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Request for Proposals_Financial Advisor THE CITY OF 411WA Dubuque D UBE All-America City. Masterpiece on the Mississippi 2012 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Financial Advisor Services DATE: July 24, 2012 Budget Director Jennifer Larson is recommending City Council approval of Piper Jaffray for financial advisor services for City of Dubuque in connection with issuing bonds for future projects, bond refundings, and debt capacity, debt structuring and cashflow analysis. I concur with the recommendation and respectfully request Mayor and City Council approval. /7AAh kt1&1 Michael C. Van Milligen MCVM:jml Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Jenny Larson, Budget Director Kenneth TeKippe, Finance Director Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Jennifer Larson, Budget Director SUBJECT: Financial Advisor Services DATE: July 24, 2012 INTRODUCTION Dubuque Leal All- America City 11111r 2012 The purpose of this memorandum is to recommend approval of Piper Jaffray for financial advisor services for the City of Dubuque. DISCUSSION A request for proposal (RFP) was developed relative to providing financial advisor services to the City of Dubuque in connection with issuing bonds for future projects, bond refundings and debt capacity, debt structuring and cashflows analysis. The RFP was distributed to thirteen firms. Five firms submitted quality proposals in response to the invitation. The firms that submitted proposals included: Northland Securities; Public Financial Management (PFM); Piper Jaffray, Inc.; Speer Financial, Inc.; and Independent Public Advisors. Two of the firms submitting proposals (Northland Securities and Piper Jaffray, Inc) also provide underwriting services (buy /sell bonds), but agreed in writing not to bid on underwriting services, place bonds or be part of any syndicate bidding on the City's bonds if awarded the City contract for providing financial advisor services. A committee was established to review the proposals, interview selected firms and provide a recommendation. The committee included Finance Director Ken TeKippe, Assistant Finance Director Jean Nachtman and Budget Director Jennifer Larson. After reviewing the proposals, three firms were invited to Dubuque for interviews. The firms interviewed included Northland Securities; Public Financial Management (PFM); and Piper Jaffray, Inc. All of the firms would be able to adequately serve as our advisor based on the RFP responses and interviews. It is the consensus of the committee that Piper Jaffray, Inc. be selected as the City's financial advisor for at least the next five years. Factors that contributed to the selection included: • Size of firm • Number of Iowa governmental bodies that are currently clients of firm (School Districts including Dubuque, Sioux City, Ames, Council Bluffs, Waterloo, Cedar Rapids, Ballard, Gilbert, Knoxville, Johnston, North Polk and West Des Moines; Cities including Coralville, Burlington, Fairfield, Fort Madison, Grimes, New Hampton, Urbandale, Keokuk, DeWitt and Waukon; and Counties including Boone and Polk. • Work to be completed in the Des Moines office • Positive comments on firm from City's bond counsel, Bill Noth since Piper Jaffray agreed in writing not to underwrite, place bonds or be part of a syndicate bidding on City of Dubuque bonds • Competitive fees • Quality of proposal, interview presentation and responses to interview questions • Ease of working with the primary individual(s) assigned to City • Number and dollars of bond issues involved in Iowa and across the country There has been significant staff turnover at Public Financial Management in the past three months. During the interview process, it was presented to the City that PFM would provide a team approach, headed by Jenny Blankenship, Senior Managing consultant, to serve the City's needs. They operate with a queue approach and work is assigned to staff available. Previously, the City had been assigned one person to handle all calculations and bond sales for the City. Piper Jaffray, Inc. represented during the interview that they would assign two members of its staff to handle all requests and bond sales, Managing Director Timothy Oswald and Vice President Travis Squires. City staff would be able to call at any time to speak directly to either Tim or Travis to have any questions addressed or analysis performed. It is important to City staff that the contacts are consistent due to the complexity and frequency of information that is requested. Piper Jaffray, Inc.'s fees are 1/8 of 1% of the par amount issued for General Obligation bonds with a floor of $8,000 per issue and a cap of $15,000 per issue. Revenue bonds are .25% of the par amount issued with a floor of $9,000 and a cap of $20,000 per issue. There is no annual retainer fee. There is not a fee for continuing disclosure if it only involves the financial advisor uploading a Certified Annual Financial Report (CAFR) that includes the required tables to Electronic Municipal Market Access. It was the consensus of the committee that both PFM and Piper Jaffray could adequately serve as financial advisor; however it was more favorable to hire a financial advisor that could dedicate staff as a resource to the City of Dubuque as opposed to a team /queue system. Although price was not a primary consideration, the fees proposed by Piper Jaffray are lower than PFM. Copies of the RFP and Piper Jaffray's proposal are attached. RECOMMENDATION I respectfully recommend the approval of Piper Jaffray, Inc. as the City's financial advisor for at least the next five years. Attachments 2 Albany Baltimore Boston Charlotte Chicago Cleveland Dallas Denver Des itloines Hartford Helena Houston Indianapolis Jacksonville Kansas City Los Angeles Memphis Milwaukee Minneapolis New York Orange County Philadelphia Phoenix Pittsburgh Portland Richmond Sacramento San Antonio San Francisco Seattle St. Louis Hong Kong London Shanghai Prepared by Tim Oswald Managing Director 515/247 -2358 June, 2012 Since 1895. Member SIPC and FINRA. PiperJaffray & Co. Financial Advisory Services Request for Proposal City of Dubuque, Iowa GUIDES FOR THE JOURNEY® Pip erJaffray. Table of Contents Section 1 Profile of Firm Section 2 Statement of Qualifications Section 3 Scope of Services Section 4 References Section 5 Insurance Section 6 Fees and Compensation Section 7 Special conditions Section 8 Legal Violations and Conflicts of Interest Section 9 Questions that We think the City should be asking Section 10 Sample form of time line (Get Started Letter) Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES Er PiperJaffray - 1 - THE JOURNEY' Section 1 - Profile of Firm Date the firm was established, location of the firm's main office and other offices and the number of employees in each office, and whether the firm is a member of the National Association of Independent Public Financial Advisors (NAIPFA). Ownership and Philosophy Piper Jaffray is an equal - opportunity employer and a full service investment banking firm founded in 1895. Headquartered in Minneapolis, Piper is a publicly owned securities firm (NYSE: PJC), maintaining 31 offices primarily in the Midwest, Rocky Mountain, Southwest, Eastern and Pacific Coast states, as well as three international offices (London, Shanghai, Hong Kong). We serve corporations, government and non- profit entities, and institutional investors on a national basis predominantly across the western half of the United States. Piper Jaffray has capabilities and expertise that rival those of national firms in our areas of focus. Our public finance offices and staffing are as follows: Office Bankers Admin Support Albany 2 Atlanta 1 1 Birmingham 1 Boston 1 Charleston 2 Chicago 2 eve a� 2 Dallas 2 1 Denver 6 2 Des Moines 4 1 El Segunno 12 2 Hartford 1 Helena 1 Houston 4 1 Indianapolis 1 Jacksonville 2 Kansas City 9 2 Memphis 2 Mil ee 1 1 Minneapolis 16 4 Nashville 1 Orange County 3 Philadelphia 6 Phoenix 5 1 Pittsburgh 7 2 Portland 1 Sacramento 1 St. Louis 6 1 San Antonio 1 San Francisco 9 1 Seattle 3 1 Washington DC 2 117 22 Financial Advisory Services proposal for City of GUIDES FOR Dubuque, Iowa - 2 - THE JOURNEY" PiperJaffray. Section 1 - Profile of Firm, continued As a regulated Broker - dealer, we are members of, and regulated by, FINRA and subject to rules and regulations of the Municipal Securities Rulemaking Board and Securities Exchange Commission. Employees that would assist the City all maintain Series 7 and 63 licenses (among others). The MSRB was established by an act of Congress to write rules for the municipal securities industry, enforced by the SEC and FINRA. Only registered broker - dealers are, at this point, subject to the rules of the MSRB (though this will change in years to come). As a broker dealer, Piper is not eligible to be a member of the National Association of Independent Public Financial Advisors, a trade - organization created by independent financial advisors to advocate for their interests. Piper Jaffray has a philosophy honoring a commitment to client service, and providing a quality work environment for its employees. These values are reflected in the company's guiding principles below: We create and implement superior financial solutions for our clients. Serving clients is our fundamental purpose. We earn our clients' trust by delivering the best guidance and service. Great people working together as a team are our competitive advantage. As we serve, we are committed to these core values: Always place our clients' interests first Conduct ourselves with integrity and respect and treat others with respect Work in partnership with our clients and each other Maintain a high - quality environment that attracts, retains and develops the best people Contribute our talents and resources to serve the communities in which we live and work We have a strong tradition of supporting our communities. We provide support in many ways, including cash grants, loan assistance, in -kind donations, and sponsorships of nonprofit organizations. Employees donate thousands of hours of volunteer time each year and their personal contributions to community and higher education nonprofit organizations are matched through the company's Matching Gift Program. Our company's size and strength ensure that we continue to be a leading corporate citizen where we do business. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR - 3 - THE JOURNEY' PiperJaffray Section 1 - Profile of Firm, continued Capital Markets Overview Value is achieved through focus on: creative investment banking and underwriting to meet the needs of strategic clients, and quality advice, product and execution for select investors in fixed- income products. iDenver NeYork Baltimore ashington, DC Jacksonville • Public Finance 011 ices A Sales Caicos 7r Trading Desks 'el Corporate Headquarters Public Finance Overview The Piper Jaffray Public Finance department is staffed by 139 employees, including 117 investment banking professionals in 32 offices. Our investment bankers possess the understanding, knowledge and creativity needed to meet the capital needs of a diverse group of public sector, nonprofit and for - profit debt issuers. These investment bankers are committed to and capable of meeting the financing needs of clients of all sizes. In 2011, the department managed 573 negotiated bond issues totaling over $36.55 billion; 443 of which were sole or senior managed. In addition, the department served as a financial advisor on 155 separate issues totaling $1.60 billion. The firm ranks number two in the Midwest by volume for municipal long -term underwritings sole or senior - managed. (Paragraph source: Thomson Financial) Regional Market Areas The Public Finance department is able to provide top quality service to clients by having our investment bankers located strategically throughout the country. We are members of our local communities, which enables us to readily respond to our clients' requests. Following is a brief overview of the regional markets covered by Piper Jaffray. Financial Advisory Services proposal for City of GUIDES FOR Dubuque, Iowa - 4 - THE JOURNEY' PiperJaffray, Section 1 - Profile of Firm, continued Midwest Piper Jaffray has been a leading underwriter of municipal issues in this region since 1990. This is a direct result of our strong presence in the Midwest including our headquarters in Minneapolis and offices in Chicago, Des Moines, Kansas City, Milwaukee and St. Louis. A total of 40 investment banking professionals work with a wide variety of clients in these and other states in the region in several specialty areas including housing, health care, higher education finance and state and local government including school and special districts. Rocky Mountain We have seven investment banking professionals in Denver and Helena covering the states in the Rocky Mountain region. Our office in Denver has been m existence since 1990. This office focuses heavily on clients in Colorado, Utah and Wyoming, with additional business extending to other states in the region. In addition, for more than a decade we have maintained an office in Helena that has been a key element in our firm's significant presence in Montana municipal underwriting. Pacific Northwest We have four investment banking professionals in Seattle and Portland covering the Pacific Northwest states of Washington, Idaho and Oregon. We have functional specialists in governmental, health care and housing finance in this region. California We have offices in San Francisco, Los Angeles, Sacramento and Orange County where 25 investment banking professionals and analysts provide a strong presence in the California market. Our California offices specialize in education finance and serve as the state's leading Public Finance firm to local school districts. They also specialize in city and redevelopment finance with significant experience in California land -based financings. Southwest Our offices in Dallas, Houston, Phoenix and San Antonio concentrate on serving issuers in the southwest region of the United States. With 12 investment banking professionals in Arizona and Texas, we are among the major Public Finance firms in this region. East Our 29 investment banking professional in our Albany, Boston, Hartford, Indianapolis, Jacksonville, Memphis, Nashville, New York, Philadelphia and Pittsburgh offices concentrate on serving issuers in the eastern region of the United States. Additional ResQurces, Although our proposal is to act as financial advisor to the City, additional resources available to our advisory staff include our extensive experience as an active player in the municipal marketplace, buying, selling and supporting municipal issues in the primary and secondary market, as well as a provider of derivative solutions to clients seeking such structures. Our advisory services reflect the fact that our staff has daily access to our sales and trading operations, access which allows us to provide unique guidance to our financial advisory clients not generally available to governmental bodies whose financial advisors are not broker dealers. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR 1 PiperJaffray. - 5 - THE JOURNE]C• Section 2 — Statement of Qualifications Location of Office that will assist the City We maintain a 4- person public finance staff in our Des Moines, Iowa office, who specialize primarily in local government securities work with Iowa governmental bodies. Piper has maintained an office in Iowa providing financial advisory services to Iowa governmental bodies since 1987, when it acquired the Iowa based staff from the failed E. F. Hutton, who had a presence in Iowa since the early 1980's. Timothy J. Oswald Piper Jaffray & Co. 3900 Ingersoll Ave, Suite 110 Des Moines, IA 50312 247 -2358 (direct dial) 280 -7567 fax timothy.j.oswald@pic.com Rankings as Financial Advisor for Competitive Sales in Iowa According to Piper Jaffray files, presented below are the number of transactions and par amount, as well as percentages, of competitively -sold securities in Iowa over the 2005- 2011 calendar years (negotiated sales and private placements are not included). # Issues Par Value of % of Number % of Par Financial Advisor Advised Advised Issues Issues Advised Value Advised Piper Jaffray 743 3,334,199,029 48.22% 35.98% PFM 421 3,057,444,000 27.32% 33.00% Speer Financial 176 733,375,000 11.42% 7.91% Springsted 127 1,756,175,000 8.24% 18.95% Ruan Securities / D.A. Davidson 55 309,615,000 3.57% 3.34% Northland Securities 19 75,48S,000 1.23% 0.81% Totals 1,541 9,266,293,029 100.00% 100.00% Team that will work with the City Our team will include Tim Oswald and Travis Squires in our Des Moines, Iowa office. Mr. Oswald is the primary contact for all dealings with the City, and is the senior banker and principal in charge in our Des Moines office. Backup to Mr. Oswald will be provided by Travis Squires. Mr. Squires will be involved in all aspects of the City's financings. In addition to Tim and Travis, an analyst will be assigned to provide financial modeling support, final numbers with respect to bond sales, gaming cash flow analysis, TIF analysis (if any), and utility cash flow analysis, including future borrowing/capital expenditure capacity. Each of the individuals involved have experience assisting cities, counties and school corporations in Iowa. The resumes are presented below: Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR _6_ THEJOURNEY PiperJaffray. TIMOTHY J. OSWALD. MANAGING DIRECTOR Mr. Oswald joined Piper Jaffray's Public Finance Department in 1989 and is a Managing Director. Since 1999, Mr. Oswald has been the principal in charge of the Des Moines office. Mr. Oswald regularly assists, as advisor or underwriter, on general obligation, sales tax revenue and essential utility revenue bonds. In 2011, he assisted in the sale of 31 different series of general obligation bonds, 14 different series of sales tax revenue bonds, 4 different lease or certificate issues, and 5 different series of essential utility revenue bonds, all of which included new money issues, current refundings, advance refundings, and included both tax exempt and taxable transactions. Mr. Oswald has extensive experience with unique structured bonds, such as (1) tax credit bonds: {assisted on the sale and issuance of qualified school construction (tax credit) bonds and qualified zone academy (tax credit) bonds for issuers including Sioux City CSD, Council Bluffs CSD, Waterloo CSD and Cedar Rapids CSD }; (2) urban renewal tax increment revenue bonds {Altoona, Bass Pro; Coralville, multiple series for a hotel, convention center, brewery /restaurant, blight remediation, site acquisition and redevelopment, flood land acquisition and flood mitigation); (3) annual appropriation general obligation and tax increment revenue bonds {Altoona, Coralville, Spirit Lake, Storm Lake, DeWitt }; and (4) lease or turn -key lease facilities (Williamsburg fire station, Coralville Plaza on 5th, Coralville Marriott Hotel & Conference Center, Kirkwood Community College, the Hotel at Kirkwood Center project, and currently assisting the City of Marion on a turn -key lease of a new police station ). In addition to financings, Mr. Oswald drafted the first model set of board policies used by the Iowa Association of School Business Officers regarding financial and debt management, policies that have since been revised to incorporate ongoing disclosure obligations. Mr. Oswald has guest lectured at the University of Iowa — Pappajohn School of Business and annually teaches a class (on debt management and debt policies) at Iowa State University as part of the School Business Managers Academy. Mr. Oswald has a Bachelors of Arts degree in Economics from the College of St. Thomas, St. Paul, MN. Mr. Oswald holds Series 7, Series 63 and Series 53 securities licenses. Mr. Oswald regularly (annually) assists the following Iowa governmental bodies: {Schools} Cedar Rapids, Dubuque, Sioux City, Waterloo, Council Bluffs, Clear Creek Amana, College Community (Cedar Rapids Prairie), and Ames; {Cities} Coralville, Keokuk, DeWitt, Mt. Pleasant, Spirit Lake, Storm Lake, Okoboji, Arnolds Park, Sioux Center, Grinnell and Ottumwa (sewer capital planning); {Counties, less frequent than annually }: Boone, Dickinson, Hardin, O'Brien, Polk and Wapello; {Others} Kirkwood Community College and Iowa Great Lakes Sanitary District. Financial Advisory Services proposal for City of Dubuque, Iowa '] GUIDES FOR PiperJaff ray. - - THE JOURNEY' TRAVIS R. SQUIRES, VICE PRESIDENT Mr. Squires joined the Des Moines office of Piper Jaffray in 2006. Since 2010, Mr. Squires has been in an officer role and currently holds the title of Vice President in the Des Moines office. Mr. Squires regularly assists, as advisor or underwriter, on general obligation, sales tax revenue and essential utility revenue bonds. Since joining Piper Jaffray in 2006, he has provided financial modeling support and analytical support on over 400 transactions totaling in excess of $1 billion in par amount. Since the beginning of 2011, he has served as the primary contact for sale of 32 different series of general obligation bonds, 8 different series of sales tax revenue bonds, 1 lease issue, and 2 different series of essential utility revenue bonds, all of which included new money issues, current refundings, advance refundings, and included both tax exempt and taxable transactions. Mr. Squires has assisted numerous public entities in long range financial plans requiring extensive financial modeling. His experience includes the development of a sales tax revenue and enrollment model for Iowa schools, individualized capital and budget planning tools for Cities and School Districts in Iowa, and modeling to provide ongoing refunding and restructuring analysis for outstanding debt of their office's clients. Mr. Squires graduated Summary Cum Laude from the University of Northern Iowa in Cedar Falls, IA with a Bachelor of Arts degree in Finance. Mr. Squires currently holds a Series 7 and 63 licenses with FINRA. Mr. Squires regularly (annually) assists the following Iowa governmental bodies: {Schools} Ballard, Gilbert, Knoxville, Johnston, North Polk, and West Des Moines; {Cities} Burlington, Fairfield, Fort Madison, Grimes, New Hampton, Urbandale, and Waukon; {Others} Grant Wood Area Education Agency. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR I PiperJaffray _ 8 - THE JOURNESG • Section 3 — Scope of Services In general, the Scope of Services outlined mirrors the typical requirements of a financial advisor in a municipal financing. In our experience, financings first begin with the identification of a particular need, often capital improvement in nature. With the identification of the need comes a discussion about potential options to address the need, and ultimately, the legal authority to pay for such options. It is at this point that the concept of financing begins, with the requisite debt schedules starting to be prepared. For most of our clients, and from what we know about the City's financings, we believe this to be true for the City as well. There are annual resources that are or may be available, often time resources that have some existing obligations assigned for a period of time, but for which balances may exist from time to time. Simply "running a bond schedule" using typical or customary approach is inconsistent with long -range planning. In a true long -range plan, cash assets available from time to time are identified and, if earmarked (legally or otherwise), available resources are identified as to the fiscal year available. If the leveraging of those assets is to be contemplated (borrowing money), that leveraging is also identified year by year. In our experience, often the time at which leveraging becomes available determines when a project is to be contemplated. {As a sidebar, we note that the Legislature changed the TIF laws effective July 1, 2012, such that projects must be defined in the Urban Renewal Plan prior to being eligible for reimbursement from the Division of Taxes ( "TIF "). It is likely that past practice with respect to 11F is not going to be acceptable in the future, and we note the City has seven separate urban renewal areas, one with no valuation, two with modest TIF valuations, and the balance having material TIF valuations. The City needs to carefully consult with its legal counsel and financial advisor to ensure that future capital improvement projects are eligible to be certified as TIF debt in the future.} To that end, we maintain an excel model that identifies all of the debts of the issuer (in this case, the City), the source of repayment of those debts (by fiscal year and bond series), the cash receipts that are available from time to time to support those debts (for example, annual installments of gaining rent), and the surplus balances that may exist from time to time. This single file would encompass all of the City's various funding options available, including debt service tax levies, various gaming sources, 11F, utility revenues, airport revenues, local option sales tax revenues, etc. Our approach with an issuer, such as the City, is to share this file back and forth with finance staff such that our workings are collaborative. We try to generate the schedules both for fiscal year planning, but also such that the City can easily prepare the necessary annual budget forms. Once a funding source is identified and a bond schedule agreed upon, we then move to circulating proposed bond terms. We have included in Section 10 a sample initial bond memo that we use with bond counsel and issuers; we developed the form with input from the bond attorneys practicing in Iowa to ensure that we circulate one simple, easy to read document that included all of the information that a person (whether elected official, staff or outside professional) would need to know to complete their work on the transaction. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR I PiperJaffray _9_ THEJOURNEL• • Section 3 — Scope of Services, continued In the current marketplace, we believe that the City is best served offering its highly rated general obligation, water revenue and sewer revenue bonds in competitive sale format (we assume that the water and sewer bonds, if any, would be highly rated based on the City's excellent rating). The City might consider negotiated bond sales (with someone other than Piper Jaffray) for tax increment revenue bonds, annual appropriation bonds, unique structures most commonly sold in a negotiated format, or when fees and interest rates are such that a negotiated sale is likely to produce a more favorable outcome for the offering being contemplated than a competitive sale might produce. In that set of circumstances, our role includes the creation of a form of RFP, including coordinating with the City's purchasing and finance departments, as well as creating an evaluation process and ranking system to score responses. If the bonds are general obligation or essential utility revenue securities, we will take the lead creating the draft preliminary official statement, as well as the final (after the sale) official statement, subject to acceptable indemnity language in our contract. The official statement is the City's communication with the municipal market, and under current securities laws and interpretations, the City has liability for its communications with the investor public. As such, we believe that the City needs to take an active role in the preparation and review of the preliminary official statement, including action by the City Council accepting the document and directing its publication. If the bonds have a security source other than general obligation or essential utility, we will discuss with the City and bond counsel the most efficient method for preparation of the preliminary official statement. Once an official statement draft is prepared, the credit rating process begins. We coordinate the rating process, including necessary document shuffling and coordinating rating calls. Unless there is some extenuating circumstance, we do not recommend a rating presentation that causes people to travel to Chicago or New York. We occasionally ask that the rating analyst visit us at the Issuer, so that recent updates can be seen visually. The City has an excellent municipal credit rating, higher than any of the municipal bond insurors practicing in the marketplace. While we send information to the insurors regarding each of our clients' sales, we seriously doubt that, in the current market environment, insurance would be advantageous to the City. If that set of facts were to change, for whatever reason, we would be an aggressive advocate for insurance (as used to be the case, pre - 2007). We typically advise use of the PARITY on -line bidding system. We will review the merits of the system with the City, if the City has not previously used such system. Bids are received at the administrative offices of the City, and we typically are physically present for the receipt of bids. Bidding shall be set such that the bids are received during normal business hours, with adequate time for us to evaluate bids, prepare recommendation and supporting schedules, and adequate time for the City Council to consider the action item and recommendations. This sometimes means that bids are due on the day of the board meeting; other times, depending upon board schedule, we receive bids the day before board meetings (as a matter of practice, this is Kirkwood's standing process, in order to give staff time to prepare for the Board meeting). Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR - - THE JOURNEY' 1 PiperJaffray. Section 3 - Scope of Services, continued Your RFP makes a reference to pre - marketing of the issue. We would like to draw a distinction when using the term marketing. It is never the role of the financial advisor to market a securities offering; that is a prohibited act under current securities rules. It is the role of the financial advisor to ensure that the underwriters who regularly practice in a particular area or a particular state (and who are the entities licensed to market a securities offering): (a) are aware of the offering; and (b) have adequate time to understand the offering and ask questions they deem appropriate to ensure their interest in the offering. To that end, it is our practice that (a) the official statement be published not less than two weeks prior to the sale date; and (b) that the official statement be published WITH the bond rating already assigned. Most bond rating agencies need two to three weeks to review, ask questions, review documents and assign a rating. The timelines that we communicate with you, bond counsel and others will reflect these facts. We believe that we are the only financial advisory firm practicing in Iowa that regularly uses this approach. Of course, we coordinate the closing process and circulate memorandum and distribution lists to support closing. We have significant experience working on multi -year wastewater capital improvement programs, and we believe that the City has some form of consent decree with the EPA or DNR (though the makeup of that document we are not aware) regarding separation of combined sewers and wastewater plant upgrades. We have developed a form of cash flow modeling for future revenue and expense, as well as debt and capital set - asides, which projects out into the future the actual increases in revenue necessary to support the ongoing commitment on the part of a city. Other client communities have relied on us to be a part of their presentations to city council regarding future rate increases necessary, the timing and sizing of those increases. In most instances, we will advocate for earlier rate increases than is typical in order to spread the burden out over multiple years and attempt to avoid shocking rate increases. We believe that the DNR and SRF are familiar and comfortable with our approach and documentation surrounding long- term funding of operations and capital improvements. We note that the DNR has a mandate, on the drinking water side of the SRF program, to establish the sufficiency of the operation, and this almost always requires a long-range finance plan. With our input, our clients have utilized multiple different types of security for SRF financings, in addition to the usual and customary revenue bonds, we have also used LOST and TIF bonds as funding sources in other communities. Each has its own unique set of requirements, statutorily and otherwise, as our familiarity with multiple different funding options should be of value to the City as it plans for the future. We do not provide arbitrage rebate services; however, we typically work with a CPA in Omaha to provide this service. To that end, we typically set up an initial call with him to identify the process that the issuer will use, the paperwork they will retain etc. This up -front discussion saves tremendous time on the back end when it comes to completing the actual calculation. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR - 11 - THE JOURNEY• PiperJaffray. Section 3 — Scope of Services, continued With respect to debt management policies, we would want to be involved in any review of existing or assist with the creation of new policies. This is an area that the rating agencies and investors are focusing more time and attention. This is also an area where the City can and should lead others with best practices. As with any policy, debt management and operating policies should be reviewed and updated on a regular schedule. We are prepared to share debt management guidance that we typically give our clients as part of this process, as well as review existing policies with the City's staff. With respect to post -sale compliance, assuming a competitive sale of securities, if engaged, we can monitor the secondary trading market for transactions of the City, and share this information with the City and its bond counsel periodically. It would be unusual for a financial advisor to render an opinion regarding tax code compliance; this opinion is typically in the responsibility of bond counsel, however, we will work with bond counsel to provide the information requested by bond counsel. In the event of a negotiated sale, we will work with the underwriter to monitor secondary trades, and provide the information to the City and bond counsel regarding the secondary trading activity with respect to the securities offered. We would expect that the underwriter will work with the City, us and bond counsel to identify any circumstances where trades vary from certifications. Continuing disclosure is a service that most of our clients request we assist with, and we have proposed to do so here, provided however, that if the City prepares an annual CAFR, this constitutes the annual filing (so long as the requisite tables are included in the CAFR), and as such, we do not charge a fee to assist uploading a CAFR to EMMA (the MSRB's website for municipal securities filings). Typically, issuers ask us to prepare and present annually an overview of their financial position as it relates to bonding, future leveraging opportunities, debt limit, and, perhaps, prepare comparisons to rating medians. We will take part in such a session annually at a time mutually agreeable to both. The effort of identifying the resources, debts and future debts is on -going depending upon the request of the City. We are frequently in Northeast Iowa for one meeting or another, and would anticipate regular in- person dialogue with the City. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES OR Pi - THE JOU RNE perJaff ray. 12 JOURNEY' Section 4 — References References include: Kelly Hayworth, City Administrator City of Coralville 1512 7th St. Coralville, IA 52241 319/248 -1703 Khavworth0 .ci.coralville.ia.us Jim Choate, Chief Financial Officer Kirkwood Community College 7725 Kirkwood Blvd. SW Cedar Rapids, IA 52404 319/398 -7612 Jim.choate @kirkwood.edu Kelley Brown, City Administrator City of Grimes 101 N. Harvey St. Grimes, IA 50111 515/986 -3036 kelbrown @ci.grimes.ia.us Kevin Kelleher Dubuque Community School District 2300 Chaney Dubuque, IA 52001 563/552 -3038 kkelleher@dubuque.k12.ia.us Deb Anderson, Budget Director Polk County 111 Court Ave. Suite 372 Des Moines, IA 50309 515/286 -3016 DAnders@a.co.polk.ia.us Justin Yarosevich, City Clerk City of Storm Lake 620 Erie St. Storm Lake, IA 50588 712/732 -8000 Justin@.stormlake.org Nicci Lamb, Finance Director City of Urbandale 3600 86th St. Urbandale, IA 50322 515/278 -3900 nlamb @urbandale.org Tom Ridout, Controller Northeast Iowa Community College 1625 Hwy. 150 PO Box 400 Calmar, IA 52132 563/562 -3263 ext 211 ridoutt@nicc.edu Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR - - THE ray � THE JOURNEY.• Piper Jaffray & Co. January 9, 2012 GD��EU� °y $650,000 Elkader GO Ann. App. Corporate Purpose Bonds, Series 2012A Financial Advisor 1 PiperJaffray January 18,2012 $1,870,000 DeWitt Sewer Revenue Refunding Bonds Placement Agent GIDES FOR ,ro:U]n11NUEr PiperJaffray February 3, 2012 $1,935,000 Coralville Sewer Revenue Refunding Bonds, Series 2012A Placement Agent TGO . \Ol: ' I PiperJaffray January 9, 2012 $415,000 Elkader General Obligation Refunding Bonds, Series 20128 Financial Advisor GUIDES FOR PiperJaffray nn<]nuxuer• January 18,2012 $772,000 DeWitt Water Revenue Refunding Bonds Placement Agent 1G7,SNO ' I PiperJaffray February 15, 2012 $3,348,000 Jefferson Sewer Revenue Capital Loan Notes Placement Agent GVIDE [ON T„EJOU> R.EY 1 PiperJaffray. January 10,2012 $5,935,000 Asbury General Obligation Refunding Bonds, Series 2012A, 8, & C Financial Advisor TcDOWNR ' I PiperJaffray. February 6, 2012 $3,390,000 Burlington General Obligation Refunding Bonds, 20128 Financial Advisor GUIDES FOR I PiperJaffray 7TIE]n11NYEY.' February 16, 2012 $1,570,000 New Hampton General Obligation Capital Loan Notes Financial Advisor TGJONE • I PiperJaffray. 2012 Experience Iowa City Issues January 11, 2012 $3,540,000 Sioux Center Water Revenue Refunding Capital Loan Notes Financial Advisor 1 ° °i °E. °�• PiperJaffray February 7, 2012 GUJUES FOR $4,273,000 Ottumwa Sewer Revenue Capital Loan Notes Placement Agent PiperJaffray. '1111: n11NXI�.Y.• February 14, 2012 $830,000 Onawa General Obligation Refunding Capital Loan Notes Placement Agent TGJOK I PiperJaffray. January 12,2012 $3,825,000 Storm Lake GO Urban Renewal Refunding Bonds Financial Advisor I PiperJaffray. nlr•.]nuNanr. February 8,2012 $3,515,000 Arnolds Park General Obligation Urban Renewal Refunding Bonds Financial Advisor GUIDES FOR I PiperJaffray 1'llh:]MIIIXM.Y' J February 21, 2012 $9,611,000 Mount Pleasant Sewer Revenue & Refunding Bonds Placement Agent TJM'FY GDIOU I E I PiperJaffray. XEOU• February 28, 2012 $995,000 Jefferson Sewer Revenue Refunding Bonds Placement Agent GUIDES FOR IID;jDI.s,Z,"' PiperJaffray. March 5, 2012 $820,000 DeWitt GO Urban Renewal Bonds, Series 20128 Financial Advisor ° °,DEtiOR I PiperJaffray uu' JDUxurr Apri124, 2012 $6,300,000 Spirit Lake General Obligation Refunding Capital Loan Notes Financial Advisor UIDES FOR ,HCI,1Dtr::. PiperJaffray March 5, 2012 $4,035,000 Ottumwa General Obligation Capital Loan Notes Placement Agent 1G14 DO ' PiperJaffray April 2,2012 $4,120,000 Ottumwa General Obligation Capital Loan Notes Ottumwa G °'DEt FOR I PiperJaffray. 'f11R�D11xNRY.' April 24, 2012 $2,675,000 Spirit Lake Water Revenue Refunding Capital Loan Notes Financial Advisor GVIUES NR I PiperJaffray. -1'114 �(1111<NI.Y• March 6, 2012 $700,000 Riverdale General Obligation Capital Loan Notes Financial Advisor QUID“ FOR 1111. .1DURNRY.' PiperJaffray April 5, 2012 $2,950,000 Mount Pleasant Municipal Utilities Water Revenue Refunding Bonds Placement Agent GUIDES NE I PiperJaffray. THEJOVRNY' May 8, 2012 $2,340,000 Jefferson General Obligation UR Corporate Purpose Bonds Financial Advisor 'FGVIIFjOUNNI YDEt FOR ' I PiperJaffray March 5, 2012 $870,000 DeWitt General Obligation Refunding Bonds, Series 2012A Financial Advisor GUIDES FOR I PiperJaffray. 'rnF'JOUxNPY• April 10, 2012 $4,639,000 Boone Sewer Revenue Refunding Bonds Placement Agent (iUIDEi FOk r`.,.J IZ:. PiperJaffray May72012 $2,780,000 Albia General Obligation Capital Loan Notes Financial Advisor GUIDLS FOR ,'11 N.�DIIRNRY• PiperJaffray. February 28, 2012 $995,000 Jefferson General Obligation Refunding Bonds Placement Agent I G Op FO 1 PiperJaffray April 6, 2012 $4,985,000 Marshalltown Sewer Revenue Refunding Bonds Placement Agent GUIDEE FOR 'II1R]DIIRNN.Y• PiperJaffray May 29, 2012 GDIDLS fOR $1,500,000 Williamsburg General Obligation Corporate Purpose Bonds Financial Advisor 1 PiperJaffray l ill'- �DIINNI!Y' June 26, 2012 $9,095,000 Spirit Lake GO Urban Renewal Annual Approp. Refunding, 2012A Financial Advisor GUIDES FOR I PiperJaffray INY.JMINY /:Y.' April 27. 2012 $6,000,000 Coralville Annual Appropriation General Obligation Urban Renewal Bonds, Series 2012F Financial Advisor GUIDES IUN I PiperJaffray THE JOUR.YE):' July 9, 2012 $4,000,000 Adel General Obligation Urban Renewal Bonds, Series A Financial Advisor EJOUR'DR I PiperJaffray THC JOVR�'EY.' June 4, 2012 $975,000 Tama General Obligation Refunding Bonds, Series 2012 Financial Advisor GUIDES FOR 'I HFJnIINN1:Y' PiperJaffray. June 18, 2012 $4,968,000 Burlington Sewer Rev. Loan Agreement Anticipation Note, 2012D Placement Agent PiperJaffray July 9, 2012 $1,650,000 Adel General Obligation Refunding Bonds, Series 8 Financial Advisor GDIDEl FUR I PiperJaffray. TXE JOVRNEI:' June 18,2012 $2,192,000 Burlington Taxable GO Loan Agreement Anticipation Notes, 2012G Placement Agent GVIDE.S FOR I PiperJaffray. 'rl uuDuRN1Y• June 18, 2012 $817,000 Burlington General Obligation Refunding Bonds, 2012F Placement Agent GUIDES FOR I PiperJaffray. •rnF. Jnultwv July 24, 2012 $4,300,000 Spirit Lake GO Urban Renewal Annual Approp. Refunding, 2012B Financial Advisor GOUR PiperJaffray THE jOURNE Y' June 18,2012 $1,362,000 Burlington GO Loan Agreement Anticipation Note, 2012C Placement Agent GUIDES FOR „rv.JDDRNI:Y• PiperJaffray. June 25, 2012 $2,165,000 Coralville Taxable GO Corporate Purpose Bonds, 2012G Financial Advisor DUDES iOR I PiperJaffray. 'I'IIR JMIRNI'Y• July 24, 2012 $1,150,000 Spirit Lake General Obligation Urban Renewal Bonds, 2012B Financial Advisor GUM) FUR I PiperJaffray TUE June 18, 2012 $1,431,000 Burlington Taxable GO Loan Agreement Anticipation Notes, 2012E Placement Agent GUIDE.SFON I PiperJaffray. nuJnuxFEY: June 25, 2012 $4,210,000 Coralville General Obligation Corporate Purpose Bonds, 2012C Financial Advisor GVIUES FOR I PiperJaffray 'I'IIR JO11NN1Y' Section 5 — Insurance 1. We will name the City of Dubuque on our general liability policy and provide a certificate upon the City's request. A separat�orsei ent is not needed as the language is included on a contractual blanket basis within our insurance policy. We will not name the City as additional insured on our Professional Liability policy. We maintain a $1,000,000 general liability policy, with the balance of any requirement being assigned to our umbrella policy. 2. The minimum rating must be A- or higher from A.M. Best 3. We do not intend to subcontract any work. If that changes, we will review insurance requirements with the City and ensure that any subcontractor meets the City's requirements. 4. We do not use ISO forms Financial Advisory Services proposal for City of GUIDES FOR Dubuque, Iowa - 14 - THEJOURNEY• Pip erJaff ray. Section 6— Fees and Compensation We have fee relationships that are "fixed," "hourly" and "contingent fee" in nature. The vast majority of our clients prefer a contingent fee structure, as such; we will propose a contingent fee structure to our agreement, with a fixed component to protect both us and the City in the event that transaction sizes increase dramatically, without an hourly calculator. We are willing to consider any alternate structure that the City so desires. Each method of fees has an inherent conflict of interest. In an hourly fee structure, the party has no interest in keeping the hours spent to a minimum, and as such, an unethical provider might create work for themselves to have to deal with from time to time as a means of increasing overall billings. In a contingent fee structure, the incentive is on the provider to see that the transaction is completed, since their payment is entirely a function of completed transactions. In this case, an unethical provider might suggest approaches that produce transactions solely as a means of increasing overall billings. In a fixed fee arrangement, both parties make assumptions as to the work to be done and the amount of time required and liability created by the work effort. In a fixed fee arrangement, there is no reward to the Issuer (the City, in this case) for an efficient transaction requiring less time than previously contemplated. Our proposed fees are fixed for the duration of the agreement, which we understand to be initially S- years, with mutual renewal options, yet to be negotiated. We would object to a termination (using the 30 -day option) if a timeline has been established for a bond transaction and work is being undertaken, other than for cause on our part. It would hardly seem fair to use our services through planning, establish a financing and a timeline, get started, then get fired (again, other than for cause). We are fine with the 30-day provision once a financing is complete and prior to the time the next financing timeline has been established. Typically, contracts are non - assignable. We note that we are a publicly held corporation, and as such, our stock trades and is subject to acquisition by third parties. We do not believe that an acquisition by a third party where the third party assumes the responsibilities of the contract is an assignment of that contract. If the acquirer rejects the contract, then that should be grounds for the City to have the right to immediately terminate the agreement. Finanaal Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR - 15 . THE JOURNEY.' PiperJaffray. Section 6— Fees and Compensation, continued Proposed fee structure G.O Bonds/Notes 1/8 of 1% of the par amount issued; with a floor of $8,000 per issue and a cap of $15,000 per issue Special Assessment bonds .25% of the par amount issued; with a floor of $9,000 per issue and a cap of $20,000 per issue Utility Revenue bonds/notes (non SRF) Same as special assessment bonds TIT revenue or lease revenue obligations Same as GO bonds/notes, except that disdosure counsel will be required of the City as discussed herein SRF obligations No fee if we are minimally involved, for example, simply run a debt schedule. Alternate fee to be agreed upon at that time (probably hourly fees, though we are open to other ideas) if we provide more comprehensive rate analysis, working with engineers and others to establish rates and charges and assist with the SRF application process Annual retainer None Continuing disdosure dissemination agent $1,000 per credit per year, provided, however, that if the City sells bonds of that credit type during the fiscal year in question and we act as financial advisor on the issue, no fee will be charged. A credit is the class of payment obligation. For example, a general obligation bond is one credit lass, regardless whether that bond is paid from taxes, TIF, utility revenues, gaming revenues etc. The City has several GO issues outstanding, but would pay one fee total for all of those issues of the same credit. No fee if we are simply uploading a CAFR (that includes required info) to EMMA. Reimbursement/other fees City will reimburse for the cost of printing, mailing and obtaining an electronic link for the official statements, at $2,500 per issue. City is additionally responsible for (all, if any) the costs of bond counsel, local legal counsel, disclosure counsel costs, all rating fees, CUSIP fees, bond underwriting costs, paying agent and registration fees, CPA verification fees in an advance refunding, escrow agent fees, any other printing or mailing costs and publication expenses, all typical and standard "Costs of Issuance" for a bond transaction. Arbitrage rebate compliance services will be provided by a third party under direct contract with the City, if necessary, and not part of this fee structure. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR 1 PiperJaffray. - 16 - THE JOURNE]L' Section 6 — Fees and Compensation, continued We will assist the City putting together the preliminary and final official statements for a general obligation or essential utility revenue bond issue. Our engagement will not include disclosure counsel effort on behalf of the City, and we will not be the primary party assisting the City putting together the official statement for a lease revenue obligation, a TIF Revenue obligation or a special assessment obligation, if any. City will need to retain separate counsel for that effort, in the event that those types of securities are to be offered. In the event that a 10(b)5 opinion is required for a transaction, if it is required of Piper, the City will reimburse Piper for all out of pocket costs associated with retaining such legal opinion. Items covered by fee All preliminary calculations, numbers runs, long -range planning associated with a capital project financing, assistance with ratings, municipal bond insurance, official statements, closing, bond sale and attendance at City Council meetings (and other planning meetings as requested by the City), preparation of final numbers. In addition, we are often asked between bond sales to do various calculations regarding future capital improvement projects and their impact on the City (i.e. taxes, TIF income etc), as well as calculations regarding estimated interest earnings on idle bond proceeds during construction (if only the estimates produced real money!). All of those services are covered by the proposed fee schedule. Transcripts In an email from the City to Piper, there was a reference to production of a book that incorporates various numbers and other details of the financing. Often, this sort of document also incorporates the legal proceedings and is called a transcript. In our experience, transcripts are most efficiently provided by bond counsel, as they are the person to whom most documents are returned. If the City wants a full -blown transcript, we will work with the City and its bond counsel to ensure that all of the items and numbers runs necessary to fully complete the transcript are present. In the event that the City wants a document more in line with the copy shared with us via email, we will provide such a document with content consistent with that previously shared with us at no additional cost to the City. We will provide electronic copies of the preliminary and final official statements, bid summary, bids received, final numbers, and rating reports to the City for archive as part of this engagement. Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES I Pi - 17 - T perJaffray. THE JOUU RNEY.' Section 7 — Special conditions Conflicts of Interest We note that the activities discussed "Special Conditions" are prohibited by MSRB Rule G23. A financial advisor may not negotiate, or bid to purchase at competitive sale, a municipal bond for which the firm has a financial advisory relationship. A firm may not resign a financial advisory relationship and be hired as underwriter. Though the rule doesn't specifically contemplate, we believe that the rule intends that a financial advisory may not be fired by the Issuer and then hired as a negotiated underwriter for said transaction. As discussed herein, there are inherent conflicts of interest every time a fee is paid, and this can be true with respect to refinancings. A financial advisor can still potentially have a conflict of interest by recommending a refinancing, simply because a fee would be paid to said firm. It is important that the City's debt management policies contemplate appropriate refinancings, and that the City document deviation, if any, to protect itself and its advisory team, if the City deviates from the policy. There are other types of conflicts of interest, however, that should be contemplated. For example, the City should insist that its financial advisors not work with third parties who are adversarial (i.e. negotiating agreements) to the City during the term of the Agreement. Financial Advisory Services proposal for City of Dubuque, Iowa GUIOUS FOR PiperJaff ray. - 18 - THE JOURNEY' Section 8 — Legal Violations and Conflicts of Interest Due to the nature of our business, we are involved in a variety of legal proceedings on an ongoing basis. These proceedings include litigation, arbitration and regulatory proceedings, which may arise from, among other things, transactional activity, regulatory examinations of our businesses and investigations of securities industry practices by governmental agencies and self - regulatory organizations. The securities industry is highly regulated, and the regulatory scrutiny applied to securities firms has increased dramatically in recent years, resulting in a higher number of regulatory investigations and enforcement actions and significantly greater uncertainty regarding the likely outcome of these matters. Piper has no reason to believe that current and past regulatory matters or litigation will affect in any way Piper's ability to provide any of the services contemplated. For more information regarding litigation and regulatory matters involving Piper Jaffray, please refer to the Piper Jaffray's Form BD filed with the Financial Industry Regulatory Authority ( "FINRA "). You can request electronic delivery of the relevant sections of a Company's Form BD by accessing the Regulatory Systems page of FINRA's website at httpJ /www.finra.org/ Investors /ToolsCalculatorsBrokerCheck/ and conducting a FINRA Broker Check. Financial Advisory Services proposal for City of Dubuque, lowa GUIDES FOR - - THE JOURNEY.* I P1perJaff rJOURNEY.* Section 9 — Questions that We think the City should be asking What is the most creative financing that you have worked on and what makes that financing so creative? Do you have ideas on ways to lower the City's interest expense on future borrowings? 'What is the project you are least proud of working on and why? What is your experience with urban renewal? Give examples of unique urban renewal approaches that you have created or advocated for in the past. Given what you know about the City, do you see risks, issues or concerns that the City should be considering going forward? How do your employees get paid, and is it related to the fees that we pay? Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR - - THE PiperJaffray 2,Q THE JOURNEY.' Section 10 — Sample form oftimeline (Get Started Letter) Financial Advisory Services proposal for City of Dubuque, Iowa GUIDES FOR PiperJaffray - 21 - THE JOURNEY.' PiperJaffray. October 29, 2011 Mr. R. Mark Cory, Esq. Ahlers & Cooney P.C. 100 Court Ave., Suite 600 Des Moines, IA 50309 3900 Ingersoll Avenue, Suite 110 Des Moines, Iowa 50312 Tel 515 -247 -2340 I Tel: 800 - 333 -6008 I Fax- 515-280-7567 Piper Jaffray & Co. Since 1895. Member SlPC and FINRA. RE: NTE $4,000,000 Arnolds Park, Iowa, general obligation urban renewal refunding bonds (double exempt) Dear Mark: Here are the terms of offering: Action Dates Date to schedule hearing: Date to hold hearing: Schedule sale/authorize POS: Sale Date: Issuance Date: Closing date: November 9 December 14 January 11 February 8 (bids at 11am) March 7 March 29 POS Dates Expect date of POS to review: Due diligence conference call Legal/disclosure / POS comments due: Date POS due to Issuer for approval: October 6 November 3 at 10am November 9 December 14 Terms Term Bond: Method of Sale Dated date: Call Date: Maturities Callable on Above Date: Good faith amount: Award Basis: Interest Rates: Interest payment dates: Change in principal: Purchase Price: Registrar and Paying Agent: Continuing Disclosure: Permitted at bidders option Sealed bid with notice of sale with PARITY March 29, 2012 June 1, 2017 2018 -2024 $35,555 TIC 1/8, 1/20 or 1 /100 of 1% Rates must be in level or ascending order only 12/1/2012 & semiannually thereafter Unlimited as to amount per maturity Not less than 98.5% of par Bankers Trust Company Over $10 million (EMMA Filing = 210 Days) Mr. R. Mark Cory, Esq. Page Two October 29, 2011 Terms Continuing Disclosure Tables: Type of Refunding: Prior bonds to be called: Amount of prior to be called: Bond Proceeds Delivered To: Use of Accrued Interest: Very truly yours, Via Email Timothy J. Oswald Managing Director TJO: Encls. c: Ron Walker Diana VanVleet 1. Audited Financial Statements of the Issuer 2. Other Official Statement Information (Population, Employment Statistics, Retail Sales, Property Valuations, Tax Rates, Historic Tax Rates, Tax Collections, Major Taxpayers, Direct Debt, Overlapping Debt, Debt Limit and Financial Summary) Current refunding 10/1/2005 Series A & B $1,585,000 & $1,905,000 respectivelly Local Bank Use to reduce amount of issue ESTIMATED PAYMENT SCHEDULE Date Principal Payments Interest Payment Paying Agent Expense Annual Debt Service Interest Rate 12/1/2012 Present Value of Savings 30,973 69,637 30,973 38,664 6/1/2013 385,000 30,973 500 447,445 0.400% 12/1/2013 - 35,836 30,203 2,829 - 35,047 6/1/2014 360,000 30,203 500 420,905 0.650% 12/1/2014 32,619 29,033 369,929 390,703 - 20,773 6/1/2015 330,000 29,033 500 388,565 0.850% 12/1/2015 29,207 27,630 27,626 6/1/2016 260,000 27,630 500 315,760 1.150% 12/1/2016 -4,951 26,135 52,641 27,630 25,011 6/1/2017 260,000 26,135 500 312,770 1.450% 1211/2017 25,511 24,250 50,521 23,337 6/1/2018 260,000 24,250 500 309,000 1.800% 12/1/2018 19,505 21,910 308,696 286,635 22,061 6/1/2019 275,000 21,910 500 319,320 2.000% 12/1/2019 18,433 19,160 16,309 6/1/2020 290,000 19,160 500 328,820 2.250% 12/1/2020 16,566 15,898 37,598 21,910 15,688 6/1/2021 250,000 15,898 500 282,295 2.500% 12/1/2021 16,188 12,773 31,876 13,852 6/1/2022 235,000 12,773 500 261,045 2.700% 12/3/2022 10,943 9,600 323,092 309,660 13,432 6/3/2023 300,000 9,600 500 319,700 2.900% 12/1/2023 10,313 5,250 8,535 6/1/2024 350,000 5,2.50 500 361,000 3.000% Totals: 3,555,000 505,62.5 6,500 4,067,125 8,250 ESTIMATED SAVINGS Date Existing Bond Payments Proposed "New" Bond Payments Estimated Semi - Annual Savings Plus Surplus Bond $ Plus Accrued Interest Annual Savings Present Value of Savings 12/1/2012 69,637 30,973 38,664 38,236 6/1/2013 380,637 416,473 - 35,836 2,829 - 35,047 12/1/2013 63,929 30,203 33,727 32,619 6/1/2014 369,929 390,703 - 20,773 12,954 - 19,868 12/1/2014 58,239 29,033 29,207 27,626 6/1/2015 354,239 359,533 - 5,293 23,914 -4,951 12/1/2015 52,641 27,630 25,011 23,136 6/1/2016 313,641 288,130 25,511 50,521 23,337 12/1/2016 47,696 26,135 21,561 19,505 6/1/2017 308,696 286,635 22,061 43,621 19,737 12/1/2017 42,683 24,250 18,433 16,309 6/1/2018 303,683 284,750 18,933 37,366 16,566 12/1/2018 37,598 21,910 15,688 13,574 6/1/2019 313,598 297,410 16,188 31,876 13,852 12/1/2019 32,092 19,160 12,932 10,943 6/1/2020 323,092 309,660 13,432 26,364 11,240 12/1/2020 26,210 15,898 10,313 8,535 6/1/2021 276,710 266,398 10,313 20,625 8,440 12/1/2021 21,023 12,773 8,250 6,677 6/1/2022 256,523 248,273 8,250 16,500 6,603 12/1/2022 16,088 9,600 6,488 5,135 6/1/2023 316,588 310,100 6,488 12,975 5,078 12/1/2023 9,713 5,250 4,463 3,455 6/1/2024 360,213 355,750 4,463 8,925 3,416 12/1/2024 2,188 0 2,188 1,656 6/1/2025 102,688 500 102,188 104,375 76,507 Totals: 4,459,970 4,067,125 392,845 3,850 0 396,695 336,167 Savings as a % of refunded bonds: 9.63% TO: FROM: SUBJECT: DATE: GENERAL Firms Interested in Providing Financial Advisory Services Jenny Larson, Budget Director REQUEST FOR PROPOSAL — INDEPENDENT FINANCIAL ADVISORY SERVICES June 19, 2012 The City of Dubuque is seeking proposals to provide independent financial advisory services. Qualified firms are invited to submit a proposal in the format outlined in this Request for Proposal (RFP). BORROWING INFORMATION The City has an Aa1 bond rating from Moody's Investors Service since April 2010 as part of the recalibrating of municipal bonds. Scheduling of future year bond issues is dependent on projects approved through the City's Five Year Capital Improvement Program, specifically from either General Obligation or Revenue bond issues. Many City projects are funded from non - borrowing. The City may be utilizing the State of Iowa Revolving Loan Fund for projects that qualify due to the favorable borrowing costs. William Noth from the Ahlers & Cooney law firm in Des Moines serves as the City's bond counsel. Wells Fargo Bank provides paying agent services for City bond issues. The City does not anticipate any negotiated bond sales. BASIS OF AWARD A review committee of City staff will evaluate proposals based upon written responses to the RFP, the respondent's qualifications, past financial advisor work, proposed fees and other factors deemed important. The City may schedule interviews with a limited number of prospective firms. The City may reject any or all proposals if, in the opinion of the City, they do not meet the City's requirements. The recommendation of the committee will be subject to City Manager and City Council approval. 1 SUBMISSION DEADLINE Five (5) hard copies and one (1) electronic filing of the proposals must be received no later than 5:00 p.m., June 29, 2012. The proposals should be submitted to: Jenny Larson, Budget Director City of Dubuque 50 West 13th Street Dubuque, Iowa 52001 -4864 JLarson @CityofDubuque.org A copy of the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2011 is available at www.cityofdubuque.orq/2011CAFR. Questions concerning this RFP may be addressed to Jenny Larson via e-mail jlarson a@.cityofdubuque.orq until June 22, 2012. 2 CITY OF DUBUQUE, IOWA Request for Proposal: Financial Advisory Services May 22, 2012 Description of Firm Please provide a description of your firm including, at a minimum the following: • Date the firm was established; • Location of the firm's main office and other offices and the number of employees in each office; and • Whether the firm is an independent financial advisory firm and /or a member of National Association of Independent Public Financial Advisors (NAIPFA). Statement of Qualifications Please provide a statement of your firm's qualifications. Scope of Services Key responsibilities of the Financial Advisor include: • Assists in evaluating capital funding alternatives and developing a financing plan; • Assists with obtaining required authorizations including providing assistance in any referendum campaign; • Provides advice on method of sales (where appropriate); • Develops RFP for financing team; • Evaluates proposal submissions; • Recommends timing of bond sale; • Identifies tasks, responsibilities, and dates for completing activities leading up to bond sale; • Designs debt structure; • Provides advice on approach to ratings and assists with rating presentations; • Evaluates use of and obtains bids for credit enhancement Of appropriate) • Assists in producing and reviewing documents, including preliminary and final official statements; • Conducts pre- marketing of issue (competitive sale); • Evaluates bids, including accuracy of TIC calculation, and recommends award (competitive sale), present at City council meeting on date of sale; • Reviews pricing and allocations of bonds (negotiated sale); • Coordinates supplying information to City bond counsel and rating agency; • Work with City staff to ensure costs of debt repayment are favorable short and long term; • Assists with closing arrangements and provide follow -up and post sale analysis; • Provides advice on investment of bond proceeds Of appropriate); 3 • Provides advice related to compliance with arbitrage regulations; • Assist in TIF financings including cash flow, preparing materials for negotiating and best financial plans; • Assist in SRF borrowings and determine best financing options; • Assist with maintaining a City debt management policy • Filing annual continuing disclosure report; and • Provide refunding analysis in connection with new bond issues and /or when appropriate at other times; • Provide input on Post - Issuance Compliance Policy for Tax - Exempt Qualified Obligations. Please provide your firm's plan for service to the City. References Please provide at least three government client references including, at a minimum, the following: • Name of client; • Description of services provided to the client in the past three years; • Firm's staff that worked with the client; and • Name and telephone number of a client contact person. Staff to be assigned to our account Please provide the following information on your staff: • Detail of staff to be assigned to City of Dubuque; • Description of specific duties performed by each assigned staff person; • Qualifications of staff - years in public finance, other relevant experience, education and accreditation; and • Percent of total staff time in the debt issuing process attributable to each staff person. Insurance The financial advisory services firm shall adhere to insurance requirements for professional services as detailed by the insurance schedule attached during the term of this agreement. Please provide confirmation that the requirements will be met. Insurance certificate can be supplied at a later date by the successful firm. Fees Please provide a fee schedule for potential bond issues and for other projects and services including, at a minimum, the following: • Fee schedule; 4 • List of services covered by fees. Specifically state which costs are included in the fee proposal and costs that are to be reimbursed; • List of bond issue expenses to be paid by the City; • Number of years for which the fee schedule is valid; • Type of debt subject to a higher fee, if any; • Treatment of multiple issues sold at the same time; impact on fees; and • Annual continuing disclosure report; • Retainer fee Of applicable). Duration of Contract and Options for Renewal The contract duration will be five years with the right to cancel the contract by either party with 30 -days notice. There may be an automatic renewal clause available upon completion of the initial five -year term. Please provide options(s) for such a clause. Special Conditions To minimize any conflict of interest, any firm with underwriting capabilities who is selected to serve as the City of Dubuque's financial advisor will not be permitted to underwrite the City's bonds or submit bids to purchase the same during the contract period and for a period of at least one year after its engagement as financial advisor has ended. The City of Dubuque will use the competitive bidding method of bond sale for bond issues when the following conditions apply: • The market, if familiar with the issuer, and the issuer is a stable and regular borrower in the public market; • There is an active secondary market with a broad investor base for the issuer's bonds; • The issue has an unenhanced credit rating of A or above or can obtain a credit enhancement prior to the competitive sale; • The debt structure is backed by the issuer's full faith and credit or a strong, known or historically performing revenue stream; • The issue is neither too large to be easily absorbed by the market nor too small to attract investors without a concerted sales effort; • The issue is not viewed by the market as carrying complex or innovative features or requiring explanation as to the bonds' soundness; and • Interest rates are stable, market demand is strong, and the market is able to absorb a reasonable amount of buying or selling at reasonable price changes. However, negotiated sales for TIF related projects may occur. Legal Violations and Conflicts of Interest 5 State whether your firm, within the past five years, has had any legal or regulatory violations, and describe any investigations by the SEC or other regulatory agencies, or other legal action (such as litigation) in which the firm has been involved. The firm engaged as the City of Dubuque's Financial Advisor may not engage in activities on behalf of the City that produce a direct or indirect financial gain for the firm, other than the agreed -upon compensation, without the City's prior consent. 6