sr-022812-3jCity of City Council Report
Santa Monica
City Council Meeting: February 28, 2012
Agenda Item: 3 -7
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director of Finance
Subject: Modification of Professional Services Agreement with Stradling, Yocca,
Carlson and Rauth for Legal Services Related to the Issuance of Debt
Financing
Recommended Action
Staff recommends that City Council authorize the City Manager to execute a third
modification to Professional Services Agreement 9146 with Stradling, Yocca, Carlson
and Rauth (SYCR), a California -based company performing legal services related to the
issuance of debt financing, to increase the contract amount by $150,000, for a total
contract amount not to exceed $550,000.
Executive Summary
SYCR has served as the City's Bond Counsel since entering into a contractual
agreement in September 2007, following a competitive bid process. The City of Santa
Monica, the former Redevelopment Agency and the Public Financing Authority have
utilized SYCR to provide legal services related to bond issuances and disclosure for a
number of projects. The original not to exceed amount was $70,000. Council
authorized a first and second modification increasing the total not to exceed amount to
$400;000. The City requires SYCR's expertise in evaluating financing and refunding
options, preparing opinions and documents related to debt financing, and assisting with
the winding down of redevelopment activities. Staff recommends that the'amount of the
contract be increased by $150,000, making total compensation under the contract not to
exceed $550,000.
Background
On September 2, 2007, the City entered into a Professional Services Agreement with
SYCR to provide assistance in evaluating funding sources and to provide legal and
bond and disclosure services. On October 27, 2009, and on May 24, 2011 Council
authorized a first and second modification to increase the not to exceed amount to
$220,000 and $400,000, respectively.
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Since September 2007, SYCR has assisted City staff with analyses of the City and
Redevelopment Agency's funding sources. Most recently, SYCR was the City's Bond
Counsel 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 rendering
legal opinions pertaining to the issuance of these bonds. SYCR has served as the
City's counsel for numerous RDA financing strategies since 2007, including a $50
million Housing line of credit transaction, a $60 million bank loan from Wells Fargo, and
a $41 million tax allocation bond issuance. Additionally, SYCR has reviewed proposals
for MTBE mitigation insurance and other financial transactions.
Discussion
The City is reviewing debt financing and refunding options, and is also making
adjustments to the management of its existing redevelopment debt to comply with the
new requirements of the redevelopment successor agency. SYCR's experience with
the City's debt financings and its knowledge of redevelopment dissolution laws would
provide the City with the appropriate level of bond counsel expertise that is necessary to
ensure that the City's interests are protected. The current contract with SYCR did not
contemplate any additional financing or refunding opportunities, or the additional work
related to the dissolution of redevelopment, and therefore did not provide adequate
funding to meet these needs.
This modification to the contract would increase maximum compensation for SYCR to
$550,000. The remaining terms of the contract and scope of services would remain
unchanged. In 2012, the City would use SYCR as needed to assist in developing
various financing strategies, including the winding down of the Redevelopment Agency
according to the recently upheld AB1X26.
Contractor /Consultant Selection
In 2007, Council awarded a Professional Services Agreement to SYCR following a
Request for Proposal process. Consistent with City practices of seeking competitive
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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 SYCR's legal and bond advisory services will depend on the type of work
conducted. The cost of 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 legal and advisory services would be billed at the
hourly rates proposed by SYCR in their proposal.
The contract modification to be awarded to SYCR is $150,000, for a new total contract
amount not to exceed $550,000. Funds are available in the FY2011 -13 budget for the
Finance Department. The contract costs will be charged to account 01221.555110,
Legal Services.
Prepared by: Gigi Decavalles- Hughes
Approved:
F
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Gigi ecavalles -Hu hes
Director of Finance
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Forwarded to Council:
Rod Gould
City Manager
Reference Amended
Contract No. 9146 (CCS)