City Council Meeting


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  F.2.e.       
Meeting Date: 04/19/2022  
Contact: Tracy Cormier, Managing Director of Financial Services

COUNCIL ACTION
Motion by Councilmember Dr. Dinah Marks with a second by Councilmember Letitia Hughes to approved as presented, Motion passes 7-0.
AGENDA ITEM:
Consider authorizing the City Manager to negotiate and execute a professional services agreement for municipal/financial advisor services with Hilltop Securities 
BACKGROUND:
The City of DeSoto, with the guidance of its Capital Improvement Plan, periodically sells bonds and uses other financial management strategies to provide the funding required to implement that improvement plan. The City contracts with municipal financial advisors to assist with development of short-term and long-term financing plans and advise the City on current bond market conditions. Financial advisors also coordinate, prepare, and submit required information to recognized bond insurance companies for insurance qualification; maintain liaison-relationships with bond counsel in items including questions pertaining to financial debt and preparation of all legal documents; counsel in selection of the paying agent/registrar; review bond proposals for legal and IRS regulations; advise and assist in exercising any call and/or refunding; and provide all financing planning services as requested and advise and assist with arbitrage and rebate reporting audits.
FINDINGS:
On February 22, 2022, the City of DeSoto issued RFP 2022-004 for Municipal Advisor services. The selection process entails selecting the most highly qualified provider on the basis of demonstrated competence and qualifications. Two proposals were received on March 10. Subsequently, negotiations ensue for a fair and reasonable price.

The services of the financial advisor are as follows:
  1. Assist and advise in the development of short-term and long-term financing plans.
  2. Advise City of current bond market conditions.
  3. Recommend as to the advisability of obtaining credit ratings, identify proper plan to best market the City rating agencies, and coordinate preparation and submission of information to rating agencies.
  4. Coordinate, prepare, and submit required information to recognized bond insurance companies for insurance qualification.
  5. Coordinate efforts for delivery of debt instruments and preparation and verification of closing figures.
  6. Maintain liaison with Bond Counsel in items including, but not limited to, questions pertaining to financial debt and preparation of all legal documents.
  7. Counsel in selection of paying agent/registrar.
  8. Deliver schedule of annual debt requirements on debt instruments.
  9. Attend City Council meetings with staff as requested.
  10. Advise of changes in Federal and State laws and regulations.
  11. Review bond proposals for legal and IRS regulations.
  12. Advise and assist in exercising any call and/or refunding.
  13. Provide all financing planning services as requested.
  14. Testify in litigation as requested.
  15. Make recommendations on matters of credit enhancement (the City's credit rating).
  16. Advise and assist with arbitrage and rebate reporting audits.
Two firms responded to the City's RFP; Hilltop Securities and Estrada-Hinojosa.  The firms and their proposals were evaluated based on
  • Experience of the personnel proposed to be assigned to the City,
  • Qualifications of the firm and team,
  • Financial condition (value), and
  • References.
Hilltop Securities has served as DeSoto's financial advisor for more than five years. They have assisted the City is securing an improved bond rating. Feedback from staff regarding their performance has been consistently positive and the City's effective debt management and financial planning has been supported by the analysis, recommendations, and services that they have provided. Hilltop Securities' is a national firm land its Texas headquarters in located in Dallas. They serve 2,435 cities nationally.   
Estrada-Hinojasa is also a well qualified firm serving Texas with a number of offices including one in Dallas. They do not have a history with DeSoto.
FINANCIAL IMPACT:
Financial advisors are compensated based on the value of debt transactions. That compensation is included in the issuance costs of those transactions. The fee proposals of both firms is similar with both charging around $35,000 for a $10 million general obligation bond issuance. Hilltops Securities' fee schedule does provide for a lower fee on transactions above the $10 million value: ($50,000 for a $25 million General Obligation bond issuance versus $65,000).
RECOMMENDATION:
Staff recommends that the City Council authorize the City Manager to negotiate and execute a professional services agreement for municipal/financial advisor services with Hilltop Securities. 
MANAGEMENT REVIEW
Attachments
Hilltop Securities


    

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