HomeMy WebLinkAbout19-99 RESOLUTIONRESOLUTION NO i 9-94
A RESOLUTION APPROVING A LETTER AGREEMENT WITH
STEPHENS, INC. TO PERFORM UNDERWRITING SERVICES
IN CONNECTION WITH THE PROPOSED ISSUANCE OF
WATER AND SEWER REFUNDING BONDS.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,
ARKANSAS:
Section 1 That the City Council hereby approves a letter agreement with Stephens, Inc.
to perform underwriting services in connection with the proposed issuance of water and sewer
refunding bonds; and authorizes the Mayor and City Clerk to execute said agreement. A copy of
the letter agreement is attached hereto marked Exhibit "A" and made a part hereof.
PASSED AND APPROVED this day of February 1999.
APPROVED: /f
By.
APPROVED:
e/F
Fr6d Hanna, Mayor
•
•
•
•
Stephens Inc.
February 1, 1999
Honorable Fred Hanna
Mayor
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
EXHIBIT A
RE: Underwriting Services - Refunding of the City of Fayetteville's Water and Sewer System Revenue
Bonds, Series 1992
Dear Mayor Hanna:
Stephens Inc. is pleased to provide underwriting services for the City of Fayetteville in connection with
refunding the City's 1992 Water and Sewer System Revenue Bonds. This letter is to serve as an Engagement
Agreement between the City of Fayetteville and Stephens Inc. for underwriting services.
Our scope of services will be as submitted in our proposal to the City's RFC) 98-8. As indicated in our
proposal, we will provide the City with an analysis of financing options, debt schedules, and prepare a report on
pricing the bonds. In addition, we will be available to make presentations to review and explain the financing
alternatives. Once a structure is complete, we will then, based on your approval, offer the bonds.
To initiate this process, we would request that the City of Fayetteville agree to designate Stephens Inc. as
underwriter for the proposed financing. It is understood the City will not be obligated to our firm for underwriting
costs in the event the bonds are not sold or in the event the City Council fails to adopt an Ordinance approving the
bond issue. Our compensation will be limited solely to the sell of the bonds, the terms of which, including the
underwriting discount, will be subject to the City's approval. In any event, the underwriting fee will not exceed .90%
of the issue. Stephens agrees to pay all travel, phone, and computer expenses from the underwriter's discount. All
other costs relating to the issuance of the bonds will he paid from bond proceeds or from existing funds.
If the foregoing is in accordance with your understanding and our previous discussions, please execute the
acceptance below. We look forward and appreciate the opportunity to work with you on this issue.
Accepted this ice day of fiaro fre y /fff
DH/kg
Respectfully submitted,
By: l l JF.►wn. i4 f0.71
By:
Stephens Inc.
ayor, City of Fayetteville
Investment Bankers
Executive Square • 21 West Mountain, Suite 300 • Fayetteville, Arkansas 72701
501-521-4708 Fax 501-521-6770
•
FAYETTEVILLE
THE CITY Of FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
642_ 41_ cleAff,
To: Brian Swain, Admin. Services
From. Heather Woodruff, City Clerk
Date: February 10, 1999
Attached arc copies of the resolution and agreement with Stephens Inc. for your records. 1 am
also returning one original agreement for you to distribute. The original will be microfilmed and
filed with the city clerk.
cc. Internal Auditor
File
•
STAFF REVIEW FORM
YYxx AGENDA REQUEST
CONTRACT REVIEW
W/S BOND REFUND
IILB. 1
Eeco / 9- 9g
MIcRc)vTI. MED
For the Fayetteville City Council meeting of February 2. 3999
FROM:
Brian Swain Adm. Servirea_P)ir. Adm. Services
Name
Division Department
ACTION REQUIRED: WATER AND SEWER REFUNDING BONDS: A resolution approving a
letter agreement with Stephens, Inc. to perform underwriting services in
connection with the proposed issuance of water and sewer refunding bonds. The
cost is $9.50 per $1,000 of bonds issued to be paid from bond proceeds.
COST TO CITY:
S 76.000 est.
Cost of this Request
Account Number
Project Number
Category/Project Budget Category/Project Name
Funds Used To Date Program Name
Remaining Balance Fund
BUDGET REVIEW:
Budgeted Item Budget Adjustment Attached
Sudget Coordinator Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY:
�17ti.4i f 4airn.w /-N49
Acco•
r
iri Man, ger
City Att•rney
NtkR
Purchasing Officer
Date ADA Coordinate Al Date
/-75/4,-4 tar . —/k71—n
Date
-I4-99
Date
In ernal Auditor Date
STAFF RECOMMENDATION: Staff recommends approval of the agreement. K
Di ision lde
jl0
Date
v�Q� (iuo ls,41a4et
epartment Director Date
Administrjtive Services Director
Date //
Mayor Date
crass Reference
New Item: Yes No
Prev Ord/Res #:
Orig Contract Date:
FAYETTEVI LLE
THE CITY OF FAYETTEVILLE, ARKANSAS
W/S BOND REFUND
11I.B.2
TO: Fayetteville City Council
THRU Fred B. Hanna, Mayor
FROM: Kevin D. Crosson, Administrative Services Director]
DATE: January 13, 1999
RE: Underwriter Services Selection - Proposed Water & Sewer Bond Refunding
(Series 1992)
On January 4, 1999, the City of Fayetteville convened a professional selection committee for the
purpose of selecting a firm for underwriting services for the proposed refunding of Series 1992
Water & Sewer bonds. The committee was composed of five voting members:
Emma Badgley Accounting Coordinator
Kevin Crosson Administrative Services Director
Brian Swain Asst. to the Adm. Services Director
Trent Trumbo Alderman
Charles Venable Public Works Director
In addition, Peggy Vice, Purchasing Manager, served on the committee as a non-voting advisory
member.
The committee selected from firms that submitted responses to the City's Request for Proposals
(RFP) #98-8. A vote was taken by the committee in accordance with the City's purchasing policy
regarding professional service and Stephens, Inc. was selected as the undenvriter on this proposed
issue. A copy of Stephens, Inc. reponse to the RFP is on file in the Purchasing Office.
The process for negotiating a contractual agreement that conformed with the RFP was initiated.
Based on those negotiations, the attached Letter of Engagement was drafted The proposed
agreement conforms to the City's RFP and is for a fee of $9.50 per $1,000 of bonds issued For
example, if the issue were for $8,000,000 (which represents the approximate amount of the
proposed refunding), the underwriter's discount would be for $76,000. As mentioned in the
Letter of Engagement, the fee for services is contingent upon the Bonds being sold and the
transaction closed
113 WEST MOUNTAIN 72701 501-521-7700
FAX 501-575-5257
W/S BOND REFUND
III.B.3
Based on a preliminary review of the existing 1992 bond issue, it would appear that the City can
save several hundred thousand dollars by refinancing the bonds including issuance costs and
premiums paid for early retirement of the bonds. One of the first tasks the underwriter performs
Will be to undertake a financial review of the current issue to determine the options available for
refunding and to establish the cost/benefit ratio of each alternative. If a determination is made
that proceeding with the refunding is not in the best financial interest of the City, we will not
proceed. However, unless the current interest rates increase significantly, we expect that the issue
should be able to go to market by the first part of June. Should you have any questions, please
feel free to contact me. Thank you for your consideration of this matter
KDC/bts
W/S BON
111:B.4
REFUND
Stephens Inc.
February I, 1999
Ilonorablc Fred Ilanna
Mayor
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
RE: Underwriting Services - Refunding of the City of Fayetteville's Water and Sewer System Revenue
Bonds, Series 1992
Dear Mayor Hanna:
Stephens Inc. is pleased to provide underwriting services for the City of Fayetteville in connection with
refunding the City's 1992 Water and Sewer System Revenue Bonds. This letter is to serve as an Engagement
Agreement between the City of Fayetteville and Stephens Inc. for underwriting services.
Our scope of services will be as submitted in our proposal to the City's RFQ 98-8. As indicated in our
proposal, we will provide the City with an analysis of financing options, debt schedules, and prepare a report on
pricing the bonds. In addition, we will be available to make presentations to review and explain the financing
alternatives. Once a structure is complete, we will then, based on your approval, offer the bonds.
To initiate this process, we would request that the City of Fayetteville agree to designate Stephens Inc. as
underwriter for the proposed financing. It is understood the City will not be obligated to our firm for underwriting
costs in the event the bonds are not sold or in the event the City Council fails to adopt an Ordinance approving the
bond issue. Our compensation will be limited solely to the sell of the bonds, the terms of which, including the
underwriting discount, will be subject to the City's approval. In any event, the underwriting fee will not exceed .90%
of the issue. Stephens agrees to pay all travel, phone, and computer expenses from the underwriter's discount. All
other costs relating to the issuance of the bonds will be paid from bond proceeds or from existing funds.
If the foregoing is in accordance with your understanding and our previous discussions, please execute the
acceptance below. We look forward and appreciate the opportunity to work with you on this issue.
Accepted this day of
DI l/kg
Respectfully submitted,
By:
P.wrra. l-! (-51-
Stephens Inc.
By:
Mayor, City of Fayetteville
Investment Bankers
Executive Square • 21 West Mountain, Suite 300 • Fayetteville. Arkansas 72701
501-521-4708 Fax 501-521-6770
Stephens Inc.
March 25, 1999
Mr. Kevin Crosson
Administrative Services Director
City of Fayetteville
113 West Mountain
Fayetteville, Arkansas 72701
wg
Pts 19-99
RE: City of Fayetteville, Arkansas Water and Sewer System Refunding Revenue Bonds, Series 1999
Dear Mr. Crosson:
On February 2, 1999 the Fayetteville City Council retained Stephens, Inc. to initiate the preliminary steps
to offer refunding bonds to refund the City's Water and Sewer Improvement and Refunding Revenue
Bonds, Series 1992.
Following the Council's authorization, we have prepared the necessary offering documents to allow the
City to market the refunding issue. This refunding is estimated to result in a net savings to the City of
approximately $533,622. Outlined below is a comparative analysis of the existing Scrics 1992 Bond
Issue to the proposed refunding issue.
Comparative Analysis
Issue
Maturity
Interest Rate
Total Principal
& Interest Cost
Net Savings
Existing 1992
2012
5.99%
$12,281,300.00
N/A
Proposed
Refunding 1999
2012
4.30%
$11,364,145.00
5533,622.67
This savings is identical to the savings presented to the City Council on February 2, 1999. A detailed
financial analysis of this savings is also attached for your review.
We have also attached a schedule of events that identifies the steps that have been taken to date and the
necessary actions to complete this refunding. Based on this schedule, we would anticipate offering this
refunding issue on April 13, 1999 and closing on this issue on May 27, 1999.
I will be available to update the City Council on this financing and answer any questions during the
March 30, 1999 agenda meeting. Please call me if you have any questions prior to the meeting.
DI-I/kg
Sincerely,
liMM.an
Den is Bunt
Investment Bankers
Executive Square • 21 West Mountain, Suite 300 • Fayetteville, Arkansas 72701
501-521-4708 Fax 501-521-6770
Date
Principal
City of Fayetteville, AR
Series 1999 Refunding Issue
Proposed Debt Service
Coupon Interest
CiUUDEMUMMVSUM
Savings Report
Total
Prior
Debt Service
Savings
emulative
Savings
8/15/99
2/15/ 0
8/15/ 0.
2/15/ 1
8/15/ 1
2/15/ 2
8/15/ 2
2/15/ 3
8/15/ 3
2/15/ 4
8/15/ 4
2/15/ 5
8/15/ 5
2/15/ 6
8/15/ 6
65,000.00
455,000.00
465,000.00
3.300000
3.400000
3.550000
490,000.00 3.650000
505,000.00 3.750000
530,000.00 3.850000
545,000.00 3.950000
570,000.00 4.050000
2/15/ 7
8/15/ 7 595,000.00 4.150000
2/15/ 8
8/15/ 8 620,000.00 4.200000
2/15/ 9
8/15/ 9
2/15/10
8/15/10.
2/15/11
8/15/11
645,000.00
670,000.00
700,000.00
2/15/12
8/15/12 1,535,000.00
ACCRUED
8,390,000.00
8,390,000.00
Dated 5/ 1/99
Bond Years
Average Coupon
Average Life
M 1 C %
T 1 C %
Arbitrage Yield
4.300000
4.400000
4.500000
4.600000
99,961.33
171,937.50
171,937.50
164,202.50
164,202.50
155,948.75
155,948.75
147,006.25
147,006.25
137,537.50
137,537.50
127,335.00
127,335.00
116,571.25
116,571.25
105,028.75
105,028.75
92,682.50
92,682.50
79,662.50
79,662.50
65,795.00
65,795.00
51,055.00
51,055.00
35,305.00
35,305.00
164,961.33
798,875.00
793,405.00
801,897.50
799,012.50
803,075.00
799,670.00
803,142.50
805,057.50
805,365.00
804,325.00
801,590.00
802,110.00
1,605,610.00
587,065.00
834,130.00
830,700.00
422,103.67
35,255.00
37,295.00
38,571.17
73,826.17
111,121.17
835,950.00 34,052.50 145,173.67
834,530.00 35,517.50 180,691.17
840,110.00
83879000
840,327.50
35,035.00
39,120.00
37,185.00
215,726.17
254,846.17
292,031.17
839,615.00 34,557.50 326,588.67
841,870.00 36,505.00 363,093.67
841,470.00
838,657.50
838,067.50
37,145.00
37,067.50
35,957.50
400,238.67
437,306.17
473,263.67
1,640,017.50 34,407.50 507,671.17
3,000,096.33
25,951.50
2,974,144.83
11,390,096.33
25,951.50
11,364,144.83
with Delivery of 5/28/99
69,723.778
4.302831
8.310343
4.302831 % Using 100.0000000
4.286033 2 From Delivery Date
4.286033 2
N 0 T E : Cumulative Savings are Net of
Net Present Value Savings at: 4.2860% Equals
N 0 T E : Present Value Savings are Net
the Initial
12,281,300.00
12,281,300.00
._.
507,671.17
25,951.50
533,622.67
====:======:..
Transfer Amount of 383,532.50
418,757.75
of the Initial
Micro -Muni Debt Date: 01-14-1999 a 17:07:50
or 4.9912% of Par of the Current Issue
or 5.13112 of Par of the Prior Issue
Transfer Mont of 383,532.50
Filename: FAT Key: MEN
•
City of Fayetteville, AR
Series 1999 Refunding Issue
Sources and Uses of Funds
y
Delivery Date: 5/28/99
Sources of Funds
ccossc==
Par Amount of Bonds 58,390,000.00
*Premium /-Discount $0.00
Bond Proceeds
Accrued Interest
Assumed DSR Balance
Assumed Band Fund Balance
Uses of Fads
Cost to Retire Bonds
Cost of Issuance ( 1.800000%)...
Accrued Interest
Debt Service Reserve
Contingency
Micro -Muni Siting Date: 01-14-1999 2 17:07:24
8,390,000.00
25,951.50
800,000.00
383,532.00
59,599,483.50
8,621,065.00
151,020.00
25,951.50
800,000.00
1,447.00
59,599,483 50
Filename: FAT Key: NEU
Date
Principal
City of Fayetteville, AR
Debt Outstanding - Series 1992
Debt Service Schedule
Coupon
Interest Period Total Fiscal Total
8/15/99
2/15/ 0
8/15/ 0
2/15/ 1
8/15/ 1
360,000.00
380,000.00
395,000.00
4.700000
4.850000
5.000000
2/15/ 2
8/15/ 2 420,000.00 5.100000
2/15/ 3
8/15/ 3 440,000.00 5.550000
2/15/ 4
8/15/ 4
2/15/ 5
8/15/ 5
2/15/ 6
8/15/ 6
470,000.00
495,000.00
525,000.00
5.600000
5.750000
5.850000
2/15/ 7
8/15/ 7 555,000.00 5.900000
2/15/ 8
8/15/ 8 590,000.00 6.000000
2/15/ 9
8/15/ 9
2/15/10
8/15/10
2/15/11
8/15/11
625,000.00
660,000.00
700,000.00
2/15/12
8/15/12 1,545,000.00
ACCRUED
8,160,000.00
8,160,000.00
Dated 2/15/99 with Del
Bond Years
Average Coupon
Average Life
M I C %
T I C %
Arbitrage Yield
Micro -Mini Debt Date:
6.050000
6.150000
6.150000
6.150000
227,065.00
227,065.00
227,065.00
217,850.00
217,850.00
207,975.00
207,975.00
197,265.00
197,265.00
185,055.00
185,055.00
171,895.00
171,895.00
157,663.75
157,663.75
142,307.50
142,307.50
125,935.00
125,935.00
108,235.00
108,235.00
89,328.75
89,328.75
69,033.75
69,033.75
587,065.00
227,065.00
607,065.00
217,850.00
612,850.00
207,975.00
627,975.00
197,265.00
637,265.00
185,055.00
655,055.00
171,895.00
666,895.00
157 663 75
68266375
142,307.50
697,307.50
125,935.00
715,935.00
108,235.00
733,235.00
89,328.75
749,328.75
69,033.75
769,033.75
587,065.00
834,130.00
830,700.00
835,950.00
834,530.00
840,110.00
838,790.00
840,327.50
839,615.00
841,870.00
841,470.00
838,657.50
838 067 50
47,508.75 47,508.75
47,508.75 1,592,508.75 1,640,017.50
4,121,300.00 12,281,300.00
4,121,300.00 12,281,300.00
e:ee:eveceveve seseserweewe
ivery of 2/15/99
68,830.000
5.987651
8.457108
5.987651 1 Using 100.0000000
5.945479 % From Delivery Date
5.965824 %
01-14-1999 a 17:01:31 Filename: fay Key: old
•
Original
Date Principal
Original
Capon Interest
City of Fayetteville, AR
Debt Outstanding - Series 1992
Debt Service and Call Report
Original
Debt Service
Principal
To Escrow
Call
Premium
Interest
To Escrow
Debt Service
To Escrow
6/15/99
2/15/ 0
8/15/ 0
2/15/ 1
8/15/ 1
• 360,000.00
380,000.00
395,000.00
4.700000
4.850000
5.000000
2/15/ 2
8/15/ 2 420,000.00 5.100000
2/15/ 3
8/15/ 3 440,000.00 5.550000
2/15/ 4
8/15/ 4
2/15/ 5
8/15/ 5
2/15/ 6
8/15/ 6
2/15/ 7
8/15/ 7
2/15/ 8
8/15/ 8
2/15/ 9
8/15/ 9
2/15/10
8/15/10
2/15/11
8/15/11
470,000.00
495,000.00
525,000.00
5.600000
5.750000
5.850000
555,000.00 5.900000
590,000.00 6.000000
625,000.00
660,000.00
700,000.00
6.050000
6.150000
6.150000
2/15/12
8/15/12 1,545,000.00 6.150000
6,160,000.00
Dated 2/15/99 with D
Bond Years
Average Coupon
Average Life
227,065.00
227,065.00
227,065.00
217,850.00
217,850.00
207,975.00
207,975.00
197,265.00
197,265.00
185,055.00
185,055.00
171,895.00
171,895.00
157,663.75
157,663.75
142,307.50
142,307.50
125,935.00
125,935.00
108,235.00
108,235.00
89,328.75
89,328.75
69,033.75
69,033.75
47,508.75
47,508.75
587,065.00
227,065.00
607,065.00
217,850.00
612,850.00
207,975.00
627,975.00
197,265.00
637,265.00
185,055.00
655,055.00
171,895.00
666,895.00
157,663.75
682,663.75
142,307.50
697,307.50
125,935.00
715,935.00
108,235.00
733,235.00
89,328.75
749,328.75
69,033.75
769,033.75
47,508.75
1,592,508.75
8 160 000 00
234,000.00 227,065.00
8,621,065.00
4,121,300.00
elivery of 2/15/99
68,830.000
5.987651
8.457108
Call Call
No. Date
12,281,300.00
8,160,000.00
saga=.aaa=aaass
Calls Performed
cava==a=assess
First Last
Maturity Maturity
Called Called
1) 8/15/99 8/15/ 0 8/15/12
Micro -Mui Debt
234,000.00 227,065.00 8,621,065.00
Principal Call
Called Price
7,800,000.00 103.000
Call
Premium
234,000.00
7,800,000.00
Date: 01-14-1999 2 17:02:00 Filename: fay
234,000.00
Key: old
•
CITY OF FAYETTEVILLE
Water and Sewer Refunding Revenue Bonds, Series 1999
Schedule of Events
February
2
April
1
7;41.4
3
4
5
6
7
8
9
10
11
12
13
14
15
4K6t
t . '" coli/
iglr
18
19
20
21
22
23
24
25
26
27
L 28
16
March 31
17
18
April 7
19
March
2
April
2
3
4
5
6
7
8
I
2
I1
3
4
14
5
._}x'16.
17
t . '" coli/
i8(.
9
21
10
.v.;1',,_
11
6;<;
26
'r'•
igi
14
15
16
March 31
17
18
April 7
19
Kutak Rock
..-:1,
Distribute Preliminary Official Statement to investors.
21
22
23
,:,;
23?
25
Stephens
26
Commitment to underwrite Bonds.
27
28
29
30
April 24
1
March
May
2
3
2
3
4
5
6
7
8
9
10'
I1
12
13
14
"
._}x'16.
17
18
19
20
21
22
23
26
,45,.
26
27
28
29
30
Stephens
March 31
Final draft of Preliminary Official Statement distributed.
Kutak Rock
April 7
Print Preliminary Official Statement.
Kutak Rock
April 8
Distribute Preliminary Official Statement to investors.
Stephens
April 12
May
2
3
4
5
6
7
8
9
10
I1
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
"27.
28
29
30
31
Determination from rating agencies.
Stephens
March 31
Final draft of Preliminary Official Statement distributed.
Kutak Rock
1999 Date
Event
Responsible Parties
February 2
Authorization to retain underwriter.
City of Fayetteville
February 16
Authorization to retain bond counsel.
City of Fayetteville
February 17
Organizational meeting on plan of finance and time schedule.
All parties
March 1
Distribute first draft of financing documents.
Kutak Rock
March 10
Conference call for comments on financing documents.
All parties
March 15
Distribute black -lined financing documents.
Kutak Rock
March 16
Distribute financing documents to rating agencies.
Stephens
March 24
Conference call with comments on black -lined financing
documents.
All parties
March 30
Review Refunding Savings with the Fayetteville City Council.
Stephens
March 31
Determination from rating agencies.
Stephens
March 31
Final draft of Preliminary Official Statement distributed.
Kutak Rock
April 7
Print Preliminary Official Statement.
Kutak Rock
April 8
Distribute Preliminary Official Statement to investors.
Stephens
April 12
Pre -pricing meeting with the City.
Stephens
April 13
Offer bonds.
Stephens
April 15
Commitment to underwrite Bonds.
Stephens
April 20
Bond ordinance presented to the City.
Kutak Rock / Stephens
April 24
Publish bond ordinance.
Kutak Rock /
City of Fayetteville
May 27
Closing.
All parties
03/25/99