HomeMy WebLinkAbout2015-01-19-Resolutions 15-025_Placement Agent Engagement AgrTHE CITY OF WAUIME,IOWA
RESOLUTION 15-025
APPROVING DA DAVISON PLACEMENT AGENT ENGAGEMENT
AGRKKMKNT FOR THK REFUNDING OF THK 2007 NATURAL GAS UTILITY
SYSTEM REVENUE BOND
IN THE NAME AND BY THE A UTHORITY OF THE CITY OF WA UXEE,IO8'A
WHEREAS,the City of Waukee,Iowa is a duly organized municipality witlun Dallas
County;AND,
WHEREAS,the Waukee City Council approved the 2007 Natural Gas Utility System
Revenue bond on June 18,2007;Resolution 007-114 for $5,675,000;AND,
WHEREAS,Public Financial Management has analyzed the 2007 Bond,and
recommends the City place the refunding opportunity with a private placement firm DA
Davison to negotiate the refunding;AND;
WHEREAS,City Staff recommends moving forward with the refunding opportunity,
with the proposal to shorten the original bond term by two year,and decrease the par
amount by the amount of Debt Service Cash Reserve Fund;AND;
WHEREAS,DA Davison has provided an agreement for their services related to private
placement services,which is attached hereto as Placement Agent Engagement Letter and
Exhibit A.
NOW THEREFORE BK IT RESOLVED by the City of Waukee City Council in
session tliis 19"day of January,2015,that it hereby approves the DA Davison Placement
Agent Engagement Agreement for refunding services of 2007 Natural Gas Utility System
Revenue Bond.
Attest:
illiam F.P card,ayor
Rebecca D.Sclniett,City Clerk
ROLL CALL VOTE
Shane Blanchard
Brian Harrison
Casey L.Harvey
Shelly Hughes
Rick Peterson
AYE
X
X
X
X
X
NAY ABSENT ABSTAIN
DLA~DXVrOSON
PIXRD INCQMR CAPITAL MAR KRTS
January 14,2015
Mr.Tim Moerman
City Administrator
City of Waukee.Iowa
230 Hickman Road
Waukee,Iowa 50263
Re:Placement Agent Engagement Letter
Mr.Moerman:
On behalf of D,A.Davidson 8I Co.("we"or "Davidson"),we wish to thank you for the opportunity to
serve as placement agent for the City of Waukee,Iowa {"you"or the "Issuer")on its proposed offering
and issuance of approximately $2,800,000 Natural Gas Vtiiity System Revenue Notes,Series 2015 (the
"Securities"or "Loan(s)"or "Notes").In compliance with Municipal Securities Rulemaking Board
("MSRB")Rule G-23,this letter will confirm the terms of our engagement,
1.Services to be Provided b Davidson.The Issuer hereby engages Davidson to serve as
placement agent of the proposed offering and issuance of the Loan(s),and in such capacity Davidson
agrees to provide the following services:
Review and evaluate the proposed terms of the offering and the Loan(s)with your Municipal
Advisor
Develop a marketing plan for the offering,including identification of potential investors
Assist in the preparation of the offering documents
Contact potential investors,provide them with offering-related information,respond to their
inquiries and,if requested,coordinate their due diligence sessions
Consult with bond counsel,municipal advisor and other service providers about the offering and
the terms of the Loan(s)
Inform the Issuer and Municipal Advisor of the marketing and offering process
Negotiate the pricing,including the interest rate,and other terms of the Loan(s)
Plan and arrange for the closing and settlement of the issuance and the delivery of the Loan{s)
Such other usual and customary placement services as may be requested by the Issuer
Des Moines Office
515 East Locust Street ~Suite 200 ~Des Moines,IA 50309 ~(515l 471-2700 ~1 -800-642-5082 ~FAX (515l 471-2701
www.dadavidson.corn
In addition,at the issuer's request,Davidson may provide incidental advisory services,including advice
as to the structure,timing,terms and other matters concerning the issuance of the Loan(s).
Davidson is required to make the following disclosure pursuant to Municipal Securities Rulemaking
Board ("MSRB")Rule G-23:Davidson will be providing such advisory services in its capacity as
underwriter and not as a municipal advisor to the Issuer.As placement agent,Davidson's primary role is
to arrange for the placement of the Securities in an arm's length commercial transaction between the
Issuer and Davidson.Davidson has financial and other interests that differ from those of the issuer.
As placement agent,Davidson will not be required to purchase the Loan(s)or to find one or more buyers
of the Loan(s),but rather to use its reasonable best efforts to sell the Loan(s)to one or more buyers,
in addition,the Issuer acknowledges receipt of certain regulatory disclosures as required by the MSRB
that are attached to this agreement as Exhibit A.issuer further acknowledges that Davidson may be
required to supplement or make additional disclosures as may be necessary as the specific terms of the
transaction progress.
2.Fees and Ex enses.Davidson's proposed placement agent fee/spread is not to exceed
1.00%of the principal amount of the Securities issued and is contingent on the successful closing of the
proposed issue.The Issuer shall be responsible for paying or reimbursing Davidson for all other costs of
issuance,including without limitation,bond counsel,municipal advisory fees and ratings agency fees
and expenses (if any),and ail other expenses incident to the performance of the Issuer's obligations
under the proposed offering.
3.Term and Termination.The term of this engagement shall extend from the date of this
letter to the closing of the offering of the Securities.Notwithstanding the forgoing,either party may
terminate Davidson's engagement at any time without liability of penalty upon at least 10 days'prior
written notice to the other party.If Davidson's engagement is terminated by the Issuer prior to closing,
the Issuer agrees to compensate Davidson a total not to exceed $0 for both the services provided and
reimbursement of Davidson for its out-of-pocket expenses incurred until the date of termination.
4.Miscellaneous.This letter shall be governed and construed in accordance with the laws
of the State of iowa.This Agreement may not be amended or modified except by means of a written
instrument executed by both parties hereto.This Agreement may not be assigned by either party
without the prior written consent of the other party.
If there is any aspect of this Agreement that you believe requires further clarification,please do not
hesitate to contact us.If the foregoing is consistent with your understanding of our engagement,please
sign and return the enclosed copy of this letter.
Again,we thank you for the opportunity to assist you with your proposed financing and the confidence
you have placed in us.
Very truly yours,
D.A.DAVIDSON S.CO.
By:
Title:Vice President —Public Finance
Acceptedthisl~+dayof~JÃ~4 2015
CITY OF 0/AUKEE,IOWA
EXHIBIT A
D.A.Davidson S.Co.(hereinafter referred to as "Davidson"or "placement agent")intends/proposes to
serve as a placement agent,and not as a financial advisor or municipal advisor,in connection with the
issuance of the Loan(s).
As part of our services as placement agent,Davidson may provide advice concerning the structure,
timing,terms,and other similar matters concerning the.issuance of the Loan(s).
Disclosures Concernin the Placement A ent's Role:
MSRB Rule G-17 requires a placement agent to deal fairly at all times with both municipal
issuers and investors.
The placement agent has a duty to place the Loan(s)from the Issuer at a fair and reasonable
price,but must balance that duty with their duty to sell the Loan(s)to investors at prices
that are fair and reasonable.
Disclosures Concernin the Placement A ent's Com ensation:
As placement agent,Davidson will be compensated by a fee that has been set forth in the engagement
letter.Payment or receipt of the placement fee will be contingent on the closing of the transaction and
the amount of the fee may be based,in whole or in part,on a percentage of the principal amount of the
Loan(s).While this form of compensation is customary in the municipal securities market,it presents a
conflict of interest since the placement agent may have an incentive to recommend to the Issuer a
transaction that is unnecessary or to recommend that the size of the transaction be larger than is
necessary.
Additional Conflicts Disclosure:
Davidson has not identified any additional potential or actual material conflicts that require disclosure.
Disclosures Concernin Com lex Munici al Securities Financin
Since Davidson has recommended to the Issuer a financing structure that may be a "complex municipal
securities financing"for purposes of MSRB G-17,the following is a description of the material financial
characteristics of that financing structure as well as the material financial risks of the financing that are
known to us and reasonably foreseeable at this time.
Risk Disclosures Pursuant to MSRB Rule G-17-Fixed Rate Bonds
The following is a general description of the financial characteristics and security structures of fixed rate
municipal bonds ("Fixed Rate Bonds"),as well as a general description of certain financial risks that you
should consider before deciding whether to issue Fixed Rate Bonds.
Financial Char c eristic
Maturit and interest.Fixed Rate Bonds are interest-bearing debt securities issued by state and local
governments,political subdivisions and agencies and authorities.Maturity dates for Fixed Rate Bonds
are fixed at the time of issuance and may include serial maturities (specified principal amounts are
payable on the same date in each year until final maturity)or one or more term rnaturities (specified
principal amounts are payable on each term maturity date)or a combination of serial and term
maturities.The final maturity date typically will range between 10 and 30 years from the date of
issuance.Interest on the Fixed Rate Bonds typically is paid semiannually at a stated fixed rate or rates
for each maturity date.
~Redem tron Fixe.d Bate Bonds may be subject to optionalredemption,which allows you,atyouroption,
to redeem some or all of the bonds on a date prior to scheduled maturity,such as in connection with
the issuance of refunding bonds to take advantage of lower interest rates.
Fixed Rate Bonds will be subject to optional redemption only after the passage of a specified period of
time,often approximately ten years from the date of issuance,and upon payment of the redemption
price set forth in the bonds,which may include a redemption premium.You will be required to send out
a notice of optional redemption to the holders of the bonds,usually not less than 30 days prior to the
redemption date.Fixed Rate Bonds with term maturity dates also may be subject to mandatory sinking
fund redemption,which requires you to redeem specified principal amounts of the bonds annually in
advance of the term maturity date.The mandatory sinking fund redemption price is 100%of the
principal amount of the bonds to be redeemed.
~Securit
Payment of principal of and interest on a municipal security,including Fixed Rate Bonds,may be backed
by various types of pledges and forms of security,some of which are described below,
Revenue Bonds."Revenue bonds"are debt securities that are payable only from a specific source or
sources of revenues.Revenue bonds are not a pledge of your full faith and credit and you are obligated
to pay principal and interest on your revenue bonds only from the revenue source(s)specifically pledged
to the bonds.Revenue bonds do not permit the bondholders to compel you to impose a tax levy for
payment of debt service.Pledged revenues may be derived from operation of the financed project or
system,grants or excise or other specified taxes.Generally,subject to state law or local charter
requirements,you are not required to obtain voter approval prior to issuance of revenue bonds.if the
specified source(s)of revenue become inadequate,a default in payment of principal or interest may
occur.Various types of pledges of revenue may be used to secure interest and principal payments on
revenue bonds.The nature of these pledges may differ widely based on state law,the type of issuer,the
type of revenue stream and other factors.
The description above regarding "Security"is only a brief summary of certain possible security
provisions for the bonds and is not intended as legal advice.You should consult with your bond counsel
and Financial Advisor for further information regarding the security for the bonds.
Financial Risk Conside ations
Certain risks may arise in connection with your issuance of Fixed Rate Bonds,including some or all of the
following:
pay debt service on the bonds when due.The consequences of a default may be serious for you and,
depending on applicable state law and the terms of the authorizing documents,the holders of the
bonds,the trustee and any credit support provider may be able to exercise a range of available remedies
against you.For example,if the bonds are secured by a general obligation pledge,you may be ordered
by a court to raise taxes.Other budgetary adjustments also may be necessary to enable you to provide
sufficient funds to pay debt service on the bonds.If the bonds are revenue bonds,you may be required
to take steps to increase the available revenues that are pledged as security for the bonds.A default
may negatively impact your credit ratings and may effectively limit your ability to publicly offer bonds or
other securities at market interest rate levels.Further,if you are unable to provide sufficient funds to
remedy the default,subject to applicable state law and the terms of the authorizing documents,you
may find it necessary to consider available alternatives under state law,including (for some issuers)
state-mandated receivership or bankruptcy.A default also may occur if you are unable to comply with
covenants or other provisions agreed to in connection with the issuance of the bonds.
This description is only a brief summary of issues relating to defaults and is not intended as legal advice.
You should consult with your bond counsel for further information regarding defaults and remedies.
terms of any optional redemption provisions.In the event that interest rates decline,you may be unable
to take advantage of the lower interest rates to reduce debt service.
(for example,if you have term maturities or if you choose a shorter final maturity than might otherwise
be permitted under the applicable federal tax rules),market conditions or changes in law may limit or
prevent you from refinancing those bonds when required.Further,limitations in the federal tax rules on
advance refunding of bonds (an advance refunding of bonds occurs when tax-exempt bonds are
refunded more than 90 days prior to the date on which those bonds may be retired)may restrict your
ability to refund the bonds to take advantage of lower interest rates.
Reinvestment Risk.You may have proceeds of the bonds to invest prior to the time that you are able to
spend those proceeds for the authorized purpose.Depending on market conditions,you may not be
able to invest those proceeds at or near the rate of interest that you are paying on the bonds,which is
referred to as "negative arbitrage".
Tax Com liance Risk.The issuance of tax-exempt bonds is subject to a number of requirements under
the United States Internal Revenue Code,as enforced by the Internal Revenue Service (IRS).You must
take certain steps and make certain representations prior to the issuance of tax-exempt bonds.You also
must covenant to take certain additional actions after issuance of the tax=exempt bonds.A breach of
your representations or your failure to comply with certain tax-related covenants may cause the interest
on the bonds to become taxabie retroactively to the date of issuance of the bonds,which may result in
an increase in the interest rate that you pay on the bonds or the mandatory redemption of the bonds.
The IRS also may audit you or your bonds,in some cases on a random basis and in other cases targeted
to specific types of bond issues or tax concerns.If the bonds are declared taxable,or if you are subject to
audit,the market price of your bonds may be adversely affected.Further,your ability to issue other tax-
exempt bonds also may be limited.
This description of tax compliance risks is not intended as legal advice and you should consult with your
bond counsel regarding tax implications of issuing the bonds.
if you or any other Issuer officials have any questions or concerns about these disclosures,please make
those questions or concerns known immediately to the undersigned.In addition,you should consult
with the Issuer's own financial and/or municipal,legal,accounting,tax and other advisors,as applicable,
to the extent you deem appropriate.