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Home My WebLink About43-03 RESOLUTIONRESOLUTION NO. 43-03 A RESOLUTION TO APPROVE A BOND UNDERWRITING AGREEMENT WITH STEPHEN'S INC FOR BOND UNDERWRITING SERVICES OF THE TOWN CENTER BOND ISSUE REFINANCING IF ADVISABLE WHEREAS, the City of Fayetteville Debt Committee selected Stephens, Inc. for the proposed underwriting of the Town Center Bond refinancing. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves the letter agreement with Stephens, Inc. (attached as Exhibit A) to engage Stephens, Inc. as underwriter for the proposed refinancing of the Town Center Bonds. • PASSED and APPROVED this the 1st day of April, 2003. v E. //IN • • • /. . •• • e• • k* • • ••• f 41;:t tie :41 • ; 4 0 7 "mr j •• \ft • k / • • .7 • ATTEST: By • <berMd.u, Ituato-° Sondra Smith, City Clerk APPROVED: By: DAN COODY, Mayor • • Stephens Inc Dennis R. Hunt Senior Vier President and Manager March 19, 2003 Honorable Dan Coody Mayor City of Fayetteville 113 Wcst Mountain Fayetteville, AR 72701 RE: Underwriting Services — City of Fayencvillc, Arkansas Hotel and Rcstaurant Gross Receipts Tax Refunding Bonds, Series 2003 Dear Mayor Coody: Stephens Inc. is pleased to provide underwriting services for the City of Fayetteville in connection with the above referenced refunding bond issue for the City. This letter is to serve as an Engagement Agreement betwecn the City of Fayeneville and Stephens Inc. for underwriting services. Our scope of services will be as submitted in our proposal to the City's RFP 2002-21. 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 financing alternatives. Once a structure is complete, we will then, based on the City's 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 refunding 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 1.00% 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 acceptable to the City, please execute the acceptance below. We look forward and appreciate the opportunity to work with the City on this refunding bond issue. Respectfully submitted, By: Accepted this 1 Sfday of per, zood3 Stephens Inc. / .......s.„, rMayor, City of Fayettevd Investment Bankers www.stephens corn 3425 North Futrall Drive Suite 201 Fayetteville, Arkansas 72703 479-718-7400 Fax 479-718-7490 800-205-8613 dhuntestephens.com • • • • NAME OF FILE: CROSS REFERENCE: Resolution No. 43-03 Document ........ .. _ ___ 1 04/01/03 Res. 43-03 2 03/18/03 Staff Review form w/Ex. A memo to Council re: Debt Management Program -Bond Underwriter Services letter to Steve Davis from Stephens, Inc., Dennis Hunt copy of letter agreement copy of Series 2003 Hotel Restaurant Gross Receipts Tax Bonds schedule of events, copy of debt service schedule copy of debt service comparison draft resolution 3 04/08/03 memo to Steve Davis NOTES: • • FAYETTPOILLE THE CITY CIE FAYETTEVILLE. ARKANSAS DEPARTMENTAL CORRESPONDENCE lb • To: Stephen Davis Finance & Internal Services Dir. From: Clarice Buffalohead-Pearman City Clerk Division Date: 4/8/03 Re: Res. 4343 Attached please find an executed copy of the above referenced resolution passed by the City Council April 1,2003 approving a bond underwriting agreement with Stephen's, Inc. regarding the Town Center bond refinancing. The original resolution with attached letter agreement will be microfilmed and filed in the city clerk's office. If anything else is needed please let the city clerk's office know. /cbp cc Nancy Smith, Internal Auditor XX AGENDA REQUEST 411 CONTRACT REVIEW GRANT REVIEW STAFF REVIEW FORM • • For the Fayetteville City Council Meeting of: April 1, 2003 Res gp /tad.3 95-63 / Sfiegel/5 .bue FROM: Stephen Davis Finance & Intennal Services IDht Finance & Internal Services Name Division Department ACTION REM:FIRM: Approval of a Bond Underwriting Agreement with Stephen's Inc for bond underwriting services in conjunction with the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds - Series 1998 (Town Center Bond Issue) Refunding. The cost of issuance will be deducted from the bond proceeds. COST TO CITY: $70,000 - estimated Cost of this request Program Category / Project Name Account Number Project Number $ Funds Used to Date Program / Project Category Name $ Remaining Balance Fund Name BUDGET REVIEW: Budgeted Item Budget Adjustment Attached Budget Manager Date CONTRACT/GRANT/LEASE REVIEW: Accounting Manager City Attorney Date Date Internal Auditor Date Purchasing Manager Date STAFF RECOMMENDATION: Staff recommends approval of underwriting agreement. Division Head Department Director Services Dir. Internal Date Date 3_19-03 Date Mayor Date 519-03 Date Cross Reference New Item: Yee No Previous Ord/Res#: Orig. Contract Date Orig. Contract Number Description Comments: Budget Manager 40 iloStaff Review Form - Page. 40 Meeting Date Reference Comments: Accounting Manager City Attorney Purchasing manager ADA Coordinator Internal Auditor Grants Coordinator FAYETTIVILLE DIE CITY OF FAYET1EVILLE. ARKANSAS DEPARTMENTAL CORRESPONDENCE • • TO: THROUGH: FROM: DATE: SUBJECT: Fayetteville City Council Dan Coody, Mayor Hugh Earnest, Chief Administrative Officer klStephen Davis, Finance & Internal Services Directors/I March 18, 2003 2003 Debt Management Program — Bond Underwriter Services for the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds — Series 1998 (Town Center Bond Issue) Refunding Background On November 7, 2002 the City of Fayetteville advertised and solicited requests for qualifications (RFQ) for Bond Counsel Services and solicited requests for proposals (RFP) for Underwriter Services and Leasing Services. The City of Fayetteville Debt Committee (established by Resolution 173-02) received the responses to the request for qualifications and request for proposals in January, 2003. The Debt Committee selected Gordon Wilboum of Kutak Rock as Bond Counsel, Dennis Hunt of Stephens, Inc and Crews and Associates as Bond Underwriter(s) and Bank of America (BOA) Leasing for leasing services. Agreements with each of these service providers will be developed and submitted to City Council for consideration and approval. Discussion A selection committee met and is proposing Stephens, Inc as the bond underwriter for the refunding of the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds — Series 1998 (Town Center Bond Issue). The City issucd the bonds to pay for a portion of the construction cost for the Fayetteville Town Center. Dennis Hunt of Stephens Inc. has monitored the tax backed bond market and the bond agreements included in the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds — Series 1998 (Town Center Bond Issue) to determine and propose a bond re -funding schedule that meets or exceeds the City policy for debt refunding/refinancings. The predicted net present benefit (NPB) of the Town Center Bond Issue refunding is approximately S333,000. Interest rates the City will pay on the current Town Center bond issue range 3.90% in 2004 to 4.8% for term bonds with a maturity date of October 1,2015. The current predicted market interest rates for a new bond issue are from 1.1% in 2004 to 3.85% in 2015. The re -funding of the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds — Series 1998 will provide the following benefits: K:\Steve DavisiDebt Financing \Town Center Bond Issuc_Bond Undervaitcr Services Council Mcmo.doc • Lower interest cost - the refunding is predicted to generate a net present benefit (NPB) of approximately S333,000. This NPB is due to lower interest rates currently available. • Pays more principal debt earlier than originally planned. • Remove the term bonds that are due and payable on or before October 1, 2015 and replace the term bonds with a definitive scheduled debt service payment. Recommendation Staff recommends approval of the Bond Underwriter agreement with Stephens Inc for the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds - Series 2003. K:\Stcvc Davis\Debt Financing \ Town Center Bond Issuc_Bond Underwriter Services Council Memo.doc • • • • Stephens Inc Dennis R. Hunt Senior Vice President and Manager March 11,2003 Mr. Steve Davis Finance and Internal Services Director City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 RECEIVED MAR 1 3 2003 CITY OF FAyert 'JJLLE MAYOR'S OFFICE Re: City of Fayetteville, Arkansas Hotel Restaurant Gross Receipts Tax Refunding Bonds, Series 2003 Dear Steve: Enclosed please find preliminary savings numbers in connection with the above referenced bond issue that we previously discussed I have also taken the liberty to visit with Gordon Wilboum and established a Preliminary Schedule of Events for your review. I would appreciate if you would review this information and if you have changes regarding the Schedule of Events, please feel free to contact me. Sincerely, Cc: Gordon Wilboum Investment Bankers www.stephens.coM 3425 North Futrall Drive Suite 201 Fayetteville, Arkansas 72703 479-718-7400 Fax 479-718-7490 800-205-8613 dhunt@stephens.com • • • • Stephens Inc. Dennis R. Hunt Senior Vice President and Manager March 19, 2003 Honorable Dan Coady Mayor City of Fayetteville 113 West Mountain Fayetteville, AR 72701 RE. Underwriting Services — City of Fayetteville, Arkansas Hotel and Rcstaurant Gross Receipts Tax Refunding Bonds, Series 2003 Dear Mayor Coody: Stephens Inc. is pleased to provide underwriting services for the City of Fayetteville in connection with the above referenced refunding bond issue for the City. 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 RFP 2002-21. As indicated in our proposal, we will provide the City with an analysis of financing options, debt schedules, and prcparc a report on pricing the bonds. In addition, we will bc available to make presentations to review and explain financing alternatives. Once a structure is complete, we will then, based on thc City's 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. h 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 refunding 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, thc underwriting fee will not exceed 1.00% 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 acceptable to thc City, please execute thc acceptance below. We look forward and appreciate the opportunity to work with the City on this refiuiding bond issue. Accepted this day of Respectfully submitted, By: Stephens Inc. By: Mayor, City of Fayetteville Investment Bankers www.stephens.com 3425 North Futrall Drive Suite 201 Fayetteville, Arkansas 72703 479-718-7400 Fax 479-718-7490 800-205-8613 dhuntastephens.com Stephens Inc. CITY OF FAYETTEVILLE, ARKANSAS Hotel Restaurant Gross Receipts Tax Bonds Series 2003 SCHEDULE OF EVENTS March 11,2003 . April 2003 June 2003 1 _•. _ 3 4 5 6 7 10 11 12 13 _ _ 15 - 17 _._ 19 15 20 22 23 24 3: ' 26 27 28 29 30 24 25 Ma 2003 June 2003 1 1 2 4 3 4 7 8 4 1 0 ...._ 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 30 31 May 23 Final Preliminary Official Statement to the printer Kutak Stephens Ma 2003 Event Responsible Parties 1 2 1 2 3 4 5 7 7 9 10 11 12 _ 13 14 15 17 18 19 20 21 22 24 25 26 - 28 29 30 31 29 30 31 May 23 Final Preliminary Official Statement to the printer Kutak Stephens July 2003 Event Responsible Parties 1 2 3 4 5 6 7 8 9 April 14 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 1-" 28 29 30 31 May 23 Final Preliminary Official Statement to the printer 2003 Date Event Responsible Parties April 2 Organizational Meeting All Parties April 8 Discuss proposed financing with City Council City / Stephens April 9 Prepare and distribute first draft of financing documents Kutak Rock April 14 Comments due on financing documents All Pax -ties April 16 Blacklined financing documents distributed Kutak Rock April 21 Comments due on blacklined financing documents All Parties April 25 Submit Financing Documents to Insurers Stephens May 6 Bond Ordinance approved by City Council City / Kutak Stephens Rock / May 8 Publish Bond Ordinance City/ Kutak Rock May 16 Obtain Insurance Commitment Stephens May 23 Final Preliminary Official Statement to the printer Kutak Stephens Rock / May 27 Distribute POS to Investors Stephens June 2 Pre -pricing meeting with the City Stephens June 3 Offer bonds Stephens • • Stephens Inc. June 5 Coimnit to underwrite Stephens June 5 City Executes BPA City / Stephens June 5 Redemption Notice Distributed Kutak Rock / Trustee June 6 Final draft of the Official Statement distributed Kutak Rock June 9 Cormnents due on Official Statement All Parties June 11 Print final Official Statements Kutak Rock / Stephens July 10 Closing of issue All Parties • • • • City of Fayetteville, Arkansas Hotel and Restaurant Gross Recepits Tax Refunding Bonds Senes 2003 SOURCES & USES Dated 07/01/2003 Delivered 07/01/2003 SOURCES OF FUNDS Par Amount of Bonds Transfers from Prior Issue Debt Service Funds Transfers from Prior Issue DSR Funds TOTAL SOURCES USES OF FUNDS Costs of Issuance Gross Bond Insurance Premium ( 50.0 bp) Surety Bond Deposit to Current Refunding Fund Rounding Amount TOTAL USES 36,305,000.00 113,39562 495,100.00 56,913,495.62 115,000.00 39,138.64 7,881.25 6.747.455.93 4,019.80 36,913.495.62 Stephens Inc Public Finance File = FAYETT-1.SF-Series 2003- SINGLE PURPOSE 3/11/2003 4:01 PM • •14 • • YIELD STATISTICS Bond Year Dollars $46 731 25 Average Lite 7.412 Years Average Coupon 3.2584793% Net Interest Cost (NIC) 3.2584793% True Interest Cost (TIC) 3.2306980% Bond Vicki for Arbitrage Purposes 3.3466401% All Inclusive Cost (AIC) 3.6351914% IRS FORM 8038 Net Interest Cost 3.2584793% Weighted Average Maturity 7.412 Years Stephens Inc Public Finance File = FAYETT-1.SF-Series 2003- SINGLE PURPOSE 3111/2003 4:01 PM City of Fayetteville, Arkansas Hotel and Restaurant Gross Recepits Tax Refunding Bonds Series 2003 DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I 10/01/2003 - - 45,618.13 45,618.13 10/01/2004 115,000.00 1.100% 182,472.50 297472.50 10/0112005 500,000.00 1.300% 181,207 50 681,207.50 10/01/2006 505,000.00 1.650% 174,707.50 679,707.50 10/01/2007 515,000.00 2.100% 166,375.00 681,375.00 10/01/2008 525,000.00 2.450% 155.560.00 680,560.00 10/01/2009 540,000.00 2.800% 142,697.50 682,697.50 10/01/2010 555,000.00 3100% 127.577.50 682,577.50 10/01/2011 570.000.00 3.350% 110372.50 680 372 50 10/01/2012 585,000.00 3.500% 91,277.50 676,277.50 10/01/2013 610,1300.00 3.600% 70.802.50 680,802.50 10/01/2014 630,000.00 3.750% 48 642 50 678,642.50 10/01/2015 655,000.00 3.8509 25,217.50 680,217.50 Total 6,305000.00 - 1,522.728.13 7,827.728.13 YIELD STATISTICS Bond Year Dollars $46 731 25 Average Lite 7.412 Years Average Coupon 3.2584793% Net Interest Cost (NIC) 3.2584793% True Interest Cost (TIC) 3.2306980% Bond Vicki for Arbitrage Purposes 3.3466401% All Inclusive Cost (AIC) 3.6351914% IRS FORM 8038 Net Interest Cost 3.2584793% Weighted Average Maturity 7.412 Years Stephens Inc Public Finance File = FAYETT-1.SF-Series 2003- SINGLE PURPOSE 3111/2003 4:01 PM • a • • • • • • PRESENT VALUE ANALYSIS SUMMARY (GROSS TO GROSS) Gross PV Debt Service Savings 938,375.31 Transfers from Prior Issue Debt Service Fund (113.395.62) Transfers from Prior Issue DSR Fund (495,100.00) Contingency or Rounding Amount 4 019 80 NET PRESENT VALUE BENEFIT $333.899.49 NET PV BENEFIT/ $6.620,000 REFUNDED PRINCIPAL 5.044% NET PV BENEFIT / $6,305.000 REFUNDING PRINCIPAL 5.296% Stephens Inc Public Finance File = FAYETT-1.SF-Series 2003- SINGLE PURPOSE 3/11/2003 4:01 PM City of Fayetteville, Arkansas Hotel and Restaurant Gross Recepits Tax Refunding Bonds Senes 2003 GROSS DEBT SERVICE COMPARISON Date Principal Coupon Interest NEW D/S OLD D/S Savings 10/01/2003 - - 45,618.13 45,618.13 226,79125 181,173.12 10/01/2004 115,000.00 1.100% 182 472 50 297 472 50 375502.50 78,030.00 10/01/2005 500,000.00 1.300% 181 207 50 681.207.50 762,187.50 80,980.00 10/01/2006 505,000.00 1.650% 174,707.50 679.707 50 758,425.00 78,717.50 10/01/2007 515,000.00 2.100% 166,375.00 681,375.00 758,825.00 77,450.00 10/01/2068 525,000.00 2.450% 155,560.00 680,560.00 762,660.00 82,100.00 10/01/2009 540,000.00 2.800% 142,697.50 682.697.50 760,190.00 77,492.50 10/0112010 555000.00 3.100% 127,577.50 681577.50 761,325.00 78 747 50 10/01/2011 570,000.00 3.350% 110,372.50 680,372.50 760,805.00 80,432.50 10/01/2012 585,000.00 3.500% 91,277.50 676,277.50 758580.00 82,302.50 10/01/2013 610,000.00 3.600% 70,802.50 680.802.50 759,600.00 78,797.50 10/01/2014 630,000.00 3.750% 48,842.50 678,842.50 757,920.00 79 077 50 10/01/2015 655,000.00 3.850% 25.217 50 680 217 50 759,800.00 79,582.50 Total 6,305000.00 1,522,728.13 7,827,728.13 8,962.611.25 1,134,883.12 PRESENT VALUE ANALYSIS SUMMARY (GROSS TO GROSS) Gross PV Debt Service Savings 938,375.31 Transfers from Prior Issue Debt Service Fund (113.395.62) Transfers from Prior Issue DSR Fund (495,100.00) Contingency or Rounding Amount 4 019 80 NET PRESENT VALUE BENEFIT $333.899.49 NET PV BENEFIT/ $6.620,000 REFUNDED PRINCIPAL 5.044% NET PV BENEFIT / $6,305.000 REFUNDING PRINCIPAL 5.296% Stephens Inc Public Finance File = FAYETT-1.SF-Series 2003- SINGLE PURPOSE 3/11/2003 4:01 PM • III • • RESOLUTION NO. A RESOLUTION TO APPROVE A BOND UNDERWRITING AGREEMENT WITH STEPHEN'S INC. FOR BOND UNDERWRITING SERVICES OF THE TOWN CENTER BOND ISSUE REFINANCING IF ADVISABLE WHEREAS, the City of Fayetteville Debt Committee selected Stephens, Inc. for the proposed underwriting of the Town Center Bond refinancing. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves the letter agreement with Stephens, Inc. (attached as Exhibit A) to engage Stephens, Inc. as underwriter for the proposed refinancing of the Town Center Bonds. PASSED and APPROVED this the151 day of April, 2003 APPROVED: DR IS° By: DAN COODY, Mayor ATTEST. By: Sondra Smith, City Clerk