City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JUNE 27, 2023 FROM: FINANCE DEPARTMENT WARDS: ALL
SUBJECT: REQUEST FOR PROPOSAL 2261 – MASTER PROFESSIONAL CONSULTANT SERVICES AGREEMENTS WITH SEVEN MUNICIPAL FINANCIAL ADVISORS TO ASSIST WITH VARIOUS DEBT AND FINANCIAL RELATED MATTERS FOR A FIVE-YEAR TERM THROUGH JUNE 30, 2028, WITH AN OPTION TO EXTEND FOR TWO ADDITIONAL TWO-YEAR TERMS ISSUES:
Approve Master Professional Consultant Services Agreements from RFP 2261 with Fieldman, Rolapp & Associates, Inc. of Irvine, California; CSG Advisors Incorporated of San Francisco; California, NHA Advisors, LLC of San Rafael, California; PFM Financial Advisors of Delaware, KNN Public Finance, LLC of Los Angeles, California; Omnicap Group, LLC of Delaware; and Kosmont Transaction Services, Inc. dba Kosmont Financial Services of Manhattan Beach, California.
RECOMMENDATIONS:
That the City Council:
Approve the Master Professional Consultant Services Agreement with Fieldman, Rolapp & Associates Inc. of Irvine, California, for a term of five years, with an option to extend for two additional two-year terms; Approve the Master Professional Consultant Services Agreement with CSG Advisors Incorporated of San Francisco, California, for a term of five years, with an option to extend for two additional two-year terms; Approve the Master Professional Consultant Services Agreement with NHA Advisors, LLC. of San Rafael, California, for a term of five years, with an option to extend for two additional two-year terms; Approve the Master Professional Consultant Services Agreement with PFM Financial Advisors, LLC of Delaware; for a term of five years, with an option to extend for two additional two-year terms; Approve the Master Professional Consultant Services Agreement with KNN Public Finance, LLC of Los Angeles, California, for a term of five years, with an option to extend for two additional two-year terms; Approve the Master Professional Consultant Services Agreement with Omnicap Group, LLC of Delaware, for a term of five years, with an option to extend for two additional two-year terms; Approve the Master Professional Consultant Services Agreement with Kosmont Transaction Services, Inc. dba Kosmont Financial Services of Manhattan Beach, California, for a term of five years, with an option to extend for two additional two-year terms; Authorize the City Manager, or designee, to execute the Master Professional Consultant Services Agreements with each of the seven companies listed above, including the optional extensions and making minor and non-substantive changes.
BACKGROUND:
For several years, the City has been working with a team of financial advisors to assist with various debt and financial related projects. Such projects include but are not limited to bond issuance, line of credit, rating agency presentations, continuing disclosure policies and review, and arbitrage and swap calculations. The purpose and benefit of having a team of advisors is to allow the City to utilize the most appropriate firm for each specific project that arises. Each firm is able to utilize their unique skillset to help the City identify innovative and sound financing solutions. The agreements that are in place with our current financial advisors are going to expire on June 30, 2023.
DISCUSSION:
To ensure that the City was receiving the best quality services at a reasonable price, the Purchasing Division issued Request for Proposal (RFP) No. 2261 on January 4, 2023 for municipal financial advisory services. To allow for as much competition as possible and to obtain the best overall service to the City, the advisory services within the RFP were broken into six (6) possible sectors, which are: 1) General Fund and RDA; 2) Sewer Fund; 3) Electric and Water Funds (RPU); 4) Special Districts (Community Facility Districts and Assessment Districts); 5) Swap and Arbitrage (all funds); and 6) Real Estate and Financial Advisory (P3 projects). Firms were allowed to submit proposals for any and/or all of the six sectors. The RFP was structured to award contracts with the two highest-ranking firms for each sector and then allow City staff to work with either of those top two firms as projects arise throughout the course of the agreement.
Through the competitive procurement process, the City received responses from nine qualified firms. The qualified firms were evaluated based on the following criteria:
Qualifications (35%)
Experience (25%)
Approach & Methodology (20%)
Professional References (10%)
Pricing (10%)
Within the scope of the RFP, firms were also asked to provide confirmation of passing their license 50 test with the MSRB for advisory services and have at least five (5) years’ experience in providing services of a similar type and scope. The evaluation team for RFP No. 2261 consisted of four City staff members (three in City Finance and one in RPU finance). Apart from Swap and Arbitrage, each category had two highest ranking firms. The only responsive bidder for the Swap and Arbitrage category was Omnicap Group, LLC, who currently serves as the City’s Swap and Arbitrage advisor. The highest-ranking firms for each category are shown in the table below:
Category
Highest Ranking Firms
General Fund & RDA
(1) Fieldman, Rolapp & Associates, Inc. (2) CSG Advisors, Inc Sewer Fund
(1) NHA Advisors, LLC (2) PFM Financial Advisors, LLC
Electric & Water Funds (RPU)
(1) PFM Financial Advisors, LLC (2) KNN Public Finance, LLC Special Districts (CFD & AD)
(1) Fieldman, Rolapp & Associates, Inc. (2) CSG Advisors Inc Swap & Arbitrage
(1) Omnicap Group, LLC
Real Estate (P3 Projects)
(1) CSG Advisors, Inc. (2) Kosmont & Associates, Inc
Having a team of highly experienced financial advisors allows the City to draw upon their expertise and innovative financing solutions over the next several years. The proposed agreements with each of the financial advisory firms is for an initial term of five years, with the option to extend two additional two-year terms. This allows the team of advisors to gain insight into the City’s current and upcoming financial needs, as well as gaining a deeper understanding into the history of the City’s large and complex debt portfolio. As specific projects come up during the course of this timeframe, the City will engage one of the top selected firms with a Supplemental Agreement.
The Purchasing Manager concurs that this request is in compliance with Purchasing Resolution No. 23914.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 - High Performing Government and Goal 5.3 – Enhance communication and collaboration with community members, to improve transparency, build public trust, and encourage shared decision-making.
This item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – Financial Advisors serve as City of Riverside fiduciaries, providing a specialized, certified level of knowledge and skillset to ensure that the City is aware of all the risks and benefits related to various financing strategies to choose the most financially advantageous course of action for our residents, taxpayers, and ratepayers.
Equity – Competitive procurement was achieved through RFP 2261, issued January 4, 2023. Of the nine qualified firms who submitted proposals, Fieldman Rolapp & Associates, CSG Advisors, NHA Advisors, PFM Financial Advisors, KNN Public Finance, Omnicap Group, and Kosmont Financial Services were among the top two highest ranking in each category.
Fiscal Responsibility – Utilizing the RFP process, the City can lock in the rates with each firm throughout the entire term of the contract. This allows the City to achieve pre-determined rates, regardless of inflation or economic uncertainties.
Innovation – Utilizing a team of financial advisors is an innovative way for the City to stay on top of current laws and best practices in government finance. The City can rely upon experts in their field to ensure that the City is following various reporting and legislative requirements.
Sustainability & Resiliency – There are significant benefits to working with each of the financial advisory teams. In doing so, the City will be able to lock in the competitive rates for these services, rather than trying to establish a contract with a new firm which would be subject to higher fees based on the current economic environment. The City also benefits from having a history with advisors who have become familiar with the City’s large and complex debt portfolio. The historical knowledge of the City’s various Funds and Special Districts is valuable in a portfolio the size of Riverside’s.
FISCAL IMPACT:
The total fiscal impact of this action is unknown as it is dependent upon the specific projects that may come up over the course of these agreements. For the General Fund related projects, it is anticipated that the fiscal impact for the Finance Department will be approximately $15,000 per year for ongoing general advisory services, which has been budgeted for in the General Fund, Finance-Debt & Treasury, Professional Services account number 2302000-421000.
Arbitrage and swap reporting is anticipated to be approximately $40,000 per year and is budgeted as administration costs within the funds of the related bond issuances that have swap and arbitrage reporting requirements. For Community Facilities and Assessment District bonds, fees are paid through special taxes. Should a refinancing or new bond issuance occur, the financing team fees would be paid from bond proceeds and would be submitted for authorization by City Council at the same time as approval for the financing.
Prepared by: Karen Hessell, Interim Debt and Treasury Manager Certified as to
availability of funds: Kristie Thomas, Assistant Chief Financial Officer/Finance Director Approved by: Edward Enriquez, Assistant City Manager/Chief Financial Officer/City Treasurer
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Master PCSA with Fieldman, Rolapp, & Associates, Inc.
Master PCSA with CSG Advisors, Inc.
Master PCSA with NHA Advisors, LLC
Master PCSA with PFM Financial Advisors, LLC
Master PCSA with KNN Public Finance, LLC
Master PCSA with Omnicap Group, LLC
Master PCSA with Kosmont Transaction Services, Inc.
Award Recommendation
Financial Advisors RFP-2261 ● Page 2