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sr-012412-3s�—r City Council and Parking City of Authority Report Santa Monica City Council Meeting: January 24, 2012 Agenda Item:__S To: Mayor and City Council From: Gigi Decavalles- Hughes, Acting Director of Finance Subject: Modification of Professional Services Agreement with Public Resources Advisory Group for Financial Advisory Services for the City of Santa Monica and the Parking Authority Recommended Action Staff recommends that City Council authorize the City Manager to execute a third modification to Professional Services Agreement 8724 (CCS) with Public Resources Advisory Group (PRAG) to increase the contract amount by $150,000 for a total contract amount not to exceed $650,000 for the five -year contract term. Executive Summary The City of Santa Monica, the Redevelopment Agency and the Parking Authority have utilized PRAG to assist in financial planning and analysis and debt issuance activities. Since June 2007, PRAG has provided advisory services for a broad range of projects including: debt financing of Parking Structure 6, refinancing of Public Safety Facility bonds, a Housing line of credit, a debt capacity study, presentations to rating agencies, a review of risk mitigation measures, refunding and issuance of several bonds. The cost of these services, now to be provided to the City and Parking Authority, is not expected to exceed $650,000 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 a full - 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. On February 23 2010, Council authorized a second modification to increase the not to exceed amount to $500,000. 1 Since June 2007, PRAG has assisted City staff with analyses of the City and Redevelopment Agency's debt capacity and debt affordability. Most recently, PRAG was the City's Financial Advisor for the debt financing for Parking Structure 6 and a refunding of lease revenue bonds originally issued for construction of the Public Safety Facility, including preparation of the related presentations to three credit ratings agencies: Moody's, Standard & Poors, and Fitch. PRAG has served as the City's advisor for numerous RDA financing strategies since 2007. Additionally, PRAG has reviewed proposals for MTBE mitigation insurance and other financial transactions and acted as financial advisor for a $50 million Housing line of credit transaction. Given the services to date and expected ongoing services, staff estimates that the cost of PRAG's services will not exceed $650,000 over the five -year term of the contract. In 2012, the City will use PRAG as needed to assist in developing various financing strategies, including the winding down of the Redevelopment Agency according to the recently upheld AB1X26, and potential bond financing. Staff recommends that the contract be modified to reflect a not -to- exceed amount to $650,000. Contractor /Consultant Selection In 2007, Council awarded a Professional Services Agreement to PRAG following a Request for Proposal process. PRAG has served as the financial advisor to the City since 1996. PRAG is also one of the largest public agency financial advisors in California and its service to the City has assisted in numerous successful funding strategies. Consistent with City practices of seeking competitive proposals at least once every five years for ongoing services, a new Request for Proposal process will be completed in 2012. Financial Impacts & Budget Actions The cost of PRAG's 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 0a budgeted as a bond project cost. The costs of all other financial advisory services would be billed at the hourly rates proposed by PRAG in their proposal. The total cost of financial advisory services is not expected to exceed $650,000 during the five -year term and will be charged to 01221.555060 as services are rendered. Prepared by: Gigi Decavalles- Hughes, Acting Director of Finance Approved: Gigvbecavalles -Hu Acting Director of Finance 3 Forwarded to Council: Rod Gould City Manager Amended Contract No. 9167 (CCS).