SR-11-13-2012-3LCity Council Meeting: November 13, 2012
Agenda Item: 3— L°
To: Mayor and City Council, Redevelopment Successor Agency and Parking
Authority
From: Gigi Decavalles- Hughes, Director of Finance
Subject: Reinstatement and extension of Professional Services Agreement with
Public Resources Advisory Group for Financial Advisory Services for the
City of Santa Monica, the Redevelopment Successor Agency and the
Parking Authority
Recommended Action
Staff recommends that the City Council authorize the City Manager to reinstate and
extend the term of Contract #8724 with Public Resources Advisory Group (PRAG), a
New York -based company, to provide financial advisory services to no later than
January 31, 2013, until a Request for Proposal process can be completed. No change
to the not -to- exceed contract amount of $650,000 is required.
Executive Summary
Since June 2007, the City, the Parking Authority, the Redevelopment Agency (RDA)
and the RDA Successor Agency have utilized PRAG to assist in various financial
planning, analyses and debt issuance activities. PRAG has provided advisory services
for a broad range of issues including issuance of new debt, refunding of existing debt, a
debt capacity study, presentations to rating agencies, a review of risk mitigation
measures, and consultation on Redevelopment/Successor Agency issues. The City's
current contract with PRAG terminated on June 11, 2012. Staff is in the process of
conducting a Request for Proposal process for financial advisory services.
Reinstatement and extension of the current contract's term is necessary to provide the
ability to use financial advisory services, if necessary, during the selection process,
contract negotiation and transition to a new financial advisor, if required.
Background
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
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2008, Council authorized a modification to increase the not to exceed amount to
$250,000. On February 23 2010 and January 24, 2012, Council authorized second
and third modifications to increase the not to exceed amount to $500,000 and $650,000,
respectively.
Discussion
PRAG has served as the City's advisor for numerous 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 and a $60 million credit agreement with Wells Fargo Bank. Most
recently, PRAG was the City's Financial Advisor for refunding the City's Library General
Obligation bonds and Wastewater revenue bonds (including preparation of the related
presentations to three credit ratings agencies: Moody's, Standard & Poors, and Fitch),
debt financing for Parking Structure 6, and a refunding of Public Safety Facility bonds.
In 2012, the City has also used PRAG to assist in developing various financing
strategies, including the winding down of Redevelopment. The City's current contract
with PRAG terminated on June 11, 2012. Staff is in the process of conducting a
Request for Proposal process for financial advisory services. Staff recommends that
the contract be reinstated and reflect a term extension until January 31, 2013 to ensure
services can continue, if necessary, through the current selection process as well as
allow sufficient time for contract negotiation and transition to a new financial advisor, if
required. The services that could be required include assistance in providing
information to rating agencies currently evaluating Santa Monica's current bond ratings,
as well as guidance related to outstanding Successor Agency bonds and loans during
State Department of Finance reviews.
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Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of
recommended action. The current not -to- exceed contract amount of $650,000 is
sufficient to cover any costs that may be incurred during the contract extension period.
Funds are available in account 01221.555060.
Prepared by: David Carr, Treasury Administrator
Director of Finance
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Forwarded to Council:
Rod Gould
City Manager
Reference
Amended Contract
No. 8724 (CCS).