Loading...
HomeMy WebLinkAbout22-99 RESOLUTION• • RESOLUTION NO. 2 2- 9 9 A RESOLUTION AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A LETTER AGREEMENT WITH KUTAK ROCK TO PERFORM BOND COUNSEL SERVICES FOR THE PROPOSED ISSUANCE OF WATER AND SEWER REFUNDING BONDS, AT A COST NOT -TO -EXCEED $35,000, PLUS OUT OF POCKET EXPENSES TO BE PAID FROM BOND PROCEEDS; AND TO AUTHORIZE THE BUDGET COORDINATOR TO EXECUTE ANY BUDGET ADJUSTMENT NECESSARY TO IMPLEMENT THIS REFUNDING. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Lection 1 That the City Council hereby authorizes the Mayor and City Clerk to execute a letter agreement with Kutak Rock to perform bond counsel services, for the proposed issuance of water and sewer refunding bonds, at a cost not -to -exceed $35,000, plus out of pocket expenses to be paid from bond proceeds; and to authorize the Budget Coordinator to execute any budget adjustment necessary to implement this refunding. A copy of the letter agreement is attached hereto marked Exhibit "A" and made a part hereof. .,, F`IE rASsfl AND APPROVED this 16t11_ day of February 1999. ,, / . r R APPROVED• (l !"1 ►t' s , 0 • , , �' • i Fre.d Hanna, Mayor v. u �` ATTEST: By:$iv Heather Woodruff, City Cle KUTAK ROCK SUITE 1100 425 WEST CAPITOL AVENUE LITTLE ROCK. ARKANSAS 72201.3409 501-975-3000 FACSIMILE 801-978.3001 www. kutakrock.com January 25, 1999 VIA E-MAIL ANI) FIRST-CLASS MAIL 1 lonorable Fred Hanna City of Fayetteville, Arkansas 113 W. Mountain Fayetteville, AR 72701 City of Fayetteville, Arkansas Water and Sewer System Refunding Revenue Bonds Series 1999 Dear Mayor Hanna: ATLANTA OE RIVER TY NEW YORK NEWPORT BEACH OKLAHOMA CITY OMAHA PHOENIX PITTSBURGH WASHINGTON The purpose of this engagement letter is to set forth certain matters concerning the services we will perform as bond counsel to the City of Fayetteville, Arkansas (the "City") in connection with the proposed issuance of the referenced bonds (the "Bonds"). We understand that the Bonds are being issued for the purpose of refunding the City's outstanding Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1992 (the "1992 Bonds"), and will be secured by and payable solely from the City's net water and sewer revenues. We further understand that the Bonds will be purchased in a negotiated sale by Stephens Inc. (the "Underwriter") during the late spring or early summer of 1999. SCOPE OF ENGAGEMENT In this engagement, we expect to perform the following duties: (1) Subject to the completion of proceedings to our satisfaction, render our legal opinion (the "Bond Opinion") regarding the validity and binding effect of the Bonds, the source of payment and security for the Bonds, and the excludability of interest on the Bonds from gross income for federal and Arkansas income tax purposes. (2) Prepare and review documents and certificates necessary or appropriate to the authorization, issuance and delivery of the Bonds, coordinate the authorization and execution of such documents and certificates, and review enabling legislation. (3) Prepare and review documents in connection with the defeasance and refunding of the 1992 Bonds. KUTAK ROCK Honorable Fred Hanna City of Fayetteville, Arkansas January 25, 1998 Page 2 (4) Assist the City and the Underwriter in seeking from other governmental authorities such approvals, permissions and exemptions as we determine are necessary or appropriate in connection with the authorization, issuance and delivery of the Bond. (5) (6) (7) Opinion. (8) Assist the City in presenting information to bond rating organizations and providers of credit enhancement relating to legal issues affecting the issuance of the bonds. Review legal issues relating to the structure of the Bond issue. Review certified proceedings. Undertake such additional duties as are necessary to render our Bond (9) Draft the continuing disclosure undertaking of the City. In addition to the customary duties of Bond Counsel set forth above, we understand that we may additionally he asked to (i) draft the Bond Purchase Agreement between the City and the Underwriter with respect to the Bonds and (ii) assist the City in preparing the official statement (the "Official Statement") with respect to the Bonds, and, subject to the satisfactory completion of our review, provide to the City written advice that, in the course of our participation, no information has come to our attention which leads us to believe that the Official Statement, as of its date (except for the financial statements, other statistical data, feasibility reports and statements of trends and forecasts, and information concerning any credit enhancer and DTC, contained in the Official Statement and its appendices, as to which we will express no belief), contains any untrue statement of material fact or omits to state any material fact necessary to make the statements in the Official Statement, in light of the circumstances under which they were, not misleading. Although it is permissible for Bond Counsel to undertake the activities described in this paragraph, they are typically performed by counsel to the Underwriter. Our Bond Opinion will be addressed to the City and will he delivered by us on the date the Bonds are exchanged for their purchase price (the "Closing"). The Bond Opinion will be based on facts and law existing as of its date. In rendering our Bond Opinion, we will rely upon the certified proceedings and other certifications of public officials and other persons furnished to us without undertaking to verify the same by independent investigation, and we will assume continuing compliance by the City with applicable laws relating to the Bonds. During the course of this engagement, we will rely on the City to provide us with complete and timely information on all developments pertaining to any aspect of the Bonds and their security. KUTAK ROCK Honorable Fred Hanna City of Fayetteville, Arkansas January 25, 1998 Page 3 Our duties in this engagement are limited to those expressly set forth above. Among other things, our duties do not include: (a) Preparing requests for tax rulings from the Internal Revenue Service, or no action letters from the Securities and Exchange Commission. (b) Drafting state constitutional or legislative amendments. (c) Pursuing test cases or other litigation. (d) Making any investigation or expressing any view as to the creditworthiness of the City or the Bonds. (e) Representing the City in Internal Revenue Service examinations or inquiries, or Securities and Exchange Commission investigations. (f) After Closing, providing continuing advice to the City or any other party concerning any actions necessary to assure that interest paid on the Bonds continue to be excludable for federal income tax purposes (e.g, our engagement does not include rebate calculations for the Bonds). (g) Addressing any other matter not specifically set forth above that is not required to render our Bond Opinion. ATTORNEY-CLIENT RELATIONSHIP Upon execution of this engagement letter, the City will be our client and an attorney- client relationship will exist between us. We assume that all other parties understand that in this transaction we represent only the City, we are not counsel to any other party, and we are not acting as an intermediary among the parties. Our services as bond counsel are limited to those contracted for herein, and the City's execution of this engagement letter will constitute an acknowledgment of those limitations. Our representation of the City will not affect, however, our responsibility to render an objective Bond Opinion. Our representation of the City and the attorney-client relationship created by this engagement letter will be concluded upon issuance of the Bonds. Nevertheless, subsequent to the Closing, we will prepare and provide to the participants in the transaction a transcript of the proceedings pertaining to the Bonds. CONFLICTS During the course of the Bond financing, our firm will likely be representing the Underwriter in separate unrelated matters. We do not believe such representation, if it occurs, will adversely affect our ability to represent you as provided in this letter because such matters KUTAK ROCK Honorable Fred Hanna City of Fayetteville, Arkansas January 25, 1998 Page 4 will be sufficiently different from the issuance of the Bonds so as to make such representations not adverse to our representation of you. Execution of this letter will signify the City's consent to our representation of the Underwriter consistent with the circumstances described in this paragraph. FEES Based upon: (i) our current understanding of the terms, structure, size and schedule of the financing represented by the Bonds; (ii) the duties we will undertake pursuant to this engagement letter; (iii) the time we anticipate devoting to the financing; and (iv) the responsibilities we will assume in connection therewith, we propose a bond counsel fee of $30,000. In the event we are asked to undertake additional duties traditionally performed by Underwriter's counsel (including the preparation of the Bond Purchase Agreement and Official Statement), we propose an additional fee of $5,000. In addition, we will expect to be reimbursed for all client charges made or incurred on your behalf, such as travel costs, photocopying, deliveries, long distance telephone charges, fax charges, filing fees, computer- assisted research and other out-of-pocket expenses. We estimate that such charges will be in the range of $1,000 to $2,500. We understand and agree that our fees will be paid at the time of Closing. If the financing is not consummated, we understand that we will not be paid for time expended on your behalf but will be reimbursed for client charges made or incurred on your behalf. If the foregoing terms are acceptable to you, please so indicate by returning the enclosed copy of this engagement letter signed by an appropriate officer, retaining the original for your files. We look forward to working with you. Accepted and Approved: CITY OF AYETTEVILLE, ARKANSAS By:y Title: 4 /l9.Qye,e Dated: .zh, jiff * Authorized by cc: Dennis Hunt, Stephens Inc. No. KUTAK ROCK adopted , 1999 STAFF REVIEW FORM W/S REFUND BOND I. B.1 /45 q�_q9 xxxx AGENDA REQUEST For the Fayetteville City Council meeting of February 16. 1999 FROM: Brian Swain Adm. Services Dir. Adm Services Name Division Department ACTION REQUIRED: WATER AND SEWER REFUNDING BONDS: A resolution approving a letter agreement with Kutak Rock to perform bond counsel services in connection with the proposed issuance of water and sewer refunding bonds. The cost is not -to -exceed $351000, plus out-of-pocket expenses to be paid from bond proceeds. Additionally, authorize the Budget Coordinator to execute any budget COST TO CITY: adjustments necessary to implement this refunding. S 37.500 est. S Cost of this Request Account Number Project Number Category/Project Budget Category/Project Name S Funds Used To Date S Program Name Remaining Balance Fund BIIIjGET�EW (\\'/J/IJ Apt Budge Coordinator Budgeted Item Budget Adjustment Attached Administrative Services Director CONTRACT/GRANT/LEASE REVIEW: '77vtt E 417LPt Accounti g M nager C'ty Attorney QU LA9. Purchasing Officer GRANTING AGENCY: TM -9g Date ADA Coordinator Date 12v l L4 cull /e- r-97 Date Ia9 L7? Date ernal Auditor Date STAFF RECOMMENDATION: Staff recommends approval of the agreement. Division Head rtm ector 1-27-99 Date Date L1� Admi '�-trativ- Services Director ate Mayor /4y Date Cross Reference New Item: Yes No Prev Ord/Res #: Orig Contract Date: W/S REFUND BOND TEVILLE THE CITY OF FAYETTEVILLE. ARKANSAS TO: Fayetteville City Council THRU: Fred B. Hanna, Mayor FROM: Kevin D. Crosson, Administrative Services Director DATE: January 27, 1999 RE: Bond Counsel Services Selection - Proposed Water & Sewer Bond Refunding (Series 1992) On January 11, 1999, the City of Fayetteville convened a professional selection committee for the purpose of selecting a firm to provide bond counsel 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 Bob Davis Alderman Brian Swain Asst. to the Adm. Services Director Charles Venable Public Works Director In addition, Peggy Vice, Purchasing Manager, and LaGayle McCarty, Assistant City Attorney served on the committee as a non-voting advisory members. The committee selected from firms that submitted responses to the City's Request for Qualifications (RFQ) #98-10. A vote was taken by the committee in accordance with the City's purchasing policy regarding professional service and Kutak Rock was selected as the bond counsel on this proposed issue. A copy of Kutak Rock's response to the RFQ is on file in the Purchasing Office. The process for negotiating a contractual agreement that conformed with the RFQ was initiated. Based on those negotiations, the attached Letter of Engagement was drafted. The proposed agreement conforms to the City's RFQ and is for a fee of 530,000. An additional $5,000 will he paid, if the underwriter on the issue does not hire underwriter's bond counsel. Additional out-of- pocket expenses not expected to exceed $2,500 would also be reimbursed. 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 501 575-8257 • W/S REFUND BOND I.B.3 Based on a preliminary review of the existing 1992 bond issue, it would appear that the City can save over $500,000 by refinancing the bonds including issuance costs and premiums paid for early retirement of the bonds. The refunding is of benefit to the City in two ways. First, the City is simply able to save interest expense on the bonds. Second, the savings in interest expense and lower annual debt service payments provides the City with additional flexibility to issue future water and sewer bonds as the need may arise. The City's underwriter will be assisting with more definitive financial analysis. If a determination is made at some point 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 REFUND BOND • I.B.4 KUTAK ROCK SUITE 1100 425 WEST CAPITOL AVENUE LITTLE ROCK. ARKANSAS 72201-3409 501.975-3000 FACSIMILE 501-975.3001 www.kutakrock.com January 25, 1999 VIA E-MAIL AND FIRST-CLASS MAIL Honorable Fred Hanna City of Fayetteville, Arkansas 113 W. Mountain Fayetteville, AR 72701 City of Fayetteville, Arkansas Water and Sewer System Refunding Revenue Bonds Series 1999 Dear Mayor Hanna: ATLANTA O[NV611 K ANSAS CITY NEW YORK NEWPORT BEACH OKLAHOMA CITY OMAHA • HOENIK PITTSBURGH WASHINGTON The purpose of this engagement letter is to set forth certain matters concerning the services we will perform as bond counsel to the City of Fayetteville, Arkansas (the "City") in connection with the proposed issuance of the referenced bonds (the "Bonds"). We understand that the Bonds are being issued for the purpose of refunding the City's outstanding Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1992 (the "1992 Bonds"), and will be secured by and payable solely from the City's net water and sewer revenues. We further understand that the Bonds will be purchased in a negotiated sale by Stephens Inc. (the "Underwriter") during the late spring or early summer of 1999. SCOPE OF ENGAGEMENT In this engagement, we expect to perform the following duties: (1) Subject to the completion of proceedings to our satisfaction, render our legal opinion (the "Bond Opinion") regarding the validity and binding effect of the Bonds, the source of payment and security for the Bonds, and the excludability of interest on the Bonds from gross income for federal and Arkansas income tax purposes. (2) Prepare and review documents and certificates necessary or appropriate to the authorization, issuance and delivery of the Bonds, coordinate the authorization and execution of such documents and certificates, and review enabling legislation. (3) Prepare and review documents in connection with the defeasance and refunding of the 1992 Bonds. N/S REFUND BOND I.B.5 KUTAK ROCK Honorable Fred Hanna City of Fayetteville, Arkansas January 25, 1998 Page 2 (4) Assist the City and the Underwriter in seeking from other governmental authorities such approvals, permissions and exemptions as we determine are necessary or appropriate in connection with the authorization, issuance and delivery of the Bond. (5) Review legal issues relating to the structure of the Bond issue. (6) Review certified proceedings. (7) Undertake such additional duties as are necessary to render our Bond Opinion. (8) Assist the City in presenting information to bond rating organizations and providers of credit enhancement relating to legal issues affecting the issuance of the bonds. (9) Draft the continuing disclosure undertaking of the City. In addition to the customary duties of Bond Counsel set forth above, we understand that we may additionally be asked to (i) draft the Bond Purchase Agreement between the City and the Underwriter with respect to the Bonds and (ii) assist the City in preparing the official statement (the "Official Statement") with respect to the Bonds, and, subject to the satisfactory completion of our review, provide to the City written advice that, in the course of our participation, no information has come to our attention which leads us to believe that the Official Statement, as of its date (except for the financial statements, other statistical data, feasibility reports and statements of trends and forecasts, and information concerning any credit enhancer and DTC, contained in the Official Statement and its appendices, as to which we will express no belief), contains any untrue statement of material fact or omits to state any material fact necessary to make the statements in the Official Statement, in Tight of the circumstances under which they were, not misleading. Although it is permissible for Bond Counsel to undertake the activities described in this paragraph, they are typically performed by counsel to the Underwriter. Our Bond Opinion will be addressed to the City and will be delivered by us on the date the Bonds are exchanged for their purchase price (the "Closing"). The Bond Opinion will be based on facts and law existing as of its date. In rendering our Bond Opinion, we will rely upon the certified proceedings and other certifications of public officials and other persons furnished to us without undertaking to verify the same by independent investigation, and we will assume continuing compliance by the City with applicable laws relating to the Bonds. During the course of this engagement, we will rely on the City to provide us with complete and timely information on all developments pertaining to any aspect of the Bonds and their security. W/S REFUND BOND 1.B.6 KUTAK ROCK Honorable Fred Hanna City of Fayetteville, Arkansas January 25, 1998 Page 3 Our duties in this engagement are limited to those expressly set forth above. Among other things, our duties do not include: (a) Preparing requests for tax rulings from the Internal Revenue Service, or no action letters from the Securities and Exchange Commission. (b) Drafting state constitutional or legislative amendments. (c) Pursuing test cases or other litigation. (d) Making any investigation or expressing any view as to the creditworthiness of the City or the Bonds. (e) Representing the City in Internal Revenue Service examinations or inquiries, or Securities and Exchange Commission investigations. (0 After Closing, providing continuing advice to the City or any other party concerning any actions necessary to assure that interest paid on the Bonds continue to be excludable for federal income tax purposes (e.g, our engagement does not include rebate calculations for the Bonds). (g) Addressing any other matter not specifically set forth above that is not required to render our Bond Opinion. ATTORNEY-CLIENT RELATIONSHIP Upon execution of this engagement letter, the City will be our client and an attorney- client relationship will exist between us. We assume that all other parties understand that in this transaction we represent only the City, we are not counsel to any other party, and we are not acting as an intermediary among the parties. Our services as bond counsel are limited to those contracted for herein, and the City's execution of this engagement letter will constitute an acknowledgment of those limitations. Our representation of the City will not affect, however, our responsibility to render an objective Bond Opinion. Our representation of the City and the attorney-client relationship created by this engagement letter will be concluded upon issuance of the Bonds. Nevertheless, subsequent to the Closing, we will prepare and provide to the participants in the transaction a transcript of the proceedings pertaining to the Bonds. CONFLICTS During the course of the Bond financing, our firm will likely be representing the Underwriter in separate unrelated matters. We do not believe such representation, if it occurs, will adversely affect our ability to represent you as provided in this letter because such matters • KUTAK ROCK Honorable Fred Hanna City of Fayetteville, Arkansas January 25, 1998 Page 4 W/S REFUND BOND I.B.7 will be sufficiently different from the issuance of the Bonds so as to make such representations not adverse to our representation of you. Execution of this letter will signify the City's consent to our representation of the Underwriter consistent with the circumstances described in this paragraph. FEES Based upon: (i) our current understanding of the terms, structure, size and schedule of the financing represented by the Bonds; (ii) the duties we will undertake pursuant to this engagement letter; (iii) the time we anticipate devoting to the financing; and (iv) the responsibilities we will assume in connection therewith, we propose a bond counsel fee of $30,000. In the event we are asked to undertake additional duties traditionally performed by Underwriter's counsel (including the preparation of the Bond Purchase Agreement and Official Statement), we propose an additional fee of $5,000. In addition, we will expect to be reimbursed for all client charges made or incurred on your behalf, such as travel costs, photocopying, deliveries, long distance telephone charges, fax charges, filing fees, computer- assisted research and other out-of-pocket expenses. We estimate that such charges will be in the range of $1,000 to $2,500. We understand and agree that our fees will be paid at the time of Closing. If the financing is not consummated, we understand that we will not be paid for time expended on your behalf but will be reimbursed for client charges made or incurred on your behalf. If the foregoing terms are acceptable to you, please so indicate by returning the enclosed copy of this engagement letter signed by an appropriate officer, retaining the original for your files. We look forward to working with you. Accepted and Approved: CITY OF FAYETTEVILLE, ARKANSAS By: Title: Dated: Authorized by No. adopted , 1999 cc: Dennis Hunt, Stephens Inc. FAYETTEVILLE THE CITY OF FAYETTEVILLE. ARKANSAS DEPARTMENTAL CORRESPONDENCE To: Brain Swain, Admin. Assistant From: Heather Woodruff, City Clerk Date: February 19, 1999 Attached is a copy of the resolution and contract with Kutak Rock authorizing bond council services. 1 am also returning one original contract for you to distribute. The original will be microfilmed and filed with the City Clerk. cc. Steve Davis, Budget Yolanda Fields, Internal Auditor File