11. Financial Advisor, designation 1 -As
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CITY OF _A CHANHASSEN
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4 690 COULTER DRIVE •• P.O. BOX 147 •• CHANHASSEN, MINNESOTA 55317
1 (612) 937-1900
IMEMORANDUM
TO: Mayor and City Council
IFROM: Don Ashworth, City Manager
DATE: September 25 , 1989
ISUBJ: Fiscal Consultant
I The City Council acted to table action on this item during their
special session of Wednesday, September 13, 1989. Staff recom-
mended tabling to clarify a letter which had just been received
I from Springsted regarding fees for their service.
I have met with officials from Springsted wherein they have
agreed to establish a retainer of 50 hours which can be drawn
I upon by the City for special projects. The special projects
category comes into play where the City is considering tax incre-
ment proposals which do not involve the sale of bonds . If there
I is no bond sale, typically a consultant would not be paid unless
it was through an hourly rate. In 1988, the number of non-bond
issue hours worked by Mr. Merry was 218 .
1 Modified Comparison of Rates
Based upon the City Council ' s action to consider modifications
I and the statements by Springsted/Mericor, I have re-estimated the
total fee schedule from each of the bidders. Mr. Merry stated
that he would match the Springsted proposal. As staff does not
I anticipate that "special projects" will be as extensive in 1990
as they have been this past year, we are re-setting those hours
to 50 versus the 218 previously shown. Although I have talked to
PFS, such occurred prior to meeting Springsted and, therefore, I
1 do not know if they would also agree to a "no charge" retainer.
Comparison Bids
IIAt time of tabling, the Council asked for a tabulation of the
bids received by Chanhassen, during the past two sales , in com-
parison to other bids received by other cities . Although I have
1 stated that it is very difficult to make comparisons of bids
recognizing the apples and orange situation which typically
exists , I was quite surprised to see that Coon Rapids (a
1 Springsted community) sold at the same time frame as the
Chanhassen bonds on our last sale and that Eagan (another
Springsted city) likewise sold at a similar time frame to the
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Mayor and City Council
September 25 , 1989
Page 2
first sale in 1988 . A key factor in reviewing bids is in
recognizing the credit rating differences that exist between
cities. Typically, a tenth of a percent difference can be seen ,
for stronger rated issues over weaker rated credits. In one case,
Chanhassen had a similar rating and in the second a lower rating
than the Springsted communities. In both cases, the rates
received by Chanhassen were better than the other cities.
As originally stated, I believe it is very difficult to make rate
comparisons. Even though Chanhassen' s rating is lower, much of
our debt is shorter term and we have generally received a very
good response in the marketplace regardless of the specific
rating itself. To me, the statistics are not as important as
past performance in terms of insuring that we get as many bids as
possible for our account. Specifically, the City has looked to a
minimum of three bond insurers on our last offerings and has
received at least four bids. By this memorandum, I am
challenging whoever gets our account to carry out a performance
level where we can see those same three bond insurers and four
bidders on the bond sale itself. I think it is also important
that the bond sale show that the Chanhassen sale is seen by the
marketplace to have similar quality to that attributed to com-
munities such as Eagan, Coon Rapids .
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CHANADV89
CITY OF CHANHASSEN MN.
FINANCIAL ADVISOR PROPOSALS
FEE EVALUATION
AUGUST 18, 1989
ONE SALE ONE SALE
T.I.F 6.0. IMP. T.I.F. T.I.F. TOTAL
FINANCIAL ADVISOR 1,775,00 -e---?- 1,200,000 i 4,815,000 740,000 1,015,000 6,570,000
PUBLIC FINANCIAL SYSTEMS 9,186 6,225 13,000 6,160 8,450 27,610
MILLER & SCHROEDER 10,325 6,450 15,223 5,415 6,034 26,672
JURAN & MOODY 13,500 5,000 17,500 5,500 6,000 29,000
MERICOR-FEE SCHEDULE 14,200 15,000 ADD ALL BONDS TOGETHER 42,135
MERICOR-ACTUALLY CHARGED 17,750 12,500 25,045 9,070 9,353 43,468
EVENSON DODGE 17,025 9,690 18,630 13,362 16,545 48,537
SPRINGSTEAD 18,150 10,900 18,900 13,050 16,350 48,300
HOURLY MERICOR'S RESULTING TOTAL POLICY ON REIMBURSEMENT
FINANCIAL ADVISOR RATE (MAX.) 1988 HOURS HOURLY FEES ANNUAL FEES FOR DISBURSEMENTS *
PUBLIC FINANCIAL SYSTEMS 120.00 50 218:50' 4,0oa26;220':00 6 ,9 Ek 00 20, - "OTHER DIRECT EXPENSES"
MILLER & SCHROEDER NOT GIVEN 218.50 UNDETERMINED --- NOT PROVIDED
JURAN & MOODY 100.00 218.50 21,850.00 69,350.00 COVERED BY FEE
MERICOR-FEE SCHEDULE 75.00 3"0 21650 dO 18487:50 8-7;-.7E750 ,5T 4d " COVERED BY FEE
MERICOR-ACTUALLY CHARGED 60.00 218.50 13,110.00 86,828.00 " COVERED BY FEE
EVENSON DODGE 145.00 218.50 31,682.50 106,934.50 OVERNIGHT MAIL
SPRINGSTEAD 150.00 S-0 218750 4*' 75:00 • 110,125.00 si, z a a ° COMPUTER RUNS, COPYING, LONG DISTANCE,
POSTAGE, COURIER, AND
GOVERNMENTAL 'mg Y FEES
* IT IS ASSUMED THAT LOCAL TRAVEL, OFFICE RELATED DISBURSEMENTS INCLUDING LONG DISTANCE,
COURIER AND POSTAGE (0.S. DISTRIBUTION) ARE INCLUDED IN THE BASE FEE UNLESS OTHERWISE INDICATED.
INDICATED. IT IS FURTHER ASSUMED THAT EXTRODINARY EXPENSES LIKE RATING MEETING TRIPS
TO NEW YORK WILL BE ELLIGIBLE FOR REIMBURSEMENT BY THE CITY.
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FISCAL CONSULTANT SERVICES
Services Without Fee
o Coordinate "Lost Bond" requests with attorney/paying
' agent/holder. Prepare report to Council with recommendation.
o Complete all forms required by Moody' s, other rating service,
or insurance companies, i .e. cut and paste new debt to pre-
vious debt listings , lift cash balances from audit report,
and/or meet with treasurer to obtain interim cash balance
information.
° Prepare hypothetical bond schedule, utility rates/general
obligation tax levies, and potential rate/tax impacts to
' various classes of residential/commercial properties. Test
tax impact of alternate sources of revenue versus taxes. As
long as the proposal may lead to a bond sale, no fees are
charged, i .e.
' - Parkland Acquisition in lieu of church construction by
Eckankar
- Community Center at Instant Web
- Community Center at School (two separate proposals )
- Excess Levy Projects (various )
' - Water Tower Construction
- Parks in Southern Chanhassen
- Lake Ann Park Expansion
- Community Trails
' - Aerial Fire Truck/Firemen Training Facility
o Analyze and/or negotiate paying agent fee changes including
' making recommendations for change.
o Analyze, at least yearly, all debt funds as potential can-
didates for refunding or defeasance.
° Review goofy financing schemes and report as to fallacies .
Attend Commission/Council meetings to discuss such if
' necessary.
Bond Sale Services (work included in fee schedule )
° Two original sets of all bond sale documents including
prospectus, resolutions, rating agency reports, arbitrage
' certificates , analysis information, bids, final fee schedule,
specimens , etc .
° Detail listing of each project showing specific construction
cost detail , overhead, capital interest, bonding costs in
both an itemized form as well as summary of all projects.
Detail to show assessment term, years spread, receipts by
' year, etc. in both detail and summary form. Overview sheets
to show revenue versus expenditures and coverage require-
'
Bond Sale Services (continued)
ments . Detail to include estimated bond proceeds, distribu-
tion of such to debt and construction accounts . Projected
numbers to be replaced with actual at time of closing.
o Cash flow analysis in sufficient detail as to track construc-
tion expenditures/verify such to actual/and in a form which
can be given to bank for investment purposes .
o All debt analysis sheets , including investment ledger, pre-
pared
using Lotus 123 with the City being furnished a copy of
such with names/description of each file.
o Analyze each issue to determine ability of City to seek '
upgrade in rating.
o Obtain bids from bond insurers for each issue and award each
issue to low bidder .
o All issues structured to allow bidding as insured or on own
merits .
• Receive bids for paying agent services and award to low
bidder . '
Special Services
° All private development incentive projects where the initial
objective is pay-as-you-go are to be billed hourly. Services
include negotiating with developments to insure proposal
meets current policies, complete tax analysis of the project
and verify that pass-through is logical . Establish Lotus
files which can be easily modified to change projected to
actual. Verify that all incentive agreements match approval
guidelines prior to signature. Verify request for payment
meets incentive agreement requirements when increment
generated but prior to pass-through.
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