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HomeMy WebLinkAboutRes-2019-192 PSA PFM FinancialBOARD OF COUNTY COMMISSIONERS COUNTY OF KITTITAS STATE OF WASHINGTON RESOLUTION NO. 2019 -\ ~ ~ A RESOLUTION ACKNOWLEDGING EXTENSION OF THE PROFESSIONAL SERVICES AGREEMENT BETWEEN KITTITAS COUNTY TREASURER'S OFFICE AND PFM FINANCIAL ADVISORS, PLLC WHEREAS, Kittitas County Treasurer's Office (KCTO) has had a Professional Services Agreement with PFM Financial Advisors, PLLC (PFM) since 2016 in which PFM serves as the financial advisor to assist the Treasurer's office in developing and implementing strategies to meet their short and long-term operations, financial obligations, capital financing needs, and to render assistance with respect to debt transactions; and WHEREAS, PFM and KCTO wish to extend the existing professional services contract an additional two years in writing, as allowed for in the original contract agreement, a copy of which is attached hereto; and WHEREAS, the purpose of extending the agreement is to continue the agreement from January 1, 2020 to December 31, 2021 and thereby retain the services of PFM as financial advisor, for which a quarterly retainage fee of $1,000 is paid, as well as any additional fees billed at a fixed rate for financing projects (e.g., bond issuance) and non- transaction related hourly project fees; and WHEREAS, there were no changes to the contract terms, including cost, other than extending the term from January 1, 2020 to December 31, 2021. The original contract allows for additional two year extension terms upon mutual agreement in writing. NOW, THEREFORE, BE IT RESOLVED AND IT IS HEREBY ORDERED, That the Agreement between Kittitas County Treasurer's Office and PFM Financial Advisors, PLLC is adopted. ADOPTED this ~L day of ou,,,ern);:e,,(2 2019 . BOARD OF COUNTY COMMISSIONERS KITTIT COUNT I WASHINGTON RESOLUTION RESOLUTION KITTITAS COUNTY PROFESSIONAL SERVIVES AGREEMENT AMENDMENT NO. 2 The Professional Services Agreement entered into September 15, 2016 by and between the Kittitas County (the "County'') and PFM Financial Advisors LLC ("PFM") is amended as follows: 1. TERMS AND TERMINATION A. Extend the Term in Section IV of the Agreement through December 31, 2021 unless sooner terminated according to the provisions therein. 2. NOTICES A. Amend Section VII as follows: KITTITAS COUNTY 205 West 5th Avenue, Suite 102 Ellensburg, WA 98926 Attention: Amy Cziske, County Treasurer PFM FINANCIAL ADVISORS LLC 1200 Fifth Avenue, Suite 1220 Seattle, WA 98101 Attention: Managing Director With a copy to: PFM FINANCIAL ADVISORS LLC 650 Holladay Street, Suite 1600 Portland, OR 97232 Attention: Duncan Brown ALL OTHER TERMS AND CONDITIONS OF THE ORIGINAL CONTRACT REMAIN IN FULL FORCE AND EFFECT. IN WITNESS WHEREOF, the parties hereby execute this Amendment. County: t l/UJ/fq Date Managing Director Title ; ACKNOWLEDGED this BOARD OF COUNTY COMMISSIONERS Kl :r WASHINGTON PFM FINANCIAL ADVISORS LLC AGR E EMEN':r F OR FINAN CIAL ADVI SORY SERVICES This agreement ("Agreement"), made and entered into this L2 day of ~+e .... be{by and between Kittitas County ("Client'') and PFM Financial Advisors LLC 01ci:c.irulfi called ''PFM'') sets forth the terms and conditions under which PF1vi shall provide services. WHEREAS, Client is desirous of obtaining the services of a financial advisor to develop and assist in implementing Client's strategies to meet its current and long-term operations, financial obligations, capital financing needs and render assistance in respect to debt transactions; and WHEREAS, PFM is capable of providing the necessary financial advisory services. NOW, THEREFORE, in consideration of the above mentioned premises and intending to be legally bound hereby, Client and PFM agree as follows: I. SCOPE OF SERVICES PFM shall provide, upon request of the Client, services related debt issuance, as applicable and set forth in Exhj bit_A to this Agreement. Client acknowledges and agrees that most tasks requested by Client will not require all services provided for in Exh ibi t A and as such the specific scope of services for such task shall be limited to just those services required to complete the task . Any material changes in or additions to the scope of services described in Exhibit A shall be promptly reflected in a written supplement or amendment to this Agreement. Services provided by PFM which are not specifically referenced in the scope of services set forth in Exhibit A of this Agreement shall be completed as agreed in writing in advance between the Client and PFM. Upon request of Client, PFM or an affiliate of PFM may agree to additional services to be provided by PFM or an affiliate of PFM, by a separate agreement between the Client and PFM or its respective affiliate. II. WORK SCHEDULE The services of PFM are to commence as soon as practicable after the execution of this Agreement and a request by the Client for such service . III. REGISTERED MUNICIPAL ADVISOR; REQUIRED DISCLOSURES 1. P FM is a registered municipal advisor with the Securities and Exchange Commission (the "SEC'') and the Municipal Securities Rulemaking Board (the "MSRB''), pursuant to the Securities Exchange Act of 1934 Rule lSBal-2. If Client has designated PFM as its independent registered municipal advisor ("IRMA") for purposes of SEC Rule 1 SBa 1-1 ( d)(3)(vi) (the "IRMA exemption"), then services provided pursuant to such designation shall be the services described in Ex hjb it A hereto, subject to any limitations described thereon . PFM shall not be responsible for, and shall be held harmless from and against any party in connection with, verifying that PFM is independent from any other party seeking to rely on the IRMA exemption (as such independent 1 status is required pursuant to the IIUvL-\ exemption, as interpreted from time to time by the SEC). Client acknowledges and agrees that any reference to PFM, its personnel and its role as 11Uv1A, including in the written representation of Client required under SEC Rule 15Ba1-1 (d)(3)(vi)(B) shall be subject to prior approval by PFM. Client further agrees not to represent that PFM is Client's IR1v1A with respect to any aspect of a municipal securities issuance or municipal financial product, outside of the scope of services without PFM's prior written consent. 2. MSRB Rule G-42 requites that municipal advisors make written disclosures to its Clients of all material conflicts of interest and certain legal or disciplinary events. Such disclosures are provided in Pfl1's Disclosure Statement delivered to Client together with this Agreement. IV. FINANCIAL ADVISORY COMPENSATION For the services provided under this Agreement, PFM's professional fees shall be paid as provided in Exhibit B to this Agreement and Client shall pay expenses and fees for other sen•ices not set forth in Ex hib ir A as provided below. 1. Rdmbursnble Expense§ In addition to fees for services, PFM will be reimbursed for necessary, reasonable, and documented out-of-pocket e:i..-penses incurred, including travel, meals, lodging, telephone, mail, and other ordinary cost and any actual extraordinary cost for graphics, printing, data processing and computer time which are incurred by PFM. The Client will be responsible for expenses of third- parties providing separate services, including bond rating agencies, bond counsel, official statement distribution, and fiscal agent or refunding agents. Upon request of Client, documentation of such expenses will be provided. 2 . QJher Services Any services which are not included in the scope of services set forth in E xhibi1 A of this Agreement will be subject to separate, mutually acceptable fee structures. IV. TERMS AND TERMINATION This Agreement shall be effective upon execution until December 31, 2017 (the "Initial Term") and may renew for additional 2 year periods (each a "Renewal Term" and together with the Initial Term, the "Term"). This Agreement shall remain in effect unless canceled in writing by either party upon thirty (30) days written notice to the other party. V. ASSIGNMENT PFM shall not assign any interest in this Agreement or subcontract any of the work performed under the Agreement without the prior written consent of the Client; provided that upon notice to Client, PThl may assign this Agreement or any interests hereunder to a municipal advisor entity registered with the SEC that directly or indirectly controls, is controlled by, or is under common control \vith, PF1v!. 2 VI. INFORMATION TO BE FURNISHED TO PFM AU information, data, reports, and records ("Data") in the possession of the Client or any third party necessary for carrying out any services to be performed under th.is Agreement shall be furnished to PF11 and the Client shall, and shall cause its agent(s) to, cooperate with PFM in its conduct of reasonable due diligence in performing the services, including with respect to the facts that are necessary in its recommendation(s) to the Client in connection with a municipal securities transaction or municipal financial product and/ or relevant to a Client's determination whether to proceed with a course of action. To the extent Client requests that PFM provide advice with regard to any recommendation made by a third party, Client will provide to PFM written direction to do so as well as any Data it has receiYed from such third party relating to its recommendation. Client acknowledges and agrees that while PFM is rel;ting on the Data in connection with its provision of the services under this Agreement, PF1v1 makes no representation with respect to and shall not be responsible for the accuracy or completeness of such Data. VII. NOTICES All notices given under this Agreement shall be in writing, sent by registered United States mail, with return receipt requested, addressed to the party for whom it is intended, at the designated below. The parties designate the following as the respective places for giving notice, to-wit: KITTITAS COUNTY 205 West 5th Avenue, Suite 102 Ellensburg, WA 98926 Attention: Brett \Vachsmith, County Treasurer PFM FINANCIAL ADVISORS LLC 1200 Fifth Avenue, Suite 1220 Seattle, WA 98101 Attention: Susan Musselman, Director VIII. TITLE TRANSFER All materials, except functioning or dynamic financial models, prepared by PFM pursuant exclusively to this Agreement shall be the property of the Client. Subject to the exception described above, upon termination of this Agreement, at Client's reasonable request no later than three 3 years after the termination of this Agreement PF1v1 shall deliver to the Client copies of any and all material pertaining to this Agreement. IX. PFM'S REPRESENTATIVES 1. Assignment of Named Individuals The professional employees of PFM set forth below will provide the services set forth in this Agreement; provided that PFM may, from time to time, supplement or otherwise amend the team members set forth below. 3 • Susan :Musselman, Director • Duncan Brown, Senior Managing Consultant 2. Changes in Staff Requested by the Client T11e Client bas the right to request, for any reason, PFl\[ to replace any member of the advisory team. Should the Client make such a request, PFM shall promptly suggest a substitute for approyal by the Client. X. INSURANCE PFM shall maintain insurance coverage ,vitll policy limits not less than as stated in E xh ib.ir C. XI. LIMITATION OF LIABILITY Except to the extent caused by \villfol misconduct, bad faith, gross negligence or reckless disregard of obligations or duties under this Agreement on the part of Pfl1 or any of its associated persons, neither PFM nor any of its associated persons shall have liability to any person for any act or omission in connection ,vith performance of its services hereunder, or for any error of judgment or mistake of law, or for any loss arising out of any issuance of municipal securities, any municipal financial product or any otl1er financial product or investment, or for any financial or other damages resulting from Client's election to act or not to act, as the case may be, contrary to or, absent negligence on the part of PF]l.1 or any of its associated persons, upon any advice or recommendation provided by PFM to Client. XII. INDEPENDENT CONTRACTOR; NO THIRD-PARTY BENEFICIARY PFM, its employees, officers and representatives at all times shall be independent contractors and shall not be deemed to be employees, agents, partners, servants and/ or joint venturers of Client by virtue of this Agreement or any actions or services rendered under this Agreement. Nothing in this Agreement is intended or shall be construed to give any person, other than the Parties hereto, their successors and permitted assigns, any legal or equitable rights, remedy or clainl under or in .respect of this Agreement or any provisions contained herein. XIII. APPLICABLE LAW 11us Agreement shall be construed, enforced, and administered according to the laws of the State of Washington. PRvi and the Client agree that, should a disagreement arise as to the terms or enforcement of any provision of tlus Agreement, each party \vill in good faith attempt to resolve said disagreement prior to pursuing other action. XIV. ENTIRE AGREEMENT; SEVERABILITY 11us Agreement represents the entire agreement between Client and PFM and may not be amended or modified except in writing signed by both parties. T11e invalidity in whole or in part of any provision of this Agreement shall not void or affect tlle validity of any other provision. XV. EXECUTION; COUNTERPARTS Each party to this Agreement represents and warrants that the person or persons signing this Agreement on behalf of such party is authorized and empowered to sign and deliver this Agreement for such party. This Agreement may be signed in any number of counterparts, each of which shall be an original and all of which when taken together shall constitute one and the same document. IN WI1NESS THEREOF, the Client and PFM have executed this Agreement as of the day and year herein above written. Kittitas County PFM~CUL :tr;L LLC By: \!tt<!h Su~a:n Mussehnan, Director Da ce; 91r1w 11o I t s EXHIBIT A SCOPE OF SERV1C ES 1. Services Related to Debt Transactions (Includes shore term financings, notes, loans, letters of credit, line of credit and bonds); provided that if the transaction is competitive, the services of the financial advisor will be modified in advance in writing to reflect that process. Upon the request of the Client: • Anal)'ze financial and economic factors to determine if the issuance of bonds is appropriate. • Develop a financing plan in concert with Client's staff which would include recommendations as to the timing and number of series of bonds to be issued . • Assist the Client by recommending the best method of sale, either as a negotiated sale, private placement or a competitive sale. In a competitive sale, make recommendation as to the detemunation of the best bid. In the event of a negotiated sale, assist in the solicitation, review and evaluation of any investment banking proposals, and provide advice and information necessary to aid in such selection. • Advise as to the various financing alternatives available to the Client. • Develop alternatives related to debt transaction including evaluation of revenues available, maturity schedule and cash flow requirements . • Evaluate benefits of bond insurance and/ or security insurance for debt reserve fund. • If appropriate, develop credit rating presentation and coordinate with the Client the overall presentation to rating agencies. • For a negotiated sale, review underwriter's proposals and submit a written analysis of same to the Client. • Assist the Client in the procurement of other services relating to debt issuance such as printing, paying agent, registrar, etc. • Identify key bond covenant features and advise as to the financial consequences of provisions to be included in bond indentures, resolutions or other governing documents regarding security, creation of resen•e funds, flow of funds, redemption provisions, additional parity debt tests, etc .; review and comment on successive drafts of bond governing documents. • Review the requirements and submit analysis to bond insurers , rating agencies and other professionals as they pertain to the Client's obligation. 6 • Review the terrns, conditions and structure of any proposed debt offering undertaken by the Client and provide suggestions, modifications and enhancements where ap propriote and necessary to reflect the constraints or current financial policy and fisc :il c:ip nb ility. • Coordim1te \\rj th C li enr's stnff :'Ind other ;i dvlsocs ns respec ts · the fuaush ing of d ata for o ffering docu m ents, i bein g speci6c:il ly un derstood thal Pl· f is n or .1:c~po nsible for th e .in clu sio n or omissio n of any ma teria l in pu blis hed o fferi ng d<i>c:u mc n ts. • As applicable, advise the Client on the condition of the bond market at the time of sale, including volume, timing considerations, competing offerings, and general economic considerations. • Assist and advise the Client in negotiations with investment banking groups regarding fees, pricing of the bonds and final terms of any security offering, and make recommendations regarding a proposed offering to obtain the most favorable financial terms based on existing market conditions. • Arrange for the closing of the transaction including, but not liinited , to bond printing, signing and final delivery of the bonds. • For any competitive sale of bonds or notes, prepare official notice of sale, recommend sale pan1meters, tnke s te ps necessary to ensure broad market exp osure o f th e is sue, throllg h the use o f n ewswire services and official statcmcnr disccibutio n, and perform additional steps necessary and customary for competitive bond sales. • Review (or upon request, prepare, for an additional fee set forth in Section IV above) Preliminary Official Statements and final Official Statements prepared on behalf of the Client for use in marketing any bonds and meeting regulatory requirements. 2. Services related to the Financial Planning and Policy Development which may be subject to hourly fees as set forth in Exhibit B, Section 2, upon request of the Client: • Assist the Client in the fonnulation of Financial and Debt Policies and Administrative Procedures . • Review current debt structure, identifying strengths and weaknesses of structure so that future debt is s u es can be desi gn ed to maximize abili ty ro fin ance future capital needs . This will include, but not be limited to, revi ewi ng ~sting d e bt for the possibility of refunding that debt to provide the Client with s:ivings . • Analyze future debt capacity to determine the Client's ability to raise future debt capital. • Assist the Client in the development of the Client's Capital Improvement Program by identifying sources of capital funding. 7 • Assist the Client with the development of the Client's financial planning efforts and process by assessing capital needs, identifying potential revenue sources, analyze financing altematives such as pay-as-you-go, lease/purchasing, short-term vs . long- term financings, assessments, user fees, impact fees, developer contributions, public/private projects, and grants and provide analysis of each alternative as re9uired as to the budgetary and financial impact. • Review the reports of accountants, independent engineers and other project feasibility consultants to ensure that such studies ade9uately address technical, economic, and financial risk factors affecting the marketability of any proposed revenue debt issues; provide bond market assumptions necessary for financial projections included in these studies; attend all relevant working sessions regarding the preparations, review and completion of such independent studies; and provide written comments and recommendations regarding assumptions, analytic methods, and conclusions contained therein. • Develop, manage and maintain computer models for long-term capital planning which provide for inputs regarding levels of ad valorem and non-ad valorem taxation, growth rates by operating revenue and expenditure item, timing, magnitude and cost of debt issuance, and pcoject operating and capital balances, selected operating and debt ratios and other financial performance measures as may be determined by the Client. • Conduct strategic modeling and planning and related consulting. • Attend meetings with Client's staff, consultants and other professionals and the Client. • Undertake financial planning and policy development assignments made by the Client regarding financings, and financial policy including budget, tax, cash management issues and related fiscal policy and programs. -• Assist the Client in preparing financial presentations for public hearings and/ or referendums. • Provide special financial services as requested by the Client. g EXHIBJTB COMPENSATION FOR SERV1CES 1. Fixed Rate Transaction Fees (Competitive and Negotiated) The compensation schedule for competitive and negotiated sales of long-term financings will be billed at closing as follows: For financing up to $20 million: For fin:rncing up to $75 million: $1.50 per $1,000, with a $20,000 minimum $30,000 plus $0.75 per $1,000 over $20 million Interim financing or bank placements may be subject to a reduced fee, based on the specific services required. Should a financing be commenced but not completed for any reason, PFM will be compensated for services provided, based on the hourly rates stated below, which in no case will exceed 75% of the Financing Services fee set forth above. 2. Hourly Project Fees (Non-Transaction 'Related) In the event the Client requests that PFM perform significant special projects (capital planning, creation of new financing programs like the installment sale concept, etc.), fees will be negotiated in ad\•ance of the project generally based upon the following hourly rates for the indicated levels of experience or their equivalents will apply. Additionally, in the event a financing is started, but cancelled at the Client's request, accrued time will be billed as follows: Ex:perience Level Managing Director/Director Senior Managing Consultant Senior Analyst Analyst Associate Ho urly Rate $305 $295 $225 $195 $175 For each contract year following the initial contract term (each, individually, a "Subsequent Contract Year"), hourly rates may be increased by the rate of CPI-U, subject to the approval of the Client. 3. Retainer For general advice between financings, PFM shall receive an annual fee in the amount of $4,000 ("Retainer"), payable in quarterly installments of $1,000. The Retainer shall be reviewed and revised upon mutual agreement. 9 EXHIBITC JNSURANCE PFM Financial Advisors LLC ("PFM") has a complete insurance program, including property, casualty, comprehensive general liability, automobile liability and workers compensation. PFM maintains professional liability and fidelity bond coverages which total $25 million and $10 million, respectively. PFM also carries a $2 million cyber liability policy. Our Professional Liability policy is a "claims made" policy and our General Liability policy claims would be made by occurrence. Deductibles/SIR: Automobile $250 comprehensive & $500 collision Cyber-Liability $50,000 General Llability $0 Professional Liability (E&O) $1,000,000 Financial Institution Bond $75,000 Insurance Company & AM Best Rating Professional Liability (E&O): Financial Institution Bond: Cyber Liability: General Llability: Automobile Llability: Excess /Umbrella liability: \-X1orkers Compensation & Employers Llability 10 Endurance American Specialty Insurance; (A:J\.'V) XL Specialty Insurance Company; (A:XV) Continental Casualty Company, (A:XV) Start Indemnity & Llability Company; (A:XIV) Federal Insurance Company; (A++/XV) Indian Harbor Insurance Company (A) Great Northern Ins. Company; (A++ /J\.'V) Federal Insurance Company; (A++/XV) Federal Insurance Company; (A++/XV) Pacific Indemnity Company; (A++ /XV)