Consideration and Approval of Contract:  Cooperative Purchase Contract with Stifel, Nicolaus & Company, Inc. to provide Financial Services for issuing a Water Infrastructure Finance Authority (WIFA) of Arizona Loan, a Private Placement Loan and a Private Placement Refinancing Loan debt in an amount not to exceed $135,000.

1. Approve the Cooperative Purchase Contract for Bond Underwriting Services with Stifel, Nicolaus & Company, Inc. for a combined fee for a maximum total not to exceed an amount of $135,000; and
2. Authorize the City Manager to execute the necessary documents.

The City of Flagstaff is anticipating issuing three loans to support Water Services funds.  The first loan is approximately $20 million in a new Water Infrastructure Finance Authority of Arizona Loan to support the Rio De Flag project. The second loan is approximately $4 million in a Private Placement Loan to support the Stormwater Fund. The third loan is approximately $6 million in a Private Placement Loan for consideration of refinancing previously issued Water and Wastewater loans. When issuing debt of this type, it is not only considered customary but in the best interest of the agency issuing the debt to contract with a Financial Advisor firm such as Stifel, Nicolaus & Company, Inc. ("Stifel or Financial Advisor"). 

Fees paid to Financial Advisor for services rendered are often based on the value of each debt issuance. The financings being considered are three distinctively different financing and the proposed fee is $50,000 for the Water Infrastructure Finance Authority of Arizona Loan, $40,000 for the Private Placement Loan and $45,000 for the Refinancing Loan. The City will only pay on completed financings.

Debt service costs are budgeted in account 206-08-901-1990-7-4248 and 206-08-901-1990-7-4250.

Priority Based Budgeting

• High Performing Governance: Enhance the organization's fiscal stability and increase efficiency and effectiveness.

No.

• Approve the cooperative purchase contract as recommended: or
• Conduct our own City procurement process. This will substantially delay the timing of issuing debt and may increase the interest rate on the Loans; or
• Not approve the proposed cooperative purchase contract.  

The Stormwater Fund has a need to issue debt to fund projects. Issuing of debt had been included in the current 5-year plan for the Stormwater Fund.  Staff has been working with our Financial Services and Bond Council teams to identify the best approach to issuing debt for this fund. Our intention is to complete two financing including a WIFA Loan for $20 million to fund expenditures related to the Rio de Flag Flood Mitigation project and a private placement loan for $4 million to fund projects including the Killip School Detention Basin project and a feasibility study. 

In addition, the City has several current WIFA loans within our Water and Wastewater Funds that are eligible for potential refinancing. Refinancing of loans are favorable when we can issue new debt to replace current commitments with a lower interest rate debt and reduce future expenses for debt.

City Staff rely on the services of a Financial Advisor and a Bond Counsel to assure we are completing the best financing and completing all the legal requirements. The City will only pay for the services on the debt issuances that are completed.  

City Procurement Staff identified a cooperative purchasing contract with Stifel for Municipal/Financial Advisor Services utilizing a cooperative contract through Crane Elementary School District No. 13 (RFP C-005-1718). The services required by the City are covered under this cooperative contract.  

Staff will be back in front of Council in April to adopt Ordinances that will authorize the City to issue debt.

Inform.