOMMENDATION Adopt the Resolution. ANALYSIS Every five years the City issues a Request for Proposals (RFP) seeking competitive pricing for Financial Advisory services, This Contract/Agreement will be for a two-year period, with an option to renew for three additional one-year periods, to be exercised at the City's discretion. The financing team will consist ofthe City's staff, including the Office of the City Attomey, the City's Bond Counsel, Financial Advisor and the Investment Banking Team, one of whom will be selected as manager. All fees will be contingent upon the issuance of the bonds. These services include. financial planning, project financial analysis, investment management, debt issuance, reporting, evaluation of proposals, development of financial strategy for capital projects taking into consideration the City's short and long-term financial needs, available financing options and alternative debt structures, and computer support and modeling for complex financial analysis. The firm will also assist in the selection of investment banking teams for the City, RFP No. 38-01102 November 13, 2002 Page Two ANALYSIS (Cont.) The firm selected will participate in future bond issues by assisting the City with development of timetables, preparation of preliminary and final official statements, bond resolution, and other documentation as may be required. Further, the Financial Advisor will make recommendations of appropriate credit structures, evaluate the use of various credit enhancements, participate in presentations to the rating agencies and review the marketing and sale of any debt prior to, during,and atter the pricing of bonds. Further, the selected firm shall assist the City in the development of strategies for investment of bond proceeds as well as provide final analysis of bond sales, The Financial Advisor will also assist the City in the development and implementation of various investment strategies, including research and evaluation of the structuring, timing and procurement of investments to implement a specific strategy, Funding is available from budget for Bond issuance costs for each bond issue. Request for Proposals (RFP) No. 38-01/02 was issued on May 21, 2002, with a deadline for the receipt of proposals of June 24, 2002, DemandStar issued twenty-five (25) notices by Onvia, This resulted in the receipt of the following four responsive proposals: 1. First Southwest Company 2. Public Financial Management, Inc. 3. RBC Dain Rauscher, Inc. 4. William R. Hough & Co. On September 24, 2002 the City Manager via Letter to Commission (LTC) No, 219-2002 appointed an Evaluation Committee ("the Committee") consisting of the following individuals: Larry Herrup, Independent CPA - (Chairperson) Jeryl (Deede) Weithorn, Chairperson, Budget Advisory Committee, Independent CPA Tony Rodriguez, Budget Advisory Committee, Investment Banker Georgina p, Echert, Assistant Finance Director Jim Sutter, Internal Auditor On October 22, 2002, the Committee convened, with all committee members in attendance. The Committee was provided with the project overview and background information by Patricia Walker, the City's Chief Financial Officer. The Committee reviewed references submitted by the proposers, and were briefed on the City's policies and procedures relative to the Cone of Silence Ordinance and the Govemment in the Sunshine Law. Furthermore, they discussed the following RFP Evaluation Criteria factors used to evaluate and rank the proposals: RFP No. 38-01/02 November 13, 2002 Page Three ANALYSIS (Cont.) . Experience and Qualifications of Proposer/Personnel assigned with the City as a Financial Adviser - 30 Points . Commitment to Florida Municipal Finance as demonstrated by Resources located in Florida - 20 Points . Availability of Independent Pricing Facility for the Evaluation of Rates proposed by the Underwriter(s) - 20 Points . Availability and Accessibility of Firm and Individuals assigned to Miami Beach - 15 Points . Proposed Fees - 15 Points BID TABULATION: FIRM FIRM FIRM FIRM COMMITTEE MEMBER FIRST PUBLIC RBC DAIN WILLIAM R. SOUTHWEST FINANCIAL RAUSCHER, INC, HOUGH & CO COMPANY MANAGEMENT LARRY HERRUP 90 (3) 55 (4) 100 (1) 100 (1) DEEDE WEITHORN 80 (3) 60 (4) 90 (2) 100 (1) T'ONY RODRIGUEZ 55 (3) 55 (3) 70 (2) 100 (1) GEORGINA ECHERT 70 (3) 60 (4) 75 (2) 100 (1) JIM SUTTER 85 (3) 77 (4) 90 (2) 93 (1) RANKINGS (3) (4) (2) (1) CONCLUSION: The Administration recommends that the Mayor and City Commission adopt the Resolution, which accepts the City Manager's recommendation, and authorizes the Administration to enter into negotiations and contract with the top-ranked firm of William R. Hough & Co.; and should the Administration not be able to negotiate an agreement with the top ranked firm; authorizing the Administration to negotiate with the second ranked firm of Dain Rauscher.