pages: CityCouncil/2010-06-15.pdf, 15
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CityCouncil | 2010-06-15 | 15 | Mr. Reynolds stated the deal is very complicated and the fee is a little higher than what would normally be [the fee] on a certificate of participation where the total underwriter discount would be expected to be around $6.00 per $1,000 worth of bonds; on this type of transaction, where calls have to be made to try to get buyers, the fee that an underwriter normally charges is around $12.50 [per $1,000]; the fee would normally have two components: the management portion, which WCH has been doing, and the take down, which is the portion that the buyer gets; the break down is usually around $6.00 or $7.00 per $1,000 for the management portion and $4.00 to $5.00 [per $1,000] for the take down; that he does not expect the competitive bid to be $12.50 per [$1,000 worth of] bond but should be around $5.00 per [$1,000 worth of] bond because the management fee is being taken care of as part of the financial advisory fee. Councilmember Matarrese stated part of the team did not have to compete to be on the team; a lower fee could have been passed down to Harbor Bay homeowners or Marina Village commercial and industrial properties; rules seem to be loose around the rest of the team; the City would be going on faith that $12.50 is the best it can do. Mr. Reynolds stated some cities have underwriters under contract, but is very rare because different underwriting firms have different expertise; a city may put out an RFP if a city is doing a new type of transaction; in the past, the City's Finance Director and City Manager have developed relationships with underwriters; the Interim City Manager has a lot of experience working on Community Facilities District (CFD) land secured financing with WCH. Mayor Johnson stated Council may want to consider a different approach going forward; inquired whether Mr. Reynolds' Contract is approved by Council, to which Mr. Reynolds responded in the affirmative. Mayor Johnson inquired how long is Mr. Reynolds' contract for, to which Mr. Reynolds responded three years with two renewals; that he has worked for three different firms while working for the City. The Interim City Manager stated the idea is to find a business that has people with the best expertise in certain areas and try to negotiate the best arrangement possible; the team is transaction driven and would not get paid unless there is an actual deal; finding the best time to do the transaction in today's market is important; that she thinks Sequoia Financial Group and WCH are the best team to do the transaction in today's market. Councilmember Tam stated Sequoia Financial Group would get $58,000 and WCH would get $137,235 which exceeds the $75,000 approval authorization; that she would like to understand the past relationship and transaction that occurred between the Interim City Manager and Mr. Holmstedt. The Interim City Manager stated that she has known Mr. Holmstedt since the 1980's; Regular Meeting Alameda City Council June 15, 2010 | CityCouncil/2010-06-15.pdf |