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.
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• 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.
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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
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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.
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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.
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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.
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