Item Coversheet

CITY OF OAKLAND PARK, FLORIDA
CITY COMMISSION AGENDA ITEM REPORT

AGENDA ITEM NO. 13

MEETING DATE: 10/20/2021
PREPARED BY: Andrew Thompson, CGFO
Chief Financial Officer		DEPARTMENT HEAD APPROVAL:  FINANCIAL SERVICES
SUBJECT: Award for Underwriting Services for General Obligation Bonds Series 2022
1.BACKGROUND/HISTORY
    
 
Issue Statement: The City of Oakland Park's voters approved $40 million in general obligation bonds for the replacement and renovation of facilities and other improvements. An overall implementation strategy for the bond program has been presented to the City Commission and the public. As discussed in these presentations, one key component of issuing the general obligation bonds is the selection of an underwriter to manage the sales of the bonds.  The underwriter purchases newly issued bonds from the issuer (the City) and markets and sells the bonds to investors. In late 2019, the City issued a request-for-proposal (RFP) to select the underwriter of the first sale of bonds.  The first sale occurred in spring 2020 and $26 million in bonds were sold as planned. 

The City is preparing to sell the remaining $14 million in bonds in 2022 while interest rates remain low.  To this end, the City released another RFP for underwriting services. After review of the proposals received, staff recommends the award of underwriting services to RBC Capital Markets, LLC.


Recommended Action:  The City Commission adopt a resolution finding RBC Capital Markets, LLC the most responsive and responsible proposer and approving and appointing them as underwriters for the 2022 Series General Obligation Bonds.
2.CURRENT ACTIVITY
    
 

On September 2, 2021, the City released Request for Proposal #092221, for Underwriting Services for General Obligation Bonds Series 2022. Proposals were due at 3:00 PM on September 22, 2021, and were opened shortly thereafter. Three proposal responses were received:

 

  •  JP Morgan Securities
  •  RBC Capital Markets, LLC
  •  Estrada Hinojosa & Company

 

A summary of the proposals is attached for reference. A staff review committee met on September 30, 2021 to review the proposals with the City's financial advisor, Dunlap & Associates. The committee recommended RBC Capital Markets, LLC due to a favorable review of underwriting capabilities, issuance costs, and competitive projected financials.  RBC Capital Markets, LLC has worked with the City previously in the past for the 2019 Water & Sewer Refunding Bonds and the Series 2020 General Obligation Bonds.

 

Upon approval of the underwriter selection, drafting of the legal documents for the bond issuance would be prepared and reviewed by bond counsel, the financial advisor, the City Attorney's Office, and City staff.  A supplemental ordinance would be presented before the Commission that would outline certain details of bonds, authorizing the term, execution and registration, and establishing accounting standards for the proceeds. As a general obligation bond approved by the voters, the ordinance would note the use of ad valorem taxes and pledge the general taxing authority of the City to pay the bonds.

The process of issuing bonds includes obtaining a credit rating for the planned bond issuance. The City's existing general obligation credit is rated AA by S&P.  The City's credit rating will be reviewed again as part of the Series 2022 preparation. The ratings are directly related to the City's general fund conditions and the City as a whole.

 

Approval of the item does not authorize the issuance of general obligation bonds. A supplemental ordinance would be brought forward to Commission that would authorize the actual issuance. Approval of this item only provides for the selection of the underwriter, which would be the party responsible for purchasing the City's bonds and then selling them on the market.

 

 


3.FINANCIAL IMPACT
    
 
As shown in the summary matrix of proposers, RBC Capital Markets, LLC has the lowest underwriting fees of the three proposers.  The underwriting fee is approximately $62,500.  These fees are part of the cost of issuance for the bonds and would be paid at the time of the bond sale in 2022.

 


4.RECOMMENDATION
    
 
The City Commission adopt a resolution finding RBC Capital Markets, LLC the most responsive and responsible proposer and approving and appointing them as underwriters for the 2022 Series General Obligation Bonds.

ATTACHMENTS:
Description
Resolution
Evaluation Memorandum
Summary of Proposals