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.
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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
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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
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Forwarded to Council:
Rod Gould
City Manager
Amended Contract No.
9167 (CCS).