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HomeMy WebLinkAboutNorthwest Municpal Advisors (NWMA) - Agreement for Financial Advisory ServicesA/VNORTHWEST MUNICIPAL ADVISORS 11900 NE 1" Street, Suite 300 Bellevue, Washington 95005 December 4, 2017 Ms. Richa Sigdel Finance Director City of Pasco 525 N. 3rd Avenue Pasco, Washington 99301 Re: AGREEMENT FOR FINANCIAL ADVISORY SERVICES Dear Ms. Sigdel: This letter and proposal specifies the terms of the engagement between Northwest Municipal Advisors and the City of Pasco (the "City") for financial advisory services related to capital planning and funding for the City. If acceptable to the City, this engagement shall become effective upon acceptance by the City. INTRODUCTION TO NORTHWEST MUNICIPAL ADVISORS Northwest Municipal Advisors ("NWMA") is a financial advisory firm that specializes in assisting public entities finance projects. We have significant experience in general government and special purpose City financing. As a firm we do not sell or underwrite securities or bonds but only serve in an advisory role. This allows us to avoid a potential conflict of interest in providing advice to a bond issuer. NWMA is a registered municipal advisor with the Securities and Exchange Commission ("SEC') and the Municipal Securities Rulemaking Board ("MSRB"). As such, NWMA has a fiduciary duty to our clients and shall act and provide advice in a manner it believes to be in the best interest of its clients. As financial advisor, our most important responsibility is to provide sound advice to our clients, and our preference is to be involved in all aspects of a financing, ranging from up -front planning and identification of financing options to the actual sale, pricing and closing of a bond issue or other financing. We work with all the bond counsel and underwriter firms in the Northwest, with many of the national underwriting firms, with regional and national banking institutions, and have good relationships with the bond rating agencies. SCOPE OF SERVICES NWMA will serve as financial advisor for the City's financing needs and provide the following services: • Attend financing meetings as appropriate and assist in facilitating the business aspects of such meetings. M/ • Consult with the City in determining the amount of borrowing, bond structure and the timing of any bond sale financing. This analysis will account for current and future capital requirements, adequate levels of City reserves, interest rates and reinvestment rates, among other things. We will advise the City whether or not to proceed with any financing. • Recommend to the City whether a borrowing should be completed through a bank loan, bond issue or other. • Review the City's outstanding debt and update the City, as appropriate, on refunding opportunities. • Assist the City in selecting a bank or underwriter for the financings. • Assume overall coordination of any financing, including developing time schedules, ensuring that documents are available on a timely basis and keeping the City up to date on the bond market and any changes that could affect the financing timeline. • Prepare and coordinate rating presentations for the bonds. We would also discuss with the City options for the presentation. • Review all documents related to the issuance of any bonds and provide the City and bond counsel with comments and recommendations as appropriate. • Perform analytical work and provide other advice and recommendations associated with the issuance of bonds, as requested by the City. • Meet with the City's Council, management and staff as requested. • Represent the City during pricing of the bonds and advise and inform the City as to the reasonableness of the structure and terms of the bonds and the fairness and reasonableness of the pricing offered by the underwriter, as of the sale date of the bonds. We will recommend whether or not to accept the underwriter's offer to purchase the bonds. • If acting in the capacity of an Independent Registered Municipal Advisor ("IRMA") with regard to the IRMA exemption of the SEC Rule, NWMA will review all third party recommendations submitted to NWMA in writing by the City. • Provide such other related services as requested by the City. FEES AND CHARGES For bond financing services, our fee for services is dependent on our involvement as financial advisor and the fees shown below are not to exceed amounts. We do not want to duplicate work done by the underwriter on a bond sale. M/ For bond sales where we have primary responsibility for coordinating the financing, working with the rating agencies and structuring the bond issue, the fee schedule would be up to the following amounts for each issue: For issues up to $20 million, $1.25 per $1,000 par amount of bonds, with a minimum fee of up to $15,000. • For issues from $20 million to $40 million, $25,000 plus $1.00 per $1,000 par amount of bonds over $20 million. • If the City sells a bond issue exceeding $40 million, we will provide a separate compensation proposal. Fees calculated on the above schedule shall be adjusted as follows: 1. In the event the City would like NWMA to prepare the official statement for a financing, the fee will be up to an additional $10,000, depending on the complexity of the financing and disclosure. 2. Compensation for services not directly related to a financing will be billed on an hourly basis, based on a rate of $300 per hour for principals in the firm and $200 per hour for associates. No work on an hourly basis shall be commenced without prior approval by the City. 3. In addition to the fees above, NWMA will be reimbursed for direct out of pocket expenses. These expenses may include, but are not limited to, mileage, long distance charges, conference calls, travel expenses, overnight delivery charges, printing, and photocopying. FIDUCIARY DUTY NWMA is registered as a Municipal Advisor with the SEC. As such, NWMA has a Fiduciary duty to the City and must provide both a Duty of Care and a Duty of Loyalty that entails the following. Duty of Care a) exercise due care in performing its municipal advisory activities; b) possess the degree of knowledge and expertise needed to provide the City with informed advice; c) make a reasonable inquiry as to the facts that are relevant to the City's determination as to whether to proceed with a course of action or that form the basis for any advice provided to the City; and d) undertake a reasonable investigation to determine that NWMA is not forming any recommendation on materially inaccurate or incomplete information; NWMA must have a reasonable basis for: I. any advice provided to or on behalf of the City; ii. any representations made in a certificate that it signs that will be reasonably foreseeably relied upon by the City, any other party involved in the municipal securities transaction or municipal financial product, or investors in the City securities; and NV iii. any information provided to the City or other parties involved in the municipal securities transaction in connection with the preparation of an official statement. Duty of Loyalty NWMA must deal honestly and with the utmost good faith with the City and act in the City's best interests without regard to the financial or other interests of NWMA. NWMA will eliminate or provide full and fair disclosure (included herein) to the City about each material conflict of interest (as applicable). NWMA will not engage in municipal advisory activities with the City as a municipal entity if it cannot manage or mitigate its conflicts in a manner that will permit it to act in the City's best interests. CONFLICTS OF INTEREST AND OTHER MATTERS REQUIRING DISCLOSURES • As of the date of the Agreement, except as disclosed below NWMA is not aware of actual or potential conflicts of interest that NWMA that might impair its ability to render unbiased and competent advice or to fulfill its fiduciary duty, except as discussed. If NWMA becomes aware of any other potential conflict of interest that arise after this disclosure, NWMA will disclose the detailed information in writing to the City in a timely manner. • NWMA is compensated for municipal advisory activities to be performed that is contingent on the size or closing of any transactions as to which NWMA is providing advice which can be a conflict of interest. • The fee paid to NWMA increases the cost of investment to the City. The increased cost occurs from compensating NWMA for municipal advisory services provided. • NWMA does not have any other engagements or relationships that might impair NWMA's ability either to render unbiased and competent advice to or on behalf of the City or to fulfill its fiduciary duty to the City, as applicable. However, NWMA serves as financial advisor to the Port of Pasco and other public agencies in the Tri -City area • NWMA does not act as principal in any of the transactions related to this Agreement. • During the term of the municipal advisory relationship, this agreement will be promptly amended or supplemented to reflect any material changes in or additions to the terms or information within this agreement and the revised writing will be promptly delivered to the City. • NWMA does not have any affiliate that provides any advice, service, or product to or on behalf of the client that is directly or indirectly related to the municipal advisory activities to be performed by NWMA. • NWMA has not made any payments directly or indirectly to obtain or retain the City's municipal advisory business. • NWMA has not received any payments from third parties to enlist NWMA recommendation to the City of its services, any municipal securities transaction or any municipal finance product; • NWMA has not engaged in any fee -splitting arrangements involving NWMA and any provider of investments or services to the City. • NWMA does not have any legal or disciplinary event that is material to the City's evaluation of the municipal advisory or the integrity of its management or advisory personnel. • NWMA is not involved in the underwriting of bonds and is not associated with any underwriting firm which eliminates any conflicts of interest related to underwriter selection or underwriter compensation. M LEGAL EVENTS AND DISCIPLINARY HISTORY NWMA does not have any legal events and disciplinary history on its Form MA and Form MA -1, which includes information about any criminal actions, regulatory actions, investigations, terminations, judgments, liens, civil judicial actions, customer complaints, arbitrations and civil litigation. The City may electronically access NWMA's most recent Form MA and each most recent Form MA -1 filed with the Commission at the following website: www.sec.gov/edgar/searchedgar/companysearch.htmi. There have been no material changes to a legal or disciplinary event disclosure on any Form MA or Form MA -I filed with the SEC. RECOMMENDATIONS If NWMA makes a recommendation of a municipal securities transaction or municipal financial product or if the review of a recommendation of another party is requested in writing by the City and is within the scope of the engagement, NWMA will determine, based on the information obtained through reasonable diligence of NWMA whether a municipal securities transaction or municipal financial product is suitable for the City. In addition, NWMA will inform the City of: • the evaluation of the material risks, potential benefits, structure, and other characteristics of the recommendation; • the basis upon which NWMA reasonably believes that the recommended municipal securities transaction or municipal financial product is, or is not, suitable for the City; and • whether NWMA has investigated or considered other reasonably feasible alternatives to the recommendation that might also or alternatively serve the City's objectives. If the City elects a course of action that is independent of or contrary to the advice provided by NWMA, NWMA is not required on that basis to disengage from the City. RECORD RETENTION Effective July 1, 2014, pursuant to the SEC record retention regulations, NWMA is required to maintain in writing, all communication and created documents between NWMA and the City for 5 years. TERM OF AGREEMENT This agreement shall remain in effect for three years unless terminated by either party. In the event of termination, NWMA shall be reimbursed for expenses incurred to the date of termination. LIMITATION OF LIABILITY Liability of NWMA under this agreement shall be limited to fees paid. &MA APPROVAL OF AGREEMENT If this agreement is satisfactory to the City, please sign and return to NWMA. We look forward to working with the City to meet your financing needs. If you have any questions regarding this proposal, please do not hesitate to call. Sincerely, Alan Dashen Accepted and approved bythe City of Pasco, Washington This day ofj20V2;jkr&6g&±7._,,-2017. / �LI WOM .