HomeMy WebLinkAboutEDB PFM EXECUTIVE SUMMARY
AGENDA ITEM:
Proposed engagement of PFM Financial Advisors LLC (PFM) to serve as financial advisor to provide strategic
consulting and assistance in the issuing of new money debt for upcoming capital projects.
Date: February 2, 2023
BACKGROUND:
Staff reported to the Board of Supervisors our progress in moving projects within the capital improvement
program(CIP) from concept, design, and construction. We recently reported to the Board of Supervisors
regarding price increases received in the Peters Creek bid and other projects. These factors lead us to
evaluate options and scenarios related to CCUA taking on additional debt. To complete this effort, staff
recommends engaging PFM.
PFM has the financial tools, expertise, and staffing to model a range of scenarios that would best meet the
capital demands of CCUA in a changing market. PFM will develop a cashflow model that will allow staff
to update assumptions for capital needs to match current and revised projections over time. The proposed
scope includes the work required to build and maintain a working model that incorporates both debt and
general fund investments to identify timing for capital needs,preparation of a request for proposal (RFP),
evaluation of the terms and conditions of the RFP responses, compilation of responses and making a
recommendation to staff, structuring the loan to mitigate impact on ratepayers and assisting with review
of closing documents.
Staff will return to the Board of Supervisors for approval of PFM's recommendations prior to issuing an
RFP. In addition, staff would also return to the Board of Supervisors to approve a recommended RFP
response.
BUDGET:
PFM's proposed fees are included in Exhibit B of the engagement letter.Attachment"A"gives an example
of$50,000,000 borrowed by CCUA. This would result in a fee of$79,750 if long term debt was issued,
or $65,687 if interim financing was obtained. Staff budgeted $100,000 within the current fiscal years
operating budget for these services.
RECOMMENDATION:
Staff respectfully requests the Board of Supervisors approval to engage PFM to complete financial modeling,
new debt, and refunding transactions for an amount not to exceed$100,000.
ATTACHMENTS:
PFM engagement letter
Attachment"A"
January 25, 2023
Jeremy Johnston
Executive Director
Clay County Utility Authority
3176 Old Jennings Road
Middleburg, FL 32068
Dear Mr. Johnston:
f m The purpose of this letter(this "Engagement Letter") is to confirm and
memorialize our agreement that PFM Financial Advisors LLC ("PFM")will act as
financial advisor to Clay County Utility Authority, Florida (the"Client" or the"Authority"),
providing strategic consulting and assistance in the issuing of Series 2023 Utility
300 S.Orange Ave System Revenue Bond ("2023 Bond" or"2023 Loan"). PFM will provide services as
Suite 1170 applicable and set forth in Exhibit A to this Engagement Letter. Any material changes
Orlando, FL 32801
407.648.2208 in or additions to the scope of services described in Exhibit A shall be promptly
reflected in a written supplement or amendment to this Engagement Letter. Upon
pfm.com request of Client, PFM or an affiliate of PFM may agree to additional services to be
provided by PFM or an affiliate of PFM, by a separate agreement between the Client
to and PFM or its respective affiliate.
MSRB Rule G-42 requires that municipal advisors make written disclosures to
its Clients of all material conflicts of interest and certain legal or disciplinary events.
Such disclosures are provided in PFM's Disclosure Statement delivered to Client
together with this Engagement Letter.
PFM is a registered municipal advisor with the Securities and Exchange
Commission (the "SEC") and the Municipal Securities Rulemaking Board (the "MSRB"),
pursuant to the Securities Exchange Act of 1934 Rule 15Ba1-2. If Client has
designated PFM as its independent registered municipal advisor("IRMA")for purposes
of SEC Rule 15Ba1-1(d)(3)(vi) (the"IRMA exemption"), then services provided
pursuant to such designation shall be the services described in Exhibit A hereto,
subject to any limitations described thereon. PFM shall not be responsible for, or have
any liability in connection with, verifying that PFM is independent from any other party
seeking to rely on the IRMA exemption (as such independent status is required
pursuant to the IRMA exemption, as interpreted from time to time by the SEC). Client
acknowledges and agrees that any reference to PFM, its personnel and its role as
IRMA, including in the written representation of Client required under SEC Rule 15Ba1-
1(d)(3)(vi)(B)shall be subject to prior approval by PFM. Client further agrees not to
represent that PFM is Client's IRMA with respect to any aspect of a municipal securities
issuance or municipal financial product, outside of the scope of services without PFM's
prior written consent.
Clay County Utility Authority, Florida
January 25,2023
Page 2
For the services described in Exhibit A, PFM's professional fees will be paid as
provided in Exhibit B. In addition to fees for services, PFM will be reimbursed for
necessary, reasonable, and documented out-of-pocket expenses incurred, including
travel, meals, lodging, telephone, mail, and other ordinary cost and any actual
extraordinary cost for graphics, printing, data processing and computer time which are
incurred by PFM. Upon request of Client, documentation of such expenses will be
provided.
This Engagement Letter shall be effective upon acceptance and shall remain in
effect unless canceled in writing by either party upon thirty (30) days written notice to
the other party. PFM shall not assign any interest in this Engagement Letter or
subcontract any of the work performed under this Engagement Letter without the prior
written consent of the Client; provided that upon notice to Client, PFM may assign this
Engagement Letter or any interests hereunder to a municipal advisor entity registered
with the SEC that directly or indirectly controls, is controlled by, or is under common
control with, PFM.
All information, data, reports, and records ("Data") in the possession of the
Client or any third party necessary for carrying out any services to be performed under
to this Engagement Letter shall be furnished to PFM and the Client shall, and shall cause
its agent(s)to, cooperate with PFM in its conduct of reasonable due diligence in
performing the services. To the extent Client requests that PFM provide advice with
regard to any recommendation made by a third party, Client will provide to PFM written
direction to do so as well as any Data it has received from such third party relating to its
recommendation. Client acknowledges and agrees that while PFM is relying on the
Data in connection with its provision of the services under this Engagement Letter,
PFM makes no representation with respect to and shall not be responsible for the
accuracy or completeness of such Data.
All notices given under this Engagement Letter will be in writing, sent by
registered United States mail, with return receipt requested, addressed to the party for
whom it is intended, at the addresses on the first page of this Engagement Letter.
All materials, except functioning or dynamic financial models, prepared by PFM
pursuant exclusively to this Engagement Letter will be the property of the Client.
Subject to the preceding exception, upon termination of this Engagement Letter, PFM
will deliver to the Client copies of any and all material pertaining to this Engagement
Letter. PFM acknowledges the Authority's obligations under Art. 1, Section 24, Florida
Constitution, and Chapter 119, Florida Statutes, as from time to time amended
(together, the Public Records Laws), to release public records to members of the public
upon request. PFM acknowledges that the Authority is required to comply with the
Public Records Laws in the handling of the materials created under this agreement and
that the Public Records Laws control over any contrary terms in this agreement. PFM
shall comply with all requirements of Chapter 119, Florida Statutes, to the extent
Clay County Utility Authority,Florida
January 25,2023
Page 3
applicable to the records and documents associated with this agreement. In
accordance with Section 119.0701(3)(a), Florida Statutes (or successor statutes), a
request to inspect or copy public records related to this agreement must be made
directly to the Authority.
The following professional employees of PFM will provide the services set forth
in this Engagement Letter: Jeremy Niedfeldt, Jay Glover and Michael Dennis. Jeremy
Niedfeldt, Managing Director in Orlando will continue to serve as the primary PFM
employee. PFM may,from time to time, supplement or otherwise amend team
members. The Client has the right to request, for any reason, PFM to replace any
member of the advisory staff. Should the Client make such a request, PFM will
promptly suggest a substitute for approval by the Client.
PFM, its employees, officers and representatives at all times will be
independent contractors and will not be deemed to be employees, agents, partners,
servants and/or joint ventures of Client by virtue of this Engagement Letter or any
actions or services rendered under this Engagement Letter.
This Engagement Letter and the Authorizing Document represents the entire
to agreement between Client and PFM.
Sincerely,
eremy Niedfeldt
Managing Director
PFM Financial Advisors LLC
Accepted by:
Clay County Utility Authority, Florida
Authorized Signature
Name
Title
Date
Clay County Utility Authority, Florida
January 25,2023
Page 4
EXHIBIT A
SCOPE OF SERVICES
Financial Modeling
• Review the Authority's current mix of cash and investments.
• Prepare a cash needs analysis to project the timing for potential future debt
funding.
• Develop a financial model that incorporates liquidity demands and forecasts
income from investments and cost of debt financing.
• Create a range of scenarios that can be used to simulate various economic
and market conditions.
• Present financial modeling results to staff and confirm that assumptions and
inputs match current projections.
• Prepare a power point and attend a board meeting to present the material and
allow for Q&A.
New Money and Refunding Transactions
to • Present current market conditions and financing alternatives to Authority staff.
• Prepare financing scenario(s)that meet the Authority's targeted parameters to
provide estimated annual debt service payments.
• Present a plan of finance to staff and discuss benefits of various structures
and offering types.
• Develop a financing timetable and prepare a working group distribution list.
• Assist the Authority with the procurement of other members of the financing
team, to include underwriter(s) if a public bond offering is anticipated.
• Draft Bank Loan request for proposals (RFP)for the selection of a bank loan
provider and/or Underwriter RFP for a public bond offering.
• Review proposals and make a recommendation to staff on the approach that
has the most favorable conditions at the lowest net borrowing cost.
• Assist with the review of financing documents, to include an authorizing
resolution and loan agreement or official statement.
• Draft closing/wiring instructions memorandum.
• Assist with the review of closing documents.
• Attend Board Meeting when financing approval is being requested.
• Attend pre-closing and coordinate closing.
Clay County Utility Authority, Florida
January 25,2023
Page 5
EXHIBIT B
COMPENSATION FOR SERVICES
For the scope of services described in Exhibit A, PFM would propose a fee schedule
based on financial modeling needs and work related to the issuance of debt. Financial
Modeling fee of$12,500, plus an ongoing retainer fee for modeling updates and
municipal advice as the Authority's Independent Registered Municipal Advisor payable
quarterly in the amount of$2,500. For new money and refunding financings, proceeds
from debt will be charged a fee of$1.25/$1,000 for the first$25 million, $1.00/$1,000
for the next$25 million and $0.75/$1,000 for amounts above $50 million with a
minimum fee of$20,000 and a maximum fee of$75,000 plus any out-of-pocket
expenses, not to exceed $1,000. If short term borrowing is used (bond anticipation
note, revenue anticipation note, fixed or variable rate interim financing, line of credit,
etc.), the financing fee will be 75% of the fees listed above.
All payments will be governed by the Local Government Prompt Payment Act, which
provides that payments will be made not later than 45 days from receipt of proper
invoice.
to
Attachment "A"
PFM 75.0%
Analysis of Fees Line of Credit
Estimated Est. Fees
Financial Modeling Fee $ 12,500.00 $ 12,500.00
Quarterly fee $ 2,500.00 4 $ 10,000.00 $ 10,000.00
Borrowed $ 50,000,000.00
1st $25M $ 25,000,000.00 1.25 $ 31,250.00 $ 23,437.50
2nd $25M $ 25,000,000.00 1.00 $ 25,000.00 $ 18,750.00
Over $50M $ - 0.75 $ - $ -
Out of Pocket $ 1,000.00 $ 1,000.00
Total Fee $ 79,750.00 $ 65,687.50
to
X:\Finance\Controllers Folder\Jeff\Projects\PFM\PFM Fees.xlsx Page 1 of 1