We recommend the board move to approve the letter of agreement

t ow
TO :
FROM :
SUBJECT:
DATE:
TYPE :
BOARD OF DIRECTORS
GARY PLATT, EXECUTIVE DIRECTOR - BUSINESS SERVICES
PREBOND PLANNING - FINANCIAL ADVISOR AGREEMENT
MARCH 17,2015
ACTION REQUIRED
The district is currently in the process of developing a proposal for the replacement of
Stanwood High School. As the planning work progresses, the district will need
financial advisory services in order to prepare a bond proposal measure. Financial
advisory services include:
Determining the timing, structure, interest rates, call features, premiums,
and discounts,
o Preparing bond maturity schedule options,
o Calculating tax rates, cash flow requirements, and related assumptions,
o Preparing official statements, rating information, and reviewing other
legal documentation,
o Coordinating with state, county, and local officials,
o Other duties as listed in the attached documents.
o
In past years, the bond underwriter provided many of these services. However, due to
changes in federal regulations, financial advisory services and underwriting must be
kept separate. In addition, it is prudent to retain a financial advisor that can assist the
district with the selection of the bond underwriter and to provide independent advice
on the terms of the bond sale agreement with the underwriter.
Attached is the proposal that was submitted by Jon Gores with D.A. Davidson. Mr.
Gores and his company have, for many years, provided financial advisor and
underwriter services to school districts in our state. The proposed letter of agreement
may be terminated at any time by either party. No costs will be incurred under this
agreement unless the bonds are approved by voters and actually sold.
Recommendation:
We recommend the board move to approve the letter of agreement for financial
advisor services with D.A. Davidson & Co. as attached.
Response to
REQUEST FOR PROPOSALS
to provide
Financial Advisory Services
to
Stanwood
* **
February 20,2015
DADAVIDSON
701 5 th Avenue, Suite 4050
Seattle, Washington 98104
Tel. (206) 389-8000
February 17, 2015
Mr. Gary Platt
Executive Director of Business Services
Stanwood-Camano School District
Dear Gary,
Thank you for the opportunity to present our qualifications to serve Stanwood-Camano School
District (the "District") as financial advisor. The following is a summary highlighting our
qualifications and special expertise to serve as your financial advisory team.
D.A. Davidson is more than just the leading underwriter and financial advisor for Washington
school districts for 7 straight years. We are an employee-owned firm committed to serving the
needs of all Washington School districts, large or small. We offer a wealth of relevant
experience and knowledge to help you evaluate the financial merits and administrative burden
of various financing alternatives. Our goal for you is to achieve an optimal debt structure
efficiently, treating your time and attention as the valuable resource it is.
Number of Employees
1,370
Total
; Washington
250
Number of locations
: Total
: Washington
86
22
Finaneial Advisory Capabilities. As a firm that also underwrites bonds, when we serve as your ;
Sales Force
68
financial advisor, we have a fiduciary responsibility to the District that differs in no respect from , Institutional
11
the responsibility offered by a stand-alone financial advisory firm. There are no varying degrees : Washington Sales
of fiduciary: We serve solely your interest, period. However, due to our extensive underwriting
experience, you will benefit from resources and a perspective not found at non-underwriting
WA K-12 Negotiated Ranking
firms. Our team has over 80 years of combined experience to better advise on financing options
by Number of Issues
Our full-time underwriting desk in
and develop debt structure and credit strategies.
2014
#of Issues
Washington affords us firsthand knowledge of the municipal bond market and patterns of Underwriter
22
investor demand for Washington school district debt. We are therefore best equipped to help ! D.A. Davidson & Co.
I
Piper Jaffray & Co.
14!
you consider various debt instruments, evaluate the pricing of your bonds.
2013
Analytical Resources. We believe you will benefit most from the time and resources we devote
I
I
: D.A. Davidson & Co.
I Piper Jaffray & Co.
to the planning, design and implementation of long-range financing plans for our school district
clients. The personalized financing plans we develop are based on thoughtful consideration of
the goals of our school district clients, and enhanced by the analytical experience of our team.
I D.A. Davidson & Co.
Commitment. While other firms are downsizing, merging, or exiting the public finance business
ISeattle Northwest
2012
38/
211
2011
entirely, Davidson continues to grow and expand to meet the needs of our clients, adding 19
institutional salespeople and an experienced Seattle public finance banker. We are also I D.A. Davidson & Co.
! Seattle Northwest
committed to giving back, through our sponsorships of WASBO, WASA, WSSDA, and through
2010
scholarships, election workshops and informational webinars.
I D.A. Davidson & Co.
Relevant Experience. Our school district financial advisory clients in the state include: Federal
Way, Highline, Camas, Mt. Vernon, North Thurston, Olympia, Cascade and Wenatchee. Other
school district clients in Snohomish and Island Counties include: Everett, Arlington, Monroe,
Sultan, Granite Falls, Edmonds, Snohomish, Marysville, and Oak Harbor school districts.
Integrity. As the largest employee-owned, full-service investment firm in the region, our
attention is focused fully on our clients, rather than divided between clients and shareholders.
We are passionate about our work, and are dedicated to exceeding your expectations for
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service and execution. We pledge all of our resources to assure you of that commitment. To provide you peace of mind, D.A.
Davidson is a regulated broker-dealer and a registered municipal advisor with the SEC and Municipal Securities Rulemaking Board.
Thank you for your consideration. We would be honored to serve Stanwood-Camano School District.
Sincerely,
Jon Gores
Managing Director
Project Team
Since our founding in 1935, D.A. Davidson has built a solid reputation of integrity, professionalism, and objectivity with our
full-service financial advisory and banking capabilities, experienced professionals, and a long-term, relationship-oriented approach
to business. School districts have seen the benefits of working with Davidson and satisfying their financing goals relying on
Davidson's expert guidance, efficiency, and consideration.
Resumes for the proposed financ ial advisory team for the project are below.
Managing Director
Principal Advisor
Seattle, WA
Mr. Jon Gores
Phone: (206) 389-4043 I Mobile: (206) 660-6142
E-mail: [email protected]
Mr. Gores joined D.A. Davidson & Co. in 2006, specializing in school district finance. He has been in the local public
finance business for 29 years. Mr. Gores has completed over 185 school district financings in the last five years. His
diverse school district clients include: Kelso, Camas, Olympia, Ridgefield, Federal Way, Riverview, Snoqualmie Valley, Sumner,
Auburn and Napavine. Mr. Gores is currently serving and has served as the lead financial advisor on these financings:
$46,255,000
$100,473,287
$66,500,000
$52,705,000
$84,647,943
$66,787,082
$24,745,495
$22,800,000
$67,930,000
$376,033,461
North Thurston Public Schools UTGO Refunding, 2014
North Thurston Public Schools UTGO, 2014
Wenatchee School District UTGO, 2014
Camas School District UTGOR - 2014
Olympia School District UTGOR, 2012
Olympia School District UTGO, 2012
Camas School District UTGO, 2012
Federal Way School District UTGO & Refunding, 2012
Federal Way School District UTGO & Refunding - in process
Highline School District - in process
Mr. Gores is a member of WASA, WSSDA, WASBO, and is a featured speaker at numerous conferences. He serves as a trustee of the
Washington State School Boards Educational Foundation. Mr. Gores served on the School Bond Guarantee Program advisory
committee and the Finance Committee for the Simple Majority. Mr. Gores has Series 52 and Series 63 FINRA licenses. Mr. Gores
recently received the Advocate for Education award from Washington State University.
Mr. David Trageser
Phone: (206) 903-8699
E-mail: [email protected]
Managing Director
Secondary Financial Advisory Contact
Seattle, WA
Mr. Trageser joined D.A. Davidson & Co. in 2007 as a Senior Vice President in the Public Finance department. He has
been in the local public finance business for 28 years. Mr. Trageser specializes in general municipal finance including
school districts. His school district clients include Lake Stevens, Lake Washington, Bainbridge Island, Ferndale, Oak
Harbor and Bremerton. Mr. Trageser currently serves as financial advisor to Pierce County and underwriter to the City of Puyallup.
Mr. Mark Froio
Phone: (206) 903-8664
E-Mail: [email protected]
Senior Vice President
Pricing Advisor
Seattle, WA
Mr. Froio joined D.A. Davidson & Co. in 2000, and is responsible for regional municipal trading and underwriting. In that
capacity he manages the competitive and negotiated underwriting accounts for transactions in Washington. In the past
six years, Mark has overseen more Washington school district pricings than any other underwriter. His experience in trading and
underwriting municipal issues covers a 26-year span. Mr. Froio will provide market updates and investor preference to inform bond
structure considerations and evaluate any bids or offers to purchase relative to comparable market sales and benchmarks.
1
Ms. Suzanne Eide
Phone: (206) 903-8690
E-Mail: [email protected]
Vice President
Structuring and Quantitative Analyst
Seattle, WA
Ms. Eide joined D.A. Davidson & Co. in 2007 as a Vice President in the Public Finance department. Previously, Ms. Eide
was with Banc of America Securities for 6 years. Ms. Eide serves as the lead debt structuring professional for financings
on behalf of school district, general municipal, tribal, utility and non-profit clients in Washington. She will provide technical support
on a day-to-day basis including quantitative analysis, debt structuring and pricing research. Her analysis takes into consideration the
issuer's strategic goals, outstanding issues, debt policies, cash flow and construction spend-down concerns and financing
alternatives to optimize financing results for the client. Ms. Eide has a BS in Finance from the University of Illinois, an MBA from the
University of Washington, and holds FINRA Series 7 and Series 63 licenses.
Ms. Eide's lead debt structuring experience includes work for the following school districts: Federal Way, Lake Washington, Everett,
Edmonds, Highline, Olympia, Bainbridge Island, Tumwater, Eatonville, Snoqualmie Valley, North Thurston, Sumner, and Auburn.
Ms. Maura Lentini
Phone: (206) 903-8687
E-Mail: [email protected]
Vice President
Rating Strategist
Seattle, WA
Ms. Lentini joined Davidson's public finance banking practice in 2002 with several years of experience as an analyst and
rating committee member in the field of public finance at Moody's Investors Service in New York. At Davidson, Ms.
Lentini's primary focus is on credit rating analysis and presentations for Washington school district and general municipal clients. Her
analysis helps clients evaluate the credit implications of finanCing alternatives, predict rating outcomes, and present the strongest
case possible to voters, rating agencies, credit enhancers, and investors. Maura also provides assistance with written
communications such as press releases and comments or responses to news articles. Maura has a Master of Public Administration
degree and a Master of Arts in International Relations from the Maxwell School of Citizenship and Public Affairs at Syracuse
University. She holds a Bachelor of Arts degree from Cornell University, and holds Series 7 and Series 66 FINRA licenses.
Ms. Lentini's credit experience includes work for the following school districts: Federal Way, Lake Washington, Everett, Edmonds,
Olympia, Bainbridge Island, Tumwater, Eatonville, Snoqualmie Valley, North Thurston, Sumner, Orting and Auburn. She has also
recently prepared rating presentations for Pierce County, Central Pierce Fire & Rescue, and the City of Puyallup.
Ms. Kelsey Thomas
Phone: (206) 903-8694
E-Mail: [email protected]
Associate Vice President
Disclosure
Seattle, WA
Ms. Thomas joined D.A. Davidson & Co. in 2008 in the Public Finance department. Previously, Ms. Thomas was with
UBS Securities. As a disclosure specialist, she oversees and manages disclosure document preparation and continuing
disclosure compliance. Ms. Thomas also serves as a liaison with rating agencies and credit enhancement providers and will be
available to review all documents and assist with on-going disclosure as needed. Ms. Thomas has a BS from the Juniata College, and
holds Series 52 and Series 63 FINRA licenses.
2
Financial Advisory Experience for Principal Advisor Jon Gores
201()"201S
Washington School Districts
Dated Date
Par
($ millions)
Issuer
Issue Description
In Process
67.885
Federal Way SO #210
UTGO & Ref Bonds
In Process
47.595
Highline SO #401
UTGOR Bonds
02/09/2015
4.2
Pacific Co (Willapa Valley) SD #160
UTGOR Bonds
02/04/2015
54.19
Clark Co (Camas) SO #117
UTGOR Bonds
04/30/2014
5.27
08/13/2014
Chelan Co (Cascade) SO #28
LTGO Bonds
46.255
Thurston Co (North Thurston) PSO
UTGOR Bonds
Thurston Co (North Thurston) PSO
UTGO Bonds
Chelan Co (Wenatchee) SO #246
GO Bonds
06/02/2014
91.705
OS/20/2014
59.45
11/06/2012
39.465
10/10/2012
2.385
North Thurston Public Schools
UTGOR Bonds
Kitsap Co (South Kitsap) SO #402
GO Ref Bonds
09/05/2012
21.97
Clark Co (Camas) SO #117
UTGOR Bonds
06/28/2012
75.13
Thurston Co (Olympia) SD #111
UTGO Bonds
06/04/2012
54.415
Thurston Co (Olympia) SO #111
UTGOR Bonds
04/26/2012
22.28
King Co (Federal Way) SO #210
UTGO & Ref Bonds
10/26/2010
07/07/2010
16.35
20.44
King Co (Federal Way) SO #210
King Co (Federal Way) SO #210
UTGOR Bonds
UTGOR Bonds
01/26/2010
45.00
King Co (Federal Way) SO #210
UTGO Bonds
COMPENSATION
The proposed fee schedule for publicly offered competitive or negotiated sale bonds is as follows:
•
For issues up to $15 million: A flat fee of $15,000
•
For issues over $15 million: A flat fee of $35,000
There is no per bond fee or fees for travel, telephone, conference calls, or mail. Our fee is inclusive of the preparation of the
Preliminary and Final Official statements. The District is responsible for providing accurate and complete information used in the
preparation of the preliminary and final official statements.
Services: D.A. Davidson will perform, at a minimum, all the following services for the fees listed above:
•
Development of financing plan to meet the District's short and long-term financing goals.
•
Overall management of the financing process and schedule, and coordination of all parties involved.
•
Available for board meetings, community and facilities committee presentations.
•
Thorough review and recommendation on the method of sale.
•
Prepare all bid documents for any competitive sale.
•
•
Development and implementation of a rating strategy including preparation of rating presentations.
Draft press releases following bond refundings or favorable rating outcomes.
•
Updates on market conditions and investor preferences.
•
Review of all legal and disclosure documents.
•
Coordinate all bond closing details.
•
Advise on reinvestment options and arbitrage compliance.
•
Communicate with County Assessor and Treasurer & ESD to ensure accurate tax levy amounts.
•
Monitor the financial markets for refinancing opportunities, and provide input on the appropriate refunding savings target.
3
REFERENCES & SERVICES PROVIOEO
North Thurston School District No.3
305 College 5treet Northeast
Lacey, Washington 98516
$46,255,000 Unlimited Tax General Obligation Refunding Bonds, 2014
$91,705,000 Unlimited Tax General Obligation Bonds, 2014
$39,465,000 Unlimited Tax General Obligation Refunding Bonds, 2012
Mr. John Bash
Deputy Superintendent
Phone: (360) 412-4416
Fax: (360) 412-4410
Services Provided as Financial Advisor:
E-mail: l!l.i!liill!£ill.llil.!:Jill!.!l:!..lfi~~
Ms. Teena Barnes
Executive Director, Financial Services
Phone: (360) 412-4439
Fax: (360) 412-4410
E-mail: [email protected]
Federal Way School District No. 210
th
33330 8 Ave South
Federal Way, WA 98003
Ms. Sally McLean
Interim Superintendent
Phone: (253) 945-2042
Fax: (253) 941-0442
E-mail: [email protected]
Ms. Jeri Carlson
Director of Business Services
Phone: (253) 945-2045
Fax: (253)945-0442
E-mail: [email protected]
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Attended facilities committee meeting and provided overview of capital financing and property taxes.
Developed financing plan Provided guidance and input on community survey.
Attended board meetings to review financing plan.
Provided input on the Ballot Resolution.
Attended Bond Campaign committee meetings to assist in ways to communicate tax rates.
Prepared the Preliminary and Final Official Statements.
Developed and implemented rating strategy.
Prepared rating presentations and conducted conference calls.
Prepared aU bid documents for competitive sale.
Tabulated and verified bids.
Reported results to district staff and board.
Provided bond sale summary and press release.
Prepared and distributed closing documents.
Provided guidance on refunding savings target.
Prepared state credit enhancement application.
Reviewed compliance with continuing disclosure requirements.
Prepared closing memo and reviewed all closing documents.
Reviewed Debt Service Fund (DSF) cash flow for compliance.
Assisted with budget extension and notes to the financial statements.
Provided updated debt schedules to ESD and County.
$5,687,797
$22,280,000
$16,350,000
$45,000,000
$20,440,000
Unlimited Tax General Obligation Refunding Bond, 2013
Unlimited Tax General Obligation and Refunding Bonds, 2012
Unlimited Tax General Obligation Refunding Bonds, 2010B
Unlimited Tax General Obligation BAB Bonds, 2010A
Unlimited Tax General Obligation Refunding Bonds, 2010
Services Provided as Financial Advisor:
• Monitored refunding opportunities.
• Provided input on bond resolution.
• Provided guidance on refunding savings target.
• Presented refunding overview to school board.
• Prepared the Preliminary and Final Official Statements.
• Prepared all bid docuemnts for competitive sa Ie.
• Reviewed DSF for possible contribution to refunding.
• Prepared state credit enhancement applications.
• Prepared bond rating presentations and conducted conference calls.
• Tabulated and verified bids.
• Provided bond sale summary to board and prepared draft press releases.
• Prepared closing memos and reviewed all closing documents.
• Assisted with budgeted extension statement and notes to the financial statements.
• Provided updated debt schedules to ESD and County.
4
Olympia School District No. 111
1113 legion Way SE
Olympia, WA 98501
Ms. jennifer Priddy
Assistant Superintendent
Phone: (360)596-6117
Fax: (360) 596-6111
E-mail: [email protected]
$54,415,000 Unlimited Tax General Obligation Bonds, 2012
$75,130,000 Unlimited Tax General Obligation Bonds, 2012B
$9,885,000 Unlimited Tax General Obligation Refunding Bonds, 2011
Services Provided as Financial Advisor:
• Attended facilities committee meeting and provided overview of capital financing and property taxes.
• Developed financing plan
• Provided guidance and input on community survey.
• Attended board meetings to review financing plan.
• Provided input on the Ballot Resolution.
• Attended Bond Campaign committee meetings to assist in ways to communicate tax rates.
• Prepared the Preliminary and Final Official Statements.
• Develop and implemented rating strategy.
• Prepared rating presentation and conducted conference call.
• Prepared all bid documents for competitive sales.
• Tabulated and verified bids.
• Reported results to district staff and board.
• Provided bond sale summary and press release.
• Prepared and distributed closing documents.
• Provided guidance on refunding savings target.
• Prepared state credit enhancement application.
• Reviewed compliance with continuing disclosure requirements.
• Prepared closing memo and reviewed all closing documents
• Reviewed DSF cash flow for compliance.
• Assisted with budget extension and notes to the financial statements.
• Provided updated debt schedule to ESD and County.
Additional References:
Arlington School District No. 16
315 North French Avenue
Arlington, Washington 98223
Dr. Kristine McDuffy
Superintendent
Phone: (360) 618-6200 x 1202
Fax: (360) 618-6221
E-mail: [email protected]
Marysville School District No. 25
4220 80th St NE
Marysville, WA 98270
Mr. jim Baker
Executive Director, Finance
Phone: (360) 653-0803
Fax: (360) 629-1993
E-mail: [email protected]
Edmonds School District No. 15
th
20420 68 Avenue W
lynnwood, WA 98036-7400
Nooksack Valley School District No. 506
3326 East Badger Road
Everson, WA 98247
Ms. Deb Borgens
Director Fiscal Service
Phone: (360) 618-6200
Fax: (360) 618-6221
E-mail: [email protected]
Mr. Stewart Mhyre
Executive Director, Business & Operations
Phone: (425) 431-7015
Fax: (425) 431-7006
E-mail: [email protected]
Mr. Mark Johnson
Superintendent
Phone: (360) 988-4754
E-mail: mark.johnson@}nv.k12.w<l.U5
Monroe School District No. 103
200 E. Fremont
Monroe, WA 98272
Mr. john Mannix
Assistant Superintendent for Operations
Phone: (360) 804-2570
E-mail: [email protected]
Mrs. Brenda Hunt
Executive Director of Fiscal Services and Public
Records Officer
Phone: (360) 804-2510
E-mail: [email protected]
Gay campbell, APR
Phone: (360) 572-4172
Cell: (425) 293-5451
E-mail: [email protected]
5
Innovative Approaches
Our team always strives to develop and implement new strategies for our clients. Our experience with both large and small districts
throughout the state has given us the opportunity to learn from and improve our processes. We also have the history of being first
to market with new products such as the BABs and QSCBs. We believe some of the approaches outlined below could benefit the
District.
1.
Capital Planning Approaches. We work closely with Districts on their ever changing project cash flows. We realize these
school project timelines and cash flows are a moving target, but we implement strategies to allow for change. We work
with bond counsel on the allowable amount of capitalized interest as to allow us flexibility in the sale dates and levying for
the following year without impact to the tax rate. We are also in constant communication with the counties regarding
preliminary assessed value, so we can more accurately project levy rates in the near term. We will run a multitude of
scenarios for the District once we know more about the project costs and your tax rate goals.
2.
Utilize a Sealed Bid Process for the First Maturity. Money market funds often prefer larger block sizes within a one year
maturity range, so utilizing a sealed bid process is often to the issuer's advantage. Instead of offering preliminary pricing
ideas, you could direct the underwriter to ask potential buyers to submit a sealed bid for the entire first maturity. This
often results in much lower interest cost for the issuer on that maturity. As the financial advisor, we would recommend this
strategy if the District went the negotiated sale route.
3.
Maximizing Terms. Districts often decide on the term of the bonds well before the election, but we recommend allowing
for flexibility in the bond documents. Surprisingly, a difference of even half a year can greatly affect the levy rate. So if a
District wants to issue new bonds in the middle of the year, a 20.5 year term as opposed to a 19.5 year term can change
when the District can issue bonds and continue or start another phase of construction, while staying within a tax rate
constraint. This strategy can also be used as a hedge against rising interest rates.
4.
Timing of Bond Sale. If the District would like to levy for the new authorization starting in 2017, we can start the bond
issuance process quickly so the closing can be timed for January. It is critical to communicate early and often with
Snohomish and Island Counties on the possible levy increase for the current tax year. We implemented a similar strategy
for Auburn School District in 2013 with great success, allowing them to sell bonds at low interest rates and on a schedule
that included a closing over year end.
5.
Semiannual Principal Payments. By adding June maturities, the District could take advantage of the steepness of the yield
curve. There may be a slight yield penalty on some of the longer maturities if June dates are included, depending on the
block size. We can research this with potential buyers as we lead up to pricing. We will also do a cost/benefit analysis by
year to determine which maturities benefit from this structure.
Below are case studies demonstrating our innovative approaches in the marketplace.
6.
Richland SO. We assisted Richland School District throughout the entire bond election process by providing levy
projections, survey research, and tax impact analyses, culminating in two successful bond sales. We ran numerous levy
projections for the district, adhering to the levy rate constraint promised to the voters and the district's cash flow timeline
for the project. The original plan entailed three bond sales over a 4 year period, but we were able to accelerate the timeJine
and reduce the number of sales to two with strategic use of PILT (payment in lieu of taxes) monies, capitalizing on a low
interest rate environment and healthy AV growth. Due to our conservative projections and adjustments as data became
available, Richland SO was able to accelerate certain projects planned for later years while managing their tax rate.
7.
Marysville SO - When Marysville School District wanted to build new classroom space using nonvoted debt that could be
repaid with the district's considerable impact fee revenue, there was a legal obstacle: In Washington, nonvoted debt cannot
be used for new construction. Jon Gores helped the District devise a plan to construct a campus of modular buildings, which
met their space needs with the desired repayment source within the legal funding constraints.
8.
QSCBs/BABs. When Qualified School Construction Bonds (QSCB) were introduced into the marketplace in 2009, our team
was the first one to learn the complexities of the tax credit structure and underwrite this new product. Davidson
underwrote more QSCBs in Washington than any other firm. We were also a market leader in issuing Build America Bonds
("BABs") for school districts in Washington. We were able to generate significant savings for our clients with both of these
programs.
9.
Wellpinit SO - We pioneered the use of a QSCB with a Revenue Anticipation Note (RAN). This allowed the District to receive
Federal funding for a new school without a tax increase to the voters. We assisted with the private placement of the QSCB
RAN.
6
10. Evaline SO - Evaline School District passed a six-year $890,000 bond issue at their 2011 February election. This was the
first-ever bond issue in the District's 12t-year history. The bond proceeds were used to modernize and expand the tworoom school house located north of Winlock. Davidson came up with the financing idea to sell these bonds directly to Lewis
County as a way to reduce both the issuance costs and interest costs as well as expedite the bond sale.
11. Edmonds SO - We recently completed a financing for the Edmonds School District where we emphasized the District
repurposing of vacant school sites as a long term revenue source for the capital projects fund. We have also helped the
District consider ways to front-fund the lease revenue to fund near-term projects. Our thorough rating presentation
emphasizing the District's credit positives resulted in a bond rating upgrade to AA.
12. Auburn SO - During the recession, we developed tools and data to help district shift their bond campaign communication
focus from tax rates to tax bills. For Auburn School District, which was experiencing AV declines in the midst of its 2012
$110 million bond campaign, we gathered data from real estate websites and the assessor to select five representative
homes within the district and compile a five-year history of assessed value, total school tax rate and total school tax bill. The
results demonstrated that, as home values and tax rates shifted, tax bills remained far less volatile. Jon Gores gave
supporting presentations to educate voters about how school property taxes work. The Auburn School District successfully
used these materials and presentations in their dissemination of voter information.
Team Availability
Each team member is available to devote their full attention, focus and experience to this financing to ensure superior results for the
District within the desired schedule. We encourage you to ask our references about the responsiveness and involvement of our
primary advisor and all of our financial advisory team members.
State of the Aft Knowledge
Davidson has the full array of technical resources necessary to provide the District with all information and technological analySiS
desired. We also maintain extensive proprietary databases that monitor all our clients' refunding opportunities and ratings.
In addition we utilize the following technological resources to best serve our clients:
Market Data
»
»
»
IPREO - Municipal Bookrunning System
TM3/MMD - Municipal index interest rate scales
MMA - Municipal market commentary, economic data,
market supply, trader feedback
Price Evaluation Services
»
»
»
»
»
»
»
»
»
»
Bloomberg BVAL
Kennybase
IDC
Ratings
Electronic Trading Platforms
S&P Ratings Direct
Moody's Ratings
Fitch Ratings
IPREO
Valubond
Tradeweb
MuniCenter
However, the most important measure our firm makes to ensure that our employees are knowledgeable and ahead of the curve, is a
bit counterintuitive: We use less sophisticated technology such as telephones and face-to-face conversations to maintain strong
relationships with bond attorneys, rating analysts and clients. We learn more about the shifting opportunities and obstacles facing
our clients and generate more solutions when engaging in these decidedly low-tech activities than we do from any database,
electronic service or website.
7
Summary: We believe that no ather firm can meet the District's needs with the same performance and proven track record
Davidson is able to deliver.
•
Experience Our senior financial advisors bring over 50 years of school district financing experience to ensure a thoroughly
satisfactory process. Furthermore, our post-issuance financial advisory services, such as annual debt service fund analysis,
disclosure assistance, election information and survey research, allow us to generate useful ideas for our clients. Other
stand-alone financial advisory firms simply do not offer these ongoing services.
•
Dedication We are committed to serving the needs of all school districts in the State of Washington, large or small.
And we are a true partner in supporting WASBO, WASA, WSSDA, and InvestED.
•
Service Mentality As an employee-owned firm, Davidson's team has the freedom to approach transactions with superior
long-term service to the client in mind, instead of the quarterly demands of shareholders. Most of all, we value and honor
management's time and effort, and strive to make the process of debt planning and issuance efficient for you.
It would be a privilege to serve as Financial Advisor to Stanwood-Camano School District, and we sincerely appreciate your
consideration.
8
D AIDAVIDSON
FIXED INCOME CAPITAL MARKETS
March 4, 2015
Mr. Gary Platt
Executive Director of Business & Operations
Stanwood-Camano Public Schools No. 401
26920 Pioneer Highway
Stanwood, WA 98292
Columbia Center
701 5th Avenue, Suite 4050
Seattle, WA 98104
(206) 389-8000
(888) 389-8001
Fax (206) 389-8020
www.davidsoncompanies.comlficm
D.A. Davidson & Co. member SIPC
Re: Financial Advisory Services Agreement
Stanwood-Camano Public Schools No. 401
Snohomish & Island Counties, Washington
Unlimited Tax General Obligation, 2016-2017
Dear Gary,
On behalf of D.A. Davidson & Co., we wish to thank you for the opportunity to serve as exclusive
financial advisor to Stanwood-Camano Public Schools No. 401 with respect to the issuance of Unlimited
Tax General Obligation, 2016-2017 (the "Securities"). This Agreement will establish the terms and
conditions under which Davidson will provide financial advisory services to the District in connection
with the proposed issuance or other financing (the "Financing").
1.
Financial Advisory Services to be Provided by Davidson. The District hereby engages
Davidson to serve as financial advisor with respect to the Financing, and in such capacity Davidson
agrees to provide advice as to the structure, timing, terms and other matters regarding the Financing,
including the following services, if and as requested by the District:
•
We will review all financial information necessary to determine the ability of the District to incur
and repay the debt. This review will include an analysis as to the effect of the Bonds on the
ability of the District to incur future obligations.
•
We will prepare comparative taxpayer impact statements according to the size of the Bond
issue, the term the Bonds will be outstanding, and the expected interest rates on the Bonds, and
will revise such schedules as necessary. We will provide final taxpayer impact statements for
comparison following issuance ofthe Bonds.
•
We will recommend maturity schedules, call features, method and timing of the bond sales and
other terms necessary to ensure the lowest interest rate on the Bonds.
In preparing the
maturity schedules, we will analyze the best alternative for payment of the debt service in
conjunction with the District's outstanding debt, and future financing needs.
•
We will coordinate with District Officials and all project professionals to include Bond Counsel,
Architects, and ESD and in that regard will prepare a financing time and responsibility schedule.
•
We will consult with K&L Gates as bond counsel and will review all legal documentation on the
District's behalf.
Bond counsel will draft all legal proceedings, including resolutions and
certificates, and will advise as to proper legal procedure to ensure a favorable and marketable
legal opinion on the Bonds.
•
If requested, we will prepare a Preliminary Official Statement (the disclosure document) that
will contain the Official Notice of Sale, the Official Bid Form, legal authorization of the Bond
issues, terms of the Bond issues, requirements of the District concerning continuing disclosure,
and general and financial information concerning the District.
The Preliminary Official
Statement and bidding materials will be sent to prospective bidders both locally and nationwide
through electronic and/or hard copy distribution. The final Official Statement will be sent to the
purchaser{s) of the Bonds and to the individual investors of the Bond issues.
•
We will prepare and disseminate the information necessary for review by bond rating agencies
to obtain ratings on the Bonds and will make recommendations in that regard for improved
marketing of the Bonds ("Underlying Rating").
•
We will prepare and disseminate the information necessary for review by nationally recognized
municipal bond insurance companies for consideration of bond insurance on the Bonds for
improved marketing ofthe Bonds ("AAA/Aaa Rating").
•
We will provide for electronic bidding on the Bonds through ParityTM.
•
We will make the Bonds eligible for FSA Sure Bid good faith security services for ease of
providing good faith deposits for the bidders.
•
We will attend the sale of Bonds and will assist in the receipt of bids, check the accuracy of bids,
verify that the bids comply with the Notices of Sale, and provide bond market trend information
and other information to facilitate the sale.
•
We will provide for the registration of the Bonds in book-entry form through the Depository
Trust Company in New York.
•
We will prepare the final debt service schedules, and other related schedules and calculations
for the District, the County Treasurer, Bond Counsel and ESD.
•
We will assist the District in delivery of the Bonds to the successful bidder and Bond proceeds to
the District in such a manner that bond proceeds will be immediately available for reinvestment
and will assist the District's administration in maximizing investment earnings of unused
construction obligations.
•
We will prepare and provide debt service fund cash flow analysis information relating to the
total revenues necessary to retire the Bonds.
•
In the event of the possibility of a refinancing for a more favorable interest rate on the Bonds,
D.A. Davidson & Co. will examine the feasibility of such a refinancing at no additional cost to the
District.
•
If applicable, assist in the selection of one or more underwriters for the Financing
•
Such other usual and customary financial advisory services as may be requested by the District
Under MSRB Rule G-23, Davidson will not be able to serve as underwriter or placement agent for any
notes, bonds or other securities to be issued and sold as part of the Financing. Davidson is registered as
a municipal advisor with the Securities Exchange Commission and Municipal Securities Rulemaking
Board.
2.
Fees and Expenses. For our services performed on behalf of the District, you agree to
pay us as per the attached proposal (page 3), payable at the time the District receives Bond proceeds. If
for any reason the Bonds are not sold, there will be no obligation on the part of the District to D.A.
Davidson & Co. for that Bond issue. DA Davidson & Co. shall be responsible for any costs it may incur
in the performance of its obligations unless described below.
3.
Term and Termination. The term of this engagement shall extend from the date of this
Agreement to the closing of the Financing. Notwithstanding the forgoing, either party may terminate
Davidson's engagement at any time without liability or penalty upon at least 30 days' prior written
notice to the other party.
4.
Indemnification; limitation of liability. The District agrees that neither Davidson nor its
employees, officers, agents or affiliates shall have any liability to the District for the services provided
hereunder except to the extent it is judicially determined that Davidson engaged in gross negligence or
willful misconduct. In addition, to the extent permitted by applicable law, the District shall indemnify,
defend and hold Davidson and its employees, officers, agents and affiliates harmless from and against
any losses claims, damages and liabilities that arise from or otherwise relate to this Agreement, actions
taken or omitted in connection herewith, or the transactions and other matters contemplated hereby,
except to the extent such losses, claims, damages or liabilities are judicially determined to be the result
of Davidson's gross negligence or willful misconduct.
5.
Miscellaneous. This Agreement shall be governed and construed in accordance with the
laws of the State of Washington. This Agreement may not be amended or modified except by means of
a written instrument executed by both parties hereto. This Agreement may not be assigned by either
party without the prior written consent of the other party.
If there is any aspect of this Agreement that you believe requires further clarification, please do not
hesitate to contact us. If the foregoing is consistent with your understanding of our engagement, please
sign and return a copy of this letter.
Again, we thank you for the opportunity to assist you with the Financing and the confidence you have
placed in us.
Very truly yours,
D.A.DAVIDSON & CO.
By: _ _ _ _ _ _ _ _ __
Title: Managing Director
This Letter and Agreement is hereby accepted for and on behalf of Stanwood-Camano Public Schools
No. 4010n this _ day of March, 2015.
By: _ _ _ _ _ _ _ _ __
Title: Executive Director of Business & Operations