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HomeMy WebLinkAboutMunistat Services, Inc. John A. Cushman; Town Comptrollez Telephone (631) 765:,~333 Fax (631) 765-1356 E-mail: acemmKng@towmsoutl{old my.u~ TOWN 01' SOUTI{O~D OFFICE OF THE SLrPERVISOR TOWN llALL ANNEX Feather I=!511, Building 620 Traveler Street P.O; -Box&179 Southold, NY 11971-0959 Ap.r[l..26. 2001 ,-x,~bert S kom, PresidO~t- Munistat Services. 12 Roosevelt Avenue 'Port Jefferson; St~tioni: ~Y I q 776 '- Re: Fishers Island Refuse & Garl~age District ' EFC Loan Application ' Dear Bob: As requested in your letter of April 20, enclosed please find an executed agreement between the Town and' Munista~t .relating to financial advisory services for the above referenced matter, in addition, t am enclosing two copies of the executed agreement between ~he Town and Hawkins. Delafield and Wood for legal services relating to this matter (one copy is for your files and the other is for submission to' NYS EFC). Yoor attention to this matter is appreciaied. Please conta~{~n~ sl~ould you require any additional information. ' Very truly yours. /z~ John Cushman Town Comptroller / cc: Elizabeth A. Neville, Town ClerkV' Telephone: 212-820-9416 Facsimile; 212-820-9603 e-mail ~(~&ress: gfern 'aUdez@hdw.com April 23, 2001 Town of Southold, New York $2,500,0,00 EFC Fisher's Island Refuse and Garbage District Serial Bonds-2001 (Our File Designation: 2615/022471) Hon. Jean W. Cochran Supervisor Towa of Southold Town Hall 53095 Main Road P.O. Box 1179 Southold, New York 11971 Dear Ms. Cochran: We hereby confirm that it will be our pleasure to serve as bond counsel to the Town of Southold, in the County of Suffolk, New York (the "Town"), in connecuon with the sale and issuance of its $2,500,000 EFC Fisher's Island Refuse and Garbage District Serial Bonds-2001 (the "Bonds"). Such Bonds will evidence the Town's obligation m repay the loan made to the Town pursuant m a Loan Agreement between the New York State Environmental Facilities Corporation (the "EFC") and the Town, and the related Terms Certificate. Our services in connection with this bond issue will include: research, examination of law, preparation and review of proceedings for authorization, sale and issuance of the serial bonds, including the proceedings for the increase and improvement of the facilities of the Fisher's Island Refuse and Garbage District and adoption of the bond resolutien, review of all disclosure documents and other preliminary documents prepared by the EFC, including the Loan Agreement and the Project Financing Agreement; preparation of closing documents: review of additional closing documents prepared by the EFC; preparation of Bonds: telephone and written 367324.1 022471 LTR Hon. Jean W. C6chran April 23, 2001 Page 2 communications witl~ the EFC and officials of the Town; and rendering of our final approving legal opinion. Our fee in connection with the above wilt be in an amount not in excess of $12,500, including out-of-pocket disbursements and incidental expenses incurred in connection therewith. In the event that the Town should require our services in connection with a short- Cer,m EFC ~grid note" financing prior tO the time of~an SRF £mancing, we woutd propose a fee therefor of halt inexcess of $1,500, inc[uding'out-of~pocket disbursements ,and incidental exp. enses incurred in com3ection~ therewith. As:you know. the EFC has requested that the Town provide a document signed on behalf of theTown and thia f'trm, confirming our representation and fee arrangement. May we ask therefore, that you kindly sign below to indicate the Town' s agreement with and acceptance of the above, and forward a signed original hereof to us for our records. Thanking you and with kind regards, I remain READ AND AGREED TO: TOWN OF SOUTHOLD. NEW YORK By: J(k~gt W. Cochran, Supervisor 367324.1 022471 LTR AGREEMENT FOR MUNICIPAL FINANCE ADVISORY SERVICES TO THE TOWN OF SOUTHOLD, NEW YORK RELATING TO FISHER'S ISLAND REFUSE AND GARBAGE DISTRICT LANDFILL CLOSURE PROJECT N.Y.S. ENVIRONMENTAL FACILITIES CORP. PROJECT NO. C1-$110-04-00 INTRODUCTION MUNISTAT SERVICES, INC, has served as financial advisors to local governments and school districts throughout New York State, specializing in debt management and securities offeffmgs. Our main office is located in Port Jefferson Station, N.Y.; and our Western New York State office is located in Wr[liamsville, NY. Our staff (which includes 9 employees on Long Island) consists of dedicated and experienced individuals uniquely suited to taking each borrowing from inception to closing as efficiently as possible. Our pr'anary purpose is m perform the technical and administrative functions required as integral parts of the borrowing process in coordination and cooperation with our clients, bond cotmsel, local counsel and market participants. In addition, however, we have extensive experience in other areas of municipal finance, such as fund accounting, government auditing, and municipal credit analysis. MUNISTAT SERVICES, INC. presently serves approximately 500 clients throughout New York State. We serve as financial advisor to the cities of Schenectady, Plattsburgh and Dunkirk; in addition, the firm's clients include 10 counties in the State as well as some of the largest Towns. including Clarkstown in Rockland County; Brookhaven, Smithtown and Riverhead in Suffolk County; and Colonic in Albany County. We have acted as financial advisor on advance refunding obligations and private placements as well as on competitive sales of Bonds, BANs, TANs and RANs. We also have experience assisting our clients in the sale of taxable obligations and revenue and appropriation-hacked obligations. We are members of the New York State GFOA and the New York State Association of School Business Officials, and participate in their meetings and seminars, since we feel it is critical to our clients that we stay abreast of the latest developments and legislation that affect the issuance of bonds and notes of local governments and school districts in New York State. The financial advisory services commonly provided to our clients include: Prepare financial plans including cost analyses and the evaluation thereof. Develop marketing plan based on evaluation of market conditions including interest rates and supply factors. Prepare and distribute requests for proposals to uude~riters, escrow agents, te~fder agents, verification agents and banks for liquidity support (variable rate bonds only). Review proposals and advise client coneefiaing th~ award of bid~.' Prepare the official statement and arrange for the printing and distribution thereof to underwriters, rating agencies and other appropriate parties. Submit applications and required documents to Moody's and Standard & Poor's. Adv[se the client concernSng presentations to the rating agencies. Submit applications for bond insurance to various municipal bond insurers. Coordinate the review process between the client and the respective insurance companies. Arrange for the issuance of bonds or notes in book-entry-only form through The Depository Trust Company. Prepare and coordktate required documents. Distribute completed documents to the appropriate parties. Prepare and coordinate the filing of debt statements, as required. Coordinate the publication of sale notices in The Bond Buyer and such other publications as may be appropriate. Review and verify accuracy of interest rate bids or pricing proposals. Advise the client on the acceptance and award of bid proposals. Prepare and distribute closing letter with instructions concerning the transfer of funds and delivery of securities. Prepare final bond amortization schedules including detailed schedules required for capital project accounting. Distribute consolidated schedules to The Depository Trust Company, bond insurance companies and other appropriate parties. Provide additional information required by investors, analysts and others after the bonds or notes are issued. 2 Commitment tO Comprehensive, Quality Services MUNISTAT SERVICES, 1NC. is commilled to providing the highest quality f'mancial advisory service available to municipalities and school districts in the State. In order to achieve this goal, we work closely with our client to fully understand irs operation - particularly any special circumstances or limitations. The fn'm places special emphasis on its role as an advisor. We provide a hands on technical service to our clients. Most of the professionals at MUNISTAT SERVICES, INC. have more than 20 years experience; the knowledge and skills we have gained through the years is brought to each and every assignment and our client benefits from this experience. MUNISTAT SERVICES, INC'. believes that a financial advisor must do more than write official statements and provide bond amortization schedules. The advisor must help the finance manger develop and implement an effective and efficient debt management program. A financial advisor must facilitate this process and be a problem solver, And above all, the financial advisor must be a communicator who takes the time to be certain the client clearly understands what the plan is, what it will accomplish and the basis for the advisors recommendations. The f'mance manager bears the ultimate responsibility for the debt program and mast be able to explain the decisions to elected officials and the general public. In order to do our job as an advisor, we must take the time m learn our client's business including any unique or unusual circumstances that might influence the debt program. Reports must be reviewed and analyzed. The questions must be asked. The cornerstone of any debt management program is financial planning and a key element in this process is financial analysis and cost feasibility. Proper planning requires that the advisor examine alternate courses of action thereby providing options and flexibility. A thorough understanding of the client's operations allows the advisor to make reasoned choices among a number of possible and appropnaxe options. The following paragraph discusses certain procedures employed to develop the bond structure during the cost feasibility phase of our work. Later sections of this proposal outline methods used to prepare the official statement; the services which we propose to provide to the Town; and management biographies of the principals of the f'mn. 3 Cost Fec~ibili'ry - Bond Structures Effective cost analysis begins with an in-depth ~evieW' of the client's operations. MUNISTAT SERVICES, INC. reviews historical performances, current operating and capital budgets, debt history, current outstanding debt including the cost of servicing such debt, and open debt authorizations. In addition, we discuss with the client other matters which may affect the way the bond structure is developed. Furore budgetary constraints or extraordinary expenditures must be considered for their impact on debt repayment and possible implications for credit ratings. After observing the rules imposed by the State law, the process of structuring a bond is usually left [o the imagination of the financial advisor. The basic objective of structuring a bond issue is to balance thc financial resources of the issuer with the demands of investors. A rapid payback lowers interest costs but can also create budgetary strains. Computer programs are used to test various snmcmres and express the results in terms of the effect on the tax rate. In addition to the new bond costs, a comprehensive analysis requires that current debt costs, other furore borrowings, projected cost savings generated by the improvement, non-tax revenue sources of repayment and tax assessment trends all be considered. MUNISTAT SERVICES, INC. prepares several amortization schedules using varying assumptions with respect to term, interest rates and structure. The goal is to develop a bond maturity schedule which has the lowest average life possible without creating undue pressure on the budget. As a result of this type of analysis, the borrower generally can repay the debt more quickly while minimizing, to the extent possible, the negative effects on the tax rate. Accelerating debt payback based on a well thought out plan helps to reduce the total interest that will be paid and, all else being equal, generates lower interest rate bids from underwriters. With respect to this spec'flit £maucing, two separate schedules must be prepared for each project -one that amortizes the outstanding debt as if the Town issued the bonds directly to the market and a second schedule in accordance with the terms and conditions set forth by the EFC. We then assist the Town in evaluating which option is in its best interests. 4 SCOPE OF SERVICES MUNISTAT SERVICES, INC. provides a complete package of fmancial advisory services that begins with developing a financial plan and continues after the securities are sold and delivered. Although the primary emphasis is on debt management, we routinely advise our clients on various financial mattm-s unrelated to debt. MUNISTAT SERVICES, INC. coordinates all aspects of the fmaneing to ensure that all deadlines are met. Because present duties of your staff do not allow for a lot of time on this type of project, werelieveyou of this burden. MUNISTAT SERVICES, INC. assumes responsibility for working with bond counsel, architects and other third party professionals. All of the work done by MUNISTAT SERVICES, INC. is performed by personnel with extensive experience in advisory work. A knowledgeable advisor will be involved in the entire process from start to finish. You will be kept informed at all times concerning the status of your fmancing. There follows a summary list'mg of the services provided by MUNISTAT SERVICES, INC. dur'mg a typical engagement. Financial Planning Assist the Town to develop a financial plan to size, structure and market its bonds. The plan should provide alternatives and be flexible in order to accommodate changmg circumstances. Services to be provided to the Town in connection with the financial plan include: Confer with Town officials, bond counsel and EFC officials to review the proposed financing. Detecto'me the amount and nature of the financing, such as new money, note reftmding or advance refunding. Establish approximate time frame for the financing. Evaluate tax status of proposed financmg. Review currem operating and capital budgets and discuss budgetary impact of proposed financing. Review and evaluate credit related issues, if apprnpriate. Read current credit reports and review the Town's current official statement. Evbluate the use of early redemption or call features. Determine optimal dates for principal and inter6st payments, in accordance with EFC fmancing schedule. Pre-Marketing Activities Prepare data required for EFC Official Statement from documents and information provided by the cliem and other third party sources. MUNISTAT SERVICES, INC. gathers much of the necessary data on sim. Review Official Statement with bond counsel and EFC officials. Marketing and Sales In a transaction of this nature, we assist the Town by coordinating the sale of the Town's bonds to E.F.C., as E.F.C. sells its own bonds to obtain funds for purchasing the bonds of the Town. This requires maintaining open lines of communication between the Town, E.F.C., all of E.F.C.'s attorneys and advisors, and the Town's bond counsel. It may also include representing the Town as part of the transaction with E.F.C.'s investment bankers. After both the Town and E,F.C have sold their respective bond issues, all matters related to the closing must be coordinated between all parties. Where necessary and appropriate, it is our function to assist the Town in these matters~ OFFICIAL STA~TEMENT - METHOD AND PROCEDURES rile FOLLOWING DISCUSSION ASSUMES THAT MUNISTAT SERVICES WILL PREPARE THE TOWN'S PORTION OF THE E.F.C. OFFICIAL STATEMENT, AND COORDINATE ~ REVIEW OF THIS DOCUMENT. MUNISTAT SERVICES will assume responsibility for prepar'mg the Town's portion of the E.F.C. official statement on behalfof the Town. The representations contained in the statement, however, are those ofl!ae Town and all disclosure infonnatiun w/ll be reviewed and approved by the Town before any materials are released to the public. The ongoing involvement ofsenior level personnel improves both the quality and the utility of the official statement. It is an excellent way for us to constantly monitor the accuracy and consistency of the document. This high degree of oversight provides timely information on trends or special developments that effect our client's credit rating [rom both a positive standpoint as well as negative one. An experienced f'mancial advisor will plan and coordinate the entire process of producing the official statement. The Town will be asked to provide certain information and statistics as well as financial reports and other selected data. All third part information will be obtained by our firm. MUNISTAT SERVICES, INC. will compile the Town's portion of the E.F.C. official statement including the word processing thereofi Drafts will be distributed to the Town and its bond counsel for comment and approval. MUNISTAT SERVICES, INC. prepares a very comprehensive official statement for its clients. The document reflects our commitment to provide quality disclosure; it includes data which is personal and unique to the client in addition to standard presentations on legal matters, debt, taxes, etc. A strong emphasis is placed on providing the kind of information that is not readily available to analysts at the rating agencies or those employed by the bond underwriters. Providing this information can make a difference in the bond rating as well as improve the competition among underwriters bidding on the bonds. An experienced public f'mance professional writes all of our documents; it is a process that we treat very seriously. We know what the financial markets expect in terms of disclosure. And, because we understand municipal operations and the laws affecting those operations, we are able to identify issues that require disclosure and write about them m clear, understandable language. Since the default of the FEES AND EXPENSES The charge for our services and related out-of-pocket expenses for duplicating, overnight delivery charges, etc., for this bond issue will not exceed $7,500. this fee is payable as follows: $5,000 on completion of the Application submission to EFC and $2,500 upon the completion of the long-term financing with the NYS EFC. this fee does not include other issuing expenses such as printing and postage for Official Statements and Notices of Sale; printing of bonds or notes; fiscal agent fees; bond counsel; rating 'agency fees, etc. MUNISTAT SERVICES. INC. ROBERT F. SIKORA PRESIDENT DATED: April 20, 2001 Ach~owledged and agreed to this '~ day of /t~/~. ,2001 TOWN OF SOUTHOLD, NEW YORK TITLE