Agenda item #6 on the June 1, 2016 Council meeting was a Resolution authorizing the City to extend the contract with Public Financial Management, Inc. (PFM) for financial advisory services for one year. The Council voted to table the item. At this time, I am requesting the Council to pull this item off of the table and authorize the one year contract extension. The City entered into a contract with PFM in 2013. The contract provided for an initial three-year term with two one-year extensions. This request is for the first of the two extensions. Financial advisory work revolves around debt issuance and the majority of a financial advisor’s compensation is paid only when debt is issued.
The role of an independent financial advisor is to serve as an advocate for the City and to provide the City with the financial market information necessary to make intelligent, informed decisions when issuing municipal debt. The financial advisor should know how to structure a financing to get the best rate for the community. They review and give advice on the bond underwriter’s proposals and reviews documents from underwriter, underwriter’s counsel and bond counsel. They coordinate the bond issuance process including rating agency presentations. A financial advisory should be an independent and objective bond market expert with no financial ties to the underwriting or investment management industry.
PFM has served the City well since 2013 guiding the City through the 2014 Utility Special District refunding, the $22,000,000 Public Improvement Revenue Bonds for street reconstruction and the Marina District project, the 2015 Pension Obligation Bonds and most recently, the 2016 Stormwater Bonds. With PFM as its Financial Advisor, the City has been able to re-enter the financial markets after a ten-year hiatus and receive A+, and interest rate bids better than market expectations. PFM is currently working on the upcoming $40,000,000 Utility Special District Bond issue. Failing to extend their contract will put this sale on hold pending a new financial advisor contract. PFM will be compensated at the time of issuance from bond proceedings.
PFM is the national leader in providing independent financial services to local and state governments. The firm is well respected, innovative and more importantly independent. As noted above, PFM was unanimously recommended by the selection committee. PFM also served as the City’s financial advisor in 2007.