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Financial Advisor SelectionTHE CITY OF Dui Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Financial Advisor Services DATE: August 12, 2014 Dubuque bigriti AI -America City r 2007 • 2012 • 2013 Budget Director Jennifer Larson is recommending City Council approval of Independent Public Advisors 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. Michael C. Van Milligen MCVM/jml Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Kenneth TeKippe, Finance Director THE CITY OF DJI Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Jennifer Larson, Budget Director SUBJECT: Financial Advisor Services DATE: August 12, 2014 INTRODUCTION Dubuque All -America City 1111 F 2007 • 2012 • 2013 The purpose of this memorandum is to recommend approval of Independent Public Advisors, LLC 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. The primary role of the financial advisor is to support the debt issuance activity of the City. Other responsibilities include, but are not limited to providing advice on all aspects of any proposed capital financing; developing innovative solutions to the City's funding requirements in order to achieve the most advantageous financing terms; making recommendations on the timing, sizing, maturity schedules, call provisions and other details of bond issues; reviewing and making appropriate recommendations on all ordinances, official statements, and other documents necessary for debt issuance; as well as other responsibilities. The RFP was distributed to ten firms. Five firms submitted quality proposals in response to the invitation. The firms that submitted proposals included: D.A. Davidson; Public Financial Management (PFM); Springsted, Inc.; Speer Financial, Inc.; and Independent Public Advisors, LLC. 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 D.A. Davidson; Public Financial Management (PFM); and Independent Financial Advisors LLC. 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 Independent Financial Advisors LLC be selected as the City's financial advisor. Factors that contributed to the selection included: • Prior positive experience with financial advisor • Experience with Iowa governmental bodies (Cities: Creston, Lisbon, Marion, North Liberty, Norwalk, Vinton and Windsor Heights; Des Moines Area Community College; and Iowa Economic Development Authority). • Competitive fees • Quality of proposal, interview presentation and responses to interview questions • Not an underwriting firm • Advisor to client ratio allows for a customized and responsive approach Independent Public Advisors, LLC has a client -centered financial advisory approach with an emphasis on long-term planning rather than debt issuance. The pro -active planning allows for greater long-term financial flexibility and the development of credit strategies. The financial advisory services include tax increment forecasting, debt levy forecasting, enterprise forecasting, credit strategy development, debt monitoring, sizing and execution, primary and secondary disclosure and custom analysis as requested. In addition, Independent Public Advisors, LLC has the expertise to complete the annual State Tax Increment Financing report. Independent Public Advisors, LLC provides the industry experience of a large firm with the responsiveness and accessibility of a small company. The work performed is not delegated to other staff; instead all work is performed by Owner/President Tionna Pooler. It is important to City staff that the contact is consistent due to the complexity and frequency of information that is requested. City staff has had negative experiences in dealing with larger financial advisory firms including requests being delegated to other staff without proper supervision; tasks not completed in a timely manner; lack of responsiveness to requests; and ineffective project management. Independent Public Advisors, LLC's fees by par amount for General Obligation bonds is as follows: Par Amount of Issue Fee Under $5 million $13,000 $5-$9.9 million $15,000 $10-$19.9 million $18,000 $20-$29.9 million $25,000 $30-$39.9 million $30,000 Revenue bonds are 125% of the applicable fee for general obligation bonds. There is an annual retainer fee of $6,000 which includes services related to long-term financial planning, including the development of tax increment cash flows, debt levy analysis, enterprise fund planning, as well as for the preparation of annual continuing disclosure. Copies of the RFP and Independent Public Advisors, LLC proposal are attached. RECOMMENDATION I respectfully recommend the approval of Independent Public Advisors, LLC as the City's financial advisor. 2 Attachments cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Ken TeKippe, Finance Director Jean Nachtman, Assistant Finance Director 3 FINANCIAL ADVISORY SERVICES PROPOSAL to the City of Dubuque, Iowa Independent Public Advisors, LLC 8805 Chambery Blvd, Suite 300 #114 Johnston, IA 50131 515.259.8193 (phone & fax) www.independentpublicadvisors.com Independent Public Advisors, LLC Ms. Jennifer Larson, Budget Director City of Dubuque 50 West 13th Street Dubuque, Iowa 52001-4864 Dear Ms. Larson: 8805 Chambery Blvd, Suite 300 #114 Johnston, Iowa 50131 515.259.8192 www.independentpublicadvisors.com July 22, 2014 Independent Public Advisors, LLC ("IPA"), is pleased to submit this proposal to provide independent financial advisory services to the City of Dubuque (the "City"). Herein you will find a demonstration of our qualifications, including: • Proven Track Record: IPA professionals enjoyed partnering with the City from 2003-2012. Throughout our partnership, we came to understand the City's objectives and challenges, and demonstrated an ability to develop cost-effective solutions for the benefit of the City. • Expertise: IPA's principal owner has 14 years of experience as an independent financial advisor, advising on the issuance of over $3.68 billion in bonds. This experience has afforded IPA the specific knowledge required to advise Iowa's cities on matters of municipal finance such as constitutional debt margin, tax increment financing, general fund and other operational levies, and state revolving loans. • Comprehensive Scope of Services: From transaction management to long-term planning, IPA can offer the City a comprehensive scope of services that is designed specifically to address the City's needs. The planned scope of services includes long-term financial planning, transaction management, and primary and secondary disclosure. IPA is excited for the opportunity to demonstrate its willingness to provide service to the City, and to renew its prior relationship with the City and its staff. If you have any questions or seek additional information, please don't hesitate to contact me at 515.259.8193. Sincerely, Independent Public Advisors, LLC iPL4-13-& Tionna Reed Pooler President Financial Advisory Proposal A. Firm Information DEDICATION.................................................................................................................................................................................1 CREDIT ENHANCEMENT. ..4 Com PErITWE SALE M..NAGEMEIST.........................................................................................................................................9 NEGOTIATED SALE MANAGEMENT. ..9 DEBT CAPACITY. . 13 B. Statement of Individual Qualifications C. Proposed Fee Schedule D. References WhyIPA7....................................................................................................................................................................................... 22 A. Firm Information Founded on the principle of independence, IPA embraces its fiduciary duty to its municipal clients and serves without fear of conflict. 1. Describe the experience of your firm in providing public sector financial advisory services. Identify the total number of professionals employed by your firm who serve as financial advisors to public sector entities, including support staff Independent Public Advisors, LLC ("IPA") is a small independent financial advisory firm that does not engage in underwriting activities. The firm is staffed by its two owners; one is a 14 -year finance professional, the other is an IT professional and provides internal support. IPA is a registered Municipal Advisor, pursuant to amended Section 15B of the Securities Exchange Act of 1934. Neither IPA nor any of its professionals have ever been the subject of any legal or regulatory violations, or any litigation. We are an associate member of the Iowa League of Cities, and the National Association of Independent Public Finance Advisors. TECHNICAL EXPERTISE In addition to engagement management experience, IPA has the specific technical skills required to develop fully -customized financing and planning solutions for the City. Not only have we mastered industry - standard software, our professionals have the advanced skills necessary to develop specific solutions for the City's planning needs. Our in-house analytical tools are critical to affording the City the most flexibility in the development of its financial plans, as we are capable of making any number of modifications as we partner with City staff to analyze its challenges and opportunities. MARKET ACCESS IPA has secured access to all major industry outlets, and is poised to provide the City with the same market access to which it is accustomed. IPA subscribes to primary sources of market data and industry news. The Parity electronic bid submission platform through which the City has historically received bids for its competitive bond offerings is a 3rd - party platform used by IPA and financial advisors industry -wide. IPA is registered to submit continuing disclosure filings to the Electronic Municipal Market Access ("EMMA"). COMPREHENSIVE SCOPE OF SERVICE IPA is prepared to renew its partnership with the City; our work together has extended well beyond the execution of transactions to include detailed planning for the City's ongoing financial operations. As will be demonstrated in our plan of service, IPA offers a holistic approach to financial advisory service and financial planning that alleviates some of the analytical burden for staff, creates long-term solutions, and maximizes the cost-effectiveness of related borrowings. DEDICATION IPA does not strive to become the largest financial advisory firm. First and foremost, our goal is to build a firm dedicated to serving key client relationships. As a small firm, each partnership is critical to our success. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 1 As such, we work to earn our clients' trust, deliver sound advice and exceed expectations. Responsiveness is a critical component of service, and throughout our previous relationship with the City, professionals at IPA were dedicated to reliably providing City staff with financial advisory products designed to meet its needs. Only IPA can combine the historical knowledge of the City and the technical capability of a national firm with the personalized service and flexibility IPA professionals have come to be known for. Scope of Services A. Assistance Our in-depth services include the development of a number of tools specifically designed on behalf of the City to allow ongoing evaluation of financing options. It is expected that we will be called upon on a regular basis to provide cash flows and comparative analysis to allow the City to fully evaluate its potential funding options. STATE REVOLVING FUND The revolving fund program provides access to below-market rates for eligible projects, and can allow issuers to avoid the establishment of a reserve fund, and the cost of obtaining a credit rating. IPA has worked extensively with the program to develop loan structures that meet the needs of the borrower; options such as general obligation pledges, taxable loans, and deferred debt structures are available to increase flexibility. Dubuque in Focus: To address a concern over debt service coverage, IPA professionals worked with the City's bond counsel to obtain a subordinate pledge for certain of the City's water loans issued through the program. This innovative solution helped the City maintain its covenanted bond coverage levels. FINANCE TEAM DEVELOPMENT The City's financing efforts require professionals that offer a variety of services, and from time to time it may be necessary to broaden and/or refine the finance team. IPA is available to assist the City in the development of requests for proposals for all members of the financing team. This is most commonly undertaken to select an underwriter in advance of a negotiated sale, but the same process is also used for arbitrage advisors, verification agents, special tax counsel, bond counsel, and even trustees. Should it be determined that the City needs to solicit underwriting proposals for a negotiated transaction, IPA will assist in the development and distribution of the request and evaluation of the responses received. We will ensure that questions are designed to City of Dubuque, Iowa — Financial Advisory Services Proposal Page 2 generate meaningful responses, and will use our working knowledge of industry standards, reputations and pricing to develop written recommendations to document the selection process. Similarly, IPA will assist the City in the development/and or evaluation of proposals for the selection of a trustee. AUTHORIZATIONS Having worked extensively with bond counsel and with issuers across the State, IPA is well -versed in various state limitations on the issuance of debt (such as constitutional debt limit, limitations on essential and general corporate purposes, etc.). In addition, we have the working knowledge necessary to assist the City with the hearings, resolutions ordinances, and referenda required throughout the bond issuance process. Specifically, IPA will craft the financing schedule to reflect the timing necessitated by legal parameters, and will support the City's referenda efforts by providing summary data for use in stake -holder education. To that end, IPA will also attend any public meetings deemed necessary by the City. COMPETITIVE SALE PROCESS Prior to every transaction, IPA develops a proposed schedule that organizes and assigns the tasks related to issuance. IPA will ensure that all necessary information is distributed to members of the financing team in a timely manner. In most cases, prevailing market conditions are such that the timing of the City's transactions will be based on internal factors, primarily scheduling the receipt of funds. If the City's schedule allows, the date of sale is chosen to avoid the following: • Key economic data release dates due to the potential for market disruption; • Pricing close to bank holidays during which the potential for vacation travel may reduce interest in the bonds; and • Known instances of high Iowa volume. While competing bond sales may be announced after the City's sale date is determined, the date should be chosen to avoid issuance of like size, security, and rating to the extent possible. Dubuque in Focus: The City's practices „ECof( dictate that financing be secured prior to the Dui 1l acceptance of bids for projects. To ,,? r_. , c3• accommodate that policy, it is often necessary to begin the issuance process prior to the receipt of all information. It is the role of the financial advisor to facilitate this process, and to communicate modifications to the financing team to allow adjustments to be made and reflected in the financing documents as promptly as possible. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 3 CREDIT ENHANCEMENT After unprecedented market events in 2008 and 2009, most insurance providers have been downgraded or exited the market. Since then, the municipal market has shown a marked preference for premium uninsured credits such as the City. While it is not anticipated that insurance will be utilized, IPA is able to assist the City to procure and evaluate the cost-effectiveness of credit enhancement if needed. B. Financial Condition Review At the onset of our engagement, IPA will work with staff to redevelop the detailed financial plans to which the City has become accustomed. Our practice is to carry out extensive research to create initial forecasts which will then be further developed with specifics from staff. As your partner, it will be our responsibility to provide you with accurate and timely analysis and reporting to aid in your decision making. To that end, we will communicate regularly with staff to ensure that our financial plans accurately reflect financial operations, and that they are readily available when needed. CREDIT REVIEW IPA has extensive experience working with all of the major rating agencies, and has assisted clients to develop detailed presentations that address the topics of interest to the rating agencies. Moody's Investors Service ("Moody's") evaluates an issuer's tax base, debt statistics, financial statistics, and demographics. IPA evaluates issuer statistics relative to Moody's medians in advance of discussions to help identify key strengths and weaknesses. Presentations are crafted to highlight credit positives and to address challenges in a manner that demonstrates the strength of the administration. While ratings are important, the primary goal of government administration is to work as a fiduciary to citizens to achieve the directives established by constituents in a prudent and fiscally responsible manner. While good fiscal management often leads to premium ratings, there are instances in which an issuer's responsible plan of finance does not align with credit criteria. In such cases, IPA provides assistance in the education of stakeholders as to the potential rating impact of the financing plan. Dubuque in Focus: Moody's has expressed r�crrrop� concern over reductions in the City's general Du; i fund reserves for some time, as the City's general fund balances are lower than other Aa1 rated cities. In April 2014, the Moody's rating was officially reduced from Aa1 to Aa2, reflecting declining reserves as well as increasing debt burden. Anther noted challenge is the use of gaming and sales tax revenues for general fund operations. At the beginning of our engagement, IPA would prepare a median analysis based on the new Aa2 rating. This will allow us to become reacquainted with the City's credit WashvthrroN City of Dubuque, Iowa — Financial Advisory Services Proposal Page 4 position, and to evaluate the long-term impact of the plan of finance on the City's credit. PLAN OF FINANCE IPA will work with City staff to develop a plan of finance that addresses the City's capital needs and fully evaluates alternatives for consideration. Capital plan development begins with the establishment of long-term forecasting models that establish historical trends, current revenue and expense patterns, as well as future revenue raising abilities. Identifying & Evaluating Objectives The City has identified economic development as a key priority and any objectives should be evaluated for their ability to support sustainable development as well as other financial goals. As in all communities, resources are finite, so the evaluation of objectives should be comprehensive in nature and should include the following: • Ensured compliance with relevant policies and legal constraints; • A review of essentiality and/or public support; • Identifying financial risks and opportunity costs and • Quantifying the impact on the fiscal health of the community. Cost Effective Financing Alternatives IPA is well -versed in the financing alternatives permissible under state law, such as general obligation and revenue bonds, State Revolving Fund financing, short- and long-term debt, local bank loans and cash financing from a variety of levies or user revenues. For each project to be financed there is likely to be a single option that represents the lowest cost of borrowing. Securing the lowest borrowing cost, however, may be at odds with other objectives, such as preserving general obligation capacity (which is not reduced by higher cost revenue bonds) or matching the life of the loan to the life of the asset (which may extend the debt and increase the borrowing rate). To comprehensively evaluate these options, IPA will utilize cash flows to ascertain the impact on the short- and long-term financial position of the associated fund, as well as the potential need for increased user rates. Affordability analysis will include evaluation of the ability to undertake financing and maintain adequate liquidity, debt reserves and future capacity. Revenue & Financing Requirements Our analytical approach centers on the concept that a financial plan should be both flexible and dynamic, ultimately reflecting the City's actual financial performance. To accomplish this, we create excel -based financial plans built on deriving revenue projections from underlying usage and customer data as applied to the appropriate billing structure or from tax rates and underlying property valuations. This methodology allows us to test the impact of recommended modifications to user charges, as well as to make ongoing adjustments throughout the fiscal City of Dubuque, Iowa — Financial Advisory Services Proposal Page 5 year as data becomes available. Regular monitoring is especially important for a water utility, as fluctuations in weather have a direct impact on usage and revenues. For enterprise funds, the financial forecast begins with an in-depth review of system customers and usage; this data is modeled based on the billing structure, reflecting variances related to items such as meter sizes. Volume charges are also modeled separately from monthly access charges, allowing the City to isolate the potential revenue from each type of charge and evaluate proposed rate adjustments individually. After the rate structure is replicated we can evaluate both the adequacy of the existing rates and the impact of proposed rate changes on cash balances and debt coverage. Similarly, a proposed financing plan can be analyzed to determine its impact on revenue requirements. The flexibility of the forecasts allows the City to find the compromise between the size and timing of the capital program and any rate parameters put in place by Council. When evaluating levy -based funds, valuations and tax rates are used to project revenue. Many cities prefer to keep the debt levy stable or slightly increasing to avoid sudden declines. This can be accomplished by using the debt levy model to monitor debt levels and valuation, which allows the City to structure future debt to achieve the desired levy. Tax increment revenues are evaluated in a similar way. Finally, whether financing is funded by property tax or user fee revenues, this comprehensive analysis is used to determine available revenues to fund projects. Any costs that cannot be funded with cash while maintaining adequate liquidity or reserves will be identified as costs to be financed with debt. Dubuque in Focus: It is anticipated that IPA will continue the water and sewer fund forecasts that were previously developed, with a particular focus on the City's water fund. Moody's has indicated concern over the City's reduction in liquidity and coverage. The City has attempted to moderate its coverage through the subordination of an SRF loan, however it was initially assumed that subordination would be temporary. Given the volatility that the fund has experienced, and its susceptibility to fluctuations in weather, the City and its financial advisor will need to monitor the fund more regularly and evaluate rates and charges that will allow the fund to rebuild liquidity and increase coverage. WRITTEN REPORTS IPA will partner with the City to provide ongoing financial analysis, which will result in periodic recommendations as needed. Similarly, prior to the issuance of bonds, IPA will undertake analysis to ensure adequacy of revenues for repayment, compliance with policies and covenants, as well as marketability of structure. Any observations and/or recommendations will be communicated to the City via memorandum. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 6 C. Bond Document Participation and Review Our responsibilities as the City's financial advisor will include activities related to the preparation of bond documents and general management of each transaction. Specifically, we will actively participate in the review and/or preparation of documents, as well any meetings that pertain to the financing. COVENANTS Key covenants, such as debt service coverage, reserves, and the conditions under which additional bonds can be issued, can be used to strengthen the City's credit position. Covenants should be crafted to find the balance between providing assurance to bondholders (and thereby maximizing marketability), and providing sufficient flexibility for the City to manage its capital plans. IPA will work with bond counsel to ensure that these terms are carefully crafted and disclosed in relevant documents. COORDINATION OF FINANCING TEAM IPA will ensure that all necessary information is distributed to members of the financing team in a timely manner. Details of the bonds and the timing of the issuance will be provided to bond counsel. The rating materials and any ongoing support documentation that may be requested will be provided to facilitate the rating process. Information will be made available to underwriters (for both negotiated and competitive transactions) in advance of the sale date to facilitate participation in the City's issuance. Similarly, relevant information will be furnished to bond insurers and letter of credit providers is applicable. DEBT STRUCTURE The proper debt structure is one that best matches debt service to a conservative estimate of anticipated revenues, and is part of a well - conceived plan for current and future debt. Not only must the debt structure meet the needs of the City, but it must satisfy both legal and market restrictions related to details such as term and call provisions. Additional consideration must be given to assure adherence to the existing bond covenants at a minimum, recognizing that market acceptance may require additional security. Finally, IPA can continue to assist the City to develop distinct internal debt schedules for each of its series with multiple sources of payment, allowing the bonds to be grouped and sold based on tax status to maximize efficiency and reduce costs. Any debt structure developed on behalf of the City will be submitted to staff to be sure it meets the City's needs prior to being finalized and presented to the market. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 7 D. Official Statement Review and Preparation The current market has a heightened focus on disclosure, making it more important than ever that the official statement be well written and contain clear descriptions of bond security, tax consequences, and the financial condition and operations of the issuer. IPA will assist the City with the review of financing documents, and in the case of the official statements, will prepare and assemble the required documentation. Such preparation will occur with ample time to allow bond counsel to provide opinions regarding the sufficiency and accuracy of its content. A draft of the document will be provided to the finance team for review, and a form of the document will be presented to Council for adoption prior to publication. E. Pricing of Bond Issue IPA will provide a recommendation to the City regarding the most appropriate method of sale, however under normal market conditions, it is anticipated that it will be most advantageous for the City to continue to sell its bonds on a competitive basis. When determining the method of sale, the following should be considered: • Credit of the issuer: highly -rated issuers such as the City are prime candidates for competitive sales. • Simplicity of security: general obligation bonds secured by property taxes do well in competitive markets, as the security is familiar and easily understood by potential underwriters without advance education. Revenue bonds with ample coverage and additional security offered by debt service reserve funds are also candidates. • Stability of the market: Under stable market conditions, the general predictability of market trends enables underwriters to bid with confidence that the bonds can be sold to investors. When markets are unstable, a negotiated sale allows bonds to be pre -marketed to investors, which is preferable under those conditions. • Size of the bonds: Unless the bonds are very small (less than $0.5-$1.0 million), or very large (over $100 million), a competitive sale is most likely to achieve the lowest yields for the City. • Name Recognition: Issuers who are not frequent market participants may fare better through a negotiated offering. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 8 COMPETITIVE SALE MANAGEMENT The City's strong credit and straightforward debt security make it a prime candidate for the competitive sale process. IPA's facilitation of competitive transactions includes the following: • Pre -marketing: In addition to circulating the official statement at least a week in advance of the sale (longer over holidays), IPA will call potential bidders in the days leading up to the sale to ensure that pertinent details have been received, and to answer any potential questions. • Bid evaluation: IPA will perform independent verification of all bids received, and will recommend award to the bidder representing the lowest cost of financing for the City. All bids will be summarized and presented in person to City Council for their review and acceptance. NEGOTIATED SALE MANAGEMENT In the event that the City pursues a negotiated sale, it will be IPA's responsibility to act as an advocate for the City, ensuring fair market pricing that reflects both the City's credit quality and prevailing market conditions at the time of sale. When an underwriting firm is chosen during the procurement process, the selection will be in part based on the underwriter's pricing indication for the City. As pricing approaches, we will compile market data for comparable transactions and develop our own pricing expectations in advance of the sale. After the bonds are sold, we will also provide documentation of actual pricing and allocation of bonds among the underwriting team. F. Recommendations to the City As mentioned, recommendations related to the issuance of debt (adequacy of revenues, compliance with covenants, feasibility, structure, etc.) will be formalized in a memorandum prior to execution. In addition, a verbal recommendation regarding the successful underwriter, sale results, and actual pricing will be given to Council on the night of the sale. C ., 1 C . 1 Following the sale of bonds, IPA will work with bond counsel and the successful underwriter to coordinate the delivery of funds. In addition to a closing memorandum, the City will receive documentation of the final terms of the bonds as determined on the day sale. Any relevant planning analysis will be updated to reflect actual pricing performance. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 9 INVESTMENT OF BOND PROCEEDS In the capital planning process, IPA can develop project cash flows to determine net funding needs or identify the timing of operating cash flow borrowings based on estimated investment earnings. Our ability to analyze both the investment income and debt related expenditures will enhance project planning. IPA is not a registered investment advisor, and as such cannot offer advice on the investment of funds. Thus, once the borrowing is in final stages, final cash flows should be prepared and maintained by the City's investment advisor. The City will find value in having this very important duty provided by a separate firm that specializes in providing investment advice. During the development of the financing team, IPA can assist in the selection of an investment advisor who can assist the City as needed, if there is no such firm currently identified. H. Special Meetings of the City Our goal is to serve the City as an active partner and an extension of staff. To that end, we will make ourselves available to attend Council meetings and other special meetings with members of staff and the financing team as deemed necessary by the City. L Post Issuance Assistance Following the issuance of bonds, IPA will offer assistance to the City that will include follow-up with credit enhancement providers or other consultants, as well as performance reviews as requested. POST -ISSUANCE REPORTING The City will be provided with a post -sale memorandum that will provide the pertinent details of the City's bond issuance, including pricing, ratings, and final structure. It is anticipated that such report will be provided in an electronic format to reduce cost and maximize accessibility across staff. CONTINUING DISCLOSURE The services provided to the City will include the development and filing of the City's annual continuing disclosure. Like all services provided by IPA, continuing disclosure will be performed by a senior finance professional rather than support staff, ensuring that submissions will performed with accuracy and in a timely manner. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 10 REFUNDING ANALYSIS In the years spent working with the City, IPA professionals have recommended a number of successful refundings. As the City is a regular issuer, it is typically most cost effective to execute refundings at a time that the City is in the market for new money bonds. As such, refundings are monitored in advance of every sale at a minimum, as well as when there are significant changes in the market. When evaluating a refunding, it is important to quantify not only the potential savings being generated, but the amount of negative arbitrage in the refunding escrow if the refunding is being done on an advance basis. Refundings become possible because borrowing rates have decreased; this decrease often corresponds to a reduction in investment rates as well, resulting in a less efficient and more costly escrow. Because tax law limits the issuer to a single advance refunding, it is important that the refunding be done at maximum efficiency. Most issuers adhere to savings guidelines, requiring that advance refundings generate present value savings of at least 5% of the par amount being refunded. In addition, it is recommended that negative arbitrage be no more than half of the savings realized. POST -ISSUANCE COMPLIANCE In recent years, the IRS has reiterated the importance of having written compliance policies in place. The Federal Information Return (Form 8038-G) has been revised to specifically request an indication of an issuer's written procedures for compliance with arbitrage rules and remedial action requirements. In addition, the IRS has indicated that issuers who have such policies in place will receive more favorable treatment in the event that there is a tax problem with respect to one of their issues. IPA can assist the City with not only the development of such a policy, but also recommend future amendments to reflect ever- changing best practices. ARBITRAGE COMPLIANCL As with the investment of bond proceeds, arbitrage management should be undertaken by a firm that can provide the investment strategies necessary to reduce the City's arbitrage liabilities, if any. The role of a financial advisor in this instance is to advise on the development of practices that will enable the City to ensure regulatory compliance, and to provide detailed arbitrage calculations for each transaction (or a blended yield for a common plan of finance) to enable the City's compliance. A qualified firm will monitor the City's funds, not only for compliance, but for opportunities to reduce or eliminate the City's net arbitrage liability. In the event of a liability, it is recommended that the City establish a rebate fund to prevent the accumulation of an unfunded rebate liability. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 11 J. Program Development IPA will assist the City with the evaluation and/or amendment of existing programs and policies, as well as the development of additional policies not yet in place. IPA strives to establish guidelines that are consistent with state and federal law, sufficiently permissive to allow reasonable flexibility, while limiting behaviors that may lead to unacceptable risks. IPA's role in the development of an investment policy is to assist the City to prioritize its objectives, and to review the policy as prepared by an investment advisor to be sure it is compatible with the City's fiscal goals and credit quality. Capital budget policies should focus specifically on the nature of the projects to be undertaken, which projects are eligible for financing and what expenses are considered to be capital expenditures. This becomes more critical in enterprise funds, as the City's capitalization policy will determine what expenses will be capitalized by auditors and which will be considered ongoing capital. Depending on how documents are written, this distinction could determine which expenses are logged as an operating expense rather than a capital outlay, directly impacting coverage. Dubuque in Focus: Prior to establishing the firm, IPA professionals served as the project manager for Dubuque, Iowa for a number of years. ,, ; , Throughout that time, analysis was undertaken on water, sewer and tax increment financing funds. In 2012, capacity analysis revealed that the city was approaching its legal debt limit. With slow valuation growth and additional projects to be completed, a key policy change was recommended to the city's debt policy. At that time, the city had economic development agreements in the tens of millions of dollars, none of which were subject to annual appropriation. Without this stipulation, the city's capacity was unduly constrained. The city has since amended the policy to stipulate that future agreements be subject to annual appropriation. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 12 TAX INCREMENT FINANCING As tax increment revenues are derived from valuation growth as applied to the levies of a number of jurisdictions over which the City has no control, it is critical that any debt secured by increment be part of long term plan that includes the development of a tax increment cash flow. Ideally, the debt being contemplated can be funded based on existing valuations, and will not be dependent on continued growth. Dubuque in Focus: IPA professionals assisted 1 3ECITY OF/ the City with the development of a plan of /// finance designed to maximize available / revenues and support projects. In the Greater Downtown Urban Renewal Area, we evaluated the ability for the City to concurrently fund its own projects, as well as to provide a guarantee for an economic development loan by another entity. Using our detailed tax increment model, we crafted an innovative solution that allowed the City to take on both projects. Because some of the City's urban renewal debt is ultimately secured by a general obligation property tax pledge, it retains the flexibility to pay the guaranteed developer loan with current increment revenues, and levy taxes should there be a shortfall. While this circumstance is not anticipated, the structure ensures that the City will have access to the funds required to pay all of its obligations. Because increment revenues fluctuate annually with the tax rates of associated jurisdictions and changes in valuation, it is important to update this analysis on a regular basis to quantify capacity. Should we be hired, and if the City so desires, we would be available to revisit this analysis in short order. DEBT CAPACITY With regard to property tax supported debt, the City is currently utilizing approximately 80% of its constitutional debt limit. As the City continues to issue debt, it will be important to monitor the use of this capacity, especially as related to internal policy limits. The issuance of revenue bonds, though not limited by state law, is constrained by the adequacy of pledged revenues and related bond covenants. IPA will develop and maintain capacity models to enable ongoing monitoring of the City's debt capacity. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 13 DEBT MANAGEMENT POLICY IPA has significant knowledge of the City's debt history; when combined with industry knowledge and best practices, this experience will be useful in the development of a debt management policy that reflects the City's long-term goals for financial position and credit quality. As this document will be reviewed by the rating agencies, it is important that it provide a balance between creating maximum security for bond holders and maintaining sufficient flexibility of operation for the City. Dubuque in Focus: The City is challenged by an elevated debt burden and significant capital program. This is exacerbated by the City's historical practice of excluding non - appropriation clauses in its economic development agreements. IPA professionals recommended to the City that this clause be incorporated into the debt policy, and considered standard in all new agreements. Further, should the City find itself negotiating with a counterparty with which there is an existing agreement, a revision of the existing agreement could be noted as a condition of negotiation. Doing this would allow the City to regain some of the debt capacity attributable to development agreements. IPA is prepared to assist the City in the development or review of a comprehensive debt policy. Such a policy should include guidance on items such as: • The total amount of debt to be issued (often 80-85% of the constitutional debt limit); • Affordability levels based on the absolute amount of the debt levy or debt per capita; • The types of projects to be debt financed, such as operating or capital costs; • The term and structure of debt, including the permissibility of deferred debt; • Any stipulations on rebate agreements, including minimum assessment requirements; and • Guidelines for the execution of refundings. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 14 I2. Identify the number of public sector entities for which your firm currently i, under contract to serve as financial advisor, and provide the number an. volume of debt issuance transactions completed pursuant to such contrac . during the period 2010-2013. Further, identify the number and volume of th- following types of transactions completed during this same period: GO bond Urban Renewal bonds, revenue bonds, variable rate demand bonds, bon. antici ation notes, LTGO bonds, a 'mens a reements, and others, as ertinent IPA is proudly serving a select group of 12 public sector clients. We believe all of our clients benefit from the experience gained by serving a variety of jurisdictions with unique demographics and challenges. Our clients include a range of clients from small towns in Iowa to a complex regional sewer utility in Missouri serving over 1.3 million users. We represent clients facing challenges posed by shrinking populations, government mandated capital improvement plans, rapid growth, and limited legal capacity. Our client profile is intentionally limited to allow us to provide top service to each of our clients. Despite a small portfolio, we have a broad range of experience to offer. Our current contracts include 9 cities, 1 community college, 1 sewer district, and 1 state agency, spanning 3 states. Detailed clients statistics are provided in the table on the following page. Please note: The table includes bond volume from 2010-2013 for clients under contract as requested. Although the table only represents work actually performed by the proposed project team, transactions managed from January 2010 to May 2012 occurred during tenure at another firm as noted. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 15 Par volume is provided below in a number of categories; the number of transactions represented by each appears in parenthesis following the par value. Transactions by Issuer 2010 (Prior Firm) 2011 (Prior Firm) 2012 (Prior Firm) 2013 (IPA) Cities Colleges Sewer Districts State Agency Total Par $25,035,000 (8) 10,705,000 (2) 129,980,700 (3) 0 (0) $165,720,700 (13) $6,600,000 (2) 22,200,000 (4) 92,019,300 (2) 0 (0) $120,819,300 (8) $20,945,000 (6) 0(0) $11,272,500 (4) 5,715,000 (2) $32,217,500 (10) 5,715,000 (2) $116,440,000 (7) 7,000,000 (2) 0 (0) 0 (0) 0 (0) 101,000,000 (2) 0 (0) 0 (0) 0 (0) 0 (0) $20,945,000 (6) $16,987,500 (6) $37,932,500 (12) $224,440,000 (11) Transactions by Type 2010 (Prior Firm) 2011 (Prior Firm) 2012 (Prior Firm) 2012 (IPA) 2012 (Total) 2013 (IPA) Unlimited GO Limited GO Urban Renewal GO Revenue Bonds Variable Rate Payment Agreement Bond Ant. Notes SRF Loans Total $12,110,000 (5) 10,705,000 (2) 12,925,000 (3) 122,000,000 (2) 0 0 0 7.980,700 (1) $165,720,700 (13) $790,000 (1) 22,200,000 (4) 5,810,000 (1) 52,250,000 (1) 0 0 0 39,769,300 (1) $120,819,300 (8) $9,860,000 (4) $1,815,000 (1) 0 (0) 9,270,000 (1) 5,715,000 (2) 0 (0) 1,815,000 (1) 9,457,500 (3) 0 0 0 0 $20,945,000 (6) 0 0 0 0 $16,987,500 (6) $11,675,000 (5) 5,715,000 (2) 9,270,000 (1) 11,272,500 (4) 0 0 0 $7,525,000 (4) 7,000,000 (2) 3,540,000 (1) 203,775,000 (3) 0 0 0 0 2,600,000 (1) $37,932,500 (12) $224,440,000 (11) Transactions by Tax Status 2010 (Prior Firm) 2011 (Prior Firm) 2012 (Prior Firm) 2012 (IPA) 2012 (Total) 2013 (IPA) Exempt or AMT Taxable $157,335,700 (11) 8.385,000 (2) Total $165,720,700 (13) $110,414,300 (6) 10,405,000 (2) $120,819,300 (8) $20,945,000 (6) $11,272,500 (4) $32,217,500 (10) $217,440,000 (9) 0 (0) 5.715.000 (2) 5,715.000 (21 7,000.000 (21 $20,945,000 (6) $16,987,500 (6) $37,932,500 (12) $224,440,000 (11) Transactions by Issue Status 2010 (Prior Firm) 2011 (Prior Firm) 2012 (Prior Firm) 2012 (IPA) 2012 (Total) 2013 (IPA) New Money Refunding Total $164,460,700 (12) 1.260,000 (1) $165,720,700 (13) $120,029,300(7) 790,000 (1) $120,819,300 (8) $16,750,000 (4) 4.195.000 (2) $7,840,000 (4) $24,590,000 (8) $221,830,000 (10) 9.147.500 (2) 13.342.500 (4) 2,610.000 (1) $20,945,000 (6) $16,987,500 (6) $37,932,500 (12) $224,440,000 (11) City of Dubuque, Iowa — Financial Advisory Services Proposal Page 16 3. Provide a list of other public sector entities On terms of their outstanding debt) within the State of Iowa for which your firm currently provides financial advisor services as contem.lated in the sco y e o work. Of the 12 clients previously mentioned, 9 are located in the State of Iowa, as follows: Client City of Creston (pop. 7,834) City of Lisbon (pop. 2,152) City of Marion (pop. 34,768) City of North Liberty (pop. 13,374) City of Norwalk (pop. 8,945) City of Vinton (pop. 5,257) City of Windsor Heights (pop. 4,860) Des Moines Area Community College Iowa Economic Development Authority June 30, 2014 Outstanding Debt $5,294,191 3,451,646 41,580,187 42,339,061 15,758,598 4,988,236 12,970,000 69,105,000 0 4. Identify the location of the base office for the individuals who will be assigned to the city and the total number of professionals in such office who serve as financial advisors to public sector entities. IPA will serve the City from its Johnston, Iowa location, staffed by its two owners, and no additional employees. President Tionna Pooler will serve as the financial advisor to the City, as with all public sector entities. Vice President Edward Pooler III is an IT professional who provides internal research, programming, and administrative support, but does not provide direct advisory services to clients. Although he has no client contact, the internal technical services he provides make it possible for IPA to successfully serve our clients with one professional dedicated to client management. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 17 B. Statement of Individual Qualifications 1. Identify the individual who will initially serve as the primary point of contact with the city under this contract and the other individuals of the team who are expected to work on city transactions. Describe the type of work each is expected to perform. President Tionna Pooler provided financial advisory service to the City of Dubuque for ten years from 2003 to 2012. If selected, Ms. Pooler would be the City's sole contact for the engagement. Unlike manly larger firms, IPA can guarantee that all services will be provided by a trusted and proven senior professional in a timely manner. Services provided will include: Cash flow analysis; transaction coordination and management; communication with staff and Council; meeting/ conference call attendance; development of ratings presentations; refunding analysis; document development and review; and continuing disclosure. 2. Provide brief biographical information for each of these individuals that identifies their educational background, work history, and past responsibilities serving in similar financial advisory roles. Tionna Pooley, President Uwacii=m1 g=1 Ms. Pooler founded IPA after working nearly 12 years for the nation's leading independent financial advisory firm. She has provided services to municipalities in Iowa, Kansas, Missouri, and Ohio; her broad experience includes transaction management and long-term planning for cities, water and sewer districts, non -profits, state departments of transportation, community colleges, and counties. She has managed the issuance of over $3.68 billion in municipal debt. Ms. Pooler has provided service to cities throughout Iowa, including the city of Dubuque. Ms. Pooler earned a Bachelor of Arts degree in Psychology from Yale University, as well as Master of Public Administration degree from Drake University. Edward Pooler III, Vice President & Owner Mr. Pooler manages and executes all computer and phone systems, equipment acquisitions, and the development and publication of the company website. At IPA, Mr. Pooler builds all computers, including those required for the network server he also maintains. His experience does not include financial advisory activities. Prior to establishing IPA, Mr. Pooler worked in the banking and insurance industries, and his work included the development of customized and automated database and programming solutions designed to increase efficiencies and minimize error. He continues such work at IPA. Mr. Pooler completed three years at Yale University, and is proficient in various programming languages. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 18 350 g 300 3. Describe their specific experience in the following specialized areas: GO Bonds (voted and non -voted), Urban Renewal bonds, Special Assessments, revenue bonds, variable rate demand bonds, and payment agreements. Irl addition to nearly twelve years at a leading financial advisory firm, IPA's President and engagement manager proudly served the City of Dubuque for almost a decade. This combination of industry expertise and specific, in- depth knowledge of the City makes IPA uniquely qualified to partner with the City. The chart on the left illustrates transaction management experience since 2004 (including experience prior to IPA's establishment and issuers not currently under contract). Of the $3.68 billion in par and 193 transactions executed, IPA professionals have managed the issuance of 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $103.8 million in par for the City of Dubuque. Of the $3.68 billion indicated, $949.6 million is related to the issuance of General Obligation and General Obligation Urban Renewal Bonds, $118.8 million issued were limited/special tax bonds, and $2.61 billion of Revenue Bonds were issued. Not depicted in the graph is an additional $369.8 million of variable rate demand bonds sold from 2005-2008 for which IPA professionals provided senior project management support. Special assessments related to property specific projects, and payment agreements such as rebate agreements are often analyzed or implemented without the public sale of bonds. Ms. Pooler has some experience with assisting clients to quantify potential special assessments, and has assisted a number of cities with feasibility and affordability analysis for proposed rebate agreements for economic development Transaction Experience by Year 250 200 150 100 SO 0 IPA Managed • Formerly Managed. 11 City of Dubuque, Iowa Financial Advisory Services Proposal Page 19 C. Proposed Fee Schedule 1. Please state your fee proposal for the scope of work as financial advisor a described in Attachment A. 1 For services related to long-term financial planning, including the development of tax increment cash flows, debt levy analysis, enterprise fund planning, as well as for the preparation of annual continuing disclosure, IPA proposes an annual retainer fee of $6,000. The fee includes attendance at all meetings. It is anticipated that this fee will be billed in equal quarterly installments. Fees for services related to the issuance of General Obligations are detailed below. Par Amount of Issue Fee Under $5 million $5-$9.9 million $10-$19.9 million $20-$29.9 million $30-$39.9 $40 million and over TIF Abated GO Bonds Revenue Bonds SRF Loans Multiple Issues Sold Concurrently Refunding Bonds $13,000 $15,000 $18,000 $25,000 $30,000 To be negotiated Same as above 125% of the applicable fee No charge Smallest issue billed at 90% of applicable fee Sante as applicable fee City of Dubuque, Iowa — Financial Advisory Services Proposal Page 20 2. Please document any key assumptions made 112 developing the fee proposal and I an l other contin encies the Ci . l should be aware o . 3. Is there a separate charge for attendance at City meetings which are not part o! an otherwise s a eci is Ci en, a, em en t? Out-of-pocket expenses such as travel, lodging and printing will be documented and billed at cost. Transaction fees will not be charged in absence of a completed transaction. The annual retainer will be billed each quarter as long as the contract is in place. IPA's quoted fees include only those for the provision of financial advisory services. Fees charged by other professionals, such as rating agencies, bond counsel, financial printer, etc. are NOT included. IPA acknowledges that a contract and insurance will be required of the successful bidder. IPA will not charge separate fees for attendance at meetings, the time associated with attendance and preparation is contemplated in the annual retainer. It is anticipated that IPA will be reimbursed for reasonable and documented travel expenses (mileage, meals, lodging) incurred to attend meetings. 4. Please indicate an 7 fees or hourl 7 rates for special projects. As indicated above, IPA proposes an annual retainer for all work not related to the issuance of bonds. It is anticipated that this retainer will be sufficient to compensate for all work requested of IPA. In the event a special project falls outside of this scope, our recommendation would be an adjustment to the annual retainer, rather than the charge of an hourly fee. The cost will be dependent upon the scope of the project, and any such adjustment will be agreed to prior to the onset thereof. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 21 D. References 1. Provide three references (name, title, employer, address, and phone number) for the person who will serve as the primary point of contact. The following references have been provided as a testament to our quality of service and dedication to our clients. We encourage the City to discuss with them their experience with IPA. Des Moines Area Community College 2006 S. Ankeny Boulevard Ankeny, IA 50023 Robert Denson, President 1 515.964.6638 Greg Martin, Vice President Business Services 1 515.964.6368 1225 6th Avenue Suite 110 Marion, IA 52302 Lon Pluckhahn, City Manager 1 319.743.6301 Wes Nelson, City Clerk/Finance Director 1 319.743.6351 City ofNoii erty, Iow 3 Quail Creek Circle North Liberty, IA 52317 Ryan Heiar, City Administrator 1 319.626.5711 Tracey Mulcahey, Assistant City Administrator/City Clerk 319.626.5712 Why IPA? IPA wants to resume its history of service to the City. As demonstrated in our proposal, we have all the capabilities of a large company. As a small firm, however, our success has depended upon our reputation and the quality of services provided. IPA began just over 2 years ago with 5 loyal former clients. Since then, we have gained 7 additional clients. Our growth is deliberately measured to ensure we can continue to provide premium service to each client, and it serves as a testament to the ability of a small firm to deliver big results. We are selective in the opportunities we pursue, and we would be proud to represent the City of Dubuque. The City was, and would again be, one of our most important accounts. IPA is the only financial advisory firm whose professionals have a proven record of service with the City. We are eager for an opportunity to grow with the City, and to prove once again that we can provide the City with the exemplary service it deserves. City of Dubuque, Iowa — Financial Advisory Services Proposal Page 22 Request for Proposal (RFP) for: Financial Advisory Services THE CITY OF DUB Masterpiece on the Mississippi City of Dubuque Budget Office 50 W 1 3th Street Dubuque, IA 52001 Dubuque bfrill All -America City 11111 r 2007 • 2012 • 2013 City of Dubuque REQUEST FOR PROPOSAL TI IE CITY OF DUB Masterpiece on the Mississippi Dubuque kaiXi Al -America City �r 2007 • 2012 •2013 PURPOSE OF REQUEST The City of Dubuque ("City") is requesting proposals for the provision of Financial Advisory Services. The primary role of the financial advisor under this contract is to support the debt issuance activity of the City. The initial debt issue under this contract is expected to occur in 2014. Other responsibilities include, but are not limited to: Providing advice on all aspects of any proposed capital financing; Developing innovative solutions to the City's funding requirements in order to achieve the most advantageous financing terms; Making recommendations on the timing, sizing, maturity schedules, call provisions and other details of bond issues; Reviewing and making appropriate recommendations on all ordinances, official statements, and other documents necessary for debt issuance; as well as other responsibilities. 11 SCHEDULE /TIMELINE The City will attempt to follow this timetable, which should result in a final selection by August 18, 2014. TASK DATE Issue RFP July 11, 2014 Deadline for Submitting Questions July 18, 2014 Deadline for Submittal of Proposals July 22, 2014 Preliminary Selection of Short List July 25, 2014 Interviews August 8, 2014 Final Selection August 18, 2014 111 INSTRUCTIONS /GENERAL INFORMATION A. All questions should be submitted in writing (email will suffice) to: Jennifer Larson, Budget Director City of Dubuque 50 W 13th St Dubuque, IA 52001 (563) 589-4110 jlarson©cityofdubuque.org Note that the deadline for submitting questions is by 5:00 pm CDT on Friday, July 18, 2014. B All proposals must be received by no later than 4:00 pm CDT on Tuesday, July 22, 2014. Proposals may be submitted as an email attachment in PDF or MS Word format to: jlarson©cityofdubuque.org. Note that faxed proposals or proposals submitted as Zip files will not be accepted. Page 2 of 14 City of Dubuque Request for Proposal — Financial Advisory Services OR Sealed proposals may be submitted. Sealed proposals must be clearly marked in the lower left- hand corner "RFP—Financial Advisory Services". An original and four (4) copies of the sealed proposal must be delivered to: City of Dubuque Attn: Jennifer Larson 50 W 13th St Dubuque, IA 52001 C. All proposals must include the following items as described on Attachment B: 1. Firm Information 2. Statement of Individual Qualifications 3. Proposed Fee Schedule D. Proposals should be prepared simply and economically, providing a straight forward, concise description of provider capabilities to satisfy the requirements of the request. Special bindings, colored displays, promotional materials, etc. are not required or desired. Emphasis should be on completeness and clarity of content. Use recycled paper for responses and any printed or photocopied material created pursuant to a contract with the City whenever practicable. Use both sides of the paper for any submittal to the City whenever practicable. E. The City is committed to reducing costs and facilitating quicker communication by using electronic means to convey information. Those interested in submitting a proposal are encouraged to provide contact information to Jennifer Larson, Budget Director, at ilarsona(7.cityofdubuque.orq. Providing contact information will allow the City to provide notification if an addendum to the RFP is issued or the RFP is cancelled. Those who choose not to provide contact information are solely responsible for checking the City's website for any issued addenda or a notice of cancellation. IV SCOPE OF SERVICES The services the City would expect the financial advisor to provide are listed in "Financial Advisor- Scope of Services," provided as Attachment A. V TERMS AND CONDITIONS A. The City prohibits the acceptance of any proposal after the time and date specified on the Request for Proposal. There shall be no exceptions to this requirement. B. The City reserves the right to reject any and all proposals that are deemed not responsive to its needs, and to waive minor irregularities in any proposal. C. The City reserves the right to request clarification of information submitted, and to request additional information on any proposal. D. Any proposal may be withdrawn up until the date and time set above for opening of the proposals. Any proposal not so timely withdrawn shall constitute an irrevocable offer, for a period of one hundred and twenty (120) days to provide the City with the services described in the attached specifications, or until one or more of the proposals have been approved by the City, whichever occurs first. Page 3 of 14 City of Dubuque Request for Proposal — Financial Advisory Services E. If a selection is made as a result of this RFP, a contract with fixed/known prices will be negotiated. Negotiations may be undertaken with the Proposer who is considered to be the most suitable for the work. This RFP is primarily designed to identify the most qualified firm. Price and schedule will be negotiated with the "first choice" Proposer. Negotiations may be instituted with the second choice and subsequent Proposers until the project is canceled or an acceptable contract is executed. F. The contents of the proposal of the selected Proposer shall become contractual obligations if a contract ensues. Failure of the Proposer to accept these obligations may result in cancellation of its selection. G. The City reserves the right to award any contract to the next most qualified Proposer, if the successful Proposer does not execute a contract within 30 days of being notified of selection. H. The contract resulting from acceptance of a proposal by the City shall be in a form supplied or approved by the City, and shall reflect the specifications in this RFP. A copy of the proposed contract is available for review (see attachment C). The City reserves the right to reject any proposed agreement or contract that does not conform to the specifications contained in this RFP and which is not approved by the City Attorney. The City shall not be responsible for any costs incurred by the Proposer in preparing, submitting or presenting its response to the RFP. J. The contract shall be in effect for a three-year period upon execution. The contract may be extended for three (3) additional one-year periods at the option of the City. K. Proposals and evaluation materials submitted under this RFP shall be considered public documents and will be available for inspection and copying by the public. The City may request an electronic copy of a proposal response at a later time for this purpose. VI EVALUATION PROCESSS Proposals will be evaluated by a committee of City staff. Evaluations will be based on criteria outlined herein which may be weighted by the City in a manner it deems appropriate. All proposals will be evaluated using the same criteria. The criteria used will be: A. Responsiveness to the RFP The City will consider all the material submitted to determine whether the Proposer's offering is in compliance with the RFP documents. B. Ability to Perform Required Services The City will consider all the relevant material submitted by each Proposer, and other relevant material it may otherwise obtain, to determine whether the Proposer is capable of providing services of the type and scope specific to the RFP. C. Fees Proposed fee schedule as described in Attachment B D. Interviews The City may conduct interviews as part of the final selection process. Page 4 of 14 City of Dubuque Request for Proposal — Financial Advisory Services ATTACHMENT A FINANCIAL ADVISOR - SCOPE OF SERVICES The services to be provided by the financial advisor shall include, but are not limited to, the following: A. Assistance • Evaluate possible financing options for the City, including applicable federal or state programs and subject -to -appropriation debt • Evaluate potential underwriters for a negotiated sale or define process for competitive sale • Evaluate and assist in securing credit enhancement if necessary Evaluate trustee proposals B. Financial Condition Review • Evaluate credit quality and financial strength using typical industry standards • Review, evaluate and comment on adequacy of financial forecast studies or other debt • Prepare written report to the City regarding the feasibility of issuing the bonds and sufficiency of revenues and funds pledged to support the bonds or other debt C. Bond Document Participation and Review • Attend all organizational, document review, and special meetings related to debt financing • Evaluate, advise, and consult with the City and bond counsel regarding financial and non- financial bond covenants of each debt issue • Assist in furnishing materials and data to rating agencies, bond insurers, letter of credit providers, and underwriters • Assist in structuring debt transactions, such as competitively sold bond issues and/or negotiated bond issues D. Official Statement Review and Preparation • Lead team discussions in conjunction with bond counsel on form, content, and sufficiency of information in the official statement • Prepare the official statement in conjunction with bond counsel E. Pricing of Bond Issue Competitive Sale: • Coordinate pre -sale publicity, call for bids, evaluation of bids, recommendations to the City regarding sufficiency of bids, and awarding of bonds. Negotiated Sale: • Coordinate pricing meetings and offerings of negotiated issues • Recommend structure of underwriting teams; i.e., co -managers, selling group, syndicate, etc. • Recommend timing of bond pricing • Review, monitor and advise the City regarding proposed negotiated interest rates and spreads Note: The financial advisor is precluded from participation in the underwriting as co- manager, syndicated member, selling group member, etc. F. Recommendations to the City • Prepare an oral and written recommendation to the City for each debt issue regarding financial feasibility, bond covenants, and pricing. Page 5 of 14 City of Dubuque Request for Proposal — Financial Advisory Services G. Bond Closing • Review closing memorandum with bond counsel to confirm activities at the closing and role of Each party Assist City in evaluating the investment of bond proceeds for construction fund, debt service fund, escrow, etc. H. Special Meetings of the City • Attend all City Council meetings and any special meetings with the City, bond counsel, bond insurers and rating agencies as the City deems necessary. Post Issuance Assistance Advise the City on post issuance changes, credit enhancement, management consultants, etc. • Conduct post issuance reviews (e.g., remarketing agent performance) as requested by the City. • Provide a report to the City on the project and the bond issue sale. • File annual continuing disclosure report • Provide refunding analysis • Provide assistance with post -issuance compliance policy for tax-exempt qualified obligations • Provide assistance with arbitrage regulation compliance J. Program Development • Assist staff by evaluating program proposals or changes in policy. • Assist staff by developing Tax Increment Financing cash flows and debt capacity models. • Assist staff by evaluating and maintaining the City debt management policy. Page 6 of 14 City of Dubuque Request for Proposal — Financial Advisory Services ATTACHMENT B STATEMENT OF QUALIFICATIONS A. Firm Information 1. Describe the experience of your firm in providing public sector financial advisory services. Identify the total number of professionals employed by your firm who serve as financial advisors to public sector entities, including support staff. 2. Identify the number of public sector entities for which your firm currently is under contract to serve as financial advisor, and provide the number and volume of debt issuance transactions completed pursuant to such contracts during the period 2010-2013. Further, identify the number and volume of the following types of transactions completed during this same period: GO bonds, Urban Renewal bonds, revenue bonds, variable rate demand bonds, bond anticipation notes, LTGO bonds, payment agreements, and others, as pertinent. 3. Provide a list of other public sector entities (in terms of their outstanding debt) within the State of Iowa for which your firm currently provides financial advisory services as contemplated in the scope of work. 4. Identify the location of the base office for the individuals who will be assigned to the city and the total number of professionals in such office who serve as financial advisors to public sector entities. B. Individual Qualifications 1. Identify the individual who will initially serve as the primary point of contact with the city under this contract and the other individuals of the team who are expected to work on city transactions. Describe the type of work each is expected to perform. 2. Provide brief biographical information for each of these individuals that identifies their educational background, work history, and past responsibilities serving in similar financial advisory roles. 3. Describe their specific experience in the following specialized areas: GO Bonds (voted and non - voted), Urban Renewal bonds, Special Assessments, revenue bonds, variable rate demand bonds, and payment agreements. C. Fee Proposal 1. Please state your fee proposal for the scope of work as financial advisor as described in Attachment A. 2. Please document any key assumptions made in developing the fee proposal and any other contingencies the City should be aware of 3. Is there a separate charge for attendance at City meetings which are not part of an otherwise specific City engagement? 4. Please indicate any fees or hourly rates for special projects. D. References 1. Provide three references (name, title, employer, address, and phone number) for the person who will serve as the primary point of contact. Page 7 of 14 City of Dubuque Request for Proposal — Financial Advisory Services ATTACHMENT C SAMPLE CONTRACT FINANCIAL ADVISORY SERVICES AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND This Agreement, dated for reference purposes the _ day of _ 2014, is made and entered into by and between the City of Dubuque, I owa, a municipal corporation (hereinafter "City") and whose address is (hereinafter "Consultant"). I. SERVICES BY CONSULTANT A. Consultant agrees to perform the services described in Attachment to this Agreement, which attachment is incorporated herein by reference. B. All services, and all duties incidental or necessary thereto shall be conducted and performed diligently and completely and in accordance with professional standards of conduct and performance. II. COMPENSATION A. The total compensation to be paid to Consultant for these services shall not exceed $ as detailed in Attachment B. Payment to Consultant by City in accordance with the payment ceiling specified above shall be the total compensation for all work performed under this Agreement and supporting documents hereto as well as all subcontractors' fees and expenses, supervision, labor, supplies, materials, equipment or the use thereof, reimbursable expenses, and other necessary incidentals. C. Consultant shall be paid monthly on the basis of invoices submitted. Invoicing will be on the basis of percentage complete or on the basis of time, whichever is applicable, in accordance with the terms of this Agreement. D. City shall have the right to withhold payment to Consultant for any work not completed in a satisfactory manner until such time as consultant modifies such work to the satisfaction of City. E. Unless otherwise specified in this Agreement, any payment shall be considered timely if a check is mailed or is available within 45 days of the date of actual receipt by City of an invoice conforming in all respects to the terms of this Agreement. Page 8 of 14 City of Dubuque Request for Proposal — Financial Advisory Services III. TERMINATION OF AGREEMENT City reserves the right to terminate or suspend this Agreement at any time, with or without cause, by giving ten (10) days' notice to Consultant in writing. In the event of termination, all finished or unfinished reports, or other material prepared by the Consultant pursuant to this Agreement, shall be provided to City. In the event City terminates this Agreement prior to completion without cause, Consultant may complete such analyses and records as may be necessary to place its files in order. Consultant shall be entitled to receive just and equitable compensation for any satisfactory work completed on the project prior to the date of suspension or termination, not to exceed the payment ceiling set forth above. IV. OWNERSHIP OF WORK PRODUCT A. Ownership of the originals of any reports, data, studies, surveys, charts, maps, drawings, specifications, figures, photographs, memoranda, and any other documents which are developed, compiled or produced as a result of this Agreement, whether or not completed, shall be vested in City. Any reuse of these materials by City for projects or purposes other than those which fall within the scope of this Agreement or the project to which it relates, without written concurrence by Consultant will be at the sole risk of City. City acknowledges Consultants plans and specifications as instruments of professional service. Nevertheless, the plans and specifications prepared under this Agreement shall become the property of City upon completion of the work. City agrees to hold harmless and indemnify consultant against all claims made against Consultant for damage or injury, including defense costs, arising out of any reuse of such plans and specifications by any third party without the written authorization of the Consultant. B. Methodology, materials, software, logic, and systems developed under this contract are the property of the Consultant and City, and may be used as either Consultant or City sees fit, including the right to revise or publish the same without limitation. V. GENERAL ADMINISTRATION AND MANAGEMENT The Budget Director and/or the Finance Director for City shall review and approve Consultant's invoices to City under this Agreement, shall have primary responsibility for overseeing and approving services to be performed by Consultant, and shall coordinate all communications with Consultant from City. VI. COMPLETION DATE The estimated completion date for Consultant's performance of the services specified in Section I is Consultant will diligently proceed with the work contracted for, but Consultant shall not be held responsible for delays occasioned by factors beyond its control which could not reasonably have been foreseen at the time of the execution of this Agreement. If such a delay arises, Consultant shall forthwith notify City. VII. SUCCESSORS AND ASSIGNS Consultant shall not assign, transfer, convey, pledge, or otherwise dispose of this Agreement or any part of this Agreement without prior written consent of City. Page 9 of 14 City of Dubuque Request for Proposal — Financial Advisory Services VIII. NONDISCRIMINATION In carrying out the services under this Agreement, Consultant shall not discriminate against any employee or applicant for employment because of race, creed, color, sex, age, national origin, religion, sexual orientation, gender identity, or disability. Consultant shall take affirmative action to ensure that applicants for employment are employed and that employees are treated during employment without regard to race, creed, color, sex, age, national origin, religion, sexual orientation, gender identity, or disability. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Consultant assures that all qualified applicants will receive consideration for employment without regard to race, creed, color, sex, age, national origin, religion, sexual orientation, gender identity or disability. IX. HOLD HARMLESSIINDEMNIFICATION Consultant shall defend, indemnify and hold the City, officers, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or resulting from the acts, errors or omissions of Consultant in the performance of this Agreement. X. LIABILITIY INSURANCE COVERAGE Consultant shall obtain and maintain during the term of this Agreement insurance as described in the insurance schedule in Attachment D. XI. COMPLIANCE WITH LAWS Consultant shall comply with all applicable state, federal, and city laws, ordinances, regulations, and codes. XII. FUTURE SUPPORT City makes no commitment and assumes no obligations for the support of Consultant activities except as set forth in this Agreement. XIII. INDEPENDENT CONTRACTOR Consultant is and shall be at all times during the term of this Agreement an independent contractor and not an employee of City. Consultant agrees that it is solely responsible for the payment of taxes applicable to the services performed under this Agreement and agrees to comply with all federal, state, and local laws regarding the reporting of taxes, maintenance of insurance and records, and all other requirements and obligations imposed on it as a result of its status as an independent contractor. Consultant is responsible for providing the office space and clerical support necessary for the performance of services under this Agreement. City shall not be responsible for withholding or otherwise deducting federal income tax or social security or for contributing to the state industrial insurance of unemployment compensation programs or otherwise assuming the duties of an employer with respect to Consultant, or any employee of Consultant. XIV. EXTENT OF AG REEMENTIMODIFICATION This Agreement, together with all attachments and addenda, represents the entire and integrated Agreement between the parties hereto and supersedes all prior negotiations, representations, or agreements, either written or oral. This Agreement may be amended, modified, or added to only by written instrument properly executed by both Page 10 of 14 City of Dubuque Request for Proposal — Financial Advisory Services parties hereto. XV. ADDITIONAL WORK City may desire to have Consultant perform work or render services in connection with the project other than provided for by the express intent of this Agreement. Any such work or services shall be considered as additional work, supplemental to this Agreement. Such work may include, but shall not be limited to: Additional work shall not proceed unless so authorized in advance and in writing by the City. Authorized additional work will be compensated for in accordance with a written supplemental contract between Consultant and City. CONSULTANT: CITY OF DUBUQUE: By: By: Michael C. Van Milligen, City Manager Dated: Dated: Page 11 of 14 City of Dubuque Request for Proposal — Financial Advisory Services ATTACHMENT D City of Dubuque Insurance Requirements for Professional Services 1. Insurance Schedule C shall furnish a signed Certificate of Insurance to the City of Dubuque, Iowa for the coverage required in Exhibit I prior to commencing work and at the end of the project if the term of work is longer than 60 days. Providers presenting annual certificates shall present a Certificate at the end of each project with the final billing. Each Certificate shall be prepared on the most current ACORD form approved by the Iowa Department of Insurance or an equivalent. Each certificate shall include a statement under Description of Operations as to why issued. Eg: Project # or Lease of premises at or construction of 2. All policies of insurance required hereunder shall be with a carrier authorized to do business in Iowa and all carriers shall have a rating of A or better in the current A.M. Best's Rating Guide. 3. Each Certificate shall be furnished to the contracting department of the City of Dubuque. 4. Failure to provide minimum coverage shall not be deemed a waiver of these requirements by the City of Dubuque. Failure to obtain or maintain the required insurance shall be considered a material breach of this agreement. 5. Subcontractors and sub subcontractor performing work or service shall provide a Certificate of Insurance in accord with Exhibit I. 6. All required endorsements to various policies shall be attached to Certificate of insurance. 7. Whenever a specific ISO form is listed, an equivalent form may be substituted subject to the provider identifying and listing in writing all deviations and exclusions that differ from the ISO form. 8. Provider shall be required to carry the minimum coverage/limits, or greater if required by law or other legal agreement, in Exhibit I. 9. Whenever an ISO form is referenced the current edition of the form must be used. Page 1 of 3 Schedule C, Professional Services October 2013.Doc Page 12 of 14 City of Dubuque Request for Proposal — Financial Advisory Services City of Dubuque Insurance Requirements for Professional Services Insurance Schedule C (continued Exhibit A) COMMERCIAL GENERAL LIABILITY General Aggregate Limit $2,000,000 Products -Completed Operations Aggregate Limit $1,000,000 Personal and Advertising Injury Limit $1,000,000 Each Occurrence $1,000,000 Fire Damage Limit (any one occurrence) $ 50,000 Medical Payments $ 5,000 a) Coverage shall be written on an occurrence, not claims made, form. All deviations from the standard ISO commercial general liability form CG 0001, or Business owners form BP 0002, shall be clearly identified. b) Include ISO endorsement form CG 25 04 "Designated Location(s) General Aggregate Limit" or CG 25 03 "Designated Construction Project (s) General Aggregate Limit" as appropriate. c) Include endorsement indicating that coverage is primary and non-contributory. d) Include endorsement to preserve Governmental Immunity. (Sample attached). e) Include an endorsement that deletes any fellow employee exclusion. f) Include additional insured endorsement for: The City of Dubuque, including all its elected and appointed officials, all its employees and volunteers, all its boards, commissions and/or authorities and their board members, employees and volunteers. Use ISO form CG 2026. B) AUTOMOBILE LIABILITY $1,000,000 (Combined Single Limit) C) WORKERS' COMPENSATION & EMPLOYERS LIABILITY Statutory benefits covering all employees injured on the job by accident or disease as prescribed by Iowa Code Chapter 85 as amended. Coverage A Coverage B Statutory—State of Iowa Employers Liability Each Accident $100,000 Each Employee -Disease $100,000 Policy Limit -Disease $500,000 Policy shall include an endorsement providing a waiver of subrogation to the City of Dubuque. Coverage B limits shall be greater if required by Umbrella Carrier. D) UMBRELLA LIABILITY $1,000,000 Umbrella liability coverage must be at least following form with the underlying policies included herein. E) PROFESSIONAL LIABILITY $1,000,000 Page 2 of 3 Insurance Schedule C Page 13 of 14 City of Dubuque Request for Proposal — Financial Advisory Services City of Dubuque Insurance Requirements for Professional Services Preservation of Governmental Immunities Endorsement 1. Nonwaiver of Governmental Immunity. The insurance carrier expressly agrees and states that the purchase of this policy and the including of the City of Dubuque, Iowa as an Additional Insured does not waive any of the defenses of governmental immunity available to the City of Dubuque, Iowa under Code of Iowa Section 670.4 as it is now exists and as it may be amended from time to time. 2. Claims Coverage. The insurance carrier further agrees that this policy of insurance shall cover only those claims not subject to the defense of governmental immunity under the Code of Iowa Section 670.4 as it now exists and as it may be amended from time to time. Those claims not subject to Code of Iowa Section 670.4 shall be covered by the terms and conditions of this insurance policy. 3. Assertion of Government Immunity. The City of Dubuque, Iowa shall be responsible for asserting any defense of governmental immunity, and may do so at any time and shall do so upon the timely written request of the insurance carrier. 4. Non -Denial of Coverage. The insurance carrier shall not deny coverage under this policy and the insurance carrier shall not deny any of the rights and benefits accruing to the City of Dubuque, Iowa under this policy for reasons of governmental immunity unless and until a court of competent jurisdiction has ruled in favor of the defense(s) of governmental immunity asserted by the City of Dubuque, Iowa. No Other Change in Policy. The above preservation of governmental immunities shall not otherwise change or alter the coverage available under the policy. SPECIMEN age 3 of 3 Schedule C, Professional Services October 2013.Doc Page 14 of 14 City of Dubuque Request for Proposal — Financial Advisory Services