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8.C.
City Council Meeting - FINAL
Meeting Date:
03/15/2022
From:
Rick Tadder, Management Services Director

Information

TITLE:

Consideration and Approval of Contract:  Cooperative Purchase Contract with Greenberg Traurig, LLP to provide Legal Bond Counsel 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 $120,000.

STAFF RECOMMENDED ACTION:

  1. Approve the cooperative purchase contract for Legal Bond Counsel services through Greenberg Traurig LLP for a fee of $40,000 per loan issuance and an amount not to exceed $120,000; and
  2. Authorize the City Manager to execute the necessary documents.

Executive Summary:

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 City issuing the debt to contract with a Legal Bond Counsel firm, such as Greenberg Traurig, LLP ("Bond Counsel" or "Greenberg"). A bond counsel attorney is an essential member of a governmental issuers financing team. Bond Counsel renders an opinion on the validity of the debt offering, the security for the offering, and whether to and to what extent interest on the bonds are exempt from income and other taxation. The opinion of Bond Counsel provides assurance to both issuers and to investors, who purchase the debt, that all legal and tax requirements relevant to the matters covered by the opinion are met.

Financial Impact:

Fees paid to bond counsel firm for services rendered are often based on the value of each bond issuance. The financing being considered are three distinctively different financing and the proposed fee is $40,000 per financing. The City will only pay on completed financing.  

Per the Cooperative Purchase Contract, the fees set forth in the procurement would have been estimated at $50,000 for the $20 million WIFA loan, $50,000 for the $4 million Private Placement Loan and $60,000 for the Refinancing Loan for a total of $160,000. Staff negotiated the fees for the services with Greenberg and will be saving approximately $40,000. 

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

Policy Impact:

None.

Connection to PBB Priorities/Objectives, Carbon Neutrality Plan & Regional Plan:

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

Has There Been Previous Council Decision on This:

No.

Options and Alternatives:

  • Approve cooperative purchase contract as recommended; or
  • Conduct our own City procurement process. This will substantially delay the timing of issuing debt and possibly increase the interest rates on the loans; or
  • Not approve this cooperative purchase contract. This will shift the responsibility in-house for our legal staff and potentially delay the issuing debt.

Background and History:

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 Legal 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 Mesa Public School District No.4 (Bid No. 21-03MP) cooperative purchasing contract with Greenberg Traurig for Legal Bond Council. 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.

Community Involvement:

By utilizing businesses that have great knowledge in debt issuance within the State of Arizona, the City benefits by having the assurance that the transactions are completed with the highest legal assurances and the documents are completed accurately. 

Expanded Options and Alternatives:

Inform.

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