Fort Walton Beach Council agenda — 02-09-2010 Regular — reading text

including the preparation and review of trust indentures, official statements, loan agreements, reimbursement contracts, trust participation agreements, purchase contracts, remarketing agreements, and other contracts that may be necessary for bond issues and other debt instruments considered by the CITY. Other documents, such as engineering studies, traffic and revenue projections, and arbitrage certificates, are the responsibility of other parties, but their preparation will be incorporated into the document preparation work coordinated by PFM prior to the sale of securities. 7. Coordinate the Marketing oLthe Bonds. PFM would actively undertake all necessary procedures to effectively market and sell the CITY ' s debt issues. The following discussion details the steps involved in PFM' s coordination of the sale and marketing of bonds. a. Timing ofSale, In recent years, volatile market conditions have forced municipal issuers to carefully time their tax -exempt borrowings. Factors such as wildly fluctuating interest rates, unprecedented upheaval in the international economic community, and regular federal tax reform proposals have combined to create a very unstable tax -exempt market environment. To assist its clients with the timing of proposed issues, PFM closely monitors all such developments and evaluates the potential impact of each on new -issue, tax -exempt securities. b. Target Buyers. PFM maintains extensive mailing lists, targeted by region and debt structure, of not only potential underwriters but major investors to whom all disclosure materials should be distributed. Utilizing these lists, PFM can ensure that all interested parties are provided with all the information they need to make an informed investment decision concerning the issuer' s proposed offering. Furthermore, PFM encourages interest in the issuer's new issues through our direct contact with many major underwriting desks. The advantages of this activity are two -fold. First, PFM is able to inquire about the possible impact of different financing features including early call provisions or the resizing after award of the bonds. Second, by canvassing potential investors and underwriters, PFM is able to give added market exposure to any of the issuer's new bond issues. c. Marketing Information. 1) Disclosure Documents. For the CITY ' s offering, PFM will work closely with the administrative staff to ensure that the CITY 's primary information disclosure document, the Preliminary Official Statement ( the " POS "), is in full compliance with industry standards and the guidelines developed by the GFOA and MSRB. To the extent needed, our advisory team will review the CITY ' s existing POS format and recommend any changes that may enhance the presentation of relevant information. With minor 84-  modification following the sale, the POS becomes the final OS — the public document of record for the financing and the CITY' s only official contact to most of your investors. 2) Information Meetings. PFM will closely monitor the number and composition of all underwriting syndicates that are organized for the CITY ' s bonds. We will interact directly with these groups and respond promptly to any questions that may arise concerning the issue. When it is deemed appropriate, PFM will organize and participate in investor information meetings to describe in greater detail all elements of the transaction. These could be held both nationally (usually in New York) and regionally to include all Florida firms that may have an interest in the CITY' s bonds. 3) Marketing Calls. In those cases where we are working directly with the CITY on a competitive sale, PFM will follow up the mailing of the POS the week before the sale with individual calls to all the major national and regional firms that we feel should be interested in the financing to answer any specific questions they might have and to encourage them to submit bids to the CITY. We have found that this process has been very successful in increasing the number and competitiveness of the bids an issuer would receive. 4) Bid Forms. In its preparation of the official bid form, PFM will work with the CITY's bond counsel to ensure that all statutory requirements are satisfied. In addition to these legal constraints, PFM will evaluate the impact of various bidding provisions on the resulting debt service schedule. Our efforts would be designed to allow bidders maximum flexibility as long as the interests of the CITY are protected. 8. Katie Presentations. PFM has developed considerable experience working with the major national rating agencies. As a result of our experience advising more than one hundred clients each year to issue tax- exempt securities for a wide range of purposes, PFM has developed a clear understanding of the analytical methods utilized by Moody's Investors Service, Standard & Poor's Inc. and Fitch Investor Service, Inc. Our professional staff is trained to conduct in -depth credit analyses comparable to the rating agencies' own analyses so that both credit strengths and weaknesses can be identified by the CITY prior to the presentation of materials to rating analysts. PFM believes each issuer should pursue an indication from the rating agencies of what underlying credit ratings any proposed bond issue would receive. An underlying credit rating of A or better would enhance the marketability of the bonds, thus reducing interest costs associated with the issue. By asking for a rating indicator, the CITY could receive feedback from the rating agencies of strengths and weaknesses in the CITY' s economic base, debt management, administration, and fiscal management. 85-  Debt Management Wisdom of proposed issue Operating ratio analysis Existing debt Additional debt Economic Base AdministrationAdministration Demographics LongLong - - rangerange planningplanning abilityability Employment Issuer AccuracyAccuracy ofof budgetsbudgets Cyclically /diversity of ContinuityContinuity ofof managementmanagement revenues Financial Management Reporting and budgeting Cashflow Financial controls PartPart ofof PFM'PFM' ss scopescope ofof servicesservices includesincludes workingworking closelyclosely withwith thethe ratingrating agencies agencies toto fullyfully understand understand theirtheir concernsconcerns andand methodology.methodology. IfIf aa ratingrating CITYCITY presentationpresentation isis warranted,warranted, PFMPFM willwill designdesign thethe CITYCITY ' ' ss presentationpresentation toto specifically specifically addressaddress eacheach CITY'CITY' ss questionsquestions inin aa meaningfulmeaningful way.way. WeWe maintainmaintain closeclose personalpersonal contactcontact withwith staffstaff members members atat thethe ratingrating agenciesagencies regardingregarding theirtheir viewsviews ofof debtdebt covenants covenants forfor tolltoll revenuerevenue bonds,bonds, innovative innovative financingfinancing techniquestechniques andand unusualunusual debtdebt structures.structures. 9.9. AssistAssist withwith thethe PricingPricing oo thethe Bonds.Bonds. PFMPFM hashas builtbuilt itsits entireentire reputationreputation uponupon ourour financialfinancial advisory advisory andand consultingconsulting practicepractice inin thethe areaarea ofof municipalmunicipal finance.finance. PFM'PFM' ss recordrecord ofof participationparticipation inin thethe fieldfield ofof municipalmunicipal financefinance isis unrivaledunrivaled byby anyany otherother independentindependent financialfinancial advisoradvisor andand comparescompares favorablyfavorably toto thethe performanceperformance ofof majormajor nationalnational investmentinvestment bankingbanking houses.houses. ForFor eacheach ofof thethe pastpast threethree years,years, PFMPFM hashas advisedadvised governmentsgovernments onon moremore thanthan oneone hundredhundred fiftyfifty financingsfinancings perper year,year, therebythereby assuringassuring ourour clientsclients thatthat PFMPFM isis asas activeactive inin thethe municipalmunicipal debtdebt marketmarket asas anyany WallWall StreetStreet firm.firm. ThisThis recordrecord ofof involvementinvolvement onon asas frequentfrequent aa basisbasis asas investmentinvestment banksbanks hashas keptkept usus inin touchtouch withwith thethe municipalmunicipal marketmarket andand givesgives usus thethe neededneeded prospectiveprospective toto assistassist ourour clientsclients toto marketmarket andand priceprice theirtheir debtdebt issuesissues inin aa knowledgeableknowledgeable manner.manner. InIn additionaddition toto ourour frequentfrequent involvement involvement inin thethe marketmarket representingrepresenting ourour clients,clients, PFMPFM hashas committedcommitted aa significant significant portionportion ofof itsits researchresearch efforteffort intointo studying studying thethe municipalmunicipal marketsmarkets andand thethe factorsfactors thatthat affectaffect thethe mannermanner inin whichwhich anan individualindividual securitysecurity isis pricedpriced inin thatthat market.market. AsAs aa resultresult ofof thatthat effort,effort, PFMPFM hashas developeddeveloped aa quantitativequantitative modelmodel thatthat usesuses aa dailydaily tax-tax- exemptexempt pricingpricing matrixmatrix developeddeveloped byby thethe DelphisDelphis HanoverHanover Corporation Corporation forfor aa groupgroup ofof thethe nation'nation' ss largestlargest taxtax- - exemptexempt fundfund managersmanagers