Item 23 - Pension Debt Refinancing Update and Underwriter Selection

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STIFEL 7. Cost Proposal i. NTE Underwriting Fees Provide an estimate of your total, not to exceed, underwriting costs associated with serving as senior manager to the City on a not -to -exceed approximately $671 million issue of fixed rate POBs. Please note that any payment to the underwriter is contingent on the closing of the bonds. In your response, please specifically include: i. Proposed takedown on a maturity -by -maturity basis. ii. Management Fee, if any. iii. Expenses. In this section, clearly identify expense estimates. iv. Underwriter's Counsel. Please identify three firms that you would propose to serve as underwriter's counsel, along with the primary counsel for each firm. Stifel's cost proposal is comprehensive, competitive and realistic to deliver the lowest cost of borrowing for the City. Based on a par amount of $671 million, we propose a gross spread of $1.86 per bond. a) Sales Takedown. Designed to compensate sales professionals for marketing the POBs as aggressively as possible, ensuring the lowest interest cost. b) Management Fee. Stifel does not propose a management fee if selected as sole manager of the City's POBs. If selected as senior manager, we propose a flat $30,000 fee. c) Expenses. Remaining fees are attributable to continuing disclosure, IPREO, and various other expenses. d) Underwriter's Counsel. The three firms and contacts we propose to serve as our counsel are Juan Galvan at Jones Hall, Albert Reyes, at Kutak Rock, and Kevin Hale at Orrick. Expenses $0.15 $102,500 Average Takedown 1.70 1,143,165 Total Gross Spread Expense $1.86 $/bond $1,245,665 Amount Underwriter's Counsel $0.04 $25,000 Miscellaneous Fees 0.00 1,391 IPREO Fees 0.09 61,688 Blue Sky Survey 0.00 500 DTC Setup 0.00 800 CDIAC 0.01 5,000 CUSIP Numbers 0.00 621 Day Loan 0.01 7,500 Total Expenses $0.15 $102,500 It is important to emphasize that the City's financing costs are primarily (more than 99%) determined by the interest rates set on the POBs while the underwriting fee represents roughly 0.2% of the total estimated par amount. Over the 13.3 year average life of the proposed POBs, the City will pay approximately $253.5 million in interest costs (assuming the City's issues $671 million in Bonds). By comparison, our proposed fee of $1.86 equates to $1,246,000. Each $0.50 in takedown equates to $335,000 while each basis point (0.01%) in interest rate equates to approximately $720,000 in interest costs. 8. Certifications i. Certifications The following forms, included in this RFP, shall be signed and included as part of the proposal submittal package: Attachment A: References; Attachment B: Proposer's Statement; Attachment C: Non -Collusion Affidavit; Attachment D: Non -Lobbying Certification; Attachment E: Non -Discrimination Certification Please refer to Appendix A. 9. References i. References Contractor shall provide three (3) references from public agency customers for which actuarial work similar to services specified in this RFP have been performed, including contact names and telephone numbers, and types of services your firm has provided. Use Attachment A — References. The respondent grants permission for the City to contact any individuals listed as references. Please refer to Appendix A. City of Santa Ana I Proposal to Provide Underwriting Services Page 15