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HomeMy WebLinkAbout211-04 RESOLUTIONRESOLUTION NO. 211-04
A RESOLUTION ACCEPTING CREWS AND ASSOCIATES
AS BOND UNDERWRITER FOR ANY TAX INCREMENT
FINANCING BONDS ISSUED THROUGH DECEMBER 31, 2005
WHEREAS, after soliciting requests for proposals, the City of Fayetteville Debt
Committee selected Crews and Associates in March 2003 as a bond underwriter if said
proposed bond was within their expertise; and
WHEREAS, Crews and Associates has substantial state-wide experience in TIF
bonds authorized by the recently passed Amendment 78 and state statutes.
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 selection of and accepts Crews and Associates as bond underwriter for any
tax increment financing bonds issued through December 31, 2005.
PASSED and APPROVED this 215t day of December, 2004.
ATTEST:
By:
zusizsd
SONDRA SMITH, 1ty Clerk
By
APPROILED.
DAN COODY, Mayor
NAME OF FILE:
CROSS REFERENCE:
Item #
Date
•
Resolution No. 211-04
Document
e
1
12/02/04
memo to mayor & City Council
2
draft resolution
3
copy of Crews & Associates letter
4
copy of
Investment
Banking Fee proposal
5
Staff Review Form
6
memo to Steve Davis
7
8
9
10
11
12
13
14
15
16
NOTES:
FAYETTEfILLE
THE CITY OF FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
•
,e6S
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&i s undirwriter
TO: Mayor Coody and Fayetteville City Council
FROM: Stephen Davis, Finance & [menial Services Directot7
DATE: DL Lc nbcr 2, 2004
SUBJECT: Bond Underwriter Services — Highway 71 East Square
Redevelopment District
Recommendation
Staff recommends approval (tithe Bond Underwriter agccmcnt with Crews and Associates for the
City of Fayetteville, Arkansas Highway 71 East Square Redevelopment District — Series 2004.
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
Bunt of Stephens, Inc and Crews and Associates as Bond Undenvriter(s) and Bank of America
(BOA) Leasing for leasing services. Agreements with each ofthesc service providers have now been
developed and submitted to City Council for consideration and approval.
This agreement represents the last ofthc series and is presented at this time because the Highway 71
East Square Redevelopment District was fomicd earlier this year and is now ready to issue the first
series of bonds to fund improvements identified in the project plan.
Discussion
Fhe selection committee met, during March 2003, and selected Crews and Associates as an
underwriter thr bond issues that the City envisioned over the next few years Crews and Associates,
in the opinion ofthc selection committee, were selected for their experience in developing financing
packages for TIF districts around the country.
Budget Impact
Crews and Associates fees will be paid from bond proceeds. The Highway 71 East Square
Redevelopment District bonds will be repaid from mil lage tax rwun t. growth on property located
within the redevelopment district.
1:\Debt Financing\TIfEast Squ; re_BonJ Underwriter Services Council Memo.doc
• •
RESOLUTION NO.
A RESOLUTION ACCEPTING CREWS AND ASSOCIATES
AS BOND UNDERWRITER FOR ANY TAX INCREMENT
FINANCING BONDS ISSUED THROUGH DECEMBER 31, 2005
WHEREAS, after soliciting requests for proposals, the City of Fayetteville Debt
Committee selected Crews and Associates in March 2003 as a bond underwriter if said
proposed bond was within their expertise; and
WHEREAS, Crews and Associates has substantial state-wide experience in TIF
bonds authorized by the recently passed Amendment 78 and state statutes.
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 selection of and accepts Crews and Associates as bond underwriter for any
tax increment financing bonds issued through December 31, 2005.
PASSED and APPROVED this 215' day of December, 2004.
ATTEST:
By:
SONDRA SMITH, City Clerk
APPROVED:
By: O
DAN COODY, Mayor
• •
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Crews&Associates
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E Member SIPC
,
December 6, 2004
Mr. Steve Davis
Finance and Internal Services Director
113 West Mountain Street
Fayetteville, Ar 72701
Re: Fayetteville Mountain Inn TIF Project
Dear Steve,
As per our recent conversation regarding our services as Financial Advisor /
Underwriter for the above referenced project, Crews & Associates was retained
through the City's RFP process in 2003 to being qualified to act in this capacity for
any and all City of Fayetteville financing projects. Having been retained in the same
capacity for the three other major TIF projects currently in Arkansas, Rogers,
Jonesboro and North Little Rock is a direct result of our experience and abilities to
deliver the most effective financing package available.
As we discussed early in the process, and as 1 confirmed to the Council last week,
Crews & Associates is not charging an advisory fee in assisting in implementing this
TIF project. Crews & Associates would act as undenvriter for the TIF bonds only
when we all agree as to the viability and fiscal effectiveness of the project.
If you have any questions, please feel free to call me.
Respectfully submitted
Robert D. Wright III, Vice Preside
Crews & Associates, Inc.
INVESTMENT BANKING FEE PROPOSAL
The City of Fayetteville
Management Fee $ 2.13 / $1000
Average Takedown $ 4.65 / $1000
Underwriters' Expenses $ 1.12 / $1000
r
TOTAL — UNDERWRITER SPREAD
$ 7.90/ $1000 Gross Spread
ExperlisesBreakdovnirolina
own
Clearance
Computer
Travel
Syndication
Advertising
U/W Printing
Transaction Fees (MSRB, PSA, etc.)
Freight & Communications
Closing Expenses
Underwriter's Counsel Cost*
Other (please specify)
((Mmunum not.to. be exceeded) » .'
$ 0.050 / $1000
$ 0.000 /$1000
$ 0.000 /$1000
$ 0.025 / $1000
$ 0.000 / $1000
$ 0.000 / $1000
$ 0.100/$1000
$ 0.000 / $1000
$ 0.045 / $1000
$ 0.900 / $1000
$ 0.000 / $1000
TOTAL $ 1.120 / $1000
*Crews & Associates will work with the selected Bond Counsel on a transaction by transaction basis to
determine the level of participation required, if any, by a separate Underwriter's Counsel. M a result, this
fee will be negotiated per transaction.
*This fee proposal assumes an Insured, AAA rated financing and is subject to negotiation.
Ciews&Associates
NEST
4erOa Fru Ss:u" y Bancorp
•
Services - -----
/n the course of our engagement, Crews & Associates and Arvest will work closely with the with the officials
and all members of the financing team to ensure that all aspects of the proposed financing are handled
efficiently. Our bankers are prepared to coordinate all aspects of the financing in a manner that accomplishes the
goals of the organization under the most efficient terms and conditions. We will initiate this process by listening
to your goals and then developing a plan. To facilitate a successful financing, the finance team will:
► Provide advice on market conditions and timing of sale
Since our sales force and our bankers interact with investors and issuers on a daily basis, part of our
engagement will include advising members of the financing team on timing issues that could adversely or
favorably impact the sale of the bonds. Our recommendations as to a desirable date of sale will be based on
various market indicators, including (a) the status of recently sold bond issues, (b) bond issues coming to
market (particular attention will be directed toward similar issues), and (c) general conditions of the capital
markets.
► Assist in determining the term and amortization schedule, call provisions, and other factors which
are relevant to marketing the bonds. This shall include preparation of maturity schedules and debt
service projections, which represent effective marketing structures for the company's bonds
Because investor demand can and does change on a daily basis, only an active market participant in both the
new and secondary markets can effectively evaluate and recommend the optimal combinations of coupons,
call features, discounts, premiums, serial and term bonds that will produce the lowest borrowing cost. As an
active market participant in both new issues and secondary market trading, we can effectively evaluate and
make recommendations regarding the structure that will optimize investor demand, resulting in the lowest
possible borrowing cost.
In the course of our engagement, we will evaluate all relevant data including the general conditions of the
capital markets to examine the feasibility of all factors that could serve to enhance the marketability of
bonds. We will utilize our advanced computer hardware and software and our daily feedback from investors
to model various alternatives to assist in identifying the structure that provides the greatest cost -benefits.
► Present and evaluate alternate and/ or innovative financing mechanisms
While there are several ways to address the refunding characteristics, based on our preliminary analysis and
discussions with Bond Counsel, there are some critical IRS tax issues that will need to be determined —
particularly with reference to whether this transaction will be viewed as a refunding or an acquisition. These
interpretations will have a significant impact on the structure of the refunding escrow and the structure of the
bond issue including whether or not all of the bonds can be initially issued as tax-exempt.
► Work to obtain the best possible bond rating including attendance at any presentation to the
rating agencies or insurers.
We will evaluate the feasibility of bond insurance and other credit enhancement alternatives for the purpose
of determining the option that provides the most efficient financing altemative. Our bankers arc experienced
in this process and have assisted numerous issuers in navigating this process as well as calculating and
understanding the cost benefit of these options.
► Coordinate the preparation of the Preliminary Official Statement and the Final Official Statement
and other related documents and materials with selected bond counsel and school officials.
Our bankers take an active role in the coordination of the various legal and marketing documents, including
the Preliminary Official Statement and the Official Statement. This coordination between all members of the
financing team and the investor community provides assistance in expediting the pricing of the bonds and
the closing. This allows us to secure commitments while market conditions are considered advantageous.
Crews&Associates
Meads fw4 Stain, Bancor
'WEST
•
• •
- ---
Services cont...
► Calculate the cost/benefit of credit enhancement on the issue and to provide advice for the
selection of a bond insurance firm should insurance be desirable.
We would expect to solicit competitive bids regarding the cost of bond insurance including the potential
benefit of marketing the bonds with an underlying rating. Part of the process will include the preparation of
cost benefit reports as well as the evaluation of certain other restrictive covenants that may be imposed by
potential insurance providers.
► Ability to arrange for selection of trustee/paying agent/registrar services for the bond issue if
required.
Crews&Associates
Ms,t Fool Security Bancorp
'WEST
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Marketing Plan
With more than 90 salespersons specializing in the distribution of municipal bonds, particularly those of
Arkansas municipalities, Crews & Associates has the balanced distribution network to provide the
lowest cost of borrowing. Likewise, Arvest Asset Management is an active participant in the fixed income
investment market. Since they have experience in purchasing these high quality securities in volume, Arvest has
distribution capabilities that offer the issuer competitive prices. We will utilize our network of clients in order to
access retail and institutional clients. We can prioritize our marketing efforts in order to respectively serve local,
statewide and regional/national investors. It is important for the City to have an underwriter with a balanced
distribution of retail and institutional clients. This balance creates a more beneficial marketing approach,
especially in times of market volatility.
Retail Distribution
Based on our strong Arkansas -based pool of clientele, we expect to generate strong retail demand. Due to our
local presence and established investor relationships, Crews & Associates can maximize retail distribution to
investors. Typically, these investors arc not as interest -rate sensitive as other investor groups. Consequently, they
are often willing to accept lower interest rates. We believe that by targeting this investor group first, the City will
enjoy lower interest rates.
Institutional Distribution
Our network and trading relationships with small and medium size institutional investors will benefit us
significantly in achieving the lowest possible borrowing cost. Companies like Crcws & Associates and Arvest
that utilize retail distribution have an established record of building local relationships; a natural extension of
this marketing is the group of small to medium size institutional investors that is often missed by firms without a
strong retail distribution network. This mid -market distribution strategy, coupled with our retail network, should
ultimately achieve the most aggressive cost of borrowing.
In addition to our strong retail, mid -market and large institutional clients, Crews & Associates will capitalize on
its affiliate relationship with financial institutions owned by First Security Bancorp. Arvest will also capitalize
on.its experience as a financial institution to the issuer. Each bank has a strong community presence; thus, we
expect to capitalize on its community investment objectives; this will further the ability to obtain aggressive
interest rates.
We build our approach to marketing upon a proven strategy of extensive pre -marketing to selected investors; this
generates maximum demand and valuable feedback. We will utilize, among other items, this feedback, the status
of recently sold bond issues, and the general conditions of the capital markets to revise and implement a suitable
strategy. The implementation of the marketing plan is designed to increase investor acceptance and demand, thus
lowering the overall borrowing cost to the City.
•
Crews8Associates
Mints hist Scurry Baro,
AWEST
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• Experience
Crows & Associates, a wholly owned subsidiary of First Security Bancorp, is an Arkansas -based, full-
service investment banking firm founded in 1979. We specialize in fixed-income products that include
municipal and corporate bonds, lease financings, government agency bonds, U.S. Treasury bonds, mortgage-
backed securities and mutual funds. In the past 12 months we have traded more than $6.0 billion of these
types of securities. As shown in the chart below, our organization includes more than 140 professionals.
Public Finance/Municipal Management Retail/Institutional Sales Operations/Administrative
Underwriting
If ntplcre c>
,;
(Some employees overlap into more than one category. Some categories are omitted Total number of employees 140+ of which S%
are minority and 31% are female)
Our parent company, First Security Bancorp, is a $1.4 billion Arkansas -based bank holding company
headquartered in Searcy. Our partnership with First Security Bancorp enhances our company's management
team, our access to capital, and our access to the highest technology. This alliance provides Crews &
Associates with the resources to be an even more valuable funding source for our clients.
Crews & Associates, Inc. and First Security Bancorp are committed to serving the communities of Arkansas.
Through Crews' Little Rock headquarters, the Public Finance Group's primary focus is to provide a funding
source for municipal borrowers including cities and counties of all sizes. Since its initial bank charter in 1932,
First Security Bancorp now serves the state through more than 36 bank locations throughout Arkansas. The
chart below details our organizational structure.
1
HrstSecurity
Bancorp
•
Crews&Associates
1
Fust Secu'ty Bancorp
HrstSecurity FirstSecurity
Venpals Capital teasing
•
Crews&Associates
Mats Frosi Scanty Bent=
•
FirstSecurity
Community
pi Bank
Farmers
ma Bank
ly
(1p)
PEOPLES BANK
& TRUST COMPANY
INVEST
II
Experience Coni.
1
1
1
1
1
1
1
1
1
1
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1
The firm's sales and trading personnel work from our Little Rock headquarters; this dedicated team is
recognized for the trading, underwriting and selling of fixed-income products. As a strong marketing force,
the sales team provides a stable, respected distribution network for retail and institutional markets on a local,
regional and national level. This network of professionals utilizes products developed by the Public Finance
Group - as well as secondary market support - to meet clients' objectives.
The firm's investor clients include individuals, banks and trust departments, public investment and retirement
systems, foundations, insurance companies, investment advisors, and mutual funds. Access to a substantial
client base equips the firm to offer clients a variety of financing options. Additionally, these resources help
assure that clients benefit from maximum market penetration and aggressive interest rates.
Crews & Associates typically maintains a daily bond inventory between $15 and $30 million, which enables
us to provide an efficient liquid market in municipal securities. By creating goodwill with investors in the
secondary market, we assist issuers in obtaining favorable borrowing costs when entering the market for new
funds.
PUBLIC FINANCE
As evidenced by the financial and human resources devoted to our underwriting activities, the Public
Finance Group is a critical component of the company. Initially, Crews relied upon secondary market
activity to provide a supply of municipal bonds for distribution to clients in the retail and institutional sector.
However, in 1990, Crews & Associates established a Public Finance Group to serve issuers in the
development and distribution of new bond issues. The purpose of the Group was to increase the supply of
municipal bonds available to the firm for its growing customer base.
The Public Finance Group has successfully grown to include public finance specialists here in our Little
Rock, Arkansas headquarters—with additional public finance information offices in Fayetteville, Arkansas;
Charleston, West Virginia and Columbia, Maryland. Through various underwriting services, these
professionals assist in providing taxable and tax-exempt bonds to the more than 95 Crews & Associates sales
professionals and their respective clients.
The Public Finance Group, when working for clients, holds to a simple strategy that centers around these two
objectives:
• Provide the most efficient possible structure for each client's needs.
• Continue to serve clients long after their transaction is complete.
The Group serves issuers in a variety of areas:
• water & sewer
• healthcare
• airport
• retirement
• higher education
• government & non -profits
• housing
• correctional facilities
• solid waste/resource recovery
• industrial, commercial & economic development
• lease financings
C,rews&Associates
Manta First Security Bacup
•
- -- - • — —Experience Cont.
In serving clients' needs, our public finance professionals take advantage of state-of-the-art analytical and
research technology and utilize the firm's substantial marketing, distribution and capital resources.
Throughout all activities, public finance professionals provide clients with integrity, honesty and
professionalism.
THE CREWS ADVANTAGE
We believe that some of the tangible characteristics that distinguish our firm from other respondents to
this proposal are:
• Arkansas based investment banking company
• Arkansas based bank holding company
• Business strategy is entirely focused on fixed income products such as municipal bonds
• One of the largest centralized fixed income sales groups in Arkansas
• Significant growth in public finance during a period of time when many firms are downsizing in
this area
• COMMITMENT TO THE STATE OF ARKANSAS
CAPITAL POSITION (in accordance with SEC standards)
The City can take comfort in our firm's strong capital position. As of September 30, 2002, the
Company had a net capital position of more than $8,900,000. As a result, we have the capacity to
underwrite bond issues of over $100 million in size. The recent acquisition of Crews by First
Security Bancorp gives us the even stronger capital resource of a $1.4 billion Arkansas bank holding
group with a net capital of more than $150 million. We are willing to commit this capital as
necessary in order to underwrite unsold balances of bonds.
RECENT CLIENTS
$2,850,000
Washington County
Jail
Crews8Associates
Mn•pr Fos/ Security BsCap
$42,985,000
University of
Arkansas
$4,790,000
Grand Prairie
Water
$59,415,000
State of Arkansas
Community Water
System
$890,000
City of Arkadelphia
Water & Sewer
• Please .see Appendix A for
further information
concerning these issuances.
AIWEST
I ri
-- • •RVEST
Arvest Asset Management is a financial subsidiary of Arvest Bank Group, owned by the Walton family of
Bentonville, AR. ARVEST Bank Group has over $2.5 billion in client deposits in Arkansas and over
50,000 household relationships in Arkansas. ARVEST Asset Management consists of a NASD licensed
broker / dealer, ARVEST Trust Company and ARVEST Insurance, Inc.
ARVEST Asset Management's broker / dealer arm has been consulting ARVEST Bank clients with regard to
alternative investments to bank products since 1985. AAM's broker / dealer focuses almost exclusively on
individual investors in Washinton and Benton Counties with over 25 registered representatives located in area
ARVEST banks. AAM is uniquely positioned to deliver its retails clients with investment products and
services in a bank environment. AAM has over 50,000 retail investment accounts, which also include
accounts from its banks in Oklahoma and Missouri.
AAM is the only investment firm represented in Washington or Benton county with its fixed income trading
desk located in northwest Arkansas. This allows AAM's trading desk an excellent opportunity to know the
clients purchasing the securities. AAM has more local expertise and client base to successfully distribute new
issue municipal securities to a broader segment of the local market than any other firm.
ARVEST Trust is an active participant in investing money for local clients in the Arkansas municipal bond
market. We believe AAM's local market share and marketing expertise to individual investors, combined with
Crews & Associates, Inc. excellent underwriting track record and ability to service institutional accounts,
gives this group the unique ability to successfully market any Arkansas municipal bond offering more quickly
and efficiently than any other organization.
C,rews&Associates
u.,w rrn Secvriry B.caa
}WEST
•
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Legal Issues
FIRM'S SECURITIES VIOLATIONS
Crews & Associates, Inc. nor any professionals employed by Crews & Associates has been subject to any
formal or informal regulatory action by a Federal or State agency.
FIRM'S REGULATORY VIOLATIONS
Crews & Associates, Inc. is not involved in any current or pending litigation regarding any aspect of a
municipal bond issue in which we have participated. Crews does not have any history of such investigations or
litigation within the past three years, nor any since its inception. Further, we have no conflicts that would impede
our ability to begin immediately on the proposed bond issue.
•
Crews8Associates
M�rtw Fni S c,sity Srcuo
AIZVEST
• City of Fayetteville •
Staff Review Form
City Council Agenda Items
Contracts
Stephen Davis
Submitted By
21 -Dec -04
City Council Meeting Date
FIS Director
Division
Action Required:
Finance & Internal Services
Department
Approval of a resolution accepting Crews and Associates as bond underwriter for Highway 71 East Square
Redevelopment District Bonds- Series 2004.
Crews and Associates is compensated from bond proceeds as each TIF bond. TIF bonds are paid from increases in
property taxes within the TIF boundary.
$0.00
Cost of this request
Account Number
Project Number
Budgeted Item
Category/Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
General Fund
Fund Name
Department Director
Previous Ordinance or Resolution #
/2 -)--af
Date Original Contract Date:
City Attorn
Date
lLChie Ad istrativAmyl
r Date
Mayor G Date
Comments:
4
Original Contract Number:
Received in Mayor's Office
Received in City Clerk's Office
Wtte
ARKANSAS
•
City Clerk Division
113 West Mountain
Fayetteville, AR 72701
Telephone: (479) 575-8323
Fax: (479) 718-7695
city_c lerk©ci.fayetteville.ar.us
DEPARTMENTAL CORRESPONDENCE
To: Steve Davis
Finance & Internal Services Q
From: Clarice Buffalohead-Pearman fP'
City Clerk Division
Date: January 7, 2005
Re: Res. No. 211-04
The City Council approved the above resolution on December 21, 2004. Attached is a copy of
the resolution accepting the bond underwriter as Crews & Associates for the TIF.
I'm sorry for the delay in returning this resolution, I've been out of the office and trying to play
catch this week.
If anything else is needed please let the clerk's office know. Thanks.
/cbp
attachments
cc: Internal Auditor