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~;tYOf City Council Report
Santa Monfica~
City Council Meeting: February 23, 2010
Agenda Item: 1-K
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Modification of Professional Services Agreement with Public Resources
Advisory Group for Financial Advisory Services for the City of Santa
Monica, the Redevelopment Agency, and the Parking Authority of the-City
of Santa Monica
Recommended Action
Staff recommends that the City Council authorize the City Manager to execute a second
modification to Professional Services Agreement 8724 (CCS) with Public Resources
Advisory Group (PRAG) to increase contract amount by $250,000 for a total contract
amount not to exceed $500,000 for the five-year contract term.
Executive Summary
The City of Santa Monica, the Redevelopment Agency and the Parking Authority utilize
PRAG to assist in financial planning and analysis and debt issuance activities. PRAG
has provided advisory services for a broad range of projects ranging from a Housing
line of credit to a debt capacity study and presentation to rating agencies to a review of
risk mitigation measures to refunding and issuance of bonds. The cost of these services
is not expected to exceed $500,000 for the five-year contract term.
Discussion
On June 12, 2007, Council authorized the execution of a five-year contract with PRAG,
an independent financial advisory firm headquartered in New York with afull-service
office in West Los Angeles, in an amount not to exceed $100,000. On February 26,
2008, Council authorized a modification to increase the not to exceed amount to
$250,000.
Since June 2007, PRAG has assisted City staff with analyses of the City and
Redevelopment Agency's debt capacity and debt affordability and with the related
presentations to three credit ratings agencies: Moodys, Standard & Poors, and Fitch.
PRAG has reviewed proposals for MTBE mitigation insurance and other financial
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transactions. PRAG acted as financial advisor fora $50 million Housing line of credit
transaction and a refunding of lease revenue bonds originally issued for construction of
the Public Safety Facility. Given the services to date and expected ongoing services,
staff estimates that the cost of these services will not exceed $500,000 over the five-
year term of the contract. Staff recommends that the contract be modified to reflect a
not-to-exceed amount of $500,000.
Financial Impacts & Budget Actions
The cost of these professional advisory services will depend on the type of work
conducted. The cost of financial advisory services specific to some transactions, bond
transactions, as an example, are generally included in the costs of issuance and are
budgeted as a bond project cost. The costs of all other financial advisory services will
be billed at the hourly rates proposed by PRAG in their proposal.
The total cost of financial advisory services is not expected to exceed $500,000 during
the five-year term of the professional services agreement and will be charged to
.professional services expenditure accounts as services are rendered.
Prepared by: Candace Tysdal, Financial Operations Manager
Approved: Forwarded to Council:
Carol Swindell
Director of Finance
Rod Gould
City Manager
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Reference Amended
Contract No. 8724 (CCS).