SR 10-24-2017 3H
City Council Report
City Council Meeting: October 24, 2017
Agenda Item: 3.H
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue
Subject: First Modification to Professional Services Agreement with Public Resources
Advisory Group for Financial Advisory Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a first modification to agreement #9676 with Public Resources Advisory Group
(PRAG), a California-based company, for financial advisory services. This modification
will extend the agreement’s term by two years (and result in a seven-year amended
agreement); all other terms and conditions, including the total not to exceed amount of
$250,000, will remain the same.
Executive Summary
The City of Santa Monica, the Santa Monica Public Financing Authority, the
Redevelopment Successor Agency, and the Parking Authority utilize professional
financial advisory firms to assist in financial planning and debt management activities.
Public Resources Advisory Group (PRAG) currently serves in this role. In addition to
other services, PRAG served as the City’s financial advisor for the recent City Services
Building bond issuance and provided initial analysis for various bond issuances for Fire
Station #1, parks and open space projects, and the City Yards. Since PRAG has
provided initial analyses for these projects, staff believes it would be prudent and
efficient to extend PRAG’s contract rather than reopen the procurement process. Since
costs associated with bond issuance are paid through bond proceeds, no additional
funding is required.
Background
PRAG served as financial advisor to the City from 1996 to 2004, and again from 2007
through the current time. The current agreement was approved by Council in
December 2012 and executed in January 2013 after a competitive request for proposals
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process. PRAG was the best qualified firm based on its proven track record of 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 services.
Discussion
PRAG’s experience, expertise, and assistance has helped the City identify and
implement financial management strategies to achieve and maintain its AAA bond
rating. PRAG has assisted the City 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
strategies, and development of debt policies and credit rating strategies. Most recently,
PRAG assisted the City with its City Services Building bond issuance, including
strategies to issue the bonds as green bonds.
Through its work with the City, PRAG is familiar with the City’s long term financing
strategies and its specific needs and operating environment. Staff has identified three
potential projects for the next few years that may require bond financing: Fire Station
#1 (lease revenue bonds), park and open space projects (general obligation bonds),
and City Yards modernization (lease revenue bonds). PRAG has already provided
initial analyses for these projects as part of its ongoing work, and the firm is aware of
the operational and strategic issues involved. Staff, therefore, believes it would be
prudent and efficient to retain PRAG through a contract term extension rather than
engaging in a new procurement process. All other terms and conditions of the contract
will remain the same, and no additional funding is required.
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 nine of the last ten years, and is
advisor to many California cities, including Los Angeles, San Jose, and Beverly Hills.
Financial Impacts and Budget Actions
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There is no immediate financial impact or budget action necessary as a result of the
recommended action. The agreement’s total compensation for services not related to
specific bond issuance transactions will remain capped at $250,000. Fees for services
related to bond issuance transactions will continue to be paid by bond proceeds at the
rates listed in the agreement. Funds are available in the FY 2017-18 budget for the
Finance Department in account 01221.555060. Future year funding is contingent on
Council budget approval.
Prepared By: David Carr, Assistant City Treasurer
Approved
Forwarded to Council
Attachments:
A. PRAG-Oaks Initiative 2017
REFERENCE:
FIRST MODIFICATION TO
AGREEMENT NO. 9676
(CCS)