Clerk's Miscellaneous CorrespondenceBRANCH OFFICE
3117 OVERSEAS HIGHWAY
MARATHON, FLORIDA 33050
TEL. (305) 743-9036
fanny 1. jkotbage
CLERK OF THE CIRCUIT COURT
MONROE COUNTY
500 WHITEHEAD STREET
KEY WEST, FLORIDA 33040
TEL. 1305) 294-4641
May 21, 1987
The Honorable Jerry Hernandez, Jr. and
Members of the Board of County Commissioners
C/o 500 Whitehead Street
Key West, Florida 33040
Dear Mayor and Commissioners:
BRANCH OFFICE
P.O. BOX 379
PLANTATION KEY, FLORIDA 33070
TEL. (305) 852.9253
Since there was some confusion at the Commission meeting
of May 19, 1987, surrounding the recommendation of Post, Buckley,
Schuh & Jernigan that the Board appoint a "financing team" to
pursue the funding of improvements to the Card Sound Bridge, I
felt that I should provide you with some background information
which will clarify and expand my remarks concerning the appoint-
ment of an underwriter at this time.
On March 11, 1986, I wrote a letter to Mayor Wilhelmina
Harvey, with copies to all Board members, In which I discussed my
views on the need for the appointment of a financial advisor to
assist the County in the issuance of its long-term debt as well
as other public finance issues. I am enclosing with this letter
a copy of that letter including the attachments referred to
therein.
The Board proceeded to interview applicants and finally
selected Public Financial Management, Inc. (PFM) to serve as
financial advisors to the Board. I am also enclosing a copy of
the County's contract with PFM. You will see by examination of
the description of the services to be provided that they are very
comprehensive and cover all phases from initial planning and
development work through the actual sale of the bonds.
These services would also include a recommendation as to
whether or not the County should issue bonds on a competitive
basis, or by a negotiated sale with a selected underwriter, as
well as developing criteria to be used for the selection of an
underwriter.
The over-riding consideration in all of these activities
should be to provide the necessary capital at the lowest cost to
the citizens of the County.
1k
Honorable Jerry Hernandez, Jr. and
Members of the Board of County Commissioners
C/o 500 Whitehead Street May 21, 1987
Key West, Florida 33040 Page Two
Mr. Wise, in his discussion with the Board at the
meeting of May 9, 1987, told the Board that his firm's services
would not cost the County a "dime", but that they would come out
of the "spread". For those new Commissioners who might not be
familiar with this term, I am enclosing a portion of PFM's Debt
Capacity Study which describes what the spread is and how it
affects the cost of the issue. I think we• a,11" kilbw that William
R. Hough & Co., and indeed all underwriting firms,•are�in the
business of buying and selling bonds for a protit,tand do not
provide services free of charge. This industry is,highlyL,,com-
petitive, and I am sure that many of you have been contacted by
other underwriters interested in the County's business. TAI
beneficiaries of this kind of competition can be the citizens of
the County.
The tax reform amendments of 1986 have complicated
public finance to the point that the current situation bears very
little resemblance to conditions which existed even one year ago.
What was an acceptable procedure for the County in 1977, or even
five years ago for that matter, is not adequate today.
The tax reform amendments to whict. I have referred have
also placed severe limitations on refunding issues; the result
being that great care has to be exercised on the original issue.
The deal you get up -front is probably what you will have to live
with for the life of the issue.
My comments are not intended in any way to question the
motives, capabilities, or qualifications of either Mr. Wise or his
firm. In fact, one of the recommendations which could have
potentially come from your financial advisors might have been to
begin negotiations with William R. Hough & Co. However, by
making that decision now, without any recommendation from the
Board's financial advisors, you have limited the alternatives
available to you.
Further, it is not my intention to second guess a policy
established by a majority of the Board; however, I urge you to
avail yourselves of all of the services which the County has
contracted, and is paying, PFM to provide.
Sincerely,
Board of
Ko hage
Ci cuit Court
icio Clerk of
County Commissioners
4na+rr ` -16,t > ,
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f
BRANCH OFFICE
3117 OVERSEAS HIGHWAY
MARATHON, FLORIDA 33050
TEL. (305) 743-9036
March 11, 1986
3Dantip X. Rotbage
CLERK OF THE CIRCUIT COURT
MONROE COUNTY
500 WHITEHEAD STREET
KEY WEST, FLORIDA 33040
TEL. (305) 294-4641
Mayor Wilhelmina Harvey
310 Fleming Street
Key West, Florida 33040
Dear Mayor Harvey:
•�D
BRANCH OFFICE
P.O. BOX 379
PLANTATION KEY, FLORIDA 33070
TEL. (305) 852-9253
In the last week of February, I attended some training sessions
sponsored by the Florida Association of Court Clerks. That
session consisted primarily of programs dealing with the issu-
ance of tax-exempt bonds by state and local governments.
One of the more important and informative programs concerned
the need for cities and counties to employ independent financial
advisors who are not in any way associated with underwriting or
distributing the agencies' bond issues.
There was also an extensive program on the requirements and
restrictions placed upon tax-exempt issues by the provisions of
H.R. 3838 as it now stands. The Senate is scheduled to consider
the adoption of H.R. 3838 later in the summer. Exactly what
form and what conditions will be included in the federal legis-
lation is now impossible to accurately predict; however, since
the provisions of the new federal legislation will be retroactive
to January 1, 1986, most issuers of tax-exempt bonds are now pro-
ceeding on the basis of compliance with all the conditions of
H.R. 3838. I have provided a copy of a memorandum from the Law
Offices of Chapman and Cutler of Chicago, Illinois, a very pres-
tigious law firm specializing in bond issues, concerning the
arbitrage, essential function, and unified volume cap provisions
of the law as passed by the House. This federal legislation
makes the structuring of tax-exempt financing extremely complex
and, in my view, makes it very important that the county hire a
competent financial advisor.
Furthermore, I think it is plain to both the Board members and
the staff that a great deal of confusion and hesitancy surrounded
the recent refunding of the Municipal Service District bonds. I
believe that this was due primarily to the fact that information
concerning the refunding was not presented to the Board in an
efficient and easily comprehensible format. I believe it is un-
reasonable to ask the Board members and the general public to
Mayor Wilhelmina Harvey
March 11, 1986
Page Two
wade through hundreds of pages of bond resolutions, official
statements, feasibility studies, audit reports, and other
miscellaneous information in order to obtain a basic under-
standing of what the bond issue would accomplish, and why it
was deemed necessary.
Since the Board is now considering a bond issue for its capital
projects needs, I would strongly urge that the Board consider
going through the process of issuing a call for proposals from
firms interested in serving as financial advisors, and make a
selection of a qualified firm, prior to the planning processes
which will be required for the issuance of the aforementioned
bonds.
I am enclosing copies of an article concerning the role of a
financial advisor, which I feel will be helpful to you.
I think it is important to note that such an advisor would also
be capable of advising the county as to alternatives to tradi-
tional methods of financing government facilities where they
are appropriate.
Monroe County currently has a contract with the firm of William
R. Hough & Co., which is dated October 25, 1977, which provides
for the services of both underwriter and financial advisor under
certain specific conditions. That contract has a 120-day can-
cellation provision. I have attached a copy of that contract
for your review.
I want to stress the point that this letter is in no way meant to
criticize or call into question the services that have been pro-
vided to Monroe County by the firm of William R.. Hough & Co., and
in particular, Mr. Joe Wise. They have served the county well
within the provisions of the contract to which I have referred.
Rather, I feel that the county at this time should re-evaluate
that relationship in view of the vast changes which have taken
place in the area of public finance within the last ten years.
Mr. Proby will have to advise the Board concerning its contrac-
tual obligations under the William R. Hough contract.
I hope that this information will be helpful in your important
deliberations.
Z
ely�
L. olhage
Clerk to he Board of County Commissioners
cc: Mr. Lucien Proby
Mr. Kermit Lewin
i
'' �• William H. Hou h & Co. _ U1 a g
OLD PORT COVE JOE B. WISE
1212 U.S. HIGHWAY ONE RESIDENT MANAGER
P.O. BOX 14095
NORTH PALM BEACH, FLORIDA 33408
(305) 626.3911
A G R E E M E N T
RAYMOND V.CONDON
THIS AGREEMENT entered into this .� day of O(;e7f3C� 1977�,
between WILLIAM R. HOUGH & CO., 924 Florida Federal Building, St. Petersburg,
Florida, hereinafter called "Hough", and MONROE COUNTY, FLORIDA, hereinafter
called "County";
W I T H E S S E T H
WHEREAS, William R. Hough & Co. is desirous of performing certain
research, analyses, financial and underwriting services in connection with
proposed capital improvement programs of Monroe County, Florida; and
WHEREAS, Hough has a high standing in the field of local government
finance and a wide and various experience in formulating, preparing and
marketing public bond issues and bond anticipation notes and financing
related thereto; and
WHEREAS, the County may require the financing of capital improvements
to the Court House and jail buildings under certain conditions and may require
financing for other capital improvements in the future;
NOW THEREFORE, in consideration of the premises and the mutual promises
herein contained, the parties hereto agree as follows:
A. Hough hereby agrees that in connection with any proposed capital
improvement project or any portion thereof for which Hough is given specific
authority to proceed by the County:
1. To immediately commence the development of ,s financing plan in
coordination with the County, its County Clerk, its staff, its attorney,
and its other consultants to provide funds for capital improvements as
required. All undertakings of Hough pursuant to this Agreement shall be
made with the objective of developing the best possible financing plan of
said project, the best appreciation possible for the security of the proposed
bonds or notes by the municipal market and the best possible interest rate
for the obligations when sold, considering the short and long term objectives
of the County.
2. To make such members of its staff approved by the County avail-
able to the County, its County Clerk, its staff, its attorney and its other
consultants in order to create a suitable and sound financial plan commen-
surate with foreseeable legal and economic factors. Said services shall be
done at all reasonable times in order that the financial program may proceed
with dispatch.
STATE, COUNTY AND MUNICIPAL BONDS
itlAM A Roush S Co.
3. To attend meetings when requested in order to assist the County
on fiscal matters relating to the project.
4. Once general agreement is reached between the County and Hough
concerning a financial course of action for the project, to prepare a
detailed, sound and feasible financing plan which will provide the funds
necessary for the various elements of the project. Said financing plan
shall include a reasonable analysis and details concerning the following:
(a) The present financial posture of the County.
(b) The security pledged to the payment of any proposed bonds
or notes and an analysis of the'strength of such security.
(c) Details of the rights of prior redemption of the bonds
or notes and details with respect to the issuance of any additional
bonds or notes.
(d) Other financial details of the proposed bonds or notes to
be issued including principal amounts, maturities, interest rates,
covenants and terms and conditions which will assure marketability
of such obligations.
(e) Information with respect to the time of marketing the
proposed bonds or notes and information with respect to the
documents and information required to be provided in order to
create the most favorable market for such proposed obligations.
(f) Information with respect to the administrative steps
required by the County to authorize and issue the proposed
obligations
(g) The County's financial relationship to other governmental
units and agencies in the area.
5. In coordination with the County, to prepare, print and distri-
bute to prospective bond or note buyers and the municipal market the Official
Statement which will form the basis of the bond or note offering, which
Official Statement will contain, among other things:
(a) Description of the obligations to be offered.
(b) Summary and explanation of the prospective covenants in
the resolution authorizing the proposed obligations.
(c) Description of Monroe County, Florida and an analysis of
the need of the proposed improvements and description of the County's
operations.
(d) Historical records and projection of revenues pledged to
the obligations, adequacy of such revenues, and debt service
coverage presentations.
(e) Debt service schedules.
.(f) Estimated project costs and proposed disposition of funds
derived from the issuance of the obligations.
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3. To attend meetings when requested in order to assist the County
on fiscal matters relating to the project.
4. Once general agreement is reached between the County and Hough
concerning a financial course of action for the project, to prepare a
detailed, sound and feasible financing plan which will provide the funds
necessary for the various elements of the project. Said financing plan
shall include a reasonable analysis and details concerning the following:
(a) The present financial posture of the County.
(b) The security pledged to the payment of any proposed bonds
or notes and an analysis of the'strength of such security.
(c) Details of the rights of prior redemption of the bonds
or notes and details with respect to the issuance of any additional
bonds or notes.
(d) Other financial details of the proposed bonds or notes to
be issued including principal amounts, maturities, interest rates,
covenants and terms and conditions which will assure marketability
of such obligations.
(e) Information with respect to the time of marketing the
proposed bonds or notes and information with respect to the
documents and information required to be provided in order to
create the most favorable market for such proposed obligations.
(f) Information with respect to the administrative steps
required by the County to authorize and issue the proposed
obligations
(g) The County's financial relationship to other governmental
units and agencies in the area.
5. In coordination with the County, to prepare, print and distri-
bute to prospective bond or note buyers and the municipal market the Official
Statement which will form the basis of the bond or note offering, which
Official Statement will contain, among other things:
(a) Description of the obligations to be offered.
(b) Summary and explanation of the prospective covenants in
the resolution authorizing the proposed obligations.
(c) Description of Monroe County, Florida and an analysis of
the need of the proposed improvements and description of the County's
operations.
(d) Historical records and projection of revenues pledged to
the obligations, adequacy of such revenues, and debt service
coverage presentations.
(e) Debt service schedules.
(f) Estimated project costs and proposed disposition of funds
derived from the issuance of the obligations.
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wuua t K t+Qugh & lo.
(g) Basic governmental and economic financial data of Monroe
County.
(h) Formal summary financial statements of the overall operations
of Monroe County.
(i) Reproduction of the resolution authorizing the proposed
obligations.
(j) Such other data as deemed advisable and customary in the
preparation and distribution of an Official Statement.
6. To work with the County Attorney and Bond Counsel in the drafting
of a resolution authorizing the proposed obligations and to be available upon
request for conferences as to all legal steps necessary to the sale of any
obligations.
7. To have available Joe B. Wise or other member of its staff
approved by the County to testify as an expert witness on the financing
plan at any validation or other legal proceedings regarding the issuance
of the proposed obligations.
8. To confer by direct personal contact with the Municipal Rating
Services and Municipal Bond Insurance Association to provide these services
with complete information regarding the project and the County generally in
order that they may give any proposed obligations the highest ratings
possible and maximum acceptance for insurance.
9. To stimulate a wide interest in any proposed obligations among
prospective institutional buyers through direct and personal contact.
10. To take such actions as deemed necessary to develop full market
exposure and a keen appreciation of the securities offering by the rating
agencies.
11. After submission by Hough of the plan for the financing of a
specific project and after consideration thereof and approval by the County,
and after agreement between the County and Hough upon the form and substance
of an Official Statement regarding the issuance of any obligations, the
County shall receive a purchase proposal from Hough for such obligations
to be issued pursuant to the approved financing plan for such project.
If the County accepts the purchase proposal from Hough, Hough shall be
obligated to purchase the obligations to be issued by the County pursuant
to the approved financing plan for such project and as is possible within
the limits provided by the laws of the County. The County shall have a
reasonable time to accept Hough's offer to purchase the obligations and to
enter into a contract with Hough for the sale and purchase thereof. If the
County elects to offer the proposed obligations at public sale, Hough shall
then be obligated to proceed to assist the County in such sale as provided
in subsequent paragraphs of this Agreement.
12. In the event the County shall determine not to accept the offer
by Hough for the purchase of the proposed obligations as submitted and shall
reject such offer, the County shall have the right to offer said proposed
obligations to others as provided in paragraph 14 herein.
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1i1NNi111 0. AYYgII br �0.
(g) Basic governmental and economic financial data of Monroe
County.
(h) Formal summary financial statements of the overall operations
of Monroe County.
(i) Reproduction of the resolution authorizing the proposed
obligations.
(j) Such other data as deemed advisable and customary in the
preparation and distribution of an Official Statement.
6. To work with the County Attorney and Bond Counsel in the drafting
of a resolution authorizing the proposed obligations and to be available upon
request for conferences as to all legal steps necessary to the sale of any
obligations.
7. To have available Joe B. Wise or other member of its staff
approved by the County to testify as an expert witness on the financing
plan at any validation or other legal proceedings regarding the issuance
of the proposed obligations.
8. To confer by direct personal contact with the Municipal Rating
Services and Municipal Bond Insurance Association to provide these services
with complete information regarding the project and the County generally in
order that they may give any proposed obligations the highest ratings
possible and maximum acceptance for insurance.
9. To stimulate a wide interest in any proposed obligations among
prospective institutional buyers through direct and personal contact.
10. To take such actions as deemed necessary to develop full market
exposure and a keen appreciation of the securities offering by the rating
agencies.
11. After submission by Hough of the plan for the financing of a
specific project and after consideration thereof and approval by the County,
and after agreement between the County and Iiough upon the form and substance
of an Official Statement regarding the issuance of any obligations, the
County shall receive a purchase proposal from Hough for such obligations
to be issued pursuant to the approved financing plan for such project.
If the County accepts the purchase proposal from Hough, Hough shall be
obligated to purchase the obligations to be issued by the County pursuant
to the approved financing plan for such project and as is possible within
the limits provided by the laws of the County. The County shall have a
reasonable time to accept Hough's offer to purchase the obligations and to
enter into a contract with Hough for the sale and purchase thereof. If the
County elects to offer the proposed obligations at public sale, Hough shall
then be obligated to proceed to assist the County in such sale as provided
in subsequent paragraphs of this Agreement.
12. In the event the County shall determine not to accept the offer
by Hough for the purchase of the proposed obligations as submitted and shall
reject such offer, the County shall have the right to offer said proposed
obligations to others as provided in paragraph 14 herein.
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wai4at a,,vugh 81o.
13. In making the investigations, studies, plans and determinations
leading to Hough's offer to purchase the proposed obligations and in the
submission of such offer to purchase, hough will be acting on its own behalf
as principal and not as an employee, representative or fiduciary of the County.
14. The County shall be under no obligation to sell the proposed
obligations to Hough under the foregoing provisions, and in the event the
County shall elect to sell the obligations to others, Hough shall then be
obligated to perform the additional duties customarily provided for a:d on
behalf of the County in connection with the public sale of such obligations.
Hough may bid for the bonds unless directed by the County not to do so. It
is understood that Hough shall not be entitled to any fee for services if
the offer of Hough to purchase any obligations made pursuant to paragraph 11
is accepted.
15. Should the County proceed to sell the obligations in accordance
with paragraph 14, Hough shall, upon performance of all services customarily
provided to public bodies issuing bonds or notes through public sale including
the services outlined herein and upon delivery and payment of the obligations
sold by the County be entitled to and be paid a fee based on the schedule
attached hereto as Exhibit A, or B. It is expressly understood that the
County shall not be financially obligated to Hough if for any reason the
financing fails to materialize or the County does not elect to accept any
bids at such public sale; provided, however, that the terms of this paragraph
shall not preclude payment for services to Hough which may be agreed to
pursuant to any subsequent agreement made pursuant to paragraph 17 herein.
Hough agrees to pay validation costs, the County Attorney's fee, the fee of
Bond Counsel, rating agencies' fees printing costs of the bonds or notes
and the Official Statement, and oth r costs incurred by the County under
the provisions of paragraph 11, it ieing understood that should the County
not accept an offer made by Hough pursuant to paragraph 11 hereof, these
expenses in connection with the financing of the project would be paid by
the County. Hough agrees to pay all of its own travel, communication and
other expenses incurred by it under this Agreement if the obligations are
sold pursuant to paragraph 11 hereof, except for fees and expenses incurred
under paragraph 17.
16. Hough also agrees:
(a) To supervise the printing, signing and delivery of the
obligations to be issued by the County pursuant to this Agreement.
(b) To provide an Amortization Schedule to the County subsequent
to the closing and assist the County in planning and coordinating the
investment of construction funds with project requirements.
(c) To assist the County staff in the most advantageous
investment of unencumbered County funds.
17. Should, in the course of work described in this Agreement, the
County determine that additional work products are desired of Hough and Hough
accepts such assignments, Hough shall be compensated for such work product
as provided in Exhibit , paragraph 4, or this Agreement may be amended
in writing as mutually Aceptable to the parties to provide for accomplish-
ment of such additional work products and the basis of payment therefor.
Wimm IL K"o & C&
B. STATE OR FEDERAL AID. Hough agrees to assist the County in obtaining
permanent financing under the State of Florida Bond Loan Program, and/or
through Federal assistance, where applicable and eligible from various State
and Federal agencies. Alternative financing plans and programs will be form-
ulated, but prepared within the guidelines provided by those State and Federal
agencies as would be appropriate and based upon our experience in assisting
other issuers in obtaining State and Federal funds. We will assist in the
preparation of applications and reports, attend meetings at State and Federal
level, as needed, and assist the staff in all matters relating to the financial
aspects of these funds. No avenue of financial assistance will be overlooked.
Since the parameters of conventional financing and those of State
and Federal assistance are substantially different, this may entail the
preparation of several financing plans, each tailored to the source of funds
to which the plan is directed. All alternatives will be thoroughly discussed
with the staff and Commissioners together with our recommendations and those
of the other advisors to the County.
C. This Agreement shall be in force and effect from the date of
execution hereof; provided, however, that the County, at its option, may
terminate this Agreement by giving written notice to dough at least 120
(one hundred twenty) days prior to any such termination. In the event of
such early termination of this Agreement by the County, the County shall
reimburse Hough for its expenses as shall have been approved by the County
and shall pay Hough a reasonable price for the value of the work product
of Hough to such date of early termination,
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.
Signed, sealed and delivered
in the presence of:
ATTEST:
WILLIAM R. HOUGH & CO.
Y /
Joe B. Wise, Residen
6ONROE COUNTY, FLORIDA
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tXHIBIT A -- (Page 1)
0.)
Recommended Schedule of Standard
Minimum Fees for Financial Consulting Contracts
The following schedule of standard minimum fees
is recommended by the Chartered Municipal
Financial Consultants of the Florida Security Dealers
Association and is considered to be appropriate
for all bond issues except general obligation bonds,
for which the recommended fee is 80010 of the
standard schedule and pari passu revenue bonds for
which the recommended fee is 70% of the standard
schedule. It is assumed that the issuer will pay all
direct expenses in connection with the financing.
Amount
Of Bonds
Amount
O/ Fee
Fee Per $1,000
For Next $100,000
Par Value
Amount
Or Bonds
Amount
Of Fee
Fee Per $1,090
For Next Mo.=
Par Value
$ 500,000
$ 7,500.00
$12.500
$2,800,000
$21,837.50
$4.000
600,000
8,750.00
11.250
2,900,000
22,237.50
3.875
700,000
9,875.00
10.000
3,000,000
22,625.00
3.750
800,000
10,875.00
8.750
3,100,000
23,000.00
3.625
900,000
11,750.00
7.500
3,200,000
23,362.50
3.500
1.000,000
12,500.00
6.250
3,300,000
23,712.50
3.375
1, i 00,000
13,125.00
6.125
3,400,000
24,050.00
3.250
1,200,000
13,737.50
6.000
3,500,000
24.375.00
3.125
1,300,000
14,337.50
5.875
3,600,000
24,687.50
3.000
1,400,000
14,925.00
5.750
3.700.000
24,987.50
2.875
1,500,000
15.500.00
5.625
3,800,000
25,275.00
2.750
1,600,000
16.062.50
5.500
3,900,000
25,550.00
2.625
1,700,000
16,612.50
5.375
4,000,000
25,812.50
2.500
1,800,000
17,150.00
5.250
4,100.000
26,062.50
2.375
1;900.000
17,675.00
5.125
4,200,000
26,300.00
2.250
2.000,000
18,187.50
5.000
4,300,000
26,525.00
2.125
2,100,000
18,687.50
4.875
4,400,000
26,737.50
2.000
2,200,000
19,175.00
4.750
4.500,000
26,937.50
1.875
2,300,000
19,650.00
4.625
4,600,000
27,125.00
1.750
2,400,000
20,112.50
4.500
4,700,000
27,300.00
1.625
2,500,000
20,562.50
4.375
4,800,000
27,462.50
1.500
2,600,000
21,000.00
4.250
4,900,000
27,612.50
1.375
2.700,000
21,425.00
4.125
5.000,000
27,750.00
All over $5,000,000
sublect to negotiation.
19
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EXHIBIT A -- (Page 2)
(2) Hough shall be compensated at one-half (1/2) the above Fee Schedule
for all note issues sold.
(3) Bond or note issues financed through State or Federal Grant and/or
Loan Programs shall be compensated at 80% of the above Fee Schedule,
as applicable.
( issues,
shall ensated at the rate of $50.00 per man-hour a services
of senior con su and $75.00 per man-hour a services of Mr.
Hough. Out of pocket exp eLyo,f suctl pei"So net would be added thereto,
r. such expenses not to exceed $54. -5e�r-t1 , plus travel expense
appropriately docu anted. Extraordinary serttv_a� of reasonably
included such fees would be negotiated to the mZ atisfaction
--b3f i parties.
Ll
�llh--a!d meted Versns C�*+•r� tjve Sale
the
y would
With respect to the issuance roughof i aed-rate debt, the negotiated sale or at competitive ebond
option of issuing its bond firm
process. In a negotiated sale, the County would select an underwriting
with whom to negotiate the difficult ors Of alarge trbond aansact onsvNegotiated roblem sale are
particularly advantageous f
ng periods when the market is generally weak and the
unknown issuers, or duri
issuer can benefit from the underwriters to pre -market the bonds.
In a negotiated sale,
the underwriter is compensated by the difference
between the par, or face, amount of the bonds being issued and the lower price
ation is referred to as the underwriter's
paid to the issuer. This compen
discount, or "gross spread". The gross spread is comprised of four
components, including (i) a management fee paid to compensate the banker for
the bond issue, ects the costs
(ii) an expense fee that refl
structuring computer and other fees, (iii) a
incurred by the underwriter, including legal,
risk fee to compensate the underwriter for the risk that they undertake, and
(iv) a sales commission, or thakboodaN' that reflects the fee actually paid to
the salespeople for selling
In a comparative sale, the Cwihy its lofficialisstatement distribute
describing notice
of sale and bid form, alongand
transaction of the County. The County would receive comp theibondsi at the
award the bond issue to the underwriting firm offering to buy
lowest overall interest rate. The potential benefits of a competitive sale
include the reduction of the cnitstheassociated
commissionissuing
c component oofthe
sbecause
gross
the issuer effectively PaysY
spread, and the certainty that comae Rio v million bond e bidding visaue,haan theissuer
could
receiving the lowest rate. onhrough
reasonably expect to save $5.00 spread, or,OOO.the
elimination of three of the four components of the gros
become increasingly popular in the municipal finance
Bond insurance has
arly in Florida. The advantage of bond insurance is
industry, and particul
that in exchange for an insurance premium, the issuer can receive a reduction
8 of that
in interest costs that is greater that the cost the bond insurance companies are more premium.
wllilling to
addition, in certain cases,
accept credits that might be marketable on their own meprt wi11I evaluatedand
forward with any of the County's financing programs,
quantify
the benefits to the County of utilizing bond insurance. In
ty chooses
particular, a would recommend
c that it takeif the advantagenof optionalto sell insurancesbond on
programs
a competitive bid basis,
that allow the bidder to fit ultimately realized by the County.
ranee, thereby
further maximizing the benefit
BRANCH OFFICE
3117 OVERSEAS HIGHWAY
MARATHON, FLORIDA 33050
TEL. (305) 743.9036
�annp �. �or�jagc
CLERK OF THE CIRCUIT COURT
MONROE COUNTY
600 WHITEHEAD STREET
KEY WEST, FLORIDA 33040
TEL. (306) 294-4641
M E M O R A N D U M
TO: Mayor Puto and County Commissioners
FROM: Danny L. Kolhage, Clerk
DATE: November 30, 1988
RE: Contract with PFM
1
BRANCH OFFICE
P.O. BOX 379
PLANTATION KEY, FLORIDA 33070
TEL (306) 852-9253
I am enclosing herewith copy of a proposed
investment advisory contract between Public Financial
Management, Inc. and Monroe County. The purpose of this
agreement is to obtain professional investment advisory ser-
vices from PFM in connection with the investment of the
proceeds of the 1988 Improvement Bond issue that was
recently approved by the Board.
In particular, PFM will provide my office with
advice and other investment services concerning the invest-
ment of the Construction Fund which will enable us to maxi-
mize the interest earnings on that fund while at the same
time providing for the availability of those funds as the
County begins the various capital improvement projects. PFM
will also provide those services as outlined in the attached
agreement.
The fee for services will be in the amount arf
0.15% of the average daily net assets of the Construction
Fund. I am estimating that the total amount of the fee
would fall somewhere between $5,000 and $10,000 with the
amount to be determined by the rate of expenditure of the
funds on deposit in the Construction Fund. By reference to
thatanalysis of the 1988 Improvement Revenue Bond issue that
was submitted by PFM dated November 22, 1988, you will see
that it is anticipated that, with the assistance of PFM, the
Memorandum
11-30-88
Page Two
Construction Fund should earn in excess of $500,000.
Therefore, I feel that the fees are more than justified for
the extent of the services that will be provided, and the
estimate of earnings that will be realized by the use of
those services.
Therefore, based on the above information, I
pespectfully request your approval of the enclosed contract,
which I intend to have on the agenda for the December 6th
meeting. If you have any questions concerning this matter,
please do not hesitate to contact me.
Very truly yours
DANNY L KO HAGE
Clerk of C rcuit Court and
Ex officio Clerk of the
Board of County Commissioners `
..
t! DLK:dgc
cc: Mayor Mike Puto
Commissioner Jones
Commissioner Harvey
Commissioner Lytton
Commissioner Stormont
Public Financial Management, Inc.
Advisors in Capital Finance and Investment Management
1701 North Front Street Mailing Address:
Atlanta
New York
Harrisburg, Pennsylvania 17102 P.O. Box 11813
Buffalo
Orlando
717-232-2723 Harrisburg, Pennsylvania 17108
Fort Myers
Philadelphia
Marty Margolis, Managing Director
Harrisburg
San FranciscoMemphis
State College
November 21,1988
Mr. Dan Kolhage
Clerk of Court
MONROE COUNTY
500 Whitehead Street
Key West, FL 33040
Dear Mr. Kolhage:
At the request of Mr. Charles Mansen of your office we have made a number of changes in
our proposed investment advisory contract to make it clear that the only funds we will manage
are the construction funds.
Enclosed is a revised draft of the agreement.
' Please call me if you have any questions on this.
Sincerely,
Marty Margolis
Managing Director
cc: Charles Mansen
4
(* An Affiliate of Marine Midland Bank, N.A
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the day of 1988, by and between the
Monroe County, Florida (hereinafter the "Local Government Unit") and PUBLIC FINANCIAL
MANAGEMENT, INC., a Pennsylvania Corporation with an office in Harrisburg, Dauphin
County, Pennsylvania, (hereinafter "PFM" or the "Investment Advisor").
WITNESSETH
WHEREAS, the Local Government Unit has issued Improvement Revenue Bonds Series
1988 A & 1988 B, totaling approximately $7,500,000 for the purpose of funding capital
improvements projects, and
WHEREAS, the Local Government Unit intends to conduct a temporary investment
program with the proceeds of the issue pending their application to the construction program,
and
WHEREAS, the earnings from such temporary investments constitute a vital component
of the overall financial plan; and
.j I WHEREAS, the Local Government Unit wishes to arrange for professional cash
management so as to maximize earnings from temporary investments; and
WHEREAS, the Local Government Unit desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to PFM and to have PFM undertake
certain duties and responsibilities and to perform certain services on behalf of the Local
Government Unit as investment advisor, as provided herein; and
WHEREAS, investment, of the Bond Proceeds is subject to the limitations of the Tax
Reform Code of 1986 as it relates to rebate of arbitrage earnings; and
WHEREAS, PFM is willing to provide such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed as follows:
1. Services of Advisor.
PFM will provide investment management of the Local Government Unit Construction
Fund. In connection therewith, PFM will provide investment research and supervision of the
Local Government Unit's Construction Fund investments and conduct a continuous program of
investment, evaluation and when appropriate, sale and reinvestment of the Local Government
Unit's Construction Fund assets. PFM shall continuously monitor investment opportunities and
evaluate Construction Fund investments owned by the Local Government Unit or available to it.
PFM shall furnish the Local Government Unit with statistical information and reports with
respect to investments which the Local Government Unit Construction Fund may own. PFM
shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the
Local Government Unit's Construction Fund account with brokers or dealers selected by PFM, and
to that end PFM is authorized as agent of the Local Government Unit to give instructions to the
depository designated by the Local Government Unit as its' custodian as to deliveries of
securities and payments of cash for the account of the Local Government Unit Construction Fund.
In connection with the selection of such brokers and dealers and the placing of such orders, PFM
is directed to seek for the Local Government Unit the most favorable execution and price. After
fulfilling this primary requirement of seeking the most favorable execution and price, PFM is
hereby expressly authorized to consider, subject to any applicable laws, rules and regulations,
whether statistical, research and other information or services have been furnished to PFM for
the Local Government Unit by such brokers or dealers. The depository designated by the Local
Government Unit shall have custody of cash, assets and securities of the Local Government Unit
! Construction Fund. PFM shall not take possession of or act as custodian for the cash, securities or
other assets in the Construction Fund and shall have no responsibility in connection therewith.
Authorized investments shall include only those investments which may from time to time be
authorized by law for funds of the Local Government Unit.
2. Compliance with Arbitrage and Rebate Requirements.
PFM shall conduct the .investment management program in compliance with the
arbitrage and rebate requirements of the United States Treasury, currently described in Section
103(c) of the Internal Revenue Code and Section 1.103-15AT of the Code of Federal Regulations
and as supplemented by such other regulations or- rulings as may from time to time be
promulgated. PFM shall place orders for the purchase or sale of securities at market prices as
determined in accordance with said regulations and rulings, and shall maintain records of all
such transactions which shall include documentation of the market price of each purchase and
Ale, and shall prepare on behalf of the County all arbitrage and rebate reports required by the
U. S. Treasury and the Internal Revenue Code.
3. Compensation.
(a) For services provided by PFM pursuant to this Agreement, the Local
Government Unit shall pay PFM an annual fee, in monthly installments, based on the average
daily net assets of the Local Government Unit Construction Fund as follows:.15% of such assets.
amounts deposited with the State of Florida Board of Administration Local Governments
Surplus Trust Fund, if any, shall be deducted in calculating the average daily net assets of
which are subject to said fee for management.
(b) The Local Government Unit shall pay to PFM the amount payable pursuant to
this Agreement not later than on the 15th of the month following the month during which the
services for the payment of which the fee is payable were rendered. PFM shall furnish to the
Local Government Unit a Statement indicating the basis upon which the fee was calculated
(c) If PFM shall serve for less than the whole of any month, the compensation to
PFM shall be pro -rated.
(d) If and to the extent that the Local Government Unit shall request PFM to render
services for the Local Government Unit other than those to be rendered by PFM hereunder, such
additional services shall be compensated separately on terms to be agreed upon between PFM
and the Local Government Unit from time to time.
4. Expenses.
(a) PFM furnish at its own expense all necessary administrative services, office
space, equipment, clerical personnel, telephone and other communication facilities, investment
! advisory facilities, and executive and supervisory personnel for managing the investments.
(b) Except as expressly provided otherwise herein, the Local Government Unit
shall pay all of its own expenses including, without limitation, taxes, commissions, fees and
expenses of the Local Government Unit's independent auditors and legal counsel, brokerage and
other expenses connected with the execution of portfolio security transactions, insurance
premiums, fees and expenses of the custodian for all services to the Local Government Unit
including safekeeping of funds and securities and the keeping of books and account.
S. Responsibility of PFK
PFM assumes no responsibility hereunder other than to render the services called for
hereunder in good faith and shall not be responsible for any action of the Local Government
Unit in following or declining to follow any advice or recommendations of PFM.
6. Limitation on Liability.
PFM shall not be liable for any error or judgement or mistake of law, loss arising out of
any investment, or act or omission in the execution and management of the Local Government
Unit, except for willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of a reckless disregard of its obligations and duties hereunder.
7. Freedom of Advisor.
Nothing in this agreement shall limit or restrict the right of PFM to engage in any
other business or to render services of any kind to any corporation, firm, individual, association
or government unit.
& Term.
This Agreement shall be in force for a period of three years beginning on the date of
execution of this Agreement, unless cancelled by either part, upon thirty (30) days' prior
written notice. This Agreement may be terminated at any time without the payment of any
penalty by the Local Government Unit or by PFM, on not less than thirty (30) days' written
notice to the other party.
9. Nonassignability.
This Agreement shall not be assigned by either party without the approval of the
other party.
10. Books.
PFM shall maintain appropriate records of all its activities hereunder. PFM shall
? provide the Local Government Unit with a monthly statement showing deposits, withdrawals,
purchases and sales (or maturities) of investments, earnings received, and the value of assets
held on the last business day of the month.
1L PFM's Disclosure Statement.
PFM warrants that it has delivered to the Local Government Unit, at least five business
days prior to the execution of this Agreement, PFM's current Securities and Exchange
Commission Form ADV, Part II (PFM's disclosure statement). The Local Government Unit
acknowledges receipt of such disclosure statement at least five business days prior to the
execution of this Agreement.
12. Modification.
This contract shall not be changed, modified, terminated or discharged in whole or in
part, except by an instrument in writing signed by both parties hereto, or their respective
successors or assigns.
13. Binding Effect
This Agreement shall bind any successors of the parties hereto and any assigns of the
Local Government Unit.
14. Applicable Law.
The provisions of this Agreement shall be construed and interpreted in accordance with
the laws of the State of Florida as at the time in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives as of the date set forth in the first paragraph of
this Agreement.
ATTEST:
PUBLIC FINANCIAL MANAGEMENT, INC.
Managing Director
MONROE COUNTY, FLORIDA
BY:
sY .
AttwnWs Qos
IAAI/Ma mCty/wads
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the day of , 1988, by and between the
Monroe County, Florida (hereinafter the "Local Government Unit") and PUBLIC FINANCIAL
MANAGEMENT, INC., a Pennsylvania Corporation with an office in Harrisburg, Dauphin
County, Pennsylvania, (hereinafter "PFM" or the "Investment Advisor").
WITNESSETH
WHEREAS, the Local Government Unit has issued Improvement Revenue Bonds Series
1988 A & 1988 B, totaling approximately $7,500,000 for the purpose of funding capital
improvements projects; and
WHEREAS, the Local Government Unit intends to conduct a temporary investment
program with the proceeds of the issue pending their application to the construction program,
and
WHEREAS, the earnings from such temporary investments constitute a vital component
of the overall financial plan; and
• WHEREAS, the Local Government Unit wishes to arrange for professional cash
management so as to maximize earnings from temporary investments, and
WHEREAS, the Local Government Unit desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to PFM and to have PFM undertake
certain duties and responsibilities and to perform certain services on behalf of the Local
Government Unit as investment advisor, as provided herein; and
WHEREAS, investment of the Bond Proceeds is subject to the limitations of the Tax
Reform Code of 1986 as it relates to rebate of arbitrage earnings; and
WHEREAS, PFM is willing to provide such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed as follows:
1. Services of Advisor.
PFM will provide investment management of the Local Government Unit Construction
Fund. In connection therewith, PFM will provide investment research and supervision of the
Local Government Unit's Construction Fund investments and conduct a continuous program of
investment, evaluation and when appropriate, sale and reinvestment of the Local Government
Unit's Construction Fund assets. PFM shall continuously monitor investment opportunities and
evaluate Construction Fund investments owned by the Local Government Unit or available to it.
PFM shall furnish the Local Government Unit with statistical information and reports with
respect to investments which the Local Government Unit Construction Fund may own. PFM
shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the
Local Government Unit's Construction Fund account with brokers or dealers selected by PFM, and
to that end PFM is authorized as agent of the Local Government Unit to give instructions to the
depository designated by the Local Government Unit as its' custodian as to deliveries of
securities and payments of cash for the account of the Local Government Unit Construction Fund.
In connection with the selection of such brokers and dealers and the placing of such orders, PFM
is directed to seek for the Local Government Unit the most favorable execution and price. After
fulfilling this primary requirement of seeking the most favorable execution and price, PFM is
hereby expressly authorized to consider, subject to any applicable laws, rules and regulations,
whether statistical, research and other information or services have been furnished to PFM for
the Local Government Unit by such brokers or dealers. The depository designated by the Local
Government Unit shall have custody of cash, assets and securities of the Local Government Unit
Construction Fund. PFM shall not take possession of or act as custodian for the cash, securities or
other assets in the Construction Fund and shall have no responsibility in connection therewith.
Authorized investments shall include only those investments which may from time to time be
authorized by law for funds of the Local Government Unit.
2. Compliance with Arbitrage and Rebate Requirements.
PFM shall conduct the. investment management program in compliance with the
arbitrage and rebate requirements of the United States Treasury, currently described in Section
103(c) of the Internal Revenue Code and Section 1.103-15AT of the Code of Federal Regulations
and as supplemented by such other regulations or rulings as may from time to time be
promulgated. PFM shall place orders for the purchase or sale of securities at market prices as
determined in accordance with said regulations and rulings, and shall maintain records of all
such transactions which shall include documentation of the market price of each purchase and
hale, and shall prepare on behalf of the County all arbitrage and rebate reports required by the
U. S. Treasury and the Internal Revenue Code.
3. Compensation.
(a) For services provided by PFM pursuant to this Agreement, the Local
Government Unit shall pay PFM an annual fee, in monthly installments, based on the average
daily net assets of the Local Government Unit Construction Fund as follows:.15% of such assets.
amounts deposited with the State of Florida Board of Administration Local Governments
Surplus Trust Fund, if any, shall be deducted in calculating the average daily net assets of
which are subject to said fee for management.
(b) The Local Government Unit shall pay to PFM the amount payable pursuant to
this Agreement not later than on the 15th of the month following the month during which the
services for the payment of which the fee is payable were rendered. PFM shall furnish to the
Local Government Unit a Statement indicating the basis upon which the fee was calculated
(c) If PFM shall serve for less than the whole of any month, the compensation to
PFM shall be pro -rated.
(d) If and to the extent that the Local Government Unit shall request PFM to render
services for the Local Government Unit other than those to be rendered by PFM hereunder, such
additional services shall be compensated separately on terms to be agreed upon between PFM
and the Local Government Unit from time to time.
4. Expenses.
(a) PFM furnish at its own expense all necessary administrative services, office
space, equipment, clerical personnel, telephone and other communication facilities, investment
! advisory facilities, and executive and supervisory personnel for managing the investments.
(b) Except as expressly provided otherwise herein, the Local Government Unit
shall pay all of its own expenses including, without limitation, taxes, commissions, fees and
expenses of the Local Government Unit's independent auditors and legal counsel, brokerage and
other expenses connected with the execution of portfolio security transactions, insurance
premiums, fees and expenses of the custodian for all services to the Local Government Unit
including safekeeping of funds and securities and the keeping of books and account.
5. Responsibility of PFNE
PFM assumes no responsibility hereunder other than to render the services called for
hereunder in good faith and shall not be responsible for any action of the Local Government
Unit in following or declining to follow any advice or recommendations of PFM.
6. Limitation on Liability.
PFM shall not be liable for any error or judgement or mistake of law, loss arising out of
any investment, or act or omission in the execution and management of the Local Government
Unit, except for willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of a reckless disregard of its obligations and duties hereunder.
7. Freedom of Advisor.
Nothing in this agreement shall limit or restrict the right of PFM to engage in any
other business or to render services of any kind to any corporation, firm, individual, association
or government unit.
8. Term.
This Agreement shall be in force for a period of three years beginning on the date of
execution of this Agreement, unless cancelled by either part, upon thirty (30) days' prior
written notice. This Agreement may be terminated at any time without the payment of any
penalty by the Local Government Unit or by PFM, on not less than thirty (30) days' written
notice to the other party.
9. Nonassignability.
This Agreement shall not be assigned by either party without the approval of the
other party.
10. Books.
PFM shall maintain appropriate records of all its activities hereunder. PFM shall
• provide the Local Government Unit with a monthly statement showing deposits, withdrawals,
purchases and sales (or maturities) of investments, earnings received, and the value of assets
held on the last business day of the month.
11. FFM's Disclosure Statement.
PFM warrants that it has delivered to the Local Government Unit, at least five business
days prior to the execution of this Agreement, PFM's current Securities and Exchange
Commission Form ADV, Part II (PFM's disclosure statement). The Local Government Unit
acknowledges receipt of such disclosure statement at least five business days prior to the
execution of this Agreement.
12. Modification.
This contract shall not be changed, modified, terminated or discharged irr whole or in
Part, except by an instrument in writing signed by both parties hereto, or their respective
successors or assigns.
13. Binding Effect
This Agreement shall bind any successors of the parties hereto and any assigns of the
Local Government Unit.
14. Applicable Law.
The provisions of this Agreement shall be construed and interpreted in accordance with
the laws of the State of Florida as at the time in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives as of the date set forth in the first paragraph of
this Agreement.
WITNESS:
ATTEST:
4
PUBLIC FINANCIAL MANAGEMENT, INC.
---BY: J`
Managing Director
MONROE COUNTY, FLORIDA
BY:
AP D AS TO POW
id trr
C'!�:
QY
l� A Att~s Owe
IAA 1 /Monroe Cty/week