HomeMy WebLinkAboutAgreement for Services PM Financial Advisors ,71"
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PFM FINANCIAL ADVISORS LLC
AGREEMENT FOR FINANCIAL ADVISORY SERVICES
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This agreement ("Agreement"), made and entered into this day of 04.1tU itV4020,
by and between the City of Auburn, Washington (the "City") and PFM Financial Advisors LLC
(hereinafter called "PFM") sets forth the terms and conditions under which PFM shall provide
services.
WHEREAS, the City desires to obtain the services of a financial advisor to develop and
assist in implementing the City's strategies to meet its current and long-term financial obligations,
capital financing needs and render assistance in respect to debt transactions; and
WHEREAS, PFM is capable of providing the necessary financial advisory services.
NOW, THEREFORE, in consideration of the above mentioned premises and intending to
be legally bound hereby,the City and PFM agree as follows:
I. SCOPE OF SERVICES
PFM shall provide,upon request of the City, services related to debt planning,debt policy
development and services related to debt issuance, as applicable and set forth in Exhibit A to this
Agreement. The City acknowledges and agrees that most tasks requested by the City will not
require all services provided for in Exhibit A and as such the specific scope of services for such
task shall be limited to just those services required to complete the task. Any material changes in
or additions to the scope of services described in Exhibit A shall be promptly reflected in a written
supplement or amendment to this Agreement. Services provided by PFM which are not
specifically referenced in the scope of services set forth in Exhibit A of this Agreement shall be
completed as agreed in writing in advance between the City and PFM. Upon request of the City,
PFM or an affiliate of PFM may agree to additional services to be provided by PFM or an affiliate
of PFM, by a separate agreement between the City and PFM or its respective affiliate.
II. WORK SCHEDULE
The services of PFM are to commence as soon as practicable after the execution of this
Agreement and a request by the City for such service.
III. REGISTERED MUNICIPAL ADVISOR; REQUIRED DISCLOSURES
1. PFM is a registered municipal advisor with the Securities and Exchange
Commission (the "SEC") and the Municipal Securities Rulemaking Board (the "MSRB"),
pursuant to the Securities Exchange Act of 1934 Rule 15Bal-2. If the City has designated PFM
as its independent registered municipal advisor ("IRMA") for purposes of SEC Rule 15Bal-
1(d)(3)(vi)(the"IRMA exemption"),then services provided pursuant to such designation shall be
the services described in Exhibit A hereto, subject to any limitations provided herein. PFM shall
not be responsible for,or have any liability in connection with,verifying that PFM is independent
from any other party seeking to rely on the IRMA exemption (as such independent status is
required pursuant to the IRMA exemption,as interpreted from time to time by the SEC). The City
acknowledges and agrees that any reference to PFM, its personnel and its role as IRMA, including
in the written representation of the City required under SEC Rule 15Ba 1-1(d)(3)(vi)(B) shall be
subject to prior approval by PFM. The City further agrees not to represent that PFM is the City's
IRMA with respect to any aspect of a municipal securities issuance or municipal financial product,
outside of the scope of services without PFM's prior written consent.
2. MSRB Rules require that municipal advisors make written disclosures to their
clients of all material conflicts of interest,certain legal or disciplinary events and certain regulatory
requirements. Such disclosures are provided in PFM's Disclosure Statement delivered to the City
together with this Agreement.
IV. FINANCIAL ADVISORY COMPENSATION
For the services provided under this Agreement, PFM's professional fees shall be paid as
provided in Exhibit B to this Agreement and the City shall pay expenses and fees for other services
not set forth in Exhibit A as provided below.
1. Reimbursable Expenses
In addition to fees for services, PFM will be reimbursed for necessary, reasonable, and
documented expenses incurred, including required travel. Upon request of the City,
documentation of such expenses will be provided.
2. Other Services
Any services which are not included in the scope of services set forth in Exhibit A of this
Agreement will be subject to separate, mutually acceptable fee structures.
V. TERMS AND TERMINATION
This Agreement shall be effective until December 31, 2021 (the "Initial Term") and shall
automatically renew for additional 2 year periods (each a "Renewal Term" and together with the
Initial Term, the "Term", unless canceled in writing by either party upon thirty (30) days written
notice to the other party.
VI. ASSIGNMENT
PFM shall not assign any interest in this Agreement or subcontract any of the work
performed under the Agreement without the prior written consent of the th City; provided that
upon notice to the City, PFM may assign this Agreement or any interests hereunder to a municipal
advisor entity registered with the SEC that directly or indirectly controls, is controlled by, or is
under common control with, PFM.
VII. INFORMATION TO BE FURNISHED TO PFM
All information, data, reports, and records ("Data") in the possession of the City or any
third party necessary for carrying out any services to be performed under this Agreement shall be
furnished to PFM and the City shall, and shall cause its agent(s) to, cooperate with PFM in its
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conduct of reasonable due diligence in performing the services, including with respect to the facts
that are necessary in its recommendation(s) to the City in connection with a municipal securities
transaction or municipal financial product and/or relevant to the City's determination whether to
proceed with a course of action. To the extent the City requests that PFM provide advice with
regard to any recommendation made by a third party, the City will provide to PFM written
direction to do so as well as any Data it has received from such third party relating to its
recommendation. The City acknowledges and agrees that while PFM is relying on the Data in
connection with its provision of the services under this Agreement, PFM makes no representation
with respect to and shall not be responsible for the accuracy or completeness of such Data.
VIII. NOTICES
All notices given under this Agreement shall be in writing, sent by registered United States
mail,with return receipt requested,addressed to the party for whom it is intended,at the designated
address below. The parties designate the following as the respective places for giving notice, to
wit:
CITY OF AUBURN
25 W Main Street
Auburn, WA 98001
Attention: Jamie Thomas, Finance Director
PFM FINANCIAL ADVISORS LLC
1200 Fifth Avenue, Suite 1220
Seattle, WA 98101
Attention: Managing Director
IX. TITLE TRANSFER
All materials, except functioning or dynamic financial models,prepared by PFM pursuant
exclusively to this Agreement shall be the property of the City. Subject to the exception described
above,upon termination of this Agreement,at the City's reasonable request no later than three (3)
years after the termination of this Agreement PFM shall deliver to the City copies of any
deliverables pertaining to this Agreement.
X. PFM'S REPRESENTATIVES
The City has the right to request, for any reason, PFM to replace any member of the
advisory team. Should the City make such a request, PFM shall promptly suggest a substitute for
approval by the City.
XI. INSURANCE
PFM shall maintain insurance coverage with policy limits not less than as stated in Exhibit
C.
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XII. LIMITATION OF LIABILITY
Except to the extent caused by willful misconduct, bad faith, gross negligence or reckless
disregard of obligations or duties under this Agreement on the part of PFM or any of its associated
persons,neither PFM nor any of its associated persons shall have liability to any person for(i)any
act or omission in connection with performance of its services hereunder;(ii) any error of judgment
or mistake of law; (iii) any loss arising out of any issuance of municipal securities, any municipal
financial product or any other financial product, or (iv) any financial or other damages resulting •
from the City's election to act, or not to act, contrary to or, absent negligence on the part of PFM
or any of its associated persons,upon any advice or recommendation provided by PFM to the City.
XIII. INDEPENDENT CONTRACTOR; NO THIRD-PARTY BENEFICIARY
PFM, its employees, officers and representatives at all times shall be independent
contractors and shall not be deemed to be employees, agents, partners, servants and/or joint
venturers of the City by virtue of this Agreement or any actions or services rendered under this
Agreement. Nothing in this Agreement is intended or shall be construed to give any person,other
than the Parties hereto,their successors and permitted assigns,any legal or equitable rights,remedy
or claim under or in respect of this Agreement or any provisions contained herein. In no event
will PFM be liable for any act or omission of any third party or for any circumstances beyond
PFM's reasonable control including, but not limited to, fire, flood, or other natural disaster, war,
riot, strike, act of terrorism, act of civil or military authority, software and/or equipment failure,
computer virus,or failure or interruption of electrical,telecommunications or other utility services.
XIV. APPLICABLE LAW
This Agreement shall be construed, enforced, and administered according to the laws of
the State of Washington. PFM and the City agree that,should a disagreement arise as to the terms
or enforcement of any provision of this Agreement,each party will in good faith attempt to resolve
said disagreement prior to pursuing other action.
XV. ENTIRE AGREEMENT; SEVERABILITY
This Agreement represents the entire agreement between the City and PFM and may not
be amended or modified except in writing signed by both parties. For the sake of clarity, any
separate agreement between the City and an affiliate of PFM shall not in any way be deemed an
amendment or modification of this Agreement. The invalidity in whole or in part of any provision
of this Agreement shall not void or affect the validity of any other provision.
XVI. EXECUTION; COUNTERPARTS
Each party to this Agreement represents and warrants that the person or persons signing
this Agreement on behalf of such party is authorized and empowered to sign and deliver this
Agreement for such party. This Agreement may be signed in any number of counterparts,each of
which shall be an original and all of which when taken together shall constitute one and the same
document.
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IN WITNESS THEREOF,the City and PFM have executed this Agreement as of the day
and year herein above written.
CITY OF AUBURN
By: (
U h/ -e 11/,v vvi -H Kam
Name, Title
Date: t ie11 /"
PFM FINANCIAL ADVISORS LLC
By:
, Managing Director
Date:
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EXHIBIT A
SCOPE OF SERVICES
1. General, ongoing services relative to periodic market updates, financial planning, credit ratings,
and policy development, subject to fees forth in Exhibit B, Section 3. Upon request of the City:
• Provide general advice, input, and planning as may be requested from time to time
by the City.
• Evaluate the City's capital financing plans and needs, and the City's financial
resources, relative to any proposed financing.
• Provide analysis of financing options, identify risks, and advise on the feasibility
of financing plans.
• Periodically review outstanding obligations for the City for potential debt
consolidation or refinancing opportunities that may benefit to the City.
• Advise the City of changes in state or federal law that may be relevant to the City's
future financing plans.
• If requested, serve as the City's IRMA in connection with the "Municipal Advisor
Rule," and review proposals/analysis provided by underwriters, banks, and other
third parties.
• Attend meetings with the City's staff, consultants, and other professionals.
2. Services related to debt transactions (including short term financings, notes, loans, letters of
credit, line of credit and bonds) subject to transaction fees as set forth in Exhibit B, Section 2.
Upon the request of the City or as required to complete the financing transaction:
• Develop, or review, a financing plan in concert with the City's staff which would
include recommendations as to the timing and number of series of bonds to be
issued.
• Assist the City by recommending the best method of sale, either as a negotiated
sale, direct (bank) placement or a competitive sale. In a competitive sale or direct
placement, make recommendation as to the determination of the best bid. In the
event of a negotiated sale, assist in the solicitation, review and evaluation of any
investment banking proposals,and provide advice and information necessary to aid
in such policy selection.
• Advise as to the various financing alternatives available to the City.
• Develop alternatives related to debt transaction including evaluation of revenues
available, maturity schedule and cash flow requirements.
• If appropriate, develop credit rating presentation(s) and coordinate with the City
the presentation(s) to credit rating agencies.
• For a negotiated sale, review underwriter's proposals and provide analysis of same
to the City.
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• Assist the City in the procurement of other services relating to debt issuance such
as printing, paying agent, registrar, etc.
• Identify key bond covenant features and advise as to the financial consequences of
provisions to be included in documents regarding security, creation of reserve
funds, flow of funds,redemption provisions, additional parity debt tests, etc.
• Review the terms, conditions and structure of any proposed debt offering
undertaken by the City and provide suggestions, modifications and enhancements
where appropriate and necessary to reflect the constraints or current financial policy
and fiscal capability.
• Coordinate with the City's staff and other advisors as respects the furnishing of data
for offering documents,it being specifically understood that PFM is not responsible
for the inclusion or omission of any material in offering documents.
• Review Preliminary Official Statements and final Official Statements prepared on
behalf of the City for use in marketing any bonds and meeting regulatory
requirements. •
• As applicable, advise the City on the condition of the bond market at the time of
sale, including volume, timing considerations, competing offerings, and general
economic considerations.
• Assist and advise the City in negotiations with investment banking groups
regarding fees, pricing of the bonds and final terms of any security offering, and
make recommendations regarding a proposed offering to obtain the most favorable
financial terms based on existing market conditions.
• For any competitive sale of bonds or notes, prepare(or assist in the preparation of)
the official notice of sale, recommend sale parameters, take steps necessary to
ensure broad market exposure of the issue, through the use of newswire services
and official statement distribution, and perform additional steps necessary and
customary for competitive bond sales.
• Arrange for the closing of the transaction including final delivery of the bonds.
In addition to the services identified above, PFM may also perform special projects as requested
by the City. The scope of such project will be identified prior to undertaking the project. Such
projects will be subject to fees based upon hourly rates, as set forth in Exhibit B, Section 2.
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EXHIBIT B
COMPENSATION FOR SERVICES
1. Fixed Rate Transaction Fees (Competitive,Negotiated and Direct Placement)
The compensation schedule for competitive and negotiated sales of long-term financings will be
billed at closing as follows:
Bond Proceeds Issuance Fee per$1,000
Up to $25 million $1.50 per$1,000, with a$25,000 minimum
Up to $75 million $37,500 plus $0.75 per$1,000 over$25 million
Over$75 million $75,000 plus $0.25 per$1,000 over$75 million
2. Hourly Project Fees (Non-Transaction Related) •
PFM will not charge for general advice relating to the financing plan between financings. In the
event the Authority requests that PFM perform significant special projects (capital planning,
creation of new financing programs like the installment sale concept,etc.),fees may be negotiated
in advance of the project generally based upon the following hourly rates for the indicated levels
of experience or their equivalents will apply. No such fee will be charged to the City without first
entering into a written addendum or memorandum documenting the requested services and
expected fees. Additionally, in the event a financing is started,but cancelled at the City's request,
accrued time will be billed as follows:
Experience Level Hourly Rate
Managing Director/Director $325
Senior Managing Consultant $300
Senior Analyst $225
Analyst $200
Associate $185
For each contract year following the initial contract year(each, individually, a"Subsequent
Contract Year"), hourly fee rates shall be calculated by comparing the"All Items Consumer
Price Index for All Urban Consumers(CPI-U) for the U.S. City Average" (the"Index")for the
end of month immediately preceding the start of the Subsequent Contract Year and the Index on
the date one year prior to that end of month. The greater of zero percent and the percentage
change in the Index shall be applied to the hourly fee rate schedule above and shall be the hourly
fee rates for the applicable Subsequent Contract Year. For example, and for avoidance of doubt,
for a Subsequent Contract Year commencing January 1, 2021,the Index in effect on December
31, 2020 will be compared to the Index in effect on December 31, 2019. The percentage change
in the Index will then be applied to increase the hourly rates by a similar percentage.
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EXHIBIT C
INSURANCE
PFM Financial Advisors LLC ("PFM") has a complete insurance program, including property,
casualty, general liability, automobile liability and workers compensation. PFM maintains
professional liability and fidelity bond coverages which total $40 million and $25 million single
loss/$50 million aggregate, respectively. PFM also carries a$10 million cyber liability policy.
Our Professional Liability policy is a"claims made"policy and our General Liability policy claims
would be made by occurrence.
Deductibles/SIR:
Automobile $250 comprehensive & $250 collision
Cyber-Liability $25,000
General Liability$0
Professional Liability (E&O) $1,000,000
Financial Institution Bond $75,000
Insurance Company & AM Best Rating
Professional Liability (E&O): Endurance American Specialty Insurance(A+; XV)
Argonaut Insurance Company; (A+: XIV)
Everest National Insurance Company; (A+; XV)
XL Specialty Insurance Company; (A;XV)
Continental Casualty Company; (A; XV)
Starr Indemnity & Liability Company; (A; XV)
Federal Insurance Company; (A++; XV)
Financial Institution Bond: Federal Insurance Company; (A++;XV)
Great American Insurance Company; (A+; XV)
U.S. Fire Insurance Company; (A; XV)
Cyber Liability: Greenwich Insurance Company(A+; XV)
Arch Insurance Company; (A+; XV)
General Liability: Great Northern Ins. Company; (A++; XV)
Automobile Liability: Great Northern Ins. Company; (A++; XV)
Excess/Umbrella Liability: Federal Insurance Company (A++; XV)
Workers Compensation&Employers Liability Vigilant Insurance Company; (A++; XV)
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