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Continuing Disclosure and Arbitrage Calculation Services for the City of Brea
1. Approve the agreement with Willdan Financial Services to provide disclosure and arbitrage calculation services for the City of Brea;
2. Authorize the City Manager to execute the agreement; and
3. Authorize the City Manager to issue up to four (4) one-year extensions exclusive of any cost increases.
As a municipal entity that issues bonds, the City of Brea has an ongoing obligation to meet specific continuing disclosure standards in order to maintain compliance with Federal regulatory requirements. The investment of bond proceeds are also subject to strict regulation in order to ensure that earnings meet the yield restrictions set by Federal regulatory agencies. Continuing disclosure and arbitrage calculation services provided by qualified consultants will ensure that the City of Brea remains in compliance with timely reporting guidelines and arbitrage rebate management.
The City has been able to maintain compliance through the services of qualified independent consulting firms that specialize in the analysis, reporting and calculation of disclosure and arbitrage for outstanding bond debt. These services have been contracted through single-year agreements, subject to applicable fees each year. The cost of services each year is subject to increase as applicable fees go up over time. By issuing an RFP for these services, City Staff can obtain competitive pricing and secure a flat rate over a longer term.
In August of 2021, City Staff issued a Request for Proposals (RFP) to solicit bids from firms that are capable of providing the comprehensive reporting and analysis required to meet our needs. The RFP was released on August 19 via Public Purchase and the public notice was posted on the Purchasing page of the City's website. Over 4,500 emails received a notification of this release, including two firms that have recently provided these services to the City. In September of 2021, the deadline for submissions came and only one firm, Willdan Financial Services, submitted a proposal.
The submittal contained all the required information, which included background, experience and qualifications as well as a proposed fee schedule with a not-to-exceed amount for up to five years of services. However, between receiving this proposal and reviewing the terms, some changes have occurred to the City's outstanding bond debt. As a result, the total costs will be adjusted accordingly to reflect variations that result from bond refinancing, reaching maturity, defeasance and paying off bond debt.
Also, this agreement represents a consolidation of services. Over the years, multiple firms have been involved in the disclosure reporting and arbitrage calculation service for the City's bond debt. By consolidating these services to a single firm, City staff are able to more effectively manage reporting requirements and track total expenditures for these services.
Upon execution of this agreement, Willdan Financial Services will review the past work completed by other firms in order to determine the appropriate dates and reporting requirements for arbitrage calculation services. The annual cost will be more accurately determined once this review is complete. Arbitrage costs may fluctuate depending on the requirements for the year from $0 if none are required to $10,000 if all outstanding bonds require arbitrage calculation.
Staff recommends approval of the agreement between Willdan Financial Services and the City of Brea for disclosure services at an amount not to exceed $11,250 per year, and arbitrage calculation services at an amount not to exceed $10,000 per year, for an annual maximum of $21,250.
William Gallardo, City Manager
Prepared by: Anthony Godoy, Management Analyst
Concurrence: Cindy Russell, Administrative Services Director
PSA Willdan Financial Services
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