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SR-12-11-2012-3KCity Council Meeting: December 11, 2012 Agenda Item: 3 " Y, To: Mayor and City Council From: Gigi Decavalles- Hughes, Director of Finance Subject: 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 of the City of Santa Monica Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a professional services agreement for financial advisory services with Public Resources Advisory Group ( "PRAG "), a New York -based company, for a term of five years, on behalf of the City, the Redevelopment Successor Agency, and the Parking Authority, for an amount not to exceed $250,000. Executive Summary The City of Santa Monica, the Redevelopment Successor Agency, and the Parking Authority utilize professional financial advisory firm services to assist in financial planning and debt management activities. Public Resources Advisory Group ( "PRAG ") is an independent financial advisory firm headquartered in New York with a full service office in West Los Angeles. The cost of financial advisory services would be based on the firm's proposal pricing and the type of service provided and is not expected to exceed $250,000 over the five -year term of the contract. Discussion The City of Santa Monica, the Redevelopment Successor Agency, and the Parking Authority all utilize professional financial advisory firm services including evaluating debt capacity, discussion of financing alternatives for capital projects, coordinating discussions with bond rating agencies, and providing technical expertise regarding debt issuance, as well as, evaluating certain course of action related to RDA dissolution. The City's current contract for financial advisory services is with PRAG and will expire on January 31, 2013. 1 Consultant Selection Staff issued a request for proposals for financial advisory services in August 2012. After evaluating the five submitted proposals, a selection committee composed of City staff from the Finance, Public Works and Housing and Economic Development Departments interviewed the two firms (PRAG and First Southwest) determined to have submitted the proposals that best met the City's required scope of services. Based on the proposal evaluations and subsequent interviews, the committee recommends PRAG. PRAG has ranked among the top three financial advisory firms in the country for each of the last ten years. Furthermore, the firm has been the State of California's leading financial advisory firm, based on dollar volume, for seven of the last ten years, and is advisor to many California cities, including Los Angeles, San Jose, and Beverly Hills. PRAG has extensive experience is assisting city clients with critical debt management and issuance decisions in areas such as: • Development of debt capacity indicators and monitoring debt position • Assessment of new financing programs with the view of maintaining overall credit worthiness • Innovative and/or Alternative Financing Vehicles • Development of debt policies and credit rating strategies PRAG has also provided financial advisory services to a number of California redevelopment agencies and their successor agencies. This experience will be critical to the City as it tries to meet its capital financing needs in the wake of the RDA dissolution. As financial advisor to the City from 1996 to 2004, and again from 2007 through the current time, PRAG has a proven track record advising the City, the former Redevelopment Agency, the Redevelopment Successor Agency, and the Parking Authority, on a range of capital planning, debt management, and other financial advisory 2 services. PRAG's experience, expertise, and assistance helped the City set strategies to achieve and maintain its AAA bond rating. Financial Impacts & Budget Actions The cost of professional financial advisory services included in this contract will depend on the type of work conducted. Financial advisory services not related to specific financing transactions (non - transaction fees) would be billed at the hourly rates proposed by PRAG. The contract to be awarded to PRAG is for an amount not to exceed $250,000 over the five year term of the contract for these non - transaction services. Funds totaling $50,000 are available in the FY2012 -13 budget in account object 555060 in the various funds where these costs will be charged. Budget authority for subsequent years will be requested in each budget cycle for Council approval. The costs of financial advisory services specific to bond transactions (transaction fees) are generally included in the costs of bond issuance and paid from bond proceeds. Budget authority for these transaction fees will be requested when bond financing plans are presented to Council for approval. Prepared by: David Carr, Treasury Administrator Approved: Forwarded to Council: 3 Reference Contract No. 9676 (CCS /SAS /PAS).