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HomeMy WebLinkAboutItem #58 - Discussion ItemAgenda Itch, ti,, i ape ::,signed t�> ��1�.� �,�,�..✓ �� RFQI.T.SI PAII I'R( OH-Z,4 A1) & j,PPR(il i CORR I'I FASI I 111.1 1\ J ran,mitt ,i Handcarriecl Framrript .f 117 r C t jor f �t�xliit MATTY HIRAI r�``t� of ��s CESAR H. ODIO City Clerk ►- City Mandger e 9e o4�f co.F�Qa�v March 20, 1987 Ms. Rose Gordon 1890 S. Bayshore Drive Miami,Florida 33133 Dear Ms. Gordon: Enclosed herein please find an excerpt from the Minutes of the March 13, 1987 City Commission Meeting, which this office has completed upon your request. e truly yours, catty Hirai % City Clerk MH:er Encl a/s OFFICE OF THE CITY CLERK/City Hall/3500 Pan American Drive/P.O.Box 330708/Miami, Florida 33233-0708/(305) 579-MS ----------------------------------------------------------------- ----------------------------------------------------------------- ------------- ------------- 54. DISCUSSION REGARDING PROCESS FOR SELECTING UNDERWRITERS FOR A PROPOSED CITY OF MIAMI GENERAL OBLIGATION REFUNDING BOND ISSUE. (See also label 58) - ------------------------------------- --------- Mayor Suarez: Agenda item 58. Mr. Carlos Garcia: Mr. Mayor, members of the City Commission, we are proposing that the City refinance the $33,000,000 in bonds that were sold in 1985. To that effect, I think the citizens of this community will accrue savings of $2,500,000. In front of you, we have the proposed selection process that we are proposing at this time. An R.F.P. was sent to various underwriting firms - 22 proposals were received. The names of the firms are listed in your agenda material. Subsequent to that, the City Manager has appointed a selection committee composed of six members - three from the Administration and three from the outside. The outside citizens are Arthur Hill, Amadeo Lopez -Castro, Joseph Pogue. From the Administration, we have Wally Lee, John Blaisdell and myself. What we are proposing to do, is based on the six basic criterion of the R.F.P., is to award 100 points to every firm. _ The first criteria is that of the ideas and the refinancing, and the spread of the fees that they will charge the City for doing the work. That will take 60 points, and the next 5 points will go to their experience in general obligation refundings during the last 12 months, 5 points to the general obligation refundings in the State of Florida experience, 10 points to the structure of the firm, and capital, and 10 points to the people that will be working on the project, and 10 points for minority participation. At this time, we would like to have your input on this process. Mrs. Kennedy: Carlos, let me ask you something. The priority here is to get the best deal for the City. Mr. Garcia: That's right. Mrs. Kennedy: I understand that most of the large companies are based in New York, but shouldn't we also give some points to the companies that are based in Miami, that pay local taxes... Mr. Plummer: City. Mrs. Kennedy: Oh, I am sorry,and hire local people rather in the City that pay local taxes? Mr. Garcia: That is the right. The reason we have not included that criteria here is that this R.F.P. was sent before the selection process that we had for the Convention Center refunding. At that time it was when the City Commission expressed their intention to award points for local participation. Mr. Plummer: I will move that the six points that are proffered by Carlos Garcia be accepted as the criteria used in the evaluation of the R.F.P.'s. Mrs. Kennedy: Second Mayor Suarez: So moved and seconded. Are you going to include also a number of companies selected on a rotating procedure for... Mr. Odio: What I would like to do is bring you the top five and then select from there. Id 1 March 13, 1987 Mayor Suarez: But, are we going to select a short list for a period of time, and do rotation and all of that? Is that going to be part of your recommendation at this point? Mr. Garcia: We would like... Mr. Odio: I think, Mr. Mayor that... no. Mr. Garcia: No, sir. M.r Odio: I prefer to keep an open bid. Mayor Suarez: Just the criteria right now? Mr. Odio: Because of the open bid process, we had 22 proposals and the more proposals we have, the better chances we have of getting better deals. Mayor Suarez: OK because if we are going to recommend that... now, don't change your mind, if we are going to recommend that, we can't do it once they have already presented their bids, otherwise, we have the same problems as last time, that we didn't give them fair warning, that we are going to short list for a period of time. I thought you were going to recommend that we short list? Mrs. Kennedy: So did I. Mr. Odio: No, in fact, I said the last time, that I recommended you keep it an open bid. Mayor Suarez: All right, each time we will have 22 applications, I mean, I don't know how many more we are going to do in one year, but each time we are going to have to go through this process. Mr. Garcia: Mr. Mayor, I think that would be beneficial to the City to go out and get proposals every time we go into a bond sale. Mayor Suarez: Well, everything has its benefit. I can see the benefit in that, of course. The benefit on the other is that you are able to negotiate like we have done with bond counsel, like we have done in other areas. Mr. Plummer: Yes, but I just feel that the more bids you get, the better chance you have got of getting a better deal for the City - you know, competitive bidding, there is nothing wrong with that. Mayor Suarez: OK, on the criteria then, if that is what the City's recommendation is, we will call the roll on that motion. The following motion was introduced by Commissioner Plummer, who moved its adoption: MOTION NO. 87-274 A MOTION ACCEPTING THE CRITERIA USED BY THE ADMINISTRATION IN THE EVALUATION OF REQUEST FOR PROPOSALS RECEIVED IN CONNECTION WITH THE SELECTION OF UNDERWRITERS FOR A PROPOSED CITY OF MIAMI GENERAL OBLIGATION REFUNDING BOND ISSUE. Upon being seconded by Commissioner Kennedy, the motion was passed and adopted by the following vote - Id 2 March 13, 1987 AYES: Commissioner Joe Carollo Commissioner Miller J. Dawkins Commissioner Rosario Kennedy Vice -Mayor J. L. Plummer, Jr. Mayor Xavier L. Suarez NOES: None. ABSENT: None. Mayor Suarez: Yes, addressing that issue, please. Mr. Craig Dunlap: Yes, sir. My name is Craig Dunlap, I represent the firm of Dean Witter Reynolds. I just wanted to provide a little bit of input in regard to this selection process. I think that the criteria that has been proposed is extremely adequate and I commend you for that. I wanted to introduce with me today, Mel Gordon, vice-president for investments, and with me, Sylvia Seaton, vice-president with our firm here locally. We... Mr. Plummer: Sir, are you a bidder in this process? Mr. Dunlap: Yes, sir. Mr. Plummer: I don't think it is proper that you should be doing a commercial. Mr. Dunlap: Well, I am not trying to do a commercial, but... Mayor Suarez: Yes, if you are going to address the selection criteria, that is what we are interested in. Mr. Dunlap: Right, well, I think the selection criteria that you proposed is very adequate, and I wanted to at least express our interest here at Dean Witter, and our local public finance office here, of our extreme interest in your project in doing your . refinancing. Mayor Suarez: Thank you. Mr. Dunlap: Thank you. Mayor Suarez: Anyone else to address the selection criteria? Mr. Plummer: Well, let me ask this question. Mr. Garcia, when do we expect this list to come back with the five names? Mr. Garcia: Hopefully, by the end of the month. We hope to be able... Mr. Plummer: On the 31st? Mr. Garcia: Yes, sir. Mr. Plummer: All right. Mr. Garcia: Be back by then. Mr. Alan Koslow: Mr. Mayor and members of the Commission, my name is Alan Koslow, I am with the firm of L. F. Rothschild, Unterberg & Towbin. Mr. Plummer: Are you registered as a lobbyist, sir? Mr. Koslow: I believe the firm is. I am not. Mr. Plummers No, you can't. It is individually. Mayor Suarez: Are you being compensated for your appearance, or are you just here on behalf of your firm? ld 3 March 13, 1987 '11 'sI Mr. Koslow: I am just here on behalf of the firm. Mr. Plummer: You are not representing a client? Mr. Koslow: No, I am representing the firm. Mayor Suarez: Yourself? Mr. Koslow: Yes, I am an employee of the company. (INAUDIBLE BACKGROUND COMMENTS) Mr. Koslow: I am not a lobbyist for the company. Mr. Plummer: The City Attorney says you have to register, sir. Mrs. Kennedy: It only takes five minutes. All you need to do is see the City Clerk and fill out some papers. Mayor Suarez: OK, go ahead and fill out your form. Mr. Plummer: Sure, the IRS will love you. Mayor Suarez: We didn't ask Dean Witter the same question, but... yes, sir. Mr. Mel Gordon: My name is Mel Gordon, I am with Dean Witter, I am registered as a lobbyist. I wanted to bring the attention of the criteria selection portion that refers to doing business with the companies that have been in the City of Miami, paying taxes in the City of Miami, and I think that that should be considered as a strong evaluation in considering the evaluation for primarily those companies that are doing that type of operation here, with full branch operations, and by that, I mean specifically full branch operations, and not just one store front type of a situation that we sometimes find. The criteria can include those companies that are doing business in the City of Miami, and have been doing for many, many years. In addition to that, I think the criteria ought to specify specifically those bond issues refunding that have been done both locally and in the State of Florida, as well as national distribution, and the ability to be able to market those bonds on a national basis within a short of period of time, and also the criteria should include those companies that are being able to move marketability in a situation such as the refunding deal in order to be able to get these things out to the public and in the hands of the City of Miami bond holders, as well as the hands of the City of Miami residents, and the State residents who are able to profit from bonds which are held in the State, therefore avoiding any taxes, and any situations such as we find in other states. Thank you. i Mayor Suarez: I thought we had heard from Dean Witter already. Mr. Plummer: Let's move on to the next item. , Mayor Suarez: Anyone else? (INAUDIBLE BACKGROUND COMMENTS) Mayor Suarez: OK, go ahead and fill that out. Id 4 March 13, 1987 58. CONTINUED DISCUSSION UNDERWRITER PROCESS FOR REFUNDING BONDS (See also label 54) -----------------•------------------------------------------------------------ - Mayor Suarez: Wait, there is a gentlemen on item 58. Go ahead, sir, you've got your registration filed? Mr. Alan Koslow: Mayor and Commissioners, for the record again, my name is Alan Koslow, I am with L. F. Rothschild, Public Finance Department in South Florida and I am a registered lobbyist with the City of Miami. I am here today to speak to you about item number 58, with regard to the G.O. refunding bond sale. On February 17, 1987, Rothschild responded to the R.F.P. by sending a letter to Carlos Garcia, the Director of Finance, which I believe members of the Commission also received. Essentially, what we are proposing, is that the G.O. bond sale be done by competitive bid, as opposed to negotiation The reason we feel that this would be a better method, is that it would be in the best interest of the City, both from... Mayor Suarez: Competitive, you are saying that we are now using negotiation, and not competitive? Mr. Koslow: That's correct. Mayor Suarez: Because it is sort of a subjective evaluation, is that why? Mr. Koslow: Because the structure that is being used is a negotiated basis with an underwriting spread and a discount involved, versus a competitive G.O. sale, which is, you know, open... Mayor Suarez: OK, explain, how would the mechanics of that work? Competing as to what?... as to the management fee, as to what? Mr. Koslow: There will be no management fee in a competitive... Mayor Suarez: What would be the competition, as to the rate, then? Mr. Koslow: Only rate. Mayor Suarez: Just present value? Mr. Koslow: That's correct, and we feel that this would be in the best interest of the City... Mayor Suarez: And every other factor would be totally not under consideration - experience, or whether the agency, or the company is located in this area, all of the other factors would be totally out. Mr. Koslow: It would be bid on a competitive bid basis, and it is like... Mayor Suarez: We are trying to define competitive bids, so by saying competitive bids, you are not really answering the question. Mr. Koslow: Yes, rate only... Mayor Suarez: Rate only. Mr. Koslows ...interest rate, and we would like to bring to the attention of the Commission that in the last 22 months our ld 1 March 13, 1907 I research indicates that just G.O. refundings, not G.O. ____, G.O. refundings, 432 have been done across the country in the last 22 months, and I can identify in the last month, at least four or five that have been done recently on this basis as opposed to... Mayor Suarez: Don't you think that everybody will come in pretty much the same rate and we will still have to be in a situation of negotiating with 22 companies? Mr. Koslow: What we are saying is, that experience shows that on G.O. bond sales, that when they are done by competitive basis, essentially the City would save money versus negotiating... Mayor Suarez: Why? If everybody comes in at the same rate, we are still back to having to select from among 22. Mr. Koslow: Because the underwriting discount on a G.O. sale is structured differently than on a negotiated basis. Typically negotiated bond sales are done when there is a revenue bond, it is a long drawn out negotiation and there are reasons for it, and we support that process and that method in those types of bond sales. In fact, the firm has anticipated and responded to those types of bond sales and will continue to do so in the future. It is just that on a G.O. bond sale, traditionally, the way Wall Street works, is that it is done on a competitive basis. Also, we would like to bring to the attention of the Commission that we have offered at no fee to act as a structuring agent, if the City was to go with this method. Mr. Plummer: Sir, you are out of line, I am sorry. You are a bidder in this process. You are not in this... Mr. Koslow: No, we have been listed as unresponsive because we have come up with the idea of using a G.O. competitive bid. We are not... Mr. Plummer: You are not a potential of the 22? Mr. Koslow: Correct. Mr. Plummer: I am sorry, I stand corrected. Mr. Koslow: If I was, I wouldn't be making this speech. Mr. Plummer: Continue. Mr. Koslow: So, what we are proposing is an alternative structure, and we have actually met with staff, with Carlos, and discussed it, but we just wanted to bring it to the Commission's attention, that we think it would be in the best interest of the City to go with that route on this particular type of bond sale, giving market conditions as they are today. And, you should also know that Broward County, on its G.O. bond sale is doing the same thing right now. Mayor Suarez: OK, Carlos, do you want to answer that proposal? Mr. Garcia: Yes, in December of last year, before we received that letter, which that letter was received in February, we considered whether to go on a competitive basis, or negotiated basis, and because of certain decisions we have in the City, especially with the refunding issue, we felt it would not be advantageous to the City to do a competitive refunding and we talked to our financial advisors and we discussed that internally and we felt that it was much more beneficial to the City to go out and request R.F.P.'s and from there chose the best firm. Here today we have our financial advisors in case you want to get into more detailed technical information on that. Mr. Koslow: Mayor, we just want to stress our intent that we are proposing this as an alternative mechanism in the best interestsof the City. We feel that ultimately it would save the City money in present value savings and an underwriting discount. ld 2 March 13, 1987 Mayor Suarez: Let me just ask Carlos that, the ultimate question. Do you think if we went to competitive strictly on the issue of rates, make for a lower present value and lower rates? Mr. Garcia: I don't think in this case we will... Mayor Suarez: I see you shaking... our advisors shaking their... Mr. Garcia: The problem we have with refundings, that refundings are very complex issues. It is not just a matter of selling the bonds, but once you sell the bonds, then you have to invest the money and you have to have perfect market conditions of the spread between your return and your payments of interest is wide enough to maximize savings. We don't think it is the best way... Mayor Suarez: Good old arbitrage. Mr. Garcia: Yes. We don't think it is the best way to go with a competitive basis. Mr. Koslow: Fine Mayor Suarez: Probably at this late stage on this particular issue, it will difficult for us to change our criteria to reflect that, but I am not saying to give up on trying to convince us to go that way. We sort of tried to do that with bond counsel at one point. That was my idea. I thought it could be totally competitive on rates, and we weren't able to do it. Mr. Koslow: Well... Mayor Suarez: They are not comparable, is really what the problem is. Mr. Koslow: OK, but I just wanted to bring to the Commission's attention that this is being done right now in the market place. Mayor Suarez: Thank you. Yes, and that is one thing I am very interested in personally, at least for myself, to see what other counties and other parts of the country are doing. Maybe they are getting lower rates. Mr. Koslow: There is also a middle ground, which is what Broward County is proposing, to do a bid negotiated G.O. Mayor Suarez: OK, yes, we have gone back on this item and... sir, did you want to address anything on that point? State your name for the record, tell us your opinion. Mr. Ernest Green: My name is Ernest Green, I am senior vice- president of Shearson Lehman Brothers, Washington D.C., and there is a local office here in Miami, of Shearson Lehman. I wanted to state for the record that on item 58, Shearson Lehman supports clearly the process of selection and want to have it stated that way. Thank you. Mayor Suarez: Thank you, sir. Mr. Dawkins: We have one more, Mr. Mayor. Mayor Suarez: Yes, sir. Mr. David Segal: My name is David Segal, I am a vice-president with Prudential Bache Securities in Delray Beach, and we also have a local office here in Miami. I would also like to endorse the selection process that the City is using on this refunding. Refundings are very complex tratsactions and I can tell you that between competitive and negotiating, our firm bids on competitive Issues every day, and if our rates for competitive aren't the same as negotiated, we are not doing our job, and we last year were the number one ranked firm. Id 3 March 13, 1987 • Mayor Suarez: We think we are good enough in negotiating that we can make the rates as low as they would result from competitive and get a lot of other concessions. That is basically the idea. iH