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HomeMy WebLinkAboutVIII-02 Approve Financial Services Advisor Contract City Council Memorandum To: Mayor Fasbender & City Councilmembers From: Chris Eitemiller, Finance Manager Date: January 18, 2022 Item: Approve Financial Advisory Services Contract Council Action Requested: Approve the contract extension for Financial Advisory Services with Northland Securities. Background Information: The City of Hastings entered into a contract with Northland Securities in June 2018. This contract merged advisory services for the City and HEDRA, which had previously been handled by two separate advisors. This contract extension does not have a set duration. Instead, this agreement is open-ended, and will remain in effect unless a written 30-day notice of termination is provided by either the City or Northland Securities. For the past three years, Northland has provided services to the City, not only in debt issuance planning and implementation, but TIF reporting, a debt tracking model and continuing disclosure filings, along with occasional consulting needs. These are services that the City needs on an annual basis. If this agreement is approved, the fees and hourly rates will increase. For a capital project relative to recent years, debt issuance costs will increase approximately $11,000 to $12,000. Debt issuance costs are paid through capital project budgets, meaning they would be included in the annual project planning process. The hourly rate for consulting services would increase from $195 per hour to $220. Beyond the first year, fee and hourly rate amounts would change each January 1 by a percentage equal to any increase in the Consumer Price Index for All Urban Consumers beginning January 1, 2023. Staff is asking the City Council to approve this contract to retain Northland Securities as the City’s financial advisor. Financial Impact: The proposed a rate increase for bond issuances would be included in the overall cost of future capital projects. The consulting services hourly rate increase will by paid by City departments that utilize their services, primarily Finance and Community Development. Advisory Commission Discussion: N/A VIII-02 Council Committee Discussion: N/A Attachments: Financial Advisor Contract VIII-02 FINANCIAL ADVISORY SERVICES AGREEMENT BY AND BETWEEN THE CITY OF HASTINGS, MINNESOTA HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY AND NORTHLAND SECURITIES, INC. This Agreement made and entered into by and between the City of Hastings, Minnesota and the Hastings Economic Development and Redevelopment Authority (hereinafter, “City") and Northland Securities, Inc., of Minneapolis, Minnesota (hereinafter, "NSI"). WITNESSETH WHEREAS, the City desires to use the services of NSI for Financial Advisory Services. WHEREAS, NSI desires to furnish services to the City as hereinafter described. NOW, THEREFORE, it is agreed by and between the parties as follows: SERVICES TO BE PROVIDED BY NSI The scope of work to be provided under this Agreement includes the following: 1. Assist the City with debt issuance and monitoring. 2. Assist the City with financial compliance and financial planning strategies. 3. Assist the City with economic development financial analysis, program development and financial reporting. 4. Attend meetings, deliver presentations, and submit products. 5. Advise the City on best practices and the development of policies and procedures. NSI will provide the City with a separate written agreement, including scope of work, compensation to be paid to NSI, among other disclosures, for each debt issuance or project engagement that is consistent with this Agreement. From time to time, the City may at its discretion, and consistent with this Agreement, authorize NSI to undertake a project without a separate written agreement. Nothing in this Agreement limits the ability of the City to separately engage NSI as underwriter for the issuance of bonds on which NSI has not previously provided advice regarding the structure, timing, terms, and other similar matters. The City may decide to use NSI for any or all offered services by NSI at its sole discretion. VIII-02 COMPENSATION Debt Issuance Fees for debt issuance is based on the par amount of bonds issued and are as follows: Par Amount Fee Amount $0 to $500,000 $9,000 $500,001 to $1,000,000 $13,500 $1,000,001 to $2,000,000 $17,850 $2,000,001 to $10,000,000 $17,850 plus $2.00/$1,000 $10,000,000 to $20,000,000 $33,850 plus $1.00/$1,000 1. Fee schedule applies to the aggregate amount of debt issued that day. NSI will not charge extra for multiple purposes or series in a single offering. 2. Revenue Bonds will be billed at 1.25 times the above fee schedule. 3. There will be no extra fees for meetings transcript, travel, copying, mail/shipping, and official statement preparation and distribution. 4. Fee amounts listed above will increase each January 1, beginning with January 1, 2023, by a percentage equal to any increase in the Consumer Price Index for All Urban Consumers (the “CPI”) as published by the United States Department of Labor during the preceding twelve months. Continuing Disclosure NSI will serve as Dissemination Agent for compliance with continuing disclosure obligations pursuant to the terms of a separate written Continuing Disclosure agreement between the City and NSI. Advisory Services for Consulting Projects NSI will establish fair and manageable arrangements for consulting projects billed on an hourly basis. For every project, NSI will provide the City with a written description of work to be performed and a not to exceed compensation amount (the “Budget”). NSI will not bill the City more than the Budget unless the City requests and agrees in writing to a revised scope of work and Budget. Compensation for advisory services provided under this Agreement will be based on the rate of $220 per hour. NSI will bill the City monthly for services performed and actual reimbursable expenses (publication of notices, printing, and mailing). Invoices will detail the work performed, requested compensation for the period and show amounts previously billed and amount remaining under the approved project budget. The advisory service rate per hour will increase each January 1, beginning with January 1, 2023, by a percentage equal to any increase in the CPI during the preceding twelve months. VIII-02 SUCCESSORS OR ASSIGNS The terms and provisions of this Agreement are binding upon and inure to the benefit of the City and NSI and their successors or assigns. DISCLAIMER In performing service under this Agreement, NSI is relying on the accuracy of information provided by the City and the services provided by NSI are based on current State Law. The parties agree that the Minnesota property tax system and other laws may change and may affect the accuracy and validity of services provided by NSI. NSI will perform its work using the best available information. The City recognizes and accepts that future property values, tax levies and tax rates, among other factors, may vary from the assumptions used by NSI and such changes may affect the work product produced and provided by NSI. TERM OF THIS AGREEMENT This Agreement may be terminated by thirty (30) days written notice by either the City or NSI. In the event of termination by the City, NSI shall provide the City with an itemized hourly statement of services already provided. All billable hours by NSI shall be billed at the stated hourly rates should early termination occur. Dated this ___ day of ______________, 2022. Northland Securities, Inc. By: _____________________________ Tammy Omdal Managing Director City of Hastings, Minnesota By: _____________________________ Title _____________________________ Hastings Economic Development and Redevelopment Authority By: _____________________________ Title _____________________________ VIII-02