7.2 Downtown Project Engaging Financial Advisor & Bond CounselAGENDA SECTION
NO:
ITEM
NO: 2
Page 1
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
04/11/2016 4:00 P.M.
ORIGINATING DEPARTMENT:
City Manager's Office
BY: Mike Schrage, Deputy City
FISCAL APPROVAL:
FINAL APPROVAL:
BY:
ITEM: Resolution No. 16-7341 Authorizing the Mayor to execute an engagement letter with Gilmore
& Bell, P.C. for legal services as special counsel for the City in connection with the Downtown Project,
including TIF Bonds, STAR Bonds, General Obligation Bonds and any other funding mechanisms in
connection with the Downtown Project.
Resolution No. 16-7342 Authorizing the Mayor to execute a Fiduciary Engagement Agreement with
George K. Baum & Company to engage and retain GKB to provide certain advisory services to the
City including but not limited to the preparation of supporting data, bond market information,
assistance in obtaining bond ratings, and assistance in investor negotiations, regarding various
projects which may result from time to time in the issuance of bonds, notes, refunding bonds and/or
the use of other financial instruments.
BACKGROUND:
Both Gilmore & Bell and George K. Baum have served in the respective capacities of Bond Counsel
and Financial Advisors for an exceptional number of years. A quick review of agreements with the
two entities yields agreements dating back to 1997 with Gilmore & Bell and 1989 with George K.
Baum.
As further detailed in the attached engagement letter, the role of Bond Counsel is to provide
specialized legal counsel related to the issuance of various forms of bonds. Such legal service range
from providing legal advise on the eligible and appropriate uses and structures of bond financings to
preparation of the necessary documents and compliance advise and oversight regarding the various
processes and requirements associate with a particular bond issuance.
As further detailed in the attached Fiduciary Engagement Agreement, the role of Financial Advisor is
to assist the City in the actual issuance of the bonds such as securing a bond rating, marketing the
bonds and the bond closing process.
The City has been very satisfied with the services of both Gilmore & Bell and George K. Baum, and
staff has been working with both entities in great detail related to the financial aspects of the
downtown redevelopment project which includes the initial steps to from a STAR Bond & TIF district
as well as investigate and consider New Markets Tax Credits.
In light of the amount and detail of the services that are expected related to STAR, TIF and NMTC
financing, it was concluded that specific engagement of bond counsel and financial advisor services
was necessary since the anticipated costs were likely to exceed the purchasing authority of the City
Manager, and some of the expenses would not be on a contigent fee basis as is the case with a more
typical bond financing.
It should also be noted that the Fiduciary Engagement Agreement with George K. Baum is a more
general engagement for their services for economic development bonds such as STAR, TIF and
NMTC beings considered for the downtown project as well more routine general obligation bond
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
04/11/2016 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL:
NO: '7 BY:
ITEM City Manager's Office FINAL APPROVAL:
NO: 2 Mike Schrage, Deputy City BY:
Page 2 BY. Manaaer
issuances.
CONFORMANCE WITH THE STRATEGIC PLAN:
The proposed action is consistent with the following components of the City's shared vision statement:
• Salina will be a city that is exciting to live in and thriving both economically and socially.
• Salina will be a place with a quality of life that not only appeals to residents, but also to visitors.
• Salina will be a town that is respectful of its heritage. Throughout Salina the adaptive re -use of
historic and architecturally significant buildings will be encouraged.
The proposed action is also consistent with the following goals contained in the City's strategic plan:
Goal #1: The city will create a community of mixed-use, quality development and redevelopment.
Goal #3: The city will provide the highest quality of services, consistent with governing body direction,
available resources and staff commitment to quality.
Goal #5: The city will maintain a commitment to making downtown Salina a thriving and vibrant center
of the community.
FISCAL NOTE:
The services provided will be billed on an hourly basis as described in each agreement.
Gilmore & Bell's agreement includes an hourly rate of $345/hour which is reflective of their current
rate. The cost of services associated with the financings associated with the downtown project are
estimated at $30,000, but it is specifically noted that the actual time expended on this project is difficult
to estimate with certainty due to the many issues that may arise during the course of the City
considering and approving a Downtown Project.
George K. Baum's agreement includes both hourly rates and percentage fees depending on the type of
financing. General Obligation Bonds and Notes include an advisory fee of .50% of the principal
amount of securities issued up to $500,000 and .25% of the principal amount of securities issues in
excess of $500,000 at the time of the completion of each Transactions. With a minimum fee of
$3,500. Economic Development Bonds which could include STAR Bonds, Tax Increment (TIF),
Community Improvement District (CID), Industrial Revenue, New Markets Tax Credits or other
economic development transactions are billed at an hourly rate of $200 per hour for consulting
services relating to the negotiation, development and implementation of a financing plan for a
project/issuance. As well as an issuance fee of $20,000 for each transaction that results in a closing
with the payment due at the time of closing.
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
04/11/2016 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL:
NO: 7 BY:
ITEM City Manager's Office FINAL APPROVAL:
NO: 2 Mike Schrage, Deputy City
Page 3 BY. Manaaer BY:
COMMISSION ACTION OR RECOMMENDED ACTION:
Staff has identified the following actions for the Commission's consideration:
Resolution No. 16-7341 — Gilmore & Bell — Bond Counsel
1.) Approve Resolution No. 16-7341 Authorizing the Mayor to execute an engagement letter with
Gilmore & Bell, P.C. for legal services as special counsel for the City in connection with the
Downtown Project, including TIF Bonds, STAR Bonds, New Markets Tax Credits, General
Obligation Bonds and any other funding mechanisms in connection with the Downtown Project.
2.) Postpone consideration of Resolution No. 16-7341 Authorizing the Mayor to execute an
engagement letter with Gilmore & Bell, P.C. for legal services as special counsel for the City in
connection with the Downtown Project, including TIF Bonds, STAR Bonds, New Markets Tax
Credits, General Obligation Bonds and any other funding mechanisms in connection with the
Downtown Project and provide staff additional direction regarding additional information or
additional actions that the City Commission wishes to request.
3.) Take no action on Resolution No. 16-7341 having the effect of choosing not to enter in to an
agreement with Gilmore & Bell for bond counsel services, at this time.
Staff recommends Option #1.
Resolution No. 16-7342 — George K. Baum Financial Advisor
1.) Approve Resolution No. 16-7342 Authorizing the Mayor to execute a Fiduciary Engagement
Agreement with George K. Baum & Company to engage and retain GKB to provide certain
advisory services to the City including but not limited to the preparation of supporting data, bond
market information, assistance in obtaining bond ratings, and assistance in investor negotiations,
regarding various projects which may result from time to time in the issuance of bonds, notes,
refunding bonds and/or the use of other financial instruments.
2.) Postpone consideration of Resolution No. 16-7342 Authorizing the Mayor to execute a Fiduciary
Engagement Agreement with George K. Baum & Company to engage and retain GKB to provide
certain advisory services to the City including but not limited to the preparation of supporting data,
bond market information, assistance in obtaining bond ratings, and assistance in investor
negotiations, regarding various projects which may result from time to time in the issuance of
bonds, notes, refunding bonds and/or the use of other financial instruments and provide staff
additional direction regarding additional information or additional actions that the City Commission
wishes to request.
3.) Take no action on Resolution No. 16-7342 having the effect of choosing not to enter in to an
agreement with George K. Baum for financial advisor services, at this time.
Staff recommends Option #1.
816-221-1000 MAIN
816-221-1016 FAX
GILMOREBELL.COM
Mr. Mike Schrage
Deputy City Manager
City of Salina, Kansas
300 West Ash, Room 202
Salina, Kansas 67402-0736
GILMORE & BELL PC
2405 GRAND BOULEVARD, SUITE 1106
KANSAS CITY, MISSOURI 54108-2521
April 7, 2016
ST. LOUIS
WICHITA
OMAHA I LINCOLN
Re: Special Counsel to the City of Salina for the Salina Downtown TIF and STAR Bond
Districts (the "Downtown Project")
Dear Mr. Schrage:
The purpose of this engagement letter is to set forth certain matters concerning the legal services
we will perform as special counsel for the City in connection with the Downtown Project, including TIF
Bonds, STAR Bonds, General Obligation Bonds and any other funding mechanisms in connection with
the Downtown Project.
SCOPE OF ENGAGEMENT
In this engagement, we expect to perform the following duties:
I . Assist in reviewing, analyzing and evaluating the Downtown Project;
2. Prepare and review the necessary schedules, notices, resolutions, ordinances, contracts and other
documents in connection with the proceedings of the City Commission related to the approval of
the selected redevelopment area, redevelopment plan, redevelopment project(s) and the selected
developer;
3. Attend meetings, conferences and phone conferences related thereto, as needed and directed by
the City;
4. Draft a TIF contract and associated agreements and related documents, negotiate the contract with
the developer, and assist City staff with the implementation of the contract;
5. Advise the City and other parties to the financing regarding the legal authority for the issuance of
notes or bonds, the legal structure and other legal aspects of the financing and interpretation of
relevant statutes and constitutional provisions as deemed necessary by the City in issuing the notes
or bonds;
April 7, 2016
Page 2
6. Prepare all proceedings and legal documents relating to the authorization and issuance of the notes
or bonds, including ordinances authorizing the issuance of the notes or bonds, any trust indenture
and any security agreements securing the bonds, preparation and review of the official statement or
other disclosure document used in connection with the sale of the bonds which describe the bonds,
the security therefore and the tax-exempt status of the notes or bonds, and the preparation and
review of various other documents, certificates and opinions required for authorization and issuance
of the notes or bonds;
7. Prepare the note or bond forms, supervise the printing of notes or bonds and arrange for the
execution, authentication and delivery thereof;
8. Attend and coordinate the closing of the transaction, including attendance at any meetings for a
bond sale or signing of documents as deemed necessary by the City;
9. Assemble note or bond transcripts covering the proceedings relating to the authorization and
issuance of the bonds, and distribute copies of the transcripts to the parties to the financings;
10. Render our approving legal opinion on the validity of the notes or bonds, the federal and state
income tax treatment of interest on the notes or bonds and such incidental opinions that may be
necessary to complete the financings;
11. Attend such conferences and meetings as may be deemed necessary by the City in connection with
the financings; and
12. Provide miscellaneous consultation and advice on legal matters relating to the authorization,
issuance, sale and delivery of the bonds and performing such additional standard bond counsel
services as may be necessary to complete the financings.
In preparing and reviewing documents and notices related to the Project, we may look to
representatives of the City to undertake the gathering and/or supplying of certain information required to
be included in those documents, and we will carefully coordinate our work with City staff and elected
officials.
ATTORNEY-CLIENT RELATIONSHIP
Upon execution of this engagement letter, the City will be our client and an attorney-client
relationship will exist between us, Unless otherwise specified in writing, we assume all other parties,
including the developer for the Downtown Project, will retain such counsel as they deem necessary and
appropriate to represent their interests in the project. We further assume that all other parties understand
that in this transaction we represent only the City, we are not counsel to the developer or any other party,
and we are not acting as an intermediary among the parties. Our services are limited to those contracted
for herein and the City's execution of this engagement letter will constitute an acknowledgment of those
limitations.
April 7, 2016
Page 3
PERSONNEL
We attempt to assign personnel to each matter based on the nature and scope of the issues raised
by the matter in conjunction with the experience and expertise of our lawyers. One lawyer will generally
be assigned primary responsibility for seeing that your requests for legal services are met, but additional
lawyers may assist in providing appropriate and efficient legal services. Gary Anderson will be the
primary attorney in the firm responsible for providing the legal services to the City regarding evaluation,
approval and implementation of the Downtown Project and TIF Contract, and Gary Anderson and Gina
Riekhof will be the primary attorneys in the firm responsible for any notes or bond transaction that may
result from the Downtown Project. The primary contact person for day-to-day communications with the
City on this project will be Gary Anderson. We may call upon other attorneys in our firm for specialized
services and consultation, such as our tax and securities attorneys for support regarding the planning and
preparation for issuance of tax-exempt obligations for the project.
Our legal services in connection with approval and implementation of the Downtown Project and
TF Contract and all non bond related work will be performed on an hourly basis for this Project. Our
fees associated with those legal services for special counsel pursuant to this engagement will be $345.00
per hour. We do not anticipate that the total amount of special counsel work for this project will exceed
$30,000, but the actual time expended on this project is difficult to estimate with certainty due to the many
issues that may arise during the course of the City considering and approving a Downtown Project.
All bond counsel fees related to note and/or bond work will be agreed to once the structure, size
and complexity of any notes and/or bonds are agreed upon by the City.
PROVISION OF LEGAL SERVICES
This engagement is for the provision of professional legal services, and not for the provision of
business, personal, accounting, technical, financial or other advice not constituting legal services. It is
agreed that the client is not relying upon us in this engagement for advice in areas other than professional
legal services, even if such matters should be discussed in connection with the engagement.
We may be asked to use the Internet as a means for communicating about matters concerning
your representation. Any such communication could be randomly intercepted and otherwise used or
disclosed by anyone, including someone specifically interested in your matter or business. This could
cause you to lose your confidentiality and attorney/client privilege protections. However, to facilitate
your representation, you approve the use of Internet communications during your representation by us
unless we are instructed otherwise.
CONFLICTS
As you are aware, our firm represents many cities, counties and other political subdivisions. It is
possible that during the time that we are representing the City, one or more of our present or future clients
will have transactions with the City. We do not believe any such representation will adversely affect our
ability to represent you as provided in this letter either because such matters will be sufficiently different
from the matters described herein so as to make such representations not adverse to our representation of
the City, or because the potential for such adversity is remote or minor and outweighed by the
consideration that it is unlikely that advice given to the other client will be relevant to any aspect of the
April 7, 2016
Page 4
matters described herein. Execution of this letter will signify the City's consent to our representation of
others consistent with the circumstances described in this paragraph.
RECORDS
Aller our services conclude, we will, upon your request, deliver ttie file for this engagement to
you. If you do not request the file, we will retain it for a period of ten years after the matter is closed. If
you do not request delivery of the file before the end of the ten year period, we will have no further
obligation to retain the file and may, at our discretion, destroy it without further notice to you. At any
point during the ten year period, you may request delivery of the file.
PERIODIC BILLING FOR LEGAL SERVICES
Unless other arrangements have been made, it is our policy to render periodic statements for legal
services on a monthly basis. We normally base these interim statements on hourly rates of lawyers
working on the matter. Statements will be due upon presentation, and are to be paid no later than 30 days
following the invoice date. If any statement amount remains unpaid 60 days after the invoice date, the
firm reserves the right to terminate its services, consistent with applicable Rules of Professional Conduct.
DISBURSEMENTS AND OTHER CITARGES
Most matters require, from time to time, certain monetary advances to be made on your behalf by
the firm to third parties, such as deliveries, certified mail notices. It is understood that while acting as
your lawyers, we have the authority to use our best judgment in making such expenditures on your behalf.
In addition we may incur travel costs to Salina and those will be charged at the IRS rate.
TERMINATION OF SERVICES
In the event that you choose to terminate our services, please advise us of such in writing. We
retain the right to cease performing legal services and to terminate our legal representation for any reason
consistent with ethical rules, including conflicts of interest or the failure to pay legal fees and expenses
when due. Our termination or your termination of services does not affect your obligation to pay legal
fees and expenses incurred prior to the effective date of such termination.
QUESTIONS
One of our goals is to ensure that legal services are delivered effectively and efficiently, and that
all billings are accurate and understandable. Please direct any questions about services, billing, or
payment status of your account to the appropriate attorney at our firm.
If the foregoing terms are acceptable to you, please so indicate by returning the enclosed copy of
this engagement letter dated and signed by an authorized official, retaining the original for your files. We
look forward to working with you.
GILMORE & BELL P.C.
By;
Gary A. Anderson
April 7f 2016
Page 5
ACCEPTED AND APPROVED:
CITY OF SALINA, KANSAS
By: _..
Title:
Date:, me�
RESOLUTION NUMBER 16-7341
A RESOLUTION AUTHORIZING THE MAYOR TO EXECUTE AN ENGAGEMENT
LETTER WITH GILMORE & BELL, P.C. FOR LEGAL SERVICES AS SPECIAL COUNSEL
FOR THE CITY IN CONNECTION WITH THE DOWNTOWN PROJECT, INCLUDING TIF
BONDS, STAR BONDS, GENERAL OBLIGATION BONDS AND ANY OTHER FUNDING
MECHANISMS IN CONNECTION WITH THE DOWNTOWN PROJECT.
BE IT RESOLVED by the Governing Body of the City of Salina, Kansas:
Section 1. The Mayor is authorized to execute an engagement letter with Gilmore & Bell,
P.C. for legal services as special counsel for the City in connection with the Downtown Project,
including TIF Bonds, STAR Bonds, General. Obligation Bonds and any other funding mechanisms in
connection with the Downtown Project,
Section 2. This resolution shall be in full force and effect from and after its adoption.
Adopted by the Board of Commissioners and signed by the Mayor this 11 On day of April, 2016.
Jon R. Blanchard, Mayor
(SEAL)
ATTEST:
Shandi Nicks, CMC, City Clerk
FIDUCIARY ENGAGEMENT AGREEMENT
This Fiduciary Engagement Agreement ("Agreement") is made this —day of March, 2016, by
and between the City of Salina, Kansas ("Issuer"), and GEORGE K. BAUM & COMPANY,
located at 4501 Main Street, Suite 500, Kansas City, MO 64112 ("GKB").
PURPOSE: The Issuer deems it in its best interest to engage and retain GKB, an independent
registered municipal advisor firm, to provide certain advisory services to the Issuer, including but
not limited to the preparation of supporting data, bond market information, assistance in obtaining
bond ratings, and assistance in investor negotiations, regarding various Issuer projects ("Projects")
which may result from time to time in the issuance of bonds, notes, refunding bonds and/or the use
of other financial instruments ("Transactions").
CONSIDERATION: Consideration for this Agreement includes the services, compensation, and
mutual exchange of promises of the parties specified herein.
SPECIFIC PROVISIONS: The provisions of the above "Purpose" section are material and
binding terms of this Agreement.
1. GKB's Obligations. GKB shall provide the Issuer with advisory services for or related to
the Transactions, including the analysis of the cost and benefits relative to financing
Projects, and:
A. Work with the Issuer, and others as directed by the Issuer, concerning the legal and
financial issues associated with any Transactions;
B. Attend all meetings and be available to the Issuer, and its other agents, for
consultation and conference at times and places mutually agreed upon;
C. Assist the Issuer in the preparation, coordination and distribution of printed matter
for or related to any Transactions, including circulars, press releases, special
mailings, etc., in order to acquaint the Issuer's population with the benefits and
financial considerations of any Transactions;
D. Prepare financial information and schedules necessary to acquaint the Issuer with
the benefits of the various forms of debt financing for any Transactions;
E. Assist in the preparation of a credit presentation for bond rating agencies and bond
insurance companies, if any;
F. Assist in the collection and preparation of the documents necessary to accomplish
any Transactions including any related contracts and agreements or documents
related to offering securities either for purchase or sale, all of which shall be
appropriately executed and satisfactory to the Issuer;
G. Arrange for closing and delivery of the any bonds;
GKB 021716
Fiduciary Engagement Agreement
H. It is expressly understood and agreed that this Agreement does not intend, and is
not under any circumstances to be construed as requiring GKB to perform services
which may constitute the practice of law. GKB is retained and engaged in an expert
financial capacity only;
I. It is expressly understood and agreed that, under this Agreement, GKB is acting as
an advisor or fiduciary to the Issuer for or related to any Transactions;
It is expressly understood and agreed that GKB will not limit its work to the steps
outlined, but will extend its services as necessary to ensure that all appropriate
advice for or related to any Transactions is provided to the Issuer in a professional
and satisfactory manner.
2. Issuer's Obligations. The Issuer's obligations shall include the following:
A. Retain GKB as its advisor for and related to any Transactions;
B. Cooperate with GKB in the proper development of any Transactions and provide
all pertinent information needed to allow GKB to provide the Issuer with informed
advice, and to support any desired Transactions on behalf of the Issuer;
C. Retain a nationally recognized firm of bond attorneys and utilize the services of the
Issuer's attorney;
D. Pay for all costs of legal advice, printed matter, advertising, bond ratings, bond
insurance premium, required audits and other professional services;
E. Reimburse GKB for all reasonable costs and expenses incurred by GKB that are
related to the Transactions, including but not limited to reasonable travel expenses
to meet with the Issuer, or rating agencies, if any;
F. Fee for Services:
General Obligation Bonds and Notes —
Pay GKB an advisory fee of .50% of the principal amount of securities issued up to
$500,000 and .25% of the principal amount of securities issues in excess of
$500,000 at the time of the completion of each of any of the Transactions. With a
minimum fee of $3,500.
Economic Development Bonds
For STAR Bonds, Tax Increment (TIF), Community Improvement District (CID),
Industrial Revenue or other economic development transactions pay GKB an
advisory fee of $200 per hour for consulting services relating to the negotiation,
development and implementation of a financing plan for the project(s). GKB will
submit monthly written invoice to the Issuer, detailing the number of hours of such
services rendered during the preceding month. The issue agrees to pay GKB the
GKB 021716
Fiduciary Engagement Agreement
amount of any such invoice with sixty days (60) of the Issuer's receipt of such
invoice.
Once a specific bond Issue has been identified and sized for a specific project, pay
GKB a fee of $20,000 for each transaction at the time of closing of the Issue.
3. Term. The term of this Agreement shall commence on Feb. 1, 2016, and shall expire on
Feb. 1, 2021 and will automatically renew at the end of each year for one additional year
except as terminated earlier pursuant to the provisions below.
4. Termination. Either party shall have the right to terminate this Agreement in full for any
reason by providing written notice to the other party at least sixty (60) days prior to the
stated termination date. In the event of any violation or default of the terms of this
Agreement by GKB, the Issuer shall provide written notice to GKB of any such violation
or default, and GKB shall have thirty (30) days to cure such default. If GKB is not able to
cure the default to the Issuer's satisfaction by the end of such cure period, the Issuer
thereafter shall have the right to immediately terminate this Agreement. At the termination
of this Agreement, in any such manner, the Issuer shall reimburse GKB such reasonable
costs and expenses incurred to the date of such termination, and shall pay GKB such
compensation earned to the date of such termination, which payment shall be in full
satisfaction of all claims against the Issuer under this Agreement.
5. Execution. This Agreement may be executed in multiple counterparts and together such
counterparts will be deemed an original.
IN WITNESS WHEREOF, the parties here have executed this Agreement the day and year first
above written.
AGREED TO AND ACCEPTED:
GEORGE K BAUM & COMPANY
By: i
Printed Name: Roger Ede_ _
Title: Executive Vice President
City of Salina, Kansas
By:
Printed Name:
Title:
GKB 021716
RESOLUTION NUMBER 16-7342
A RESOLUTION AUTHORIZING THE MAYOR TO EXECUTE A FIDUCIARY
ENGAGEMENT AGREEMENT WITH GEORGE K. BAUM & COMPANY TO ENGAGE
AND RETAIN GKB TO PROVIDE CERTAIN ADVISORY SERVICES TO THE CITY
INCLUDING BUT NOT LIMITED TO THE PREPARATION OF SUPPORTING DATA,
BOND MARKET INFORMATION, ASSISTANCE IN OBTAINING BOND RATINGS, AND
ASSISTANCE IN INVESTOR NEGOTIATIONS, REGARDING VARIOUS PROJECTS
WHICH MAY RESULT FROM TIME TO TIME IN THE ISSUANCE OF BONDS, NOTES,
REFUNDING BONDS AND/OR THE USE OF OTHER FINANCIAL INSTRUMENTS.
BE IT RESOLVED by the Governing Body of the City of Salina, Kansas:
Section 1. The Mayor is authorized to execute a Fiduciary Engagement Agreement with
George K. Baum & Company to engage and retain GKB to provide Certain advisory services to the
City including but not limited to the preparation of supporting data, bond market information,
assistance in obtaining bond ratings, and assistance in investor negotiations, regarding various
projects which may result from time to time in the issuance of bonds, notes, refunding bonds and/or
the use of other financial instruments.
Section 2. This resolution shall be in full force and effect from and after its adoption.
Adopted by the Board of Commissioners and signed by the Mayor this 11t' day of April, 2016.
Jon R. Blanchard, Mayor
(SEAL)
ATTEST:
Shandi Wicks, CMC, City Clerk