HomeMy WebLinkAbout1997-07-08; Municipal Water District; 373; Selection of Underwriterc
- i
: 4.‘ ’ ‘6 4
rw f+w45 (i3 -
CARLSBAU MUNICIPAL WATER DlSTRlvT - AGEfr(DA Bu -
AB# 33.3 -1
MTG. 7-8-97 SELECTION OF UNDERWRITER “4s CITY Al-W.
DEPT. CM CITYMGR w
RECOMMENDED ACTION:
Adopt Resolution No. 9 8 L directing staff to negotiate a contract for underwriting services with Dean
Witter, and appropriating funds for bond issue related services.
ITEM EXPLANATION:
On June 3, 1997 the Carlsbad Municipal Water District Board adopted Resolution No. 975 authorizing staff to
proceed with the refunding (refinancing) of several bond issues. The goal of this refunding effort is to reduce
the cost of each issue by taking advantage of lower interest rates that now exist in the municipal bond market.
Following the Board approval of the refunding plan the staff sent out 20 Requests for Qualifications (RFQ) . RFQs were sent to each underwriting firm that has contacted the City in the past few years. The RFQs were
due back to the City on June 16,1997.
Ten responses were received by the close of business on June 16. The firms responding included:
Paine Webber Piper Jaffray
Bank of America Smith Barney
Stone and Youngberg
Rauscher Pierce Refsnes
Union Bank
Dean Witter Reynolds
A. G. Edwards
Sutro and Co.
The Treasurer, Finance Director, and Financial Management Director met on June 19, to screen the proposals,
and to identify those underwriters to be interviewed the week of June 23. Although each of the firms listed above has excellent credentials, and experienced and capable staffs, the review team was able to reduce the
list of firms to be interviewed to five firms by including only those firms with experience in each type of bond issue to be refunded (Certificates of participation, enterprise debt, and Assessment Districts), and those who had clearly invested considerable effort into analyzing and understanding our needs. The five firms interviewed
included:
Paine Webber Piper Jaffray
Stone and Youngberg
Sutro and Co.
Dean Witter Reynolds
On June 23 and 25 staff conducted interviews, and, after considering all of the many variables, is
recommending that the Board select Dean Witter to act as the District’s underwriter on this refunding project.
Although each of the firms interviewed had excellent qualifications, and could easily handle this refunding
project, the interview team was particularly impressed with the Dean Witter team. The Dean Witter team
assigned to this project would include Celeste Davis and John Sheldon as Co-Project Managers. The City worked with Celeste Davis in 1988 on the financing of Hosp Grove, and was most impressed with her capabilities. Her prior knowledge of the City, her understanding of lease/revenue financings, and the reasoned
and considered approach she has used in analyzing the various refunding options reflected a level of care which impressed the interview team.
The Dean Witter team has experience with a wide variety of types of debt instruments including each of the
I
types of debt to be refunded. The interview team believes that this experience is important to the success of this refunding project.
The interview team made several reference checks on the Dean Witter team and found, without exception, that the services provided by Celeste Davis and John Sheldon were of the highest quality.
l \
- /-- ?. ‘, A ” PAGE 2 OFAGENDA BILL NO.
Another consideration in the selection of Dean Witter was the extensive retail marketing capability of the firm.
The City and District will be refunding several existing bond issues, each presenting its own challenges. One
challenge that is common to all of the issues is how best to market the issues. Because the resulting
refundings will be of relatively short duration, that is they will extend only a few years into the future, the primary
buyers for these bonds will be retail buyers. Therefore having a strong retail bond distribution system will be
important to the District’s ability to achieve the lowest possible interest rates. Each of the firms interviewed has
the ability to capture this retail market, however the Dean Witter retail distribution system is vast, covering both
southern and northern California, and the rest of the country. The interview team felt strongly that, if properly
used, this distribution system could provide a marketing advantage for these issues. Dean Witter will also be
able to market out issue to the institutional bond buyers should the larger players wish to compete with the
retail market for our bonds.
Each of the underwriters interviewed indicated that they would adjust their. fees to be reasonable and within
market. The interview team has not tried to favor any one proposal over another on the basis of price. If
adopted by the Board, the attached resolution would direct staff to negotiate a contract for services with Dean
Witter which would provide confidence that the amount paid for the services related to creating and marketing these issues is fair to both parties. Staff intends to use the services of a debt financial expert to assist with
negotiating this agreement.
Staff is asking that the Board adopt the attached resolution directing staff to negotiate a contract for
underwriting services with Dean Witter
FISCAL IMPACT:
The fee charged by the underwriter is an important part of the cost of any refunding effort. Therefore, the City
staff intends to take two steps to insure that the fees paid and the interest rates set for these refundings is fair. First, in negotiating the contract for underwriter services, staff intends to use the services of an expert in the
debt financing industry. The attached resolution will appropriate $10,000 from the Water Fund balance to pay any preliminary costs that may be related to bringing these issues to market. In addition, staff will use the
services of a pricing consultant at the time the bonds are sold to establish the proper interest rate for the bonds. The appropriation is requested to allow funds for these and any other services that might be required
of the Board prior to the sale of any bonds.
The costs for underwriting services, and all bond issue related costs will be paid from the proceeds of the
refunding issues. This will include repaying to the Board any amounts expended in support of the bond issue,
both direct costs, and the cost of staff services. The requested appropriation of funds will provide an interim means of funding certain bond issue related costs until the refund is received from the resulting bond issue.
EXHIBITS:
1. 2. Proposal from Dean Witter dated June 16, 1997 (On File in Clerk’s Office)
Resolution No directing staff to negotiate a contract for underwriting services with 9 8 &
Dean Witter, and appropriating funds for bond issue related services.
7
THE CITY OF
CARLSBAD
Proposal to Serve as Underwriter to
The City of Carlsbad
June 16, 1997
111
Dean Witter Reynolds Inc.
DE.-lN GUTTER REYNOLDS INC.
!OI California Street, San Francisco. CA 94111 Telephone (415) 693-6536
CELESTE E. DAWS
Senior \‘ice President
llunmpal Finance
June 16. 1997
Mr. James F. Elliott
Financial Management Director
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad. CA 9200% 1989
Dear Mr. Elliott:
Thank you for the opportunity to respond to your Request for Proposals to serve as underwriter on
proposed refundings. We are very excited about the prospect of working with you, your staff and
advisors on this project, especially given our recent work on a land-based financing that is adjacent to the
City of Carlsbad and our familiarity with the Carlsbad Municipal Water District through our extensive
work with the County Water Authority. It is also important to note that during my tenure with my
previous employer, I assisted in the financing of the Hosp Grove acquisition. We. at Dean Witter
Reynolds Inc.. feel most qualified for this assignment in that we are capable of bringing you the full
complement of qualifications necessary to ensure a successful financing’.: specific experience. superior
distribution and the highest level ofcapitalization among securities firms.
Specific Experience - As detailed in my proposal, we bring a strong experience base with lease
revenue bonds and certiticates of participation, 1915 Act bonds and other land-based financings.
closing a total of 13 transactions in the last five years. Of particular relevance is our experience
with cities and districts that have similar characteristics to the City, of Carlsbad and its assessment
districts. Complementing our land-based experience is our expel%se in serving water districts.
This knowledge will be critical to maintaining the Carlsbad Municipal Water District’s flexibility
for financing future projects.
Superior Distribution - Dean Witter is truly unsurpassed in marketing, selling and underwriting
California tax-exempt debt. With the largest sales force in California (over 2,000 salespeople) and
a capital base that exceeds $11 billion. our tirm will underwrite your District’s bonds at the lowest
possible interest cost. Mike Cochrane, a 22 year veteran of the California municipal market and the
current Chair of the California Public Securities Association, will offer structuring advice from a
sales and trading perspective and will direct the pricing of your bonds from our San Francisco
regional headquarters.
Mr. Jim Elliott
June 16.1997
Page 2
Cupitufi:-ation - Dean Witter Reynolds Inc. is an extremely well capitalized and profitable firm
both at the subsidiary level and at our parent corporation level, Morgan Stanley, Dean Witter
Discover & Co. What this means for the City of Carlsbad is the ability to price issues aggressively
and underwrite efficiently.
We pride ourselves on delivering comprehensive and extremely high quality services to our client base.
From initial structuring meetings to credit presentations to pricing, closing and post-closing stages of a
financing, we will play an active role in this financing.
Our proposal responds directly to the questions listed in your Request for Proposals. If you have any
questions or need additional information, please do not hesitate to contact me at (415) 693-6536 or fax
me at (415) 6936668. Again, thank you for your consideration and we look forward to the opportunity
to work with you.
Very truly yours,
DEAN WITTER REYNOLDS INC.
4jJ.xm* \
Celeste E. Davis
Senior Vice President
(4 15) 693-6536
(4 15) 693-6665
cc: Lisa Hildabrand
. .
4
‘. ’ Chy of Carlsbad
SIGNATURE OF PROVIDER
This document is signed by an individual authorized to bind the Provider. The Provider
agrees to be bound by the provisions of this REQUEST FOR STATEMENT OF
QUALIFICATIONS.
PROVIDER: Dean Witter Reynolds Inc.
ADDRESS: 10 1 California Street, 2”d Floor
San Francisco, California 94111
PHONE: (415) 693-63 18
FAX: (4 15) 693-6668
By:
Signature
ha y-p 1 I Date
Celeste E. Davis, Senior Vice President, Municipal Finance 6..
w Dean Witter Rtydds inc.
TABLE OF CONTENTS
Municipal Finance Organization
Experience with Lease Revenue Bond (COP)
and Assessment District Financings
Underwriting Team
Capital Position
Distribution Capabilities
Credit Issues, Structuring, Timing & Financing Techniques
Litigation
Appendices
List of transactions managed by the firm
Resumes of tinance team members Section B
.Q
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
Section A
111
Dean Witter Rqvtolds Inc.
. .
<-
‘. C&y of Carlsbad
Topic 1 - MUNICIPAL FINANCE ORGANIZATION
Describe the organizational structure of’ your jirm as it relates to municipal investment banking,
underwriting and sales. Describe the firm ‘s presence and activity in the State of California. include
brief summaries of yourjkm ‘s investment banking services, underwriting and trading and the firm S
sales organization.
Dean Witter Reynolds Inc. (“Dean Witter”) is a wholly owned broker-dealer subsidiary of Morgan
Stanley, Dean Witter, Discover & Co., a diversified financial services organization which provides a
broad range of nationally-marketed credit and investment products, with a primary focus on
individual customers. Our credit services business consists primarily of the issuance, marketing and
servicing of the Discover Card.
Dean Witter & Co. was organized in 1924 in San Francisco. In 1978, Dean Witter & Co.
Incorporated (the successor to Dean Witter & Co.) merged with Reynolds Securities Inc., and, in
198 1, Dean Witter Reynolds Organization Inc. was acquired by Sears, Roebuck and Co. (“Sears”).
Dean Witter Discover was a wholly owned subsidiary of Sears until March 1, 1993, when it became a
public company through an initial public offering of approximately 20% of its common stock. On
June 30, 1993, Sears divested its remaining Dean Witter Discover shares through a special dividend to
its shareholders. On May 28, 1997, shareholders of Dean Witter, Discover & Co. and Morgan
Stanley Group Inc. approved a merger agreement between the two companies to form Morgan
Stanley, Dean Witter, Discover & Co.
Prior to the merger, Dean Witter, Discover & Co. employed 37,288 people throughout the 50 states,
the District of Columbia and Puerto Rico, of whom 3,67 1 were located in offrices within the State of
California. Dean Witter (the broker-dealer) employs 20,312 people nationwide, of whom 3,521 are
based in California. Combined with the merger with Morgan Stanley, these numbers will increase
substantially.
Founded iIt
C&fomia ulnro.w
75 years ago.
rmpl0ys $6 71
Cul[fomia
residents.
Section I-I a!! Dean Witter Reynolds Inc.
. .
* * Ciiy of Carlsbad
Dean Witter’s Municipal Bond Department
Dean Witter has long been recognized as a leader in the underwriting of municipal debt, with over 65 Lirderwriting
years of experience in structuring, underwriting and distributing municipal bonds and notes. In municipal
municipal securities, the company employs over 90 professionals in the areas of trading, underwriting, stw~ritie~s, fiw 0 vex
marketing, research and institutional sales, and over 9,000 account executives covering retail sales. 65 pars.
Underwriting and trading and originates from five regional underwriting desks based in San
Francisco, Atlanta, Chicago, Dallas and New York. Brian Devlin in New York heads up the
municipal bond department, while Jack McCutcheon is in charge of national underwriting.
Ocan Uiller Reynolds Inc.
\lusicipal bond Depnnmwr
Dean Witter’s California Presence
Ever since it was founded in California in 1924, Dean Witter has been committed to serving
California and its residents, currently employing over 3,500 Californians. Dean Witter’s municipal
operation is one of the largest in California, consisting of a full complement of bankers, underwriters,
traders and salespeople. Our company’s municipal bond distribution is the largest in the state, with
over 2,200 retail account executives in 74 retail brokerage offices serving over 700,000 California
customers. Total California customer accounts total almost $60 billion, including $6 billion in
municipal bonds.
California Organization
Michael Cochnne
San Francisco
Underwriters (3)
Traders (5)
Sales Liaisons (3)
Banking (4)
Marketing (2)
Operations (2)
California Retail Sales
’ VO Account Executives -.-
74 Offices
Section l-2 d!!J Dean Witter Rqnolds Inc.
I
.I C&y of Carlsbad
Investment Banking Services
As the underwriter for Carlsbad, the Dean Witter bankers will draw upon their numerous years of
experience in structuring municipal issues to structure the most advantageous financing plan for the
City’s debt issuance. We will take the initiative in assembling a first rate financing team comprised of
the best professional in the municipal industry. Document preparation and review, including that of
the official statements, will also be handled by us. Our banking team brings over 18 years of
combined experience in structuring and underwriting municipal finance debt. We also bring strength
and specific experience in the three disciplines that the City would require at this time: general fund
certificates of participation. water revenue finances and assessment district debt.
Investment Banking
Our team is also complemented and supported by the Morgan Stanley banking operation of 30
investment bankers nationwide.
Underwriting and Trading
The Dean Witter underwriters will direct and manage the sale, pricing and undFrwriting efforts for the TIJ~ Sun
City’s proposed issuance of bonds. Headquartered out of New York, the City of Carlsbad’s debt Fratr&c() c$fice
offering would be handled by Mike Cochrane, the California underwriter, in the San Francisco office. will direct
With over 22 years of experience in municipal underwriting, Mike is very knowledgeable about cur/Lsbrrd’s
California paper and has at his disposal in the San Francisco office a full contingent of marketing
staff, liaisons and traders to find potential buyers for the City’s refunding issues. Dean Witter’s
r@r,JditJg.
demonstrated ability to secure placement of large percentages of the issue it manages through pre-
marketing efforts illustrates how effective our distribution is. In addition to our marketing resources,
Dean Witter also has the largest capital base in the industry, allowing us to t&e on risk that most of
our competitors cannot. With our significant capital base, we are in a position to aggressively price
your issues and provide you with the lowest interest rates.
Sales Organization
Dean Witter has long been known for its outstanding retail sales force. The firm’s more than 9,000 T/Jird largest
Account Executives service over 3.2 million active retail accounts nationwide as part of the third retail saIcs.fiwce
largest retail securities distribution network in the nation. The size and geographical structure of this ill f/Je ,vecJJritic,v
network not only provides tremendous distribution power, but also allows for the specific ilJdJrstJy.
geographical targeting of customers for the placement of primary market offerings. Dean Witter’s
superior retail strength is complemented by a formidable institutional sales force of 50 people
covering 600 major national and regional institutional accounts throughout the U.S. Institutional sales .\fOJ-Z tiJUtJ 9,()~~~)
covers small, mid-tier and large institutional accounts, from money managers and investment advisors :~Ci'OlltJt to bank trust departments. insurance companies and municipal bond funds. With the recent merger, Esecu tiws.
Section 1-3 4!J Dean Witter Rewvnolds Inc.
.a--.
Ciiy of Carlsbad
Dean Witter now has access to Morgan Stanley’s 20 municipal-specific institutional salespeople as
well, considered to be some of the strongest in the nation. Morgan Stanley’s sales force combined
with Dean Witter’s create one of the largest and most efficient distribution networks in the securities
industry.
National Distribution
Dean A.G. Edwards Miller & PaineWebber Stone & Sutter
Witter/Morgan Schroeder Youngberg
Stanley
P
Section l-4 tl!J Dean IVitter Reywlds inc.
. .
C&J of Carlsbad
Topic 2 - EXPERIENCE WITH LEASE REVENUE BOND
(COP) AND ASSESSMENT DISTRICT
FINANCINGS
Describe the firm ‘s experience in lease revenue bond and certificate of participation and assessment
district financing in California and provide no more than two brief case studies for comparable
CaliforniaJinancings managed by the lead banker assigned to the Cit;v’s$nancing. Please provide
in Appendix I a list of negotiated California lease revenue and cert$cate jinancings, and
assessment districtJinancings managed by your firm since 1991. Include the name of issuer, size of
financing, pricing date, role of the firm, ieau’ blinker, una* tiLqxncy contact.
Dean Witter Reynolds Inc. (“Dean Witter”) has been one of the most active municipal market
participants over the last 65 years, however its municipal banking presence has only recently been
reestablished in California with the hiring of Celeste Davis and John Sheldon. While we could
recount Dean Witter’s significant amount of experience serving as the sole or senior manager for the
negotiated issuances of lease revenue securities and certificates of participation, water revenue bonds
and 1915 Act bonds prior to 1995, such issuances would only recount transactions that were not
structured by our current banking team. Instead, in order to accurately reflect the experience and
qualifications of Celeste and John, we have listed in Appendix 1 the transactions in which they
served as the sole manager for the negotiated issuance of lease revenue securities and certificates of
participation, water revenue bonds and 1915 Act bonds. In addition, due to their very similar credit
structure to the City’s proposed issues and their proximity to the City of Carlsbad, we have also
listed the North City West School Facilities Financing Authority Mello-Roos financings for which
Celeste and John have served as sole underwriter.
In addition to our sole managed underwriting experience, John has also developed an expertise in
enterprise-secured issues, particularly in the water and sewer area. He is the financial advisor to the
San Diego County Water Authority of which your municipal water district is a member agency. In
addition to his responsibility for the issuance of all of the long-term and short-term debt, John is also
responsible for the development of various cash flow and debt issuance optirriization models. These
models are designed to optimally balance the use of debt and cash to fund capital improvements and
yield the lowest possible revenue requirements to fund a program in a fiscally prudent manner.
Sole Managed Underwriting Experience in Assessment Bonds
Issuer Finnncings Amount I
.;r
North City West School Facilities Financing Authority CFD No. I Special Tax Bonds, Series 1997
CityofSanJosc Capitol Mall Expressway Ascssmcnt Bonds
North City West School Facilities Financing Authority CFD No. I Special Tax Refunding Bonds, Series 1995
CityofOakland Limited Obligation hprovcment Bonds
City of Oakland Taxable Limited Obligation Improvement Bonds
City of Oakland Limited Obligation lmprovcmcnt Bonds
City of Cupcftim Liited Obligation lmpmvcmcnt Bonds
CityofSan Jose L.iitcd Obligation lmprovcnwmt Bods
City of htn Clan Asscssmt District lmprovcmcnt Bontls
North City West School Facilities Financing Authority CFD No. I Special Tax Bonds, Series I989
Town of Los Gates Limited Obligntion hpmvancnl Bonds
s 33,735.ooo 6.OOWN
4J.600,ooo
3,m.m
3,420,ooo
876315
3fQmJ
.l3mww
335woo
46,265,OOO
I ,587,ooo 6 isa,96s3s
Experienced itI
,finuncing.s
sinrilar to
Curlsbad’s
proposed
rejirndings.
IVe.fkeyuent&
assist rite Sun
Diego County
Water iiutltnriq
with its debt
strutegy
Deun Witter ‘s
Assessment
District
experience.
Section 2-I #!J Dean Witter Reynolds Inc.
‘, C&y of Carlsbad
CASE STUDIES
Yorth City West School Facilities Financing Authority
We have been the investment banker to the North City West School Facilities Financing Authority :Vwrlr Ci[v West
since 1989. This is a financing authority encompassing the school districts of De1 Mar, Solana Beach is sinrifur to
and San Dieguito High School Districts. This joint powers authority was formed to ensure the Curlsbad’s
funding and construction of schools in the North City West development area now known as Carmel ~~.~~&s~~~~~lr
Valley. This financing funded the construction of the new high school in La Costa. The financings &Srricf
we structured and underwrote are being accomplished through the formation of a community facilities Y@td~)?:lS~
district (CFD No. 1) and an $80 million bond authorization fnr Tchool construction.
At the time of the first bond issuance in 1989. there were approximately 1,000 developed and taxable
parcels in the District. Even with the slow down in development in the early 1990’s, developed
parcels rose to a level in excess of 3,000 by the time of the 1995 financing. With 3,000 developed
parcels and an extremely strong value to lien ratio, the District appeared to be a relatively strong
credit, however it still had a slightly high concentration of ownership among several developers.
Specifically, the concentration of ownership that we faced in the North City West financing, and
hence, payment of special taxes was the weak link in the credit. Despite the lack of strength in
ownership concentration within the District, we were successful in obtaining bond insurance and a
“AAA” rating on the financing (the underlying rating was a BaaIBBB+) through the unique structure
that we developed.
Concentration of ownership can be mitigated in a financing structure in a number of ways, through
senior-subordinate structures or through debt service coverage from alternative revenue sources. In
the case of North City West, we provided additional coverage to mitigate the concentration of the
largest taxpayer through investment earnings on several related funds. In addition, we addressed the
slowdown in development combined with the concentration of ownership problem with an escrow
structure that utilized an annual release of bond proceeds based on certain development tests. Finally,
we were able to negotiate a relatively low coverage requirement of 105% (a coverage amount
sufficient to cover non-payment by the largest taxpayer) with the rating agencies and the,bond insurer.
Recent Dean Witter Banking Experience
Water Enterurises
City of Livmore (Reverse Osmosis Project)
City of Torrance Municipal Water Department
Monterey County Water Resources Agency
Monterey Peninsula Water Management District
Otay Water District
Placer County Water Agency
San Diego County Water Authority
San Jose-Santa Clara Clean Water Financing Authoritv
Dea II Wittcr ‘s
router revenue
experience.
City of Cupertino - Blackberry Farm Open Space Acquisition Project
Celeste Davis served as lead banker and sole underwriter on the financing for the City of Cupertino The Cig of
which was quite similar to the City of Carlsbad’s Hosp Grove Financing. The financing for the City Cllpertim is
of Cupertino in the amount of $32,970.000 was a certificate of participation structure which funded similar ta
the acquisition of a large tract of open space property. The property was acquired with the intent of Curls-bad’s Hasp
conserving the property to be used for recreational and open space purposes. Like Hosp Grove, there Grove ccrr~ficmts
was a great deal of community support for the acquisition with the ultimate purpose being land r~f‘participutiorr.
Srction 2-2
Dean Witter Reynolds Inc.
&y of Carlsbad
conservation. It has been our experience on the many land conservation tinancings which we have
worked on that the market is quite receptive to these kinds of financing and as a result they price well.
Although one may argue that land conservation tinancings may not be highly essential, unlike many
certificate of participation structures, you do not have construction risk and there is virtually no
abatement risk as you can never lose use and possession of open space. It is also important to note
that Ms. Davis served as the supporting banker in 1988 on the Hosp Grove refunding for the City of
Carlsbad.
Experience in Open Space Certificate of Participation Financings
Date Issuer Issue Amount I
7114l94
3/l 8193
11/x/92
I ; : ; 3
. 1@#9i
3/14/91
606189
6/l S/88
City of Oakland
City of Cupertino
City of Cupextino
City of Cupertino
City of Cupertino
City of Livermore
City of Carlsbad
General Obligation Bonds
Various Open Space Projects
Certificates of Participation
Various Open Space Projects
Certificates of Participation
Memorial Park Financing Project
Certificates of Participation
Wilson Park Financhg Project
Certificates of Participation
Blackbeny Farm Financing Project
Certificates of Participation
GovCourse Financing Project
Refunding Certificates of Participation
Hosp Grove Project
$65,000,000
36,600,000
14,585,OOO
10,785,OOO
32,970,ooo
4~70,000
8,690,OOO
Section 2-3
Dean Witter Re.vnolds Inc.
Chy of Carl&ad
Topic 3 - UNDERWRITING TEAM
Identtfi the individual who will be the firm ‘s senior representative for the daily management of this
transaction - the individual who will attend the City’s financing team meetings, appropriate City
Council meetings, and meetings with City staff Discuss the availability of this individual. List the other
members of your team including undenvriting and marketing personnel. Please provide a list of public
agency executives who the City may contact as personal references for the lead banker. In Appendix 2,
provide brief resumes of your team, their relevant experience, and briefly describe their proposed role in
serving the financing. If an interview is scheduled with your firm. only key members of the team should
appear.
The financing team assigned by Dean Witter to serve the City of Carlsbad is provided below. As this
chart notes, Celeste Davis and John Sheldon would serve as co-project managers for this engagement,
allowing the City of Carlsbad to access each individual’s expertise during the entire financing process.
They would also both directly interface with the City of Carlsbad’s staff and its consultants, drawing
from both of their respective experiences and ideas.
Carlsbad Underwriting Team
Professional Role
. CeltsteDbis Cdroject Manager
Job- Co-Project Managex
MikeCocbrane Underwriter
David Akala Technical Assistant
Duties
Manage project and perform all banking fitnctiow
Manage project and per$otm all bankingjimtibns
Direct marketing, sales and underwriting
Quantitative and analytical support
Resumes are provided in Appendix 2 for Celeste and John, as well as for Mike Cochrane, the senior
Dean Witter professional who will direct the pricing of the City of Carlsbad’s bonds, and David Alcala,
the Financial Analyst, who will provide the City with analytical support and transaction execution.
Celeste and John are available to serve the City of Carlsbad and would make this assignment their
highest priority. 6
REFERENCES
CELESTE E. DAVlS
City of Santa Clara
Ms. A. Kristin Machnick, Director of Finance
1500 Warburton Avenue
City Hall
Santa Clara, CA 95050
(408) 984-326 1
JOHN L. SHELDON
Otay Water District Suzanne Chambers, Head Finance
2554 Sweehvater Springs Boulevard
Spring Va@y, CA 91977
(6 19) 670-2250
North City West School Facilities Financing Authority Howard Gad, Director
309 North Rios Avenue
Solana Beach, CA 92075
(619) 458-l 141
San Diego County Water Authority
Martin Bridges, Cash Manager
32 11 Fifth Avenue
San Diego, CA 92 103
(619) 682-4212
City of Livermore City of Santee
Monica Potter, Director of Finance Rene Franken, Finance Director
1052 So. Livermore Avenue 1060 1 Magnolia Avenue
Livermore, CA 94550 Santee, CA 9207 1- 1266
(W -I\ \ *--7. (619) 258-4100 _: _
Section 3-1 a!!! Dean Witter Reynolds Inc.
’ Cii of’carlsbad
Topic 4 - CAPITAL POSITION
I Provide your firm ‘s capital position as of the date of your most recent financial statement and indicate your$rm ‘s willingness to commit its capital to underwrite public$nance transactions
in I
CAPITAL
A firm’s capital should be an important factor when selecting an underwriting firm, as it is a firm’s capital base that provides the capabi!ity tcr take risk on behalf of a client. Morgan
Stanley, Dean Witter is the best capitalized securities firm in the industry. To the extent that a
firm is weakly capitalized, taking risk to underwrite an issue at the lowest obtainable interest rates will be difficult because one miscalculated underwriting can reduce that firm’s capital
base by a very large percentage.
Largest capital
base in tire
securities
industry.
Total Capital $11,700 $1,761
Equity Capital N/A 1,389
Net Capital N/A 596
Excess Net Capital 1,548 485
* Projected upon merger with Morgan Stanley
With almost $1.8 billion in capital, Dean Witter is already among the most highly capitalized firms in the municipal securities industry. With the merger with Morgan Stanley, our capital
base rises to a level that is the highest in the industry. The chart above highlights Dean Witter’s audited capital position as of June 30, 1996. In addition, we have included our capital base
after our merger with Morgan Stanley.
The following chart provides a graphical comparison of our capital compared to that of selected
competitors.
Capital Comparison
~mostrecent rip~esavel$bleorplblishedl
s I o,ooo,ooo
3 S8,000,000 z 0 2 S6,000,000
2 = S4,000,000
S2,000,000
SO
Dean Witter/ A.G. Edwards Xliller 13 PaineWebber Stone & Sitter
Morgan Schroeder Youngberg
Stanley
I / Cl Total Capital 0 Net Excess Capital
.\kar/y $12
billiort in total
capital.
.Veiw!v two
tintes the titnes
the cirpitai of’
our closest
c*oni~3etitor.
Dean Witter Reynolds Inc.
C&y of Car&bad
Topic 5 - DISTRIBUTION CAPABILITIES
I Describe your firm ‘s institutional and/or retail bond distribution capabilities. Describe your
approach to marketing the COPS or other products you propose, including any investor liaison you would recommend. The City is interested in maximizing local participation in the distribution
process if this does not increase the cost of the borrowing to the City. How would you suggest I
Dean Witter Reynolds Inc. offers one of the largest and most effective marketing and
distribution systems for municipal bonds. We %:e the !argest distribution network for
municipal bonds and other securities in California with over 2,200 brokers spread over 74 offices throughout the State. Locally in the San Diego Area we have over 190 brokers. This distribution
network for municipal bonds is supported by the Municipal Marketing Department and the
Municipal Liaison Network.
Municipal Marketing Department - Dean Witter’s Municipal Marketing Department was formed
in 1992 and is dedicated to providing marketing information regarding municipal securities and
municipal products to the firm’s sales network. The department provides a coordinated and highly
focused approach to the pre-marketing of our client’s issues, interfacing with a variety of areas
within Dean Witter such as our Municipal Research Department. In addition, it provides
marketing plans and sophisticated media presentations designed to enhance the sales effort.
Municipai Liaison Network - The Municipal Liaison Network serves as an information bridge
between Dean Witter’s syndicate desk and the Municipal Marketing Department, Municipal Research Department and the firm’s local branch offices. This formalized system, which includes “bond coordinators” in each of the firm’s branch offices, is designed to insure that each issue in
which Dean Witter is involved as a managing underwriter receives the full attention of the firm’s
vast distribution network. This, in turn. results in the broadest possible distribution of an issuer’s
obligations and the most aggressive pricing for a new issue.
Dean Witter has long been recognized as a leader in the underwriting of mun;iipal debt. ,With the
largest retail sales organization in California, the third largest nationwide, 50 institutional salespeople and one of the strongest capital bases in the securities industry, Carlsbad will not find a firm that will more aggressively market, price and fund its debt. In addition, Dean Witter can
provide the local distribution within and around Carlsbad’s service area that will facilitate
community participation in the placement of Carlsbad’s debt.
In order to judge an underwriter’s overall ability to aggressively place an issutfr’s debt, three areas are critical: the distribution network of the firm: the capital base of the firm; and the firm’s
marketing plan to efficiently utilize its distribution network and capital.
DISTRIBUTION CAPABILITIES
As a book-running underwriter, one of the primary resources Dean Witter brings to its clients,
aside from our proven investment banking and research capabilities, is an extensive securities
distribution network. The more extensive the network, the more demand that is created for a particular security, which ultimately results in the lowest interest rates to our issuer clients. In addition to creating the largest demand base possible, Dean Witter’s approach to marketing an
issuer’s bonds is also predicated upon our knowledge of our investor’s portfolios and investment
needs. In this way, Dean Witter is able to match our new issue product with our client base most
efficiently, thereby resulting in the highest attainable prices (or the lowest yields) to our clients.
Dean Witter lrrrs
one of‘tlie 1rrrye.u
lratiorial
distrihu~iorr
rrefrvorks.
,Warketing
Department wiff stir
up demarrd,fiw
Carlshad ‘s i.vsues.
Muriicipal Liaisori
:Vetwork emwres
natiorial accew rn . .
Crrrishad!~ issires.
Largest retail
sules f brce in
iXfi,rrtia.
Deurr Witter ‘*v
exterr.sil’e
distribtttiorr
rtetwork
=
Lower rules, fi)t
Curlsbud.
section 5-I a!!!! Dean Witter Reynolds inc.
C&y of Carisbad
In the case of Carlsbad, this is an extremely important feature, as its securities will require a very
strong pre-marketing effort to describe the issues to our sales force. They will in turn identify the
investors who will provide a large portion of the demand base for this product. In fact, Carlsbad’s
borrowings, because of their strong credit characteristics, will enjoy very strong demand from the
retail sector of the market. The Carlsbad issues will have strong credit characteristics that can be
explained rather easily to the individual investor.
As a result, Dean Witter would expect to sell between 50 and 60 percent of the Carlsbad issue to Expect tn sell 50-
retail clients. MR% to retail clielrrs.
RETAIL DISTRIBUTION CAPABILITIES
National Retail - Dean Witter has long been known for its outstanding retail sales force. The
firm’s more than 9,000 Account Executives service over 3.2 million active retail accounts nationwide as part of the third largest retail securities distribution network in the nation. The size
and geographical structure of this network not only provides tremendous distribution power, but
also allows for the specific geographical targeting of customers for the placement of primary
market offerings.
Over 9,000
.4ccount
Executives
natiortalr(v.
California Retail - Dean Witter’s marketing presence in the State of California is the largest
of any firm in the securities industry. Currently, Dean Witter maintains 74 branch offices - staffed with 2,022 Account Executives who cover more than 700,000 active retail accounts. These
Account Executives manage nearly $70 billion of assets for California investors, making Dean
Witter’s California brokerage network not only the most extensive in the State but also the most successful.
Lurgest retail
sales,fi,rce in
Cal~jhrniu.
California Sales Forces
(lmst recent ngures nvaiiabk or publskd)
2,500 L 2.022 4 1 I
2,000
1.500
1,000
500
0
Dean Witted
Morgan Stanley
hlerrill Lynch Stone & Youngberg PaineWebber
Local Retail - Not only will Dean Witter provide coverage of the national and California sectors of its demand base, but Carlsbad will also benefit from our extremely strong coverage of the local
investing community surrounding the City. With numerous offices in San Diego County and offices in Ranch0 Santa Fe and Carlsbad itself, Dean Witter can provide Carlsbad with coverage of
the investing community within and around its boundaries. The following table details our San
Diego County retail presence.
N 0f“iice.s with I96
brokers in the
Curlsbad arm.
Section 5-2 d!!J Dean Witter Reynolds Inc.
,’ C&J of Carlsbad
Local Distribution
196 Brokers in 8 Offices
San Diego (WC)
San Diego
Ranch0 Santa Fe
0 5 10 15 20 25 30 35 40 45
Number of Brokers
We would recommend the City hold a retail order period in which priority would be given to local retail sales. Within our organization, we would, as part of our marketing effort make presentations
to the brokers in each of our local Carlsbad area offices in order to encourage their presale efforts.
These local brokers in the eight offices would be given “first rights of access” to bonds assuring
them that their order will be in fact filled. This order flow activity can be easily tracked,
documented and reported back to the City as part of our post sales reporting effort.
Our local distribution networks are made up of highly successful investment professionals who are
quite involved in their local community. They are members of the Chamber of Commerce and
involved in many aspects of local political life. Their participation in the distribution of the
Carlsbad refimding issues will ensure not only the most efficient distribution of your debt issues,
but will also be critical in engendering local community support among the ad valorem tax payers.
INSTITUTIONAL DISTRIBUTION CAPABILITES
While retail participation provides substantial benefits to our issuing clients, to achieve a truly
diversified sale, the institutional sector of the market must be addressed. Institutional investors
offer “buying power” for an issue, increased liquidity for a market and will often support an issue
in markets that retail investors find unacceptable. Dean Witter is a leading distributor of municipal
bonds to institutions, with 50 Branch Institutional Salespeople who serve approximately 600 major
national and regional institutional accounts including second and third-tier institutional accounts. Not only do these salespeople cover the largest institutions, but they also selMunicipa1 product to
a broad range of small and mid-tier institutional buyers - money managers, investment advisors and bank trust departments, as well as certain property and casualty insurance companies and
smaller bond funds.
In addition to Dean Witter’s coverage of the institutional investing community, upon our firm’s
merger with Morgan Stanley (completed on May 2&h), we now also have access to one of the
strongest institutional sales forces in the nation, comprised of 20 municipal-specific institutional
salespeople and 10 additional municipal traders. This addition combines with our already unsurpassed sales force to create the largest and most efficient distribution network in the securities industry.
50 Branch
Iirstitutional
Salespeupie reach
over 600 major
uccounts.
.dcce.ss to Morgan
Stanley’s 20
irrstitrrtirmal
.salespeople andi
nrurricipal trailers.
Section j-3 a!!! Dean Witter ReFvnoIds Inc.
C’iiy oJ’ Curls&ad
Topic 6 - CREDIT ISSUES, STRUCTURING, TIMING & FINANCING
TECHNIQUES
Please summarise your views with respect to the following matters:
a. Discuss the key credit ratingfactors the City will be facing in the issuance of the financing. b. Preferred structure for the proposed issue.
c. Timing of the proposed issue, given current and anticipated market conditions. d. Financinp techniaues vou have used in California for minimizinp rate imaacts.
CREDIT ISSUES
Generul Fund Pledge - Cert(ficates of Participation - Hasp Grove This is the simplest, most straightforward analysis and would ultimately hinge on the credit quality of the City of
Carlsbad and the financial health of the City’s general fund. Given the open space nature of the underlying asset, the credit consideration would be the lack of essentiality of the asset. This drawback would be more than offset
by the inherent lack of abatement risk endemic in the nature of the open space asset.
Installment Sale Leuse - Certificates of Purticipation - Water District
The credit issue here will be the composition and stability of District revenues. Ultimately the credit analysis will
be based on the coverage ratio and District’s ability to demonstrate coverage of debt service payments from stable revenue sources. As the majority of District revenues are from water sales, this would be the best credit structure.
Limited Obligation Improvement Bonds - Assessment Districts
This is the most difficult credit structure as the debt is usually supported by the willingness of a sometimes
concentrated number of property owners to pay an assessment. The only recourse available is the ability to foreclose on the property owned in the District. The key credit factors in order of importance are as follows:
Concentration of Ownership
Districts with only a few owners, as is typically found in smaller industrial/commercial districts, cannot hope to receive an investment grade rating. A large diverse number of property owners,paying the assessment is necessary in order to receive an investment grade rating.
Value to Lien Given the inherent wealth in the District combined with the relative level of development, one would expect
the values to lien on all of the assessment district issues to be quite high.
Foreclosure Provisions
These provisions should be quite rapid. particularly in commercial/industr& districts.
PREFERRED STRUCTURE
We have three distinctly different credits and structures here with distinctly different security provisions. At
minimum we would have at least three tinancings:
Section 6-I
Dean Witter Reynolds Inc.
&ty of Carlsbad
They are ali such unique credits, that we believe the City would be ill advised to issue them all under one
structure. However, all of the refunding issues could certainly proceed concurrently in order for the City to take
advantage of currently strong interest rates, should it choose to do so. The certificate of participation financings
could be combined, however they are different credits. Hosp Grove is a general fund pledge lease, whereas, the
Costa Real refunding is an installment sale agreement primarily secured by water revenues. The certificate of
participation structures are quite straightforward and are excellent credits. A refunding of these two issues would
provide significant saving to the City in today’s market.
The assessment district refunding would be much more questionable in terms of the City’s ability to realize a
significant reduction in debt service payments. The primary test here would be the ability to obtain an investment
grade rating on the refunding bonds. Without the abilitv to obtain an investment grade rating, the savings would be somewhat marginal.
TIMING OF THE ISSUE
The market conditions are favorable right now for a successful issuance of all the issues. However, there are other constraints that must be considered at this time. The certificate of participation issues have both been refunded at
least once before. From a tax law standpoint, they cannot be advance refunded again. Therefore, an additional
refunding of either of these issues must be a current refunding, structured to close within 90 days of the first call date. The assessment bonds by definition have no call protection and are callable on any interest payment date at
a call premium of 103%. Given these constraints, the recommended issuance schedule would be as follows:
Issue Earliest Sale Date
Certificates of Participation - Hosp Grove 51 l/98
Certificates of Participation - Water District ASAP
Limited Obligation Improvement Bonds ASAP
First Call Date
8/l/98
511197
912197
Interest rates are very favorable right now and we do not have any reason to believe that they will go much lower.
Given an economy which is heating up combined with extremely low unemployment levels, the pressure on
interest rates will probably be upward.
FINANCING TECHNIQUES FOR RIINI3IIZING INTEREST RATE IMPACTS
This question primarily speaks to the credit concerns surrounding the limited obligation improvement bonds. The
certificates of participation issues are excellent credits in their own right and would price aggressively and receive
relatively low interest rates.
The most effective technique one can utilize in minimizing rate impacts would be to create a structure that. would obtain an investment grade rating from the rating agencies. Without the ability to conduct a more in depth
analysis of the underlying credit factors surrounding the assessment bonds, it is not clear to us whether an
investment grade rating could be obtained. In most cases, concentration of property ownership, particularly in commercial/industrial district issues, tends to stand in the way of investment grade ratings. Some of the structures which could be used to address these concerns are:
+ Create additional debt service through the subordination of administrative expenses and the use of reserve
fund interest earnings.
l :* Senior-subordinate structures which create de facto coverage from subordinated revenues.
Q Escrow Structures which allow funds to remain in an escrow and drawn out when development comes on line
and diversity of ownership levels improve.
Section 6-2
Dean Witter Rqvnoids Inc.
.,
C&J oj’ Car&bad
Topic 7 - LITIGATION
Is your firm involved in litigation regarding sales methods, security dealings, underwritings or
related practices? Please disclose the status of such matters.
in the course of our broker-dealer and investment banking activities, Dean Witter is frequently
named as a party in litigation. The rulings and depositions in each matter are far too numerous
to detail. However, to the best of our knowledge, Dean Witter has not been and is not the subject
Not the subject
of’cim- lirigcrtiou
tJ1nt \tYlLrlti of any action, order, judgemenr or litigation (pending, threatened or completed) over the course of the past 24 months which would affect irl any material way our ability to serve as an tramper our
underwriter for the City of Carlsbad as contemplated in the Request for Proposals/Statement of <[fO rt.c as
Qualifications. Carlshad S
ut~denwiter.
Section 7-I a!! Dean Witter Reynolds inc.
m -NN --m r-2
l . .
- .-
ob-Jwl~~oco~coooo~~ ~~~~“““00”““‘“00
z ci d d m 0. ty .-y 7. o- rrl r? ‘? -, I+
1 -: -
tiocy4bG~ u-l\0
p .jy
ooooomooomoooooo 6xr-oo~ooo6xo-oco 1 ‘t, 9 c! 0 -* 0. 0 9 ‘5 c? 9 4 ‘? ‘I x, -~mw-~~-Mo-LD~~~~ -d mmvrn -CQobr?D\o\
_-
L
- ._
tLY& oj’carlsbad
Appendix 2 - RESUMES
Resumes offinance team members
CELESTE E. DAVIS
SENIOR VICE PRESIDENT
Municipal Finance
Celeste Davis began her career in municipal finance in 1986 and joined Dean Witter in 1997. Over I I yews of’
She brings over eleven years of experienc: as :: s enior banker, providing account coverage to a experience in number of medium and large municipal issuers primarily in California. Celeste has a broad /lrunicipaf range of functional expertise with an in-depth knowledge of general city and county financing iinarlce.
techniques, combined with a specialty in redevelopment and land-based development financing techniques. She has also maintained a significant practice in K-14 education
financing, having provided investment banking services to a number of the larger school ,fand-based
districts and community college districts within the State of California. In addition to the standard financing techniques commonly used in the issuance of debt, Celeste is also quite deve@,mrIIr is rr
experienced in the use of alternative and innovative financing methods such as interest rate specialty.
swaps, private placements, and various forward investment structures.
Prior to beginning her career in municinal finance Celeste worked as a trader on the trading Prior experience
floor of a large money center bank. In rhis capacity, she gained a wide range of experience in as a trader and us
the financial markets having rotated through foreign exchange trading, government securities, u jinanciul agencies, money markets, and municipals trading, spending the majority of her time as a consultant. money market trader on the bank’s Eurodollar Funding Desk. Ms. Davis’ prior experience
includes over three years spent as a financial consultant with one of the “big six” public
accounting firms, where she passed the uniform CPA examination.
Celeste was educated at Boston University where she received her Bachelor of Science degree Master’s degree
in Management and Economics in 1977. She received her MBA degree in Finance from the irr Finunce,fkom University of Southern California in 1979, where she was a dean’s list scholar. USC.
JOHN L. SHELDON
VICE PRESIDENT
Municipal Finance
John Sheldon began his municipal finance career in I989 and joined Dean Wim in 1997. His Eight years uf‘
expertise covers a broad range of security structures, including general obligation bonds, e.Yperiertce in revenue bonds, lease revenue securities and certificates of participation, tax allocation bonds, mu riicipal assessment bonds and commercial paper. in addition to the traditional forms of fixed rate finance.
debt, John also has a wealth of experience with alternative financing structures, including
variable rate debt, current and advance refundings, interest rate swaps and escrow
restructurings. Finally, John has also developed a number of advanced cash flow models to
optimize capital financing structures. These models are designed to optimally balance the use
of debt and cash to fund capital improvements and yield the lowest possible revenue
requirements to fund a program in a tiscally prudent manner. Many issuers have found these models invaluable in accurately and factually projecting a capital financing plan that meets
their short and long-term needs.
John’s client base covers a broad spectrum of municipal issuers, from cities and counties to school districts to special districts. Over the last several years, however, John has developed
Section Appendix 2-I U!!J Dean Witter Reynolds Inc.
-
.* &y of Carisbad
an expertise in enterprise-secured issues, particularly in the water and sewer area. With the Expertise in the
exception of one year in New York, John has spent his entire career serving issuers in water and sewer
California. Following this summary of John’s qualifications, a partial list of client references urea.
is provided to represent his broad experience.
John received his Master of Business Administration degree from the Wharton School of :MBA degree,fhn
Business at the University of Pennsylvania, with majors in Finance and Public Policy. He also t/Je Wharton
graduated cum laude from Occidental College, where he majored in Mathematics, minored in .$dJ~d t!f’
Economics and earned election into Phi Beta Kappa. Between degrees, John worked for T. Busjtres.%
Rowe Price, a mutual fund company based in Baltimore.
MICHAEL P. COCHRANE
SENIOR VICE PRESIDENT
Municipal Underwriting
Michael P. Cochrane is responsible for all municipal bond underwriting, sales and trading Desk uveraged
activities throughout Dean Witter’s IO-state West Coast Region. During 1996, his desk $19 nziilim per
averaged $19 million per day in tax-exempt bonds bought or sold to retail investors in the du-v in ~JJIUJ~C~~U~
primary and secondary markets, for a total of $4.8 billion. California paper accounted for securities.
about 85% of this volume, or approximately $4 billion.
Based in San Francisco, Mike will direct and manage Dean Witter’s sales, pricing and Wilfpersonufly
underwriting efforts for Carlsbad’s proposed issuance of bonds. He will provide pricing and manage structuring recommendations to the assigned banking professionals and to Carlsbad based Carlsbud’s debt
upon his continuous involvement in the California municipal market and ensure. that Dean issuance. Witter’s resources of capital and California retail distribution strength are marshaled in a timely and effective way in support of the bond issue.
Mr. Cochrane has over 22 years of experience in the underwriting, marketing and distribution 22year.r of
of municipal bonds in California. He currently serves as Chairman of the California Public urzderwrititrg
Securities Association. Mr. Cochrane holds a B.S. degree from Seattle Univergity. experience.
DAVID M. ALCALA
FINANCIAL ANALYST
Municipal Finance
David Alcala is responsible for providing quantitative analysis and technical assistance for
Dean Witter’s Municipal Finance department. He will evaluate all scenarios during the
structuring phase of the debt issue to ensure that the City receives the 1owestQossible interest
cost on their borrowings. He is responsible for structuring escrows, verifying bids and the
other more technical intricacies that an issue requires. David has experience working on many
types of debt instruments, including general obligation bonds, certificates of participation,
TRAN’s, CAB’s, and variable rate bonds.
Prior to joining Dean Witter, David worked for Jones Hall Hill & White as a Financial Analyst
for almost two years and prior to that. he worked in the California State Treasurer’s Office,
where he assisted the investment desk and the Local Agency Investment Fund.
David received his Bachelor of Arts degree from Stanford University in 1994. with majors in Quantitative Economics and MUSIC.
Section Appendix 2-2
Dean Wirter Reynolds Inc.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
, 19
20
21
22
23
24
25
26
27
28
RESOLUTION NO. 982
A RESOLUION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT DIRECTING
STAFF TO NEGOTIATE A CONTRACT FOR
UNDERWRITING SERVICES WITH DEAN WITTER
REYNOLDS, AND APPROPRIATING FUNDS FOR BOND
ISSUE RELATED SERVICES.
WHEREAS, on June 3, 1997 the Board directed staff to proceed with the
refunding of the existing 1988 Certificates of Participation, and
WHEREAS the Board intends to proceed with the refunding of this issue if and
when this refunding will provide significant savings to the District, and
WHEREAS, staff was directed to solicit proposals from undemriters qualified to
provide investment banking services on these issues, and return to the Board with
recommendations on the selection of an underwriter to assist with the refunding of
these issues, and
WHEREAS staff has requested proposals from many qualified underwriting
firms, and has interviewed the most qualified candidates, and
WHEREAS, after conducting an extensive review and interview process the
Board has determined that the firm of Dean Witter Reynolds has the necessary skills,
qualifications, expertise, and abilities to assist the staff in the successful creation, and
sale of the refunding issues
,
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
, 19
20
21
22
23
24
25
26
27
28
WHEREAS, based on the results of the interview process, the staff is
recommending that the Board hereby directs staff to negotiate a contract for
underwriting services with Dean Witter, and
WHEREAS, the Board may need to fund certain costs in advance of the
issuance of any debt, and
WHEREAS, any expenditures made in the support of these issues, including
staff time invested in the process is to be fully recovered from any subsequent bond
issue,
NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
CARLSBAO MUNICI+AL WATER DISTRICT AS FOLLOWS:
1) That the above is true and correct.
2) That after considering the Staffs recommendations, the Board finds that the firm
of Dean Witter Reynolds is most qualified to provide undewriting services to the
Carlsbad Municipal Water District for the issues described above.
3) That the staff is directed to proceed with the refunding of the 1988 certificates of
participation.
4) That staff is directed to negotiate an agreement with Dean Witter Reynolds for
the required services, and that this agreement shall be presented to the Board for final
approval prior to any bond sale.
5) That all costs related to compensating the underwriter in any way shall be paid
from the proceeds of any subsequent bond issue, and that no payment shall be made
directly to the underwriter from the Carlsbad Municipal Water District funds.
-2-
i l
I) :
,
,
li
1
1:
11
1L
1:
It
li
18
, 1s
2c
21
22
23
24
25
26
27
28
6) That the District shall be reimbursed for any and all costs, including staff time,
directly related to the creation and marketing of the refunding issues.
7) That the amount of $10,000 is here by appropriated from the Water Fund
Balance to pay any preliminary costs that may be required of the District prior to the
issuance of any bonds.
PASSED, APPROVED AND ADOPTED AT A SPECIAL MEETING OF THE
BOARD OF DIRECTORS HELD ON THE 8th DAY OF July , 1997, BY
THE FOLLOWING VOTE TO WIT:
AYES: Board Members Lewis, Finnila, Nygaard, Kulchin and Hall
NOES: None
ABSENT: None
ABSTAIN: None
CLAUDE A. LEWIS, PRESIDENT
ATTEST:
ALETHA L. RAUTENKRANZ, SECRETARY’
-3-