|The Woodlands Township requires the services of a financial/municipal advisor for matters regarding currently outstanding bond indebtedness as well as potential future bond issuances.
Since 2010, Drew Masterson has served as the Township’s financial/municipal advisor. He has successfully managed the issuance and defeasance of bonds for the Township and has provided valuable assistance during credit agency rating reviews. He also recommended refinancing of the Convention Center bonds, which resulted in a $5.6 million savings in interest expense for the Township.
Several months ago, Mr. Masterson resigned from the Township’s current financial advisory company, Hilltop Securities (formerly FirstSouthwest), and established a new financial advisory firm, Masterson Advisors LLC. Due to Mr. Masterson’s detailed knowledge of the Township’s debt management plan and his exemplary performance as the Township’s financial/municipal advisor, staff is recommending that the Township maintain the business relationship with Mr. Masterson and execute a Municipal Advisor Engagement Letter with Masterson Advisors LLC.
Masterson Advisors fee schedule, which is shown in Appendix B of the attached engagement letter, compares favorably to Hilltop Securities and is summarized below:
$9,000 for the first $500,000 of bonds issued
plus $4.00 per $1,000 for the next $1,500,000 of bonds issued
plus $2.00 per $1,000 for the next $3,000,000 of bonds issued
plus $1.75 per $1,000 thereafter
The above charges shall be multiplied by 1.25 for the completion of an application to a federal or state government agency or for the issuance of revenue bonds or refunding bonds, reflecting the additional services required.
By comparison, fees charged by Hilltop Securities under the current agreement are as follows:
1.0% of the first $10 million issued plus
0.5% of the next $10 million issued plus
0.25% of any additional amount
The same 1.25 factor described above for Masterson Advisors is also included in Hilltop’s fee schedule.
Below is a summary of fees based on a bond issuance of $10 million, $25 million and $50 million.
|Fees (excluding 1.25 factor)
|$10 million bond issuance
|$25 million bond issuance
|$50 million bond issuance
The Township’s agreement with Hilltop Securities states that either party can terminate the agreement, with or without cause, with thirty days written notice. If the Board of Directors approves Masterson Advisors as the Township’s financial/municipal advisor, staff will notify Hilltop Securities accordingly.