CR 94-132 Agreement Ehlers & Associates
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July 7, 1994 0 P K \ 'I'< Council Report 94-132
AGREEMENT EHLERS AND ASSOCIATES, INC.
Proposed Action.
Staff recommends adoption of the following motion: "Move to
authorize execution of an aqreement with Ehlers and Associates.
Inc.. financial specialists. reo Westbrooke Housing Improvement
Area.
Overview
In conjunction with the creation of a special Service District
for the Westbrooke Patio Homes/Condominium Association it is
anticipated that bonds will be sold with repayment from fees
paid by the individual property owners. In conjunction with
this effort City staff is proposing to utilize the services of
Ehlers and Associates to undertake the following tasks:
o Study available financial options and calculate the
impact of each option on those properties within a
specific Special Service District.
. 0 Undertake the necessary steps to facilitate the
issuance of bonds for this project.
The compensation for services from this group would only be
provided at such time as bonds were sold for this project. If
there is no bond sale, there is no obligation for the city to
make any payment for services provided. Payment for services
would be based on a schedule provided within the agreement. The
fee schedule is generally in line with fees paid for other bond
sales. This cost would be incorporated into the actual bond
amount, and as a result repaid as part of the fee payments
received from the property owners within the special Service
District boundaries.
The City's regular financial consultant for most bond issues is
Evenson Dodge. However, in this case staff is recommending the
use of Ehlers and Associates because the individual that
assisted staff in the original preparation of the Special
service District legislation is presently with this
organization.
supporting Documents
o prop~l and agreement
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Dirtctor of Pli/ ning and Economic Development
~ ':,JUL 12 '94 12:54PM EHLERS & RSSOCIATES P.2/7
. PROPOSAL AND AGREEMENT
INDEPENDENT FINANCiAl CONSULTING SERVICE
TO: City of HopkIns, MN June 22, 1994
101 a First Street South
HopkIns, MN 55343
The following is a proposal and agreement to engage Ehlers and Associates, Inc. as financial
specialists to assist the City of Hopkins with the creation and implementation of financing for
hous.ing improvement areas in the Westbrooke neighborhood, including: (1) to execute
certain financing by the sale of obligations; (2) to suggest and analyze all financing material
and reports necessary to pro~erlY explain the project flnanclng, s.g., planning and
authorization of obligations; and 3} perform extended or ancillary services preceeding, during
or after authorization and sales of obligations, but which are not normally involved In a project
financing.
Pursuant to your request, we submit the following offer to provide Independent financial
consulting services.
. DEANITJONS
Community means the City of Hopkins.
Government means the city council charged with the management and control of the
Community. Where the words ~bou~ or "your" appear, they shall refer to the government as
defined above to which this may e addressed.
Companr refers to Ehlers and AssociatAs, lnc. or Its successors. The words "we~ or
"us" or "our" shal mean the Company.
Obfigatlons mean any bonds, notes, certificates of Indebtedness, warrants or other
instruments of indebtedness which may be issued by the government to obtain funds for a
capital improvement project in or for the Community.
Authorization means approval of a project by the required majority of voters or
approval by the governing body and/or other agencies from which approval for the project
must be obtained following the required procedures so that no further approvals are needed
prior to issuance of obUgatlons.
Project refers to the creation of housing improvement areas and the financing of
improvements within the areas.
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. JUL 12 '94 12:54PM EHLERS & RSSOCIRTES P.3/7
. SERVlCES
Planning and Authorization
The followinQ.. covers financial consulting services required from inception of the financing
program through the actual authorization of the Issuance of obligatIons - to a point where the
government is In a position to execute the financing by offering bonds for sal8. The Company
shall :
1. Cooperate In every way with you, your architect or engineer, planner, attorney and
other authorized representatives.
2. Study all available financing options.
3. With the aid of our computer services and computer programs, project the effect of
any proposed financing options on local taxes and other revenue bases through the
financing period.
4. Submit written reports, including printed computer projections, to the government
outlining the feasibility of the projects, comparing methods of financing, interest costs,
tax rates, special assessments and other revenues demonstrating various options
available to the Community and theIr effect on long-range financial planning.
5. Recommend financing designed to best fit the resources and requirements of the
Community.
. 6. Consult with attorneys of your choice relative to all notices, minutes, resolutions and
proceedings necessary to authorIze the financing.
7. Attend your meetings and public hearings necessary to properly explain the project
financing.
Execution of Project Financing
As our standard service in marketing and issuing obligations after authorization, we shall:
1. Serve as the Community's independent fInancial specialist
2_ Refrain from any dealer or investor interest in obligations of the Community and
receive no compensation in connection wlth the project flnancing, either directly or
indfrectly, from any source other than the compensation and reimbursement paid us
by the Community and its government under the terms of this proposal.
3. Cooperate in every way with you, your administration, planners, engineers and/or
architects, attorneys and other authorized representatives.
4. Provide standard debt retIrement schedules.
5. Consult with attorneys of your choice relative to notices, minutes, resolutions and
proceedings necessary for the Issuance of obligations.
6. Advise you of bond market conditions and recommend sale details consistent with
. the Community's objectives which will best assure the successful sale of your bonds.
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'_<,JUL 12 ' 94 12:55PM EHLERS & ASSOCIRTES P.4/7
. Execution of Project Financing (cant)
7. Research, author, produce and distribute a thorough, accurate official statement for
the sale of obligations.
8. Advrartise the sale as required and in such other financial publications as wiU best
assure competitive bidding for your obligations.
9. Where re~uired or desirable, and in lieu of services Sbecified in Sections 7 and 8 of
above (0 lcial statement, advertisIng), negotiate on ehalf of the government with
interested purchasers for the sale of obligations to obtain the best pos~b18 terms
thereon for the Community.
10. If required or advisable, prepare and forward financial, cultural, demographic and
other descriptive material to rating services to secure a rating for the Community's
obligations.
11. AS an Independent agent, as may be requested, receive, complete and deliver bids
to the sale on behalf of any underwriters requesting such service.
12. Attend the sale of the obligations, compute bids and advise you as to theIr
acceptability In the light of bond market conditIons.
13. Supervise the printing and execution of the obligations.
14. Coordinate our efforts with those of local counsel and recognized bond approving
. attorneys of your choice to better assure a valid a.pproving opinion as to the legality
of the obligations.
15. Supervise delivery of the obligations, closing the financial transaction. and delivery
of proceeds to the government.
16. As Independent consultants, having no financial Interest in the transaction, and at
the request of the government, assist in the investment of the sale proceeds
consistent with safety and the financial requirements of the Community.
17. Provide a record book and al/ necessary data for the use of the government and its
administrators through the maturity of the issue.
18. Maintain copies of proceedings (hard copy or microfilm) until final maturity of the
obligations.
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'-JUL 12 '94 12:5SPM EHLERS & RSSOCIRTES P.5/7
. COMPENSATION
In return for services in connection with the mar1<etlng of bonds to finance a project and for
each Issue or series of obligations, we shall be entitled to a fee, due and payable only upon
the award of !he sale of the obligations as follows:
$ 17.85 per $1,000 for the first $500,000 bonds issued
$ 8.90 per $1 ,000 for the next $500,000 bonds issued
$ 4.45 per $1 ,000 far the next $1,000,000 bonds issued
$ 2.30 per $1 ,000 for the next $8,000,000 bonds issued
$ 1.15 per $1 ,000 for any amount 1n excess of $1 0,000,000
The gross fee for any offering processed above shall not be less than $5,875.
When more than one bond issue Is sold in a single offering, the fee for the small issue(s) of
the offering shall be reduced by twenty.five percent; provided, however, that the fee for any
issue shall not be less than $4,400.
For revenUE! bonds, Including "double barrelled" general obligation revenue bonds, the above
fee shall be multiplied by 1 .5.
From said fee we are to pay the costs of computer services furnished or ordered by us in
connection with processing such issues, advertIsing the sale, ~reparatlon and distribution of
. the official statement, printing of the obligations, and normal ompany personnel travel and
overhead expense required to service a normal bond issue.
AI/legal fees, C.P.A. or accountant's charges, and the charges for any ather professional work
required to complete the project financing, and all bond rating expenses and the cost of any
authenticating agent shall be paid by the government.
It is further agreed that you reserve the right to reject all offers secured for the obligations.
Failure to Receive Offers: No Fees
If no offer is received for the bonds or if the best offer is determined to be unreasonable in the
light of various Indices recognized by the trade for bonds of similar maturities and 9uality and
is rejected. we shall not be entitled to any fee under this portion of the agreement (marketing
bonds). but we shall be reimbursed our out of pocket expense incurred in advertising, printing
and distribution of the official statement, and travel expense. In such case, for a period of one
year, we shall be authorized to solicit further offers, either through solicitation or public sale
and, if successful in obtaining an offer reasonably close to market rates, or which is accepted
notwithstanding, we shall be entitled to the fees described above, less any previous
reimbursements of expenses. Such time to seek additional offers shaH be extended if we are
prevented from entertaining offers because of statutory interest rate or other legal limitations.
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, '..JUL 12 '94 12: 55PM EHLERS & ASSOCIATES P. 6/7
. Abandonment
If a project is abandoned before receiving bids on bonds, we shall not be entitled to
compensation except as described herein. If the project is abandoned after market rate bids
have been received from bonds, we shall be entitled to the entire fee determined from the
schedule above, less bond printing expense If no bonds have been printed. At our option, a
project shall be deemed abandoned if bonds are not issued within nine months atter
authorization by election, hearings, and governing body action, or other required proceedings;
provided, however, that if a bond sale is in process, the project shall not be deemed
abandoned. If, after it shall have been abandoned, a project Is reactivated, any fees
previously billed tar travel and other out of pocket expense shall not be credited against the
fee and expenses involved in completing the reactivated project, except as further agreed
between the parties.
Umilation of Uabifity; Bond Market and Jrrterost Rates
The bond market and Interest rates can be volatile and fast changing, subject to factors
beyond the control or knowledge of the consultant, and Ehlers and Associates, Inc. shall not
be liable for differential interest costs which might be determinable only after the sale. For
example, should we recommend a bond sale and It later appears that, had the sale been
advanced or postponed, a lower interest rate might have been obtained, neither the Company
nor employees of the Company shall be held liable for the dIfferential interest cost.
Government Regulations; Renegotiation
. The United States government may at any time adopt laws and regulations relating to the sale
and issuance or municipal bonds. Depending upon future regulations and interpretations
thereof, substantial additional duties and responslbiHties may be imposed not contemplated In
the description of services above. Should such laws and regulations result in such added
work and costs that they cannot be performed within the compensation provided In this
proposal, the Company reserves the right to renegotiate the Company's compensation,
provided however, that if the parties cannot renegotiate an agreement to tllelr mutual
satisfaction, this contract may be terminated, provided that the Company shall be
compensated for services and expenses incurred to that time according to the terms of this
proposaL
Work Product; Computer Programs
Upon completion of work for which billings are made, copIes of all computer runs, analyses,
reports, and official statements, shall be delivered to the government, provided, however, no
such documents shall be used in soliciting offers for the purchase of bonds or other
Investment witnout our permission. All computer programs used by the Company in prepa.ring
fIscal analyses shall remain the property of the Company.
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. ., JUL 12 '94
. 12:56PM EHLERS & RSSOCIATES P.7/7
e DUTIES OF ruE COMMUNITY
The Community will authorize and dIrect its administration, attorneys, bond counsel,
accountants, engtneers, archItects, actuarIes. and other consultants to prepare and furnish
such informatIon as may be reasonably necessary fur the Company to carrl; out its duties and
obligations, all at no cost to the Company. The government shall provide mandai statements
~Udit reports, If available) for at least the last three fiscal years and without cost to the
ompany.
TERMINAT10N
Except as otherwise provided, this agreement shall continue in effect subject to termination by
either party upon 60 days written notice.
INFLAT10N; DElAYED PROJECT
The fees and estimated costs stated herein shalf ~overn for the twelve calendar months
following first executfon of this agreement. However, If the project is not completed wfthin that
period, said fee may be Increased by a factor as determined from official cost of living Indices.
BILUNGS; PAYMENT; INTEREST
Billings will be rendered following completion of the work assigned, or more frequently as
e agreed, and charges will be payable thirty days after the billing date. To payments made
thereafter shall be added daily interest at 16% per annum or such lesser maximum annual
interest rate permitted by law. Such interest shall be compounded monthly.
Respectfully submitted,
EHLERS AND ASSOCIATES, INC.
By: ,
Accepted by the City of Hopkins:
Mayor Date
e City Manager Date
NAD172
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