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HomeMy WebLinkAbout2000 05 08 Regular D Bond Floats and Debt Issuance COMMISSION AGENDA ITEM D May 8, 2000 Meeting ~ Mgr. Consent Informational Public Hearing Regular X / Authorization Dept. REQUEST: The General Services Department requests that the City Commission select one of two financial advisory firms to perform services on an as-needed basis related to bond floats and debt issuance. PURPOSE: The purpose of this agenda item is to authorize the City Manager to negotiate and execute a services agreement with a financial advisory firm that can advise the city on debt matters, and coordinate transactions necessary to issue bonds or acquire loans for municipal purposes. APPLICABLE LAW AND PUBLIC POLICY: City Charter and Administrative Code CONSIDERATIONS: - The city's former financial advisor, James Lentz, informed the city that he will no longer be able to function in that capacity. - An RFP (Request for Proposals) was compiled and distributed to the financial community. Proposals were received from Hanifen, Imhoff of Winter Park, and Public Financial Management of Orlando. Both proposals were referred to the city's former financial advisor, James Lentz, for his recommendations, and in-house evaluations were conducted by staff. May 8, 2000 City Commission Regular Agenda Item"D" FUNDING: To be determined. STAFF RECOMMENDATION: Based on the pricing and terms offered, staff recommends the City Commission select Public Financial Management as the city's financial advisory firm, and authorize the City Manager to negotiate and execute a services agreement consistent with their proposal of March 15, 2000 ATTACHMENTS: Proposal for Financial Advisory Services, Public Financial Management, Orlando, FL, dated March 15, 2000. Response to Request for Proposal for Financial Advisor, Hanifen, Imhoff, Winter Park, FL, dated March 15, 2000. COMMISSION ACTION: I " I I I "'I I ~I I 'I ~'I -- I -'I I I -I I I I '?:-o '; Response to Request for Proposal For Financial Advisor RFP-006-00/GD Prepared by HANIFEN, IMHOFF A DIVISION OF STIFEL, NICOLAUS & COMPANY, INC. Southeast Regional Office 1560 N. Orange A venue, Suite 210 Winter Park, Florida 32789 Phone: (407) 622-0296 Fax: (407) 622-0305 GARY E. AKERS Senior Vice President JEFFREY T. LARSON Managing Director March 15, 2000 I, ~ AF;:( 07 '00 :S: 17 FR HA~II FEr-I ir'IHOFF OPL FL TO 4073274753 P.OU01 Honifen, Imhoff Inc. Inve.~lm8nt 13onk~rc 1560 North Orer,ge .-"vr;.,,,,, S'"il'; ,"-:J:} '.l./lr.ret rO'Y-. Hor;~a .3:;:7;;9 (nO'!) 6'~;-O2';'.~ F/\:< ('::::7) c2::.C.3C~ Via Telefax # 407-327-4753 j\.'larch 7, 2000 Mr. Gene DeMarie Director of General Services City of Winter Springs 1126 East State Road 434 Winter Springs, Florida 32708-2799 Re: Financial Advisor Proposal. City's Letter Dated March 27, 2000 Proposed Fcc Schedule Dear Mr. DeMarie: We are pleased to r<::spond to the <tdditional questions in the City's kner. We have found that the typical approach employed by a municipality in (\ simi lar situation is to (irst rank. the participants and then try to negotiate an <lcceplcole Contract \"ith the top ranked tirm. tn the an~a of compensation, we note that it is import.:mt for both pmies to also underSTand the scope of services requested, and then tailor a Contract that best mC~IS the City's needs and objectives. Therefore, we have provided the information below, but also fet:1 very comfortable in our ability to provide a high level uf value-added service based on our prior demonstrated performance to the City. Of the two responding lirms, Hanifen's local team is the only finn that brings a recem service record to the City on its last bond is~ue, which included helping th~ City obtain its first ever "AU category underlying credit rat in!; with the rating agencies. 1. Do you require a monthly ret2-iner? YES_ NO ~ 2. If YES, hov." much? 3. Is the retainer credited ag<!insl a per bund or debt fee? YES_NO_ 4. fee quote per bond or debt issuancc' issue Size 0- $\ Million $1 - $3 Iv1illion S3 - $5 Million S5 Million <md Above Amount S5,OOO * $6,500 $7,500 +$0.90 per $1,000 " Minimum Fee We hope that ti1~ above is usefJl, and do not hesitate to coniact us if there are any further questions. We look forward to continuing. to be of service to the City. Sincerdy, ~M(W;<Jh1 @- fA ~ G~AkerS Senior Vice President Jeffrey T. Larson Managing Director S;tj'p' ('. ~ I .' .._..._........ ,_,......'v Mr.ml:cr. UJlli.'1\..'s1 ,.1~~I~;)IlCn d ~C'C"'111:'( o....~C'.::. "1I~ Cbt"\\I"'. Color~cto WlnlCI Pat". Florj{J3 Om.:i1\8. Nl)bt6(Ki\ APP-07-2080 lS:08 36% ~~ TOTAL PAGE.01 ~* P.01 -IJ ~ "'. CITY OF WINTER SPRINGS, FLORIDA 1126 EAST STATE ROAD 434 WINTER SPRINGS. FLORIDA 32708-2799 Telephone (407) 327-1800 March 27. 2000 Gary E. Akers Jeffrey. T. Larson Senior Vice President and Managing Director Hanifen, Imhoff Inc. 1560 North Orange Avenue, Suite 210 Winter Park, Florida 32789 Gentlemen; The City has received two (2) very qualified proposals to serve as Financial Advisor to the City. The City is requesting the firms resubmit their prpposed fees based upon the successful issuance of debt; should the City require advice other than for debt issuance then the proposed hourly rates previously quoted will be used. This quote should include all services rendered in connection with the issuance ('If debt :ncluding, but not limited to, review of all documents required in connection with the issuance of debt. assistance with offering documents, rating or insurance presentation material, attendance at ail City Commission meetings related to the debt issuance, advice regarding the method of sale, revielfl of any and all bond purchase agreements and other matters in connection with the iS5uC::lCe of debt 1. Do you require a monthly retainer? YES NO 2. If YES, how much? ' 3. Is the retainer credited against a per bond or debt fee? YES_NO 4. Fee quote per bond or debt issuance: 0-$1 million $1' - $3 million $3 - $5 million $5 million and above Amount Please quote either a minimum fee or fee per $1,000 of borrowings. Please fax this proposal to the undersigned at 407-327-4753 on April 7, 2000. Gene DeMdrie Dir~('tor of Geilera! Services I ..; ~l I Honifen, Imhoff Inc, Investment Bankers I 1560 North Orange Avenue. Suite 210 Winter Park, Florida 32789 (407) 622-0296 FAX (407) 622-0305 March 15, 2000 I Mr. Gene DeMarie Director of General Services City of Winter Springs 1 126 East State Road 434 Winter Springs, Florida 32708 I I RE: Financial Advisory Services - RFP-006-00/GD I Dear Mr. DeMarie: I We are pleased to submit our qualifications to serve as Financial Advisor to the City of Winter Springs (the "City") to assist in the issuance of municipal bonds and provide, when requested, additional ongoing consulting services, Our qualified professional staff is available immediately to provide comprehensive financial advisory services to the City. I Hanifen, Imhoff is ideally suited to serve as the City's Financial Advisor for the following reasons: Experience with Similar Issues I Members of the Hanifen financing team have served as Financial Advisor on over 57 issues totaling in excess of $2 billion for issuers across the country since 1995. Our experience on municipal debt issues ranges from issues under $1,000,000 for small cities and districts to $300,000,000 and $400,000,000 issues for major, highly rated state issuers. This includes serving as Financial Advisor on Florida issues totaling in excess of $780,464,000, with the majority of these engagements handled by professionals in our Winter Park office, Some of our recent experience includes financings for the cities of Fort Pierce, Fort Meade, Mount Dora, Orange City, Palatka, Palm Bay, Panama City, Port St. Lucie, Winter Haven, as well as multiple issues for Bay County, Osceola County, Seminole County, St. Lucie County and the Okeechobee County Utility Authority. I I I Experienced Team Assigned to the City I The personnel assigned to assist the City are experienced in all aspects of Florida public financings; including research, technical and computer analysis, structuring and marketing. Gary Akers and Jeff Larson will be heading the Hanifen, Imhoff team, with assistance from other professionals in our local office. This local Hanifen team brings prior experience on six (6) previous City bond issues in excess of $36.72 million. Gary Akers, Senior Vice President, brings 22 years of experience in Florida Public Finance to this engagement. Jeff Larson, Managing Director, a past resident of Winter Springs, is active with many local charitable and civic organizations and brings valuable experience with many comparable cities, counties and utility authorities, I I Market and Pricing Resources Available to the City I Hanifen, Imhoff is annually involved in over $15 billion of municipal underwritings - an impressive total directly attributable to the excellent national reputation of the firm. Our fixed income, sales and trading professionals are active daily in the markets for tax-exempt and taxable products which helps us provide immediately available information to the City and its Financial Advisor. This can be extremely useful in evaluating the timing of issues, market supply and demand, current interest rate I I tf":..... Smil(C ....""'.....'''....ICI'.'...__ Member: National Association 01 Securities Dealers. Inc. Denver, Colorado Winter Park. Florida Omaha, Nebraska I I 1 I I I 1 I I I 1 I I I I I 1 I .1 '" ." Hanifen, Imhoff Inc. Investment Bankers levels, proposed covenants, call features and other critical pricing considerations. As provided in our proposal, the recent merger with Stifel, Nicolaus provides the local team with additional resources and capabilities. No Litigation History An increasing amount of counties, cItIes, school districts and other institutional issuers are determining that it is important to deal with a firm and its team of professionals that have an unblemished reputation. Hanifen's record exists because we place the highest priority and emphasis on customer service and professional ethics. Hanifen, Imhoffs Southeast Regional Investment Banking office continues to expand its business in Florida and is proud of its impeccable track record. This emphasis is evidenced by Jeff Larson's recent participation as a panelist at a Bond Buyer Florida Public Conference addressing industry standards, SEC enforcement, MSRB rules and yield burning issues. Understanding of Work, Commitment to the City and Local Presence Because of similar engagements in Florida and across the country, we feel that our professional staff is thoroughly aware of the services required and are fully committed to providing these services. Our broad range of services, including computer and technical support, will be provided by Hanifen Imhoffs local office, Both Mr. Akers and Mr. Larson are residents of Central Florida. The accessibility of our fully staffed office eliminates excessive travel and delays and the necessity for the City to depend on services or support from offices and personnel in other parts of the country or state. Rating Agency and Bond Insurer Expertise One area of demonstrated perfonnance that can also benefit the City is our track record in obtaining new underlying ratings for issuers and rating upgrades. As shown with the cities of Port St. Lucie, Winter Haven, Fort Pierce, Palm Bay, Osceola County and Seminole County, to name a few, these clients achieved higher ratings which then directly helped in lowering the interest rates on their issues and significantly reduce the annual debt service obligations. The same experience held true with the Hanifen led effort on the City's Series] 999 issue. The "A" underlying rating resulted in savings in excess of $390,000. Conclusion Representing the City of Winter Springs would be a privilege for our firm and we look forward to being a part of the City's team. Relationships earned through providing value-added services have been critical to our significant growth in Florida. Therefore, we are confident that you will examine our approach, qualifications and experience and conclude that our firm is most capable of serving as your Financial Advisor. Our depth of experience and local resources insures that we will provide the City with timely advice and support, and help identify the optimum financing option. Please feel free to contact us at (407) 622-0296 with any questions or comments. Si cerely, ,~,~ resident )81- I 7. I I I I I I 'I I I I I I I I I I I I 1.: .. I I Letter of Transmittal Section Public Finance Experience of the Finn ............................................................................... 1 Personnel Assigned to the RFP ,...,............................. ................................................. .......... 2 Prior Service to the City of Winter Springs ..........................................................................3 Litigation History and Capital Position...... .......... ....................... ..... ..... ......................... ....... 4 References...................................,...................,........,...........................,....................... .,.,..... 5 Approach to Providing Financial Advisory Services ............................................................ 6 Fee Proposal... ... ,....,...,... ,... ,. ,... ......... ...., ,. ....,........ ....................,...... ,....,... .......... ,......,.......... 7 Rating Agencies and Bond Insurers...... ............................................... .......... ....................... 8 Conflict of Interest Statement ..........,.,....,.,.....,....,.,......, ......................................... .............. 9 Why Hanifen, Imhoff..................................,.,....,...,.....................,....,....,..............,.... .........,. 10 APPENDIX Florida Financial Advisory Experience List.. .................. ......... ............ ............ ............. ....... A I" I I I I I I I I I I I I I I I I I I ~ I I For over 40 years, Hanifen, Imhoff has provided innovative and reliable financial services to clients throughout the United States. We began in 1960 as the finn of Hanifen, Imhoff and Samford, a municipal bond brokerage house with only five employees focusing on public finance in the Rocky Mountain Region. Hanifen, Imhoff has since grown to a premiere regional investment banking finn, providing a full range of investment banking services to our clients throughout the country. Following our merger with Stifel (see attached), we currently have over 48 professionals in public finance and sales/trading dedicated to providing services to the public sector. In addition, over 500 retail sales professionals assist in distributing municipal and institutional securities from the public sector. The map displayed below depicts the broad reach of our public finance activities. Hanifen, Imhoff has offices in: States In Which Hanifen, Imhoff Inc. Has Completed Transactions . Winter Park, Florida . Denver, Colorado . Omaha, Nebraska The finn's major operating departments include: . Public Finance . Fixed Income Sales and Trading . Corporate Finance . Institutional Equity Sales . Corporate Research IncbuJes SolI, s.m.r, l'.o-MantZ/J", nntIRCUU Ad'Jw.,. Public .'Wlhs, I'rlVG. PI4e~11Unls and CtnIlpttllh, StUI. PUBLIC FINANCE - SOUTHEAST REGION I Transactions Completed o No Transactions Completed Hanifen, Imhoff established its Southeastern Regional office in Central Florida in 1995. This decision was driven by the finn's desire and commitment to continue to grow its investment banking presence in Florida and the surrounding southeastern states. The Southeast Region office is managed by Jeffrey T. Larson. The office is currently engaged to underwrite additional issues for new and existing clients and advise many others on their upcoming financings. This growth has included establishing a Florida based Fixed Income Sales and Trading Desk in 1999. Hanifen, Imhoff is proud of its track record, which is attributed to the hard work and diversified talents of the employees at our finn. Through a corporate philosophy that focuses on team-work and input from diversified backgrounds, Hanifen, Imhoff delivers products and services to our issuer-clients that are unparalleled in tenns of quality, cost, and timeliness. The merger with Stifel will provide our clients with additional capital strength, technological resources, retail sales distribution, and product expertise. I '" I I I I I I I I I I I I I I I I I I a: . EXPERIENCE LIST We have attached, for your reference, a Florida financing experience list in the Appendix. We are the fastest growing Financial Consulting firm in Florida. ~s seen in our expanded Florida customer list and references, our demonstrated commitment to providing professional and responsive service is reflected in our "repeat business" with existing clients. This growth has led to the recent hiring of additional professional staff and our plans to add three to five additional professionals in our local office. I I I I I I I I I I I I I I I I I I I .. HANIFEN, IMHOFF INC. STIFEL FINANCIAL CORP i\1ERGER FACT SHEET D Stifel Financial Corp. (NY~E:SF) and Hanifen, Imhoff Inc. have reached a definitive merger agreement, subject to Board and Shareholder approval. . Hanifen, Imhoff Inc., founded in 1960, is the largest independent institutional investment banking firm headquartered in the Rock.y Mountain region. .. Stifel Financial Corp., founded in 1890, is a full-service regional brokerage and investment banking firm headquartered in S1. Louis, Missouri. The firm has locations in 14 states, mainly in the Midwest, and operates retail broker- age offices in Denver, Fort Collins, and Colorado Springs, Colorado, .. Stifel Financial Corp. has approximately $60 million in capital and provides securities brokerage, investment banking, trading, investment advisory, and related financial services through its ,,,holly-owned subsidiaries, primarily Stifel, Nicolaus & Company, Incorporated. Stifel, Nicolaus and Company is a member of the New York Srock Exchange, lne. and other major exchanges. II Recognizing the excellent reputation developed over the past 40 years, Hanifen, lmhoffs fixed income operations, including municipal finance, will retain the name of Hanifen, Imhoff, Inc. and operate as a division of Stifel, Nicolaus & Company, Incorporated. III The transition will be relatively seamless to Hanifen, Imhoff clients. Walt Imhoff will continue to head the Denver office, having responsibility for both equity and fu;:ed income operations. . The merger will greatly enhance Hanifell, Imhoffs capital position, enabling the firm to offer expanded product offerings and state-of-the-art technology and support systems. . Hanifen Imhoffs highly-successful fixed income operation in the Rock)' Mountain region and Florida complements Stifel's strong municipal finance presence in the Midwest. . The merger will serve to solidify Hanifen, Imhoffs position as the leading miderwriter in the Rock)' Mountain region. Since 1996, the firm has man- aged, co-managed, or been the financial advisor on approximately $9 billion of municipal financings. . More public finance bankers will be available to serve clients, even further increasing Hanifen, Imhoffs focus on Florida and the Rocky Mountain region. . Fixed income product distribution will be significantly expanded through Stife!, Nicolaus' fast-growing retail network of 335 investment executives located in 12 states, including Colorado. . The merger is a union of two highly respected super-regional firms that will provide a broader platform for our fixed income operations, while at the same time strengthen Hanifen, I?lhoffs position in its traditional marketplace. Hanifen Imhoff Inc. investment Bonkers 303-296-2300 800-525-9989 ", I I I I I I I I I I I I I I I I I I I I Stitfel Nicolaus - - Page 1 0 I- - flfL!J;J.EI2 filfl1t~lj)1/J31J,.ilJ I'Stife! @;cess I For Immediate Release January 12, 2000 I STIFEL FINANCIAL CORP. AND HANIFEN, IMHOFF INC. ANNOUNCE MERGER CLOSING I I ST. LOUIS and DENVER, January 12, 2000 - Stifel Financial Corp. (NYSE:SF) and Hanifen, Imhoff Inc., a Denver-based investment bank, announced that they have closed the merger between the two companies. The transaction is being accounted for as a purchase and provides for a tax-free exchange of approximately I 600,000 shares of Stifel Financial Corp. for all of the outstanding shares of Hanifen, The exchange ratio was calculated using the respective book values of Stifel Financial and Hanifen Imhoff. The total shares ultimately issued in the transaction will be based upon the final closing equity of Hanifen at December 31, 1999. In I connection with the transaction, certainz key associates of Hanifen executed employment agreements containing non-compete provisions and restrictions on the sale of the stock received in the merger, and were awarded options in Stifel Financial Corp, I Stjfel's board of directors also authorized the repurchase of up to 600,000 additional common shares, These purchases may be made on the open market or in privately negotiated transactions, depending upon market conditions and other factors. Repurchased shares may be used to meet obligations under the Company's I employee benefit plans and for general corporate purposes. This authorization is in addition to Stifel's previously announced stock repurchase plan. I Stifel Financial Corp. is a full-service regional brokerage and investment banking firm, established in 1890 and headquartered in St. Louis, Missouri. The company has approximately $60 million in capital and provides securities brokerage, investment banking, trading, investment advisory, and related financial services through I its wholly-owned subsidiaries, primarily Stifel, Nicolaus & Company, Incorporated. The firm has locations in 14 states, mainly in the Midwest, and operates retail brokerage offices in Denver, Fort Collins, and Colorado Springs, Colorado. I I I p...' ~'l. .'-;!ikLVi<'oYutd :Y(/;/J1W .~I"P>J;6'Jwd ./8W ' .~ .;~ Stifel @ccess I News & Quotes I Research I Investor Relations I Calculators I Stifel News I Client Services I Mutual Funds I Investment Banking I Public Finance I Career Opportunities I Branch Information I Contact Us I Web Tools I Site Map I This site is published in the United States for U.s. residents only. The services offered within this site are available exclusively through our U.S. Investment Executives. Stifel Nicolaus Investment Executives may only conduct business with residents of the state in which they are properly registered. For more complete information about any of the funds available through Stifel Nicolaus, including their management fees, sales charges, and other expenses, please order a prospectus from one of our Investment Executives at the branch office nearest you. The prospectus should be read carefully before investing or sending money. I Copyright 1999 Stifel Nicolaus I http://stifel.com/mergerClosing.asp 3/13/ I I I I I I I I I I I I I I I I I I I " I I I . _'. ... I - . . I We propose the following organizational structure in serving the City of Winter Springs. Gary Akers and Jeff Larson will be serving as the primary financial consultants and both professionals bring extensive Florida public finance experience, This team also provides a demonstrated service track record with the City on multiple recent financings and assistance with bond proceeds investments and improving the City's ongoing Investment Portfolio, Assistance from key support officers will be provided as needed, including analytical and support services out of the Winter Park office, Supporlom."", I '1 Anul,'Ucul SUIJpnrt.,) ":: Asset F1nanC'c/lo, estment!t Ed Stull Vice President CurIos Pereda Senior Annly!-o'l Ronald New Vice Preslcllm. TuxulJlc Snlcs & Trudlng PRIMARY CONTACT OFFICERS MR. GARY AKERS, SENIOR VICE PRESIDENT I A resident of Seminole County, Mr. Akers is located in Hanifen, Imhoffs Winter Park office and has over 22 years of underwriting and financial advisory experience in Florida. This includes managing the Orlando office for Evensen Dodge, a national financial advisory firm, and serving as an Executive Vice President at Southeastern Capital Securities in Orlando. He has served numerous counties, cities, municipalities, airports, utility authorities, solid waste facilities and special tax districts throughout Florida, His experience includes financing utilities, airports, transportation and tourist development/civic center projects, tax increment redevelopment projects and general obligation financings. Mr. Akers has completed over $3 billion in financings for Florida issuers, including 6 previous financings for the City of Winter Springs. Some of his current and previous client relationships include: . Bay County . City of Winter Springs . State of Mississippi . Seminole County . City of Altamonte Springs . City of Oviedo . V olusia County . City of Panama City . City of Sunrise . Osceola County . City of Mount Dora . City of Melbourne . Charlotte County I " I I I I I I I I I I I I I I I I I I Mr. Akers is a graduate of Marshall University in Huntington, West Virginia with a B.B,A. in accounting and economics, Mr. Akers is licensed as a Series 7 General Securities Representative and a Series 24 General Securities Principal. I _ I MR. .IEFFREY~ MANAGIN(; DIRECTQ~ Based in Winter Park, Mr. Larson manages Hanifen, Imhoff s Southeast Regional Investment Banking office, Over 17 years, he has successfully closed a wide range of municipal and corporate financings totaling over $5 billion, This included the recent $7.9 million Capital Improvement Refunding Revenue Bonds, Series 1999 for the City of Winter Springs where Mr. Larson and Mr. Akers worked hard with City staff to achieve, for the first time, an underlying "A" category rating for the City. Mr, Larson was also recently selected as the Financial Consultant to the City of Deltona and brings extensive project finance and assessment district financing experience to this engagement. Recently, he has served as an Investment Banker or Financial Advisor to clients such as: . City of Winter Springs . City of Winter Haven . Broward County . City of Port St. Lucie . City of Stuart . V olusia County . City of Fort Pierce . City of Orange City . Broward County HFA . City of Palm Bay . City of Starke . Hernando County . Okeechobee Utility Authority . City of New Smyrna Beach . Charlotte County . S1. Lucie County . Sumter County . GOAA . Okeechobee County . St. Edward's School . Kissimmee Utility Authority . City of Pal atka . Orlando Utilities Commission . South Florida Water Management Other Florida clients served by Mr. Larson include St. Lucie County Schools, Indian River County Schools, Daytona Plastix, Catalina Lighting, the Adventist HealthCare Group, Panama CountylBay County Airport, Hope Hospice, Marion County Schools, Southern States Utilities, Sumter County, Southeast Vol usia Hospital District (Bert Fish Medical Center), Baader North America, Hillsborough County Schools, Nova UniversityIMiami Dolphins, Tampa Sports Authority (Tampa Bay Lighting Arena project), and various other municipal and corporate/institutional clients, Prior to joining Hanifen, Imhoff, Mr, Larson was with SunTrust Capital Markets in Orlando, Florida where he specialized in the structuring and marketing of a variety of public finance and capital markets products including assessment financings, project development financings, utility project financings, non- rated private placements, general obligation and revenue bond financings, interest rate hedging programs, investment programs, industrial development bond financings and taxable and tax-exempt lower floaters, Prior to that, he spent eight years with Barclays Bank PLC in Atlanta and San Francisco. Mr. Larson received his Masters of Business Administration degree on an academic scholarship from Emory University, Atlanta, Georgia in 1982, As part of his MBA graduate work, Mr. Larson worked, studied and taught in Germany and Austria and was a Fulbright Scholar at the Johannes Kepler University in Linz, Austria. He received an A.B. in Business Administration with honors from Franklin & Marshall College, Lancaster, Pennsylvania, Mr. Larson's professional licenses with the State of Florida, National Association of Securities. Dealers (NASD) and New York Stock Exchange (NYSE) include a Series 7 General Securities license, Series 63, Series 24 NASD General Securities Principal and Series 8 NYSE principal's license. He is a frequent speaker at industry conferences including the Annual FGFOA, Florida Bond Buyer, FICP A, regional FGFOA Meetings, and Special District conferences on topics ranging from Industrial Development, Capital Financing, Continuing Disclosure to SEC enforcementfMSRB, Mr, Larson also served as a Moderator and Speaker at the 1999 FGFOA Conference which addressed the options of :'t I I I I I I I I I I I I I I I I I I I "Negotiated versus Competitive Bond issues". He remains active with the FGFOA as the Chairman of the subcommittee on Treasury Management for 1999-2000 Annual Conference in Tampa (May 2000), instructor at the FGFOA Institute, and as a speaker at various regional FGFOA groups. Mr. Larson is also active in the local community, serving on the Board of Fugelberg Koch and Pathway Counseling Ministries. SUPPORT OFFICERS ; MR. ED STULL, VICE PRESIDENT Mr. Stull serves as a Vice President in the Public Finance Department in Hanifen, Imhoffs Central Florida office. Mr. Stull has been involved with numerous financings for counties, cities, school districts, non-profit organizations, higher education and not-for-profit healthcare entities throughout the State of Florida over his thirteen-year career. Prior to joining Hanifen, Imhoff, Mr. Stull was employed with SunTrust Bank, Central Florida, N.A. in Orlando where he specialized in providing direct bank loans, letters of credit, liquidity facilities, investments, cash management and interest rate hedging products to a variety of clients in the Governmental, Institutional and Corporate markets. Mr. Stull is a graduate of the University of Florida, receiving a B,S. in Business Administration with a major in Finance, Previous client relationships include: . City of Jacksonville . St. Lucie County . Gainesville Regional Utilities . City of Wildwood . Columbia County . Florida Municipal Power Agency (FMP A) . City of Kissimmee . City of Ocoee . City of Green Cove Springs . City of Jacksonville Beach . Highlands County . St. Johns Water Control District . City of St. Cloud . St. Johns County . Martin County School District . City of Atlantic Beach . DeSoto County . University of Central Florida Foundation . City of Panama City . Rollins College . Indian River Memorial Hospital District Mr. Stull is licensed as a Series 7 and Series 63 General Securities Representative. MR. NATE ECKLOFF, MANAGING DIRECTOR I Mr. Eckloff has assisted in the underwriting of over $4 billion in municipal bonds. His 15 years of experience covers a wide range of tax-exempt and taxable municipal finance including general obligation bonds, sales tax revenue bonds, special assessment bonds, airport revenue bonds, gas tax revenue bonds, electric revenue bonds, water and sewer revenue bonds, health care revenue bonds, lease-purchase certificates of participation and advance refunding bonds, Mr, Eckloff is currently serving as investment banker or financial advisor to several cities, counties and school districts including the City of Port St. Lucie, His recent experience with Florida issuers includes: . Okeechobee Utility Authority . City of Port St. Lucie . St. Lucie County . City of Vero Beach . City of Delray Beach . Village of Royal Palm Beach Nate is an associate member of the National Association of Bond Lawyers (NABL). Mr. Eckloff received his Juris Doctorate from the University of Denver, College of Law where he was a member of the Denver Law Journal, and his Master of Business Administration in Finance from the University of Denver, College of Business Administration. Mr. Eckloff received his Bachelor's Degree in Agricultural Economics from the University of Nebraska, I I I I I I I I I I I I I I I I I I I " , MR. Sl1iVEN II. /JELL MANAGIN(; DIRECTOR ._ - -j-....__......_ _..... -0__..___. . .... ., __. .___.. _" _"h ._. ""..__________ ... ._.. Mr. Bell has more than 19 years of municipal underwriting experience. He has specialized in public propose finance for state agencies, cities, school districts and other political subdivisions with specific emphasis on tax and user fee supported transactions. Mr. Bell also has extensive financial advisory experience with services rendered to a wide array of clients. Mr. Bell's experience includes the senior management of issues totaling over $6,0 billion in the area of K- 12 and higher education finance, general obligation bonds, user fee revenue issues, lease-purchase financing, sales and excise tax revenue debt obligations, and tax allocation revenue debt bond issues. Many issues managed have addressed flexibility for issuers with regard to certain optional, mandatory and extraordinary call provisions, and creative financing techniques to fund reserve and stabilization reserve funds. He has worked with state agencies in Nevada, California, Colorado, Arizona and Oregon in various financing programs ranging from prison construction to Clean Water Act issues. Mr, Bell provided testimony before State Legislature, including Nevada, regarding matters of education finance, method of bond sale and state enhancement programs, Mr. Bell received his Bachelor of Science degree from Colorado State University in 1969 and a Master of Science degree from the University of Arizona in 1971. He currently serves on the Legislative Committee of the Colorado Municipal League, is the past President of the Jefferson Education Foundation, and is a past member of the Board of Directors of the Colorado Municipal Bond Dealers Association. ANALYTICAL SUPPORT MR. CARLOS O. PEREDA, SENIOR ANALYST , Mr. Pereda serves as the Senior Analyst in the Public Finance Department in Winter Park. Prior to joining Hanifen, Imhoff, Mr. Pereda was employed in Orlando as a Financial Analyst/Consulting Engineer for Black & Veatch, an international consulting firm with a strong Florida presence, His work included the analysis of business and operating performance, rate and feasibility studies, the valuation of water and wastewater utilities, and the creation of sophisticated financial models. Mr. Pereda worked closely with Mr. Akers and Mr. Larson in developing the refunding and new money structure of the City's Series 1999 Bond issue which included the utilization of zero coupon capital appreciation bonds. Some of his recent clients include: . City of Winter Springs (refunding, new money) . City of Palm Bay (feasibility, capital expansion) . City of Winter Haven (utility acquisition, refunding, . City of Fort Pierce (DSRF releases, refundings, capital expansion) new money) . City of Fort Meade (refunding, capital expansion) . SEMAPA, Boliva (feasibility, tariffs) . City of Coral Springs (acquisition, feasibility) . Manatee County (valuation, acquisition, rate study) . Miami-Dade Water and Sewer Department . City of New Smyrna Beach Utilities Authority (consulting engineer's report, revenue forecasting) (annual consulting engineer's report) . City of Tampa (consulting engineer's report) . City of Tallahassee (rate design study) I " I I I I I I I I I I I I I I I I I I Prior to his consulting work at Black & Veatch, Carlos was a Systems Analyst and Engineer on the space shuttle program for Lockheed Martin. Mr. Pereda received his Master of Business Administration from the University of Central Florida, Orlando, in August of 1994, and his Bachelor of Science in Engineering from the University of Central Florida in December of 1988. As the Senior Analyst in the Winter Park office, Mr, Pereda will provide analytical support to the Hanifen senior consultants. , MS. ANGELA BRADFORD, PUBLIC FINANCE ASSISTANT --- - -.1.-- ------- ---------- --- .,--- -..- _, --------------- . - - Ms, Bradford joined Hanifen, Imhoff in 1997 after working as an Associate for Evensen Dodge, a national financial advisory firm, She has assisted in a variety of financings including general obligation, sales tax, water and sewer and utility improvements. Her public finance background includes the preparation of financial and refunding analysis, investment analysis, disclosure documents, official statements and rating agency and insurance company materials. Angela received an AA from Brevard Community College, FL with a concentration in accounting and economics, She will provide local support and analysis to the Hanifen, Imhoff senior consultants. MR. LESTER WILLSON, SENIOR VICE PRESIDENT & SENIOR ANALYST I Mr. Willson joined Hanifen, Imhoff Inc. in the Public Finance Department in 1993. He has extensive experience in the municipal finance industry, including the structuring of over $1 billion in debt. This includes structuring refunding bond issues and escrow accounts, and formulating cash flows for complex issues such as state revolving loan programs, His activities have varied from general obligation municipal transactions to complex revenue bond issues including water and water revenue bonds, water and sewer revenue bonds, certificates of participation, and refunding bond issues. Prior to joining Hanifen, Imhoff Inc" Mr. Willson spent 2 1/2 years as the Finance Manager for a large Water Resources and Power Development Authority, His work included the analysis of the complex cash flows involved with the oversight of a State's Revolving Fund Program which helped to finance over twenty water and wastewater projects, Mr. Willson received his Masters of Business Administration from the University of Denver and his bachelor's degree from the University of Colorado, MARKETING AND PRICING SUPPORT MR. MIKE IMHOFF, MANAGING DIRECTOR OF MUNICIPAL n ; m. _. SYNDICATE AND TRADING Michael F. Imhoff manages Hanifen Imhoff s syndication and trading desks, overseeing new issue pricing and distribution and directing secondary market trading. Mike led the effort to aggressively price the City's Series 1999 bond issue. His direct trading and market knowledge will be an invaluable member of the Hanifen Financial Advisory team as we work to insure that the City's underwriters provide the most flexible lowest interest rates available on the various financings. Mr. Imhoff has twelve (12) years of experience in Municipal Sales and Trading. Prior to joining Hanifen, Imhoff Inc., Mike worked on the floor of the New York Commodity Exchange (COMEX) and was with Isaak Bond Investments Inc. as a municipal bond trader. He joined Hanifen, Imhoff Inc. as an institutional salesman in 1987 and joined the municipal trading desk in 1989, His experience includes trading of general market, Colorado, Florida, and Hawaii municipal bonds, as well as new issue syndication. Mr. Imhoff received his Bachelor of Science in Finance at the University of Colorado, Boulder, and also studied International Finance at the London School of Business in England. Mr. Imhoff has also served as a Board Member and Chairman of the Regional Group of the Bond Market Association, our industry's national organization. I I I I I I I I I I I I I I I I I I I " , MR. T/JOMAS TIGIJ1~ VlCB PRBSIDENT -f--- FLORIDA FIXED.lNCOMB S11..]5S & TRADING Tom Tight joined Hanifen, Imhoff in 1999 and is a Vice President located in our Winter Park office, Mr, Tight specializes in the sales and trading of tax exempt and taxable fixed income products, primarily for issuers in the Florida and Southeast region, He has nine years of experience in the municipal finance industry. Prior to joining Hanifen, Imhoff, Mr, Tight"was the underwriter for Painewebber's southeastern regional trading desk in Orlando, Florida, Mr. Tight started his career at A. G, Edwards & Sons where he was a trader and underwriter. Mr. Tight received a Bachelor of Science in Finance and an MBA with an emphasis in Economics from St. Louis University. During his career, Tom has been involved in the pricing of over $4.6 billion of municipal issues, underwriting for the following Florida issuers: . Palm Beach County . City of Port St. Lucie . Hillsborough County . Palm Beach Gardens . Seminole County . Collier County . Leon County . Hendry County . Greater Orlando Aviation Authority . Orlando-Orange County Expressway Authority . Orange County Schools . JEA (formerly Jacksonville Electric Authority . State of Florida Board of Regents . Miami-Dad County MR. ALAN SCOTT, MANAGING DIRECTOR OF MUNICIPAL SALB.\' t ~ - . - Alan Scott is a Managing Director of the Fixed Income Sales Department of Hanifen, Imhoff specializing in the sale of tax exempt and taxable fixed income products. He is responsible for managing Hanifen's fixed-income sales force, as well as being a producing salesman to select accounts. His customer base encompasses large institutions, insurance companies, banks and investment advisers. Mr, Scott is also the investment advisor to COLOTRUST, a $1 billion money market trust that services local and county governments, school districts, and special districts in Colorado, Prior to joining Hanifen, Imhoff Inc., Mr, Scott was an institutional salesman for three years at Newman and Associates, Inc., in Denver, Colorado. He specialized in structuring and selling private placements and tax exempt bonds, In addition to his extensive experience selling fixed-income products, Mr. Scott spent three years managing the investment portfolio of a $2.3 billion mid-western bank. This position entailed investment decisions. asset-liability management, and risk trading in the cash and future markets, Mr, Scott received a Bachelor of Arts in History from Stanford University and an MBA from the University of Chicago with a specialization in Finance, ASSET FINANCE/INVESTMENTS SUPPORT MI(. RON NE~ VICB PRI!,'SI/JENT. TAXAIJLE SALES & TRADING - - ---l-----.. .. Mr. New has been with Hanifen, Imhoff since 1994. In 1996, Mr. New was promoted to Manager of Taxable Fixed Income Trading, Mr, New has also worked closely with the local Hanifen office in providing investments advice and conservative, higher yielding securities for the City of Winter Springs General Fund and Transportation Impact Fee Fund. He writes a daily market commentary and is a regular contributor to various Hanifen, Imhoff newsletters. One of Mr. New's areas of focus is mortgage-backed securities. He is well versed in the analysis of the cash flows of collateralized mortgage obligations, Mr. New is also adept at the comparative analysis of differing securities. Prior to joining Hanifen, Imhoff, Mr. New had served in various capacities at two boutique broker dealers. At these firms, he had I I I I I I I I I I I I I I I I I I I " functioned as associate financial advisor to municipalities and he assisted in the structuring of lease backed, asset backed securities; in addition to general taxable fixed income sales and trading, He attended Metropolitan State College where he majored in Business Management. He obtained his Series 7 general securities license in 1987. , _ _ -l- MR. D./}"!.NIS GO/~l}Mt\JY., VICE PRESIDEN1~ AS$EL FINANCE GROUP . Dennis Goldman joined Hanifen Imhoff in 1997, as Vice President of the Asset Finance Group, bringing 10 years of investment banking and capital markets experience. At Hanifen, Dennis is responsible for advising clients throughout the securitization process and structuring asset backed and mortgage backed transactions. Prior to joining Hanifen, he held positions as manager of a $1 billion MBS/CMO/ABS portfolio for a major West Coast thrift, a taxable fixed income trader for a boutique broker/dealer, and a senior consultant for investment software companies specializing in structured finance applications focusing on ABS/CMO/CMBS structuring and analytics. In addition to both buy and sell-side experience, he has worked with ABS market participants across the spectrum --- issuers, structurers, rating agencies, credit enhancers, and investors. Mr, Goldman's credentials include pioneering new asset backed deal structures while working with various reputable asset backed underwriters, innovating new ways to analyze and price subordinate/unrated bonds, fixed income research and model development. Mr, Goldman has a Bachelor of Science degree in Finance from The Wharton School, University of Pennsy I vania. I " I I I I I I I I I I I I I I I I I I ,. I I The local Hanifen team, led by Gary Akers and Jeff Larson, have served the City of Winter Springs for a number of years and also bring first hand knowledge of the City as local residents of the community. Mr. Larson was also a resident of the City for over 7 years. Having recently successfully served as the lead investment bankers on the City's $7.9 million Series 1999 bond issue, this engagement provides an opportunity to continue to serve the City as its Financial Advisor. Considerable local support and energy, coupled with Florida and national expertise with assessment financings, water and sewer, and general capital improvement financings, will provide invaluable as the City continues its efforts on its current projects. Underlying" A" Category Rating We took the initiative on the Series 1999 issue to work extra hard to achieve, for the first time, an underlying" A" category bond rating for the City - a testimony to its conservative fiscal policies, balance sheet, and management. Mr. McClemore was involved in some of these discussions which directly led to a widening of the market for the Series 1999 bond issues and lower interest rates, saving the City an estimated 10 b.p. or $390,000 in debt service. We have attached for your reference, a copy of the rating reports form Standard and Poor's and Fitch/IBCA. This process requires an ongoing dialogue, and will be an important one to continue by Hanifen and the City in maintaining its ratings and relationships with these important institutions. As the City's Financial Advisor, we are the only firm with the current knowledge to continue this effort. Investment Assistance The local Hanifen team has worked closely with City staff to analyze its investment portfolio, make recommendations on conservative U.S. Government securities, and developed and implemented a strategy to enhance the interest earnings on a core piece of the City's General Fund and Transportation Impact Fee account. This work was handled locally, with the City now positioned to continue to receive ongoing benefits - critical to maintaining its position as a low millage City. We again are the only local firm with the knowledge of this program and are, therefore, well positioned as the City's Financial Advisor to continue this work. We also led the effort to arrange, and receive bids, for the investment of bond proceeds in the Construction Fund account for the Series 1999 bond issue and introduced a collateralized flexible repurchase agreement (" flex repo") to the City which increased construction fund interest earnings for the Series 1999 projects. I '. I I I I I I I I I I I I I I I I I I In addition, the local Hanifen Team has also assisted the City on numerous other bond issues to finance projects such as: $7,998,970 City of Winter Springs, Florida, Improvement Revenue Refunding Bonds, Series 1999 (Senior Manager) $6,915,000 City of Winter Springs, Florida Water and Sewer Refunding Revenue Bonds, Series 1991 (Senior Manager) $9,000,000 City of Winter Springs, Florida Improvement Refunding Revenue Bonds, Series 1989 (Senior Manager) $3,785,000 City of Winter Springs, Florida Improvement Refunding Revenue Bonds, Series 1985 (Senior Manager) $5,615,000 City of Winter Springs, Florida Water and Sewer Refunding Revenue Bonds, Series 1985 (Senior Manager) $3,505,000 City of Winter Springs, Florida Improvement Revenue Bonds, Series 1984 (Senior Manager) $36,818,970 Total '. I;. '1 STANDARD '&POO~S I' I .Public:,',:Fiu'ance, .,NelV....l~;'S;tJ;el,:11'e,~j~2w' . '!..t'i . . ~"i:,;' ;;;,' ".' :.~; ; ;'.; . .::.Ji!:,: ," "",.".. I ..~( J;:,I);::,:" -:'>:':!,,'.j, ..X,:::" 1" .i' I~. '''1 .. '.';l',: '".' ,. '.'1':' I ISSUER: WINTER SPRINGS, FLORIDA NEW RATING $85 mil pub imp bnds ser 1999 dtd June I, 1999 due Oct 1,2029 Sale date: June 14, 1999 A- I OUTLOOK: STABLE RATIONALE OUTLOOKThe rating on Winter Springs, Fla.'s bonds reflects a pledge of first available revenues derived from a public service tax on electric, water, gas and telephone sales, and franchise fees paid to the city by Florida Power Corp. in return for the right to provide electric service within city limits. The rating also reflects: · Sound growth of the pledged revenue streams, · Adequate bondholder protection provided by legal provisions that includes a 1.25 times (x) additional bonds test, and · Good coverage of maximum annual debt service as 1998 revenues provided 2.26x coverage. Winter Springs, located 15 miles from downtown Orlando, has experienced strong residential growth and has above-average income levels. The city's population has increased 3\ % during the la~t 10 years. The public service tax revenue stream, as well as the franchise fee revenues stream, has seen strong growth of over 30% in the last five years. The public service tax is currently at 8%; this provides the city with some rate-raising flexibility as the Florida state statues allow a maximum tax rate of \ 0%. "loe tax is assessed on all water, electric, telephone, natural gas, and propane sales made within the city. This revenue stream is concentrated with the electric portion of the utility tax, providing 72% of the total public service tax revenues. When combined with the franchise fee revenues, dependence upon electric sales increases to 82% of total pledged revenues. The franchise fee agreement expires April I ,2014. Increases in the pubLic service tax revenues should continue to provide sound coverage in the event that a new franchise fee agreement is not in effect following that date. A lingering concern is that if the city were to bond down to the additional bonds test prior to the expiration of the franchise fee agreement, there is the potential of constrained financial operations and debt service coverage. Coverage of maximum annual debt service for 1998, including only public service tax revenues, is sound at \.39x, and stronger when franchise fees are added increasing coverage to 2.26x. OUTLOOK The outlook reflects the strong coverage provided by both revenue streams. I I I I I I I I I I I ftandard & Poor's 'iZ A Division ofThe~mII 0mrpanUs Published by Slandard & Poor's, a Dj\,siuQ of lOr. McGraw-Hill Companies. Inc. ExecUljveoffices: 1221 Avenue of the Americas. New York, N. Y. 10020. Editorial offices: 25 Broadway, New York. N. Y. 1()(()4. Subscriber services; (212) 208~1146, Copyright 1999 by lbe McGraw-Hili Comp.:ulies. 11Ie. ReprocJuctirnl in whcile or in part prohibited excel'll by permission. ; j. ~ i ,.". ..,:' ~." .., ,i . t,;.:': :n;~5, ,~ro~~~.aY 'f>" :"" : :: 'New Y9rk,NY JOO.M :':i" ;~2 ]~)}()8~$90() .' :,) ,,, " ......;..,.:.'=',.. (. . . . .., , 'I . , ,'[:,!':Regiop~FQffi~es:':" ',:. : ' ., I ~ ,,!' "f '.. i c, ;. ..'J, i ;"~i' ~ LL >~ ; ;'~ ,~.' '; ;.;:!:;. ,",' ,~: ',.;' '~ ;,; 84:~tat~ .8tre,e1;, qth,1210(k; . \Uj~1fj~?~~3%6109:~:.:. . . !,:,jti~{~~~~t~~~ve'. . ::r::;~~~N ~,31:?t~~'. ..,'. ," "".' Vi: ,:' 'i" . ", . .,. ", .,~ '.' : ;"',5pO,North 4ard street i'i;,~{f.:;,::.If.~.~l,..~.,'~.~r:.r .' .... ~: .. ; ", .' . .~~~&4~;'t4~*~Mrl,j~rii"" . .:!> Sa~' Frandi~co',: ,CA"94 105 , '., t ":1; f~'~~)t,i :~3'Q6~ :,1. :J;' '.. . :!;: ,:;; 'i"i:.i~i:--~; ,:1, t :1';' i fiiif ,'~r \,,' :1q~:/:~ '~,'._-;~,l[,C::" " j' ~ i ,. .~, j l ,;,"'--ri::" .1 ~ 1 to .1 :~: . I iPH,:!i...: .:.. ~., ;1' " ' "';, ~ . i !;r; ~;;l ~~; , .. ,:}~~~~IY~ts;: . .: ~ ',',: :,J3d:~y=ard, R'. Mcqlaqe ,Wj;l~:i2;.2P~~174,f':' '.' i;~}~,~f~II~:ii~tf;~n'" ; ~ rr~;;r:' I " I I. I I I I I I I I I I I I I I I I 'Fitch Press Release - Winter Springs FL $8M Revs Rated Undrlyng , A' by Fitch IBCA Page 1 of 1 Winter Springs FL $8M Revs Rated Undrlyng 'A' by Fitch ISeA FITCH IBCA-NY-May 21, 1999: Fitch IBCA assigns its underlying 'A' rating to Winter Spring, FL's $8 million improvement refunding revenue bonds, series 1999 and $12 million parity outstanding improvement revenue bonds. The bonds will sell competitively on June 9 and mature serially Oct. 1, 1999-2029. Public service tax revenue and franchise fees received from Florida Power Corp. secure the bonds, which are expected to be rated 'AAA' based on an AMBAC insurance policy. The proceeds will be used to fund various capital improvement projects within the city as well as refund the series 1989 improvement revenue refunding bonds. The rating reflects adequate debt service coverage with a fairly stable revenue base, strong financial performance, and positive economic indicators. Public service tax revenue includes taxes levied on the purchase of electricity, water, telephone, gas, and propane. Historical public service tax receipts alone cover maximum annual debt service (MADS) 1.39 times (x), In addition, the city pledges electric franchise fee receipts. The city is currently halfway into a 30-year agreement with Florida Power Corp., which allows the city to collect a fee equal to 6% of the corporation's revenues derived from the sale of electrical energy within the city. This agreement will terminate prior to maturity of all outstanding bonds. Agreement renewal risk is low given the essentiality of the franchised service and the ability to levy fees on future electric service providers. Combined revenue of over $2,7 million in 1998 from the above listed sources provides 2.26x coverage of MADS, which occurs in 2018. The city may issue additional bonds on parity as long as coverage remains above 1.25x. Financial performance is strong. Consistent operating surpluses have resulted in an undesignated fund balance equal to 26% of total expenditures and transfers out. Over 40% of expenditures are for public safety purposes while debt service represents a modest 9% of general fund and debt service expenditures, City tax rates are well below the state 10 mill limit at 3.6 mills and have remained stable in the past few years. Minimal future capital needs due to substantial use of current resourcesto fund capital projects and already existent infrastructure should keep direct debt levels manageable. Overall debt is moderate due to the overlapping debt outstanding of Seminole County and the school board. Located north of Orlando, Winter Springs is primarily a residential community. Population growth in the area has been substantial over the past several years, The number of residents in 1998 had increased 28% since 1990. Unemployment in the city is below both the state and national averages with the majority of residents commuting to neighboring Orange County or other parts of Seminole County. Wealth levels in the county are well above both the state and national averages. Contact: Chad H, Farrington 1-212-908-0886 and Jason F. Dickerson 1-212-908-0684 in New York. http://www.fitchibca.comlfinanci al wire/detai l.cfm ?PRESSREL_PR_ID=24986 5/27/99 I '. I I I I I I I I I I I I I I I I I I I I Hanifen, Imhoff is proud of our high level of business ethics and has not been a party to any litigation or regulatory action filed in the past five (5) years resulting from its role as an investment banker or financial advisor to any state, local governmental or municipal entity in Florida. Neither the firm or any of our employees are the subject to any ongoing municipal securities investigation, a party to any municipal securities litigation or arbitration, or the subject of a subpoena in connection with a municipal securities investigation. In fact, it is our "no litigation" history which, along with a demonstrated work ethic and performance track record, that has helped to fuel our office's growth to become the largest local full service investment banking and financial consulting office in Central Florida. I " I I I I I '1 I I I I I I I I I I I I We believe that there are a number of compelling reasons to select Hanifen, Imhoff as the Financial Advisor to the City and continue our relationship. These reasons include: 1. Experienced Local Team In addition to the Hanifen's over 39 years of experience, the local team brings considerable knowledge and experience from years of financing both large and small municipal and corporate projects in Florida and across the country, Both Jeff Larson and Gary Akers have been very active with similar financi,ngs in Florida during their over 39 years of experience and look forward to assisting the City on these important financings. Both Mr. Larson and Mr. Akers are residents of Seminole County and very sensitive to the City's goals and objectives. Ed Stull brings fourteen years of experience in debt structuring and commercial banking, Carlos Pereda also brings expertise from his years at Black & Veatch working with utility acquisitions, due diligence research, feasibility studies, rate modeling, revenue forecasting, valuations and other analytical and technical reports. 2. Familiaritv with the City In addition to Jeff Larson having lived in the City of Winter Springs for a number of years, Gary Akers has previously served the City on numerous financings - including the issue that built City Hall. Both officers worked together and produced significant results for the City on the recent $7.9 million Series 1999 issue. This included the notable achievement of helping the City obtain, for the first time, an "A" category underlying credit rating which helped to further reduce the interest rates and bond insurance premiums on the City's bonds. 3. Proven Sales Performance - Abilitv to Help Reduce Interest Expense When we serve as Financial Advisor, we can leverage Hanifen's over 39 years of first hand experience in the municipal markets. This helps to insure, as the City's selected underwriters price the various issues, that the City's Financial Advisor has the direct knowledge of the market and can push for the lowest interest rates possible. 4. Commitment to the Florida Market and Public Finance Recent experience and commitment to the Industry and Florida market should be considered. While others have left the business or scaled back or closed down offices, Hanifen, as a well capitalized, NASD member firm has expanded by establishing its Southeast Regional Office in Orlando in 1995, and other offices across the country over the past three years. The recent merger with Stifel, a NYSE, publicly traded firm, provides additional strength and history due to their extensive track record since 1890. I " I I I I I I I I I I I I I I I I I I 5. No Liti2:ation Historv An increasing amount of cities, counties, authorities, school districts and other institutional issuers are determining that it is important to deal with a firm and its team of professionals that have an unblemished reputation. Hanifen's record exists because we place the highest priority and emphasis on customer service and professional ethics. Hanifen, Imhoffs Southeast Regional Investment Banking office continues to expand its business in Florida and is proud of its impeccable track record. This emphasis is evidenced by Jeff Larson's recent participation as a panelist at the Bond Buyer's 1997 Florida Public Conference addressing industry standards, SEC enforcement, MSRB rules and yield burning issues. 6. Emohasis on Relationshios We encourage you to contact the Florida references provided. Our growth has been due primarily by the high level of services provided by our seasoned team of professionals. The demonstrated track record has led to additional clients, a growth in our local office, and very strong references. We believe that this effort has been both proactive and responsive. ' Our business continues to grow because we emphasize, and place strategic importance on, establishing and strengthening relationships. In short, we initiate relationships by providing innovative, and highly professional services. We build on and strengthen relationships by consistently providing responsive and cost effective services. I " I HANIFEN, IMHOFF FLORIDA FINANCING LIST 1995 TO PRESENT* I Par Amount Issue Description Dated Date I 3,075,377 City ofLynn Haven, Florida, Special Project Refunding Revenue 10/01/99 Bonds, Series 1999 (Cash Defeasance) (Financial Advisor). I 3,645,000 City of Panama City, Florida, Capital Improvement Revenue 08/15/99 Bonds, Series 1999 (Financial Advisor) . I 18,000,000 Indian River County, Florida, Variable Rate Demand 07/27/99 Revenue Bonds (St. Edward's School, Incorporated Project), Series 1999 (Financial Advisor) 7,998,970 City of Winter Springs, Florida, Improvement Revenue Refunding 07/01/9'9 Bonds, Series 1999 (Senior Manager) I 3,860,000 City of Fort Pierce, Florida, Capital Improvement Refunding 07/01/99 Revenue Bonds, Series 1999 (Sole Manager) (Delayed Delivery/Forward Refunding) I 2,395,000 City of Wildwood, Florida, Water and Sewer Revenue Bonds, 06/28/99 Series 1999 (Financial Advisor) I 43,435,000 Seminole County, Florida, Water and Sewer Revenue Bonds, Series 06/15/99 1999 (Financial Advisor) I 6,965,000 City of Winter Haven, Florida, Capital Improvement Refunding 06/01/99 Revenue Bonds, Series 1999 (Sole Manager) I 189,100,000 Greater Orlando Aviation Authority, Airport Facilities Revenue 06/01/99 Bonds, Series 1999A (AMT) and 13,890,000 Series 1999B (Non-AMT) (Co-Manager) I I 4,770,000 Osceola County, Florida, West 192 Redevelopment Area 06/01/99 Municipal Service Benefit Unit, Special Assessment Bonds (Phase IlB) Series 1999 (Financial Advisor) 54,435,000 Osceola County, Florida, Sales Tax Revenue Bonds, Series 1999 05/15/99 (Financial Advisor) I 22,410,000 Okeechobee Utility Authority, Utility System Capital Improvement 04/01/99 Revenue Refunding Bonds, Series 1999 (Sole Manager) I 15,300,000 St. Lucie County, Florida, Limited Advalorem Tax Bonds, Series 02/01/99 1999 (Senior Manager) . I 3,755,000 City of Fort Meade, Florida, Electrical System Refunding Revenue 02/01/99 Bonds, Series 1999 (Financial Advisor) I 23,215,000 City of Palm Bay, Florida, Utility System Capital Improvement 12/01/98 Revenue Bonds, Series 1998 (Sole Manager) I I * Completed by Banifen, Imhoff or by currellt employees prior to joining Hanifell, Imhoff Tllc. Does 1I0t illclude pending trails actio liS. I " HANIFEN, IMHOFF I FLORIDA FINANCING LIST 1995 TO PRESENT* I Par Amount Issue Description . Dated Date 47,700,000 Bay County, Florida, Sales Tax Revenue Bonds, 12/01/98 I Series 1998 (Financial Advisor) 40,0 I 0,000 Escambia County Utilities Authority, Florida, Utility System 10/0 1/98 Refunding Revenue Bonds, Series 1998D I (Delayed Delivery) (Co-Manager) 24,060,000 Seminole County, Florida, Sales Tax Revenue I % 1/98 I Refunding Bonds, Series 1998 (Financial Advisor) 15,280,000 Village of Royal Palm Beach, Florida, Utility System Revenue I % I /98 Bonds, Series 1998 (Co-Manager) I 46,640,000 Greater Orlando Aviation Authority, Florida 08/15/98 Airport Facilities Refunding Revenue Bonds, Series 1998 I (Co-Manager) 7,335,000 City of Pal atka, Florida, Water and Sewer System Improvement 08/0 I /98 and Refunding Revenue Bonds, Series 1998 (Sole Manager) I 65,455,000 City of Port St. Lucie, Florida, Special Assessment Bonds, Series 07/15/98 1998A (USA 3&4 Water and Wastewater Extension Project) I (Senior Manager) 9,020,000 Osceola County, Florida, West 192 Redevelopment Area 07/01/98 Municipal Service Benefit Unit, Special Assessment Bonds (Phase I IIA), Series 1998 (Financial Advisor) 14,920,000 St. Lucie County, Florida, Special Assessment Refunding Bonds, 07/01/98 I Series 1998 (South Hutchinson Island Wastewater System) (Senior Manager) 45,0]5,000 City of Winter Haven, Florida, Utility System Improvement and 07/01/98 I Refunding Revenue Bonds, Series 1998 (Senior Manager) 12,450,000 City of Mount Dora, Florida, Water and Sewer Refunding Revenue 04/0 I /98 I Bonds, Series 1998 (Financial Advisor) 7,500,000 City of Fort Pierce, Florida, Capital Improvement Revenue Bonds, 03/01/98 Series 1998 (Senior Manager) I 62,250,000 Osceola County, Florida, Capital Improvement Revenue Bonds, 03/01/98 Series 1998 (Financial Advisor) I 22,655,000 Charlotte County, Florida, Utility System Refunding Revenue 03/0]/98 Bonds, Series 1998 (Financial Advisor) I 10,010,000 City of Port St. Lucie, Florida, Sales Tax Refunding & 02/15/98 Improvement Revenue Bonds, Series 1998 (Senior Manager) I 5,345,000 Osceola Gas Tax Refunding Revenue Bonds, 01101/98 Series 1998, (Financial Advisor) I * Completed by Ballifen, Imhoff or by currellt employees prior to joining Banifen, Imhoff Illc. Does not include pending transactions. I '. I HANIFEN, IMHOFF FLORIDA FINANCING LIST 1995 TO PRESENT* I Par Amount Issue Description Dated Date I 21,610,000 City of Callaway /Bay County, Florida, Wastewater System 10/11/96 Revenue Bonds, Series 1996 A & B (Financial Advisor) I 3,000,000 Seminole County, Florida, Line of Credit, Series 1996 10/08/96 (Financial Advisor) 6,830,000 Bay County, Florida, Public Improvement Bonds, Series 1996 09/01/96 (Financial Advisor) I 141,483,068 City. of Sunrise, Florida, Utility System Revenue Bonds, Series 09/0 l/96 1996 A (Financial Advisor) I 19,130,000 Seminole County, Florida, Limited General Obligation Refunding 08/0l/96 and Acquisition Bonds, Series 1996 (Financial Advisor) I 12,180,000 City ofFort Pierce, DSRF Release - 3 old issues (Financial 07/02/96 Consultant) I 4,270,000 Longboat Key Beach Erosion Control District A, General 07/0l/96 Obligation Bonds, Series 1996 (Financial Advisor) I 1,605,000 City of Orange City, Florida, Utility System Improvement Revenue 06/25/96 Bonds, Series 1996 (Senior Manager) 43,155,000 City of Sunrise, Florida, Utility System Revenue Refunding Bonds, 06!l5/96 Series 1996 (Financial Advisor) I 4,210,000 Osceola County, Florida, Special Assessment Bonds, Series 1996 06/01/96 (Financial Advisor) I I 11,560,000 City of Panama City, Florida, Water and Sewer Revenue Bonds, 06/01/96 Series 1996 (Financial Advisor) 25,750,000 Seminole County, Florida, Sales Tax Revenue Bonds, Series 1996 05/01/96 (Financial Advisor) I 21,231,029.90 City of Port St. Lucie, Florida, Utility System Revenue Bonds, 04/25/96 Series 1996 (Sole Manager) I 8,210,000 City of Port St. Lucie,'Florida, Special Assessment Bonds, Series 04!l8/96 1996A (Senior Manager) I 6, I 00,000 City of Oviedo, Florida, Utility Revenue Bonds, Series 1996 03/0 l/96 (Financial Advisor) 9,080,000 City of Port St. Lucie, Florida, Local Option Gas Tax Revenue 01!l5/96 Refunding & Improvement Bonds, Series 1996 (Sole Manager) I 10,500,000 Mississippi Business Finance Corporation, Taxable Industrial 1995 Development Revenue Bonds (Catalina Lighting Project), Series 1995 (Sole Manager) I I * Completed by Banifen, Imhoff or by current employees prior to joining Banifen, Imhoff Inc. Does not include pending transactions. I '. I HANIFEN, IMHOFF FLORIDA FINANCING LIST 1995 TO PRESENT* I Par Amount Issue Description Dated Date I 2,350,000 Volusia County Industrial Development Authority Industrial 1995 Development Revenue Bonds (Daytona Plastix Project), Series 1995 (Sole Manager) I 19,700,000 Southeast Vol usia Hospital District Revenue Bonds, Bert Fish 1995 Medical Center Issue, Series 1995 (Co-Manager) I 15,500,000 St. Lucie County, Special Assessment Bonds, (South Hutchinson 10/03/95 Island Wastewater System), Series 1995 (Co-Manager) I 19,295,000 Okeechobee Utility Authority, System Acquisition and 09/15/95 Improvement Bonds, Utility Revenue, Series 1995 (Senior Manager) I 3,820,000 City of Orange City, Florida, Utility Refunding Revenue Bonds, 09/12/95 Series 1995 (Financial Advisor) I 8,630,000 Melbourne Airport Authority, Florida, Forwarded Revenue 08/29/95 Refunding Bonds, Series 1995 (Financial Advisor) 7,120,000 Panama City, Florida, Capital Improvement Revenue Bonds, Series 07/18/95 1995 (Financial Advisor) I 8,500,000 City of Sunrise, Florida, Revenue Notes, Series 1995 (Financial 05/18/95 Advisor) I 3,890,000 City of Port St. Lucie, Florida, Sales Tax Revenue Notes, Series 05/15/95 1995 (Sole Manager) I I 2,740,000 Volusia County, Florida, Special Assessment Bonds, Series 1995 04120/95 (Financial Advisor) I I I I I I * Completed by Banifen, Imhoff or by current employees prior to joining Banifen, Imhoff 111C. Does not include pending transactiollS. I 0, I I I I I I I I I I I I I I I I I I . . I I Hanifen, Imhoff's capital position as of November 1999 was: $7,148,429 $4,378,554 $3,294,598 Prior to the merger with Hanifen in January 2000, the Total Capital for Stifel Financial Corp. (NYSE:"SF') as of December 31, 1999 was approximately $59.1 million (please see attached Stifel news release). For more information on Stifel, we would refer you to our Web page ..www.stife1.com ". I 't I I I I I I I I I I I I I I I. I I I Stifel Financial Corp. Reports Fourth Quarter Diluted Earnings Per Share of $0.25 Earnings Per Share Up 79% Over 1998 Fourth Quarter Record Annual Revenues Sf. Louis, Missouri, January 31, 2000 - Stifel Financial Corp. (NYSE: "SF") today reported net income of $1,703,000, or $0.25 per diluted share, for the quarter ended December 31, 1999, compared to $1,002,000, or $0.14 per diluted share, for the comparable quarter of 1998. Total revenues for the fourth quarter were a record $40.8 million, compared with $33.1 million in the corresponding period a year ago. For the year ended December 31, 1999, net income was $7,165,000 or $1.03 per diluted share, compared with $5,245,000 or $0.73 per diluted share for 1998. Total revenues for 1999 were a record $151.2 million, compared with $137.3 million the previous year. At December 31, 1999, the company's equity was $59.1 million, resulting in book value p~r share of $9.18. During 1999, the company repurchased 576,165 shares, using existing board authorization, at an average price of $9.44 per share. For the quarter, total revenues increased 23%. The firm's continued t:xpansion of its private client group contributed to the increase in revenues from commissions and principal transactions of 14%, while investment banking revenues increased 76% and interest revenue increased 48%, all compared to the prior 1998 fourth quarter. Total expenses increased 21% in the fourth quarter. Employee compensation and benefits increased 15%, which was lower than the percentage increase in operating revenues. Increases in communications and occupancy of 2% and 19%, respectively, were the result of the firm's expansion in its private client group and investment in new technology. President and Chief Executive Officer, Ronald 1. Kruszewski, and Chairman of the Board, George H. Walker, commented, "We are pleased with our most recent quarter and the progress made over the past year. During 1999, we opened 11 new offices and added 102 investment executives and independent contractors. Also, the recent merger with Hanifen, Imhoff will strengthen our fixed income and equity capital market groups, Our growth has validated our ''OJ Choice" stratef,'Y, and we are optimistic that our strategic investment in associates and technology bodes well for the future." Stifel Financial Corp. is a financial services holding company whose subsidiaries are engaged in general securities brokerage, investment banking, and money management with locations in 17 stat{:s, primarily in the Midwest. To learn more about Stifel, please visit the Company's' web site at www.stifel.com. (table attached) I " I I I I I I I I I I I I I I I Number of Shares for Earnings Per Share Computatiolls: Basic Shares 6,485 6,871 I Diluted Shares 6,822 7,102 I Note: All shares and earnings per share amounts reflect the 5% stock dividend declared January, 1999. I I I 6,655 6,926 6,850 7,198 I " I I I I I I I I I I I I I I I I I I I I We have provided the following references where we have served as either Financial Advisor or Senior Manager on recent Florida financings. SEMINOLE COUNTY Ms. Cindy Hall Director of Fiscal Services 1101 East First Street Sanford, Florida 32771 Phone: (407) 321-1130 Fax: (407) 665-7183 OSCEOLA COUNTY Mr, John Ford Assistant County Manager 17 S. Vernon Avenue Kissimmee, Florida 34741 Phone: (407) 343-2387 Fax: (407) 343-2381 CITY OF PORT ST. LUCIE Mr. Frank Blackwell Finance Director Mr, Don Cooper City Manager 121 S,W. Port St. Lucie Blvd. Port St. Lucie, Florida 34984 Phone: (561) 871-5189 Fax: (561) 871-5203 CITY OF PALM BAY Ms. Dona Newman Finance Director Mr. Dan Greenfield Deputy City Manager 120 Malabar Road, Southeast Palm Bay, Florida 32907 Phone: (407) 952-3400 Fax: (407) 952-3401 I " I I I I I I I I I I I I I I I I I I , , CITY OF WINTER HA VEN Mr. Calvin Bowen Finance Director Mr. Carl Cheatham City Manager 451 3rd Street N.W. Winter Haven, Florida 33883 Phone: (941) 291-5613 Fax: (941) 297-3027 CITY OF DELTONA Mr. Fritz Behring City Manager 800 Deltona Blvd. Deltona, Florida 32728 Phone: (407) 860-7160 Fax: (407) 860-7167 BAY COUNTY Mr, Joey Rogers Finance Director 240 E. Fourth Street Panama City, Florida 32401 Phone: (850) 747-5215 Fax: (850) 747-5212 CITY OF FORT PIERCE Mr. George Bergalis Finance Director 100 N. U.S. Highway 1 Fort Pierce, Florida 34954 Phone: (561) 460-2200 Fax: (561) 489-2594 I'. I I I I I I I I I I I I I I I I I I . . OKEECHOBEE UTILITY AUTHORITY Mr, Jim Paul Finance Director 100 S,W. 5th Avenue Okeechobee, Florida 34972 Phone: (863) 763-9460 Fax: (863) 763-9036 CITY OF MOUNT DORA Ms. Carol Rogers Finance Director 510 North Baker Street Mount Dora, Florida 32756 Phone: (352) 735-7119 Fax: (352) 383-4801 CHARWTTE COUNTY Mr, Tommy White Chief Deputy of Board Services 18500 Murdock Circle Port Charlotte, Florida 33948 Phone: (941) 743-1413 Fax: (941) 743-1420 We would be pleased to provide additional references upon request. I " I I I I I I I I I I I I I I I I I I I I Service Approach On the following pages, we detail our general approach to providing financial advisory services for a typical transaction. In developing this approach, our intent is to provide a broad range of professional advisory services, allowing us to achieve the most efficient financings in terms of both issuance costs, net interest cost and structuring flexibility to the City. Hanifen, Imhoff is prepared to provide the following services as they relate to typical transactions. I. ISSUE DEVELOPMENT SERVICES Our assistance in the development of bond issues or other forms of financings includes at least three phases: planning and development, marketing, and closing. These services are provided, as appropriate, regardless of whether a competitive or negotiated sale is pursued. We are prepared to immediately commence work for the City upon being selected as the City of Winter Springs Financial Advisor. Planning and Development Phase . Research and advise on aspects of tax exemption, financing structure and arbitrage In cooperation with the City's legal counsel and bond counsel. . Assist in the preparation and analysis of rate or feasibility studies in cooperation with the City's staff, bond attorneys, accountants, engineers and other professionals as requested by the City. . Carefully analyze the financing to determine the best methods of strengthening its marketability consistent with current economic, capital market conditions and increasingly stringent rating agency criteria and bond insurer requirements. This may involve the use of municipal bond insurance, surety bonds, letters of credit or other credit enhancement devices. . Perform a comprehensive analysis to determine the best possible plan of finance or refunding. Each issue must be analyzed on merits, including a market test to determine its marketability. Given the breadth of our team's experience base, the options reviewed will include bridge, bank, structured finance and bond financings. . Consult with Moody's, Standard & Poor's and/or Fitch Investors Service with regard to the proposed financing and assist in obtaining, or maintaining, the most favorable rating possible. Assist the City with preparation of an effective presentation, if necessary. I " I I I I I I I I I I I I I I I I I I . , · Submit applications to Municipal Bond Insurers for the purpose of securing a commitment for a policy of insurance for the bonds. Analyze benefits of debt service reserve surety policy compared to fully funded debt service reserve fund. · Evaluate the economic benefit of insuring or not insuring the bonds. Evaluate and determine benefits of obtaining underlying rating if the bonds are to be insured. · Provide assistance and recommendations with the selection of ancillary service providers such as registrar, trustee, escrow agent, verification agent and printer. . Act as liaison with bond counsel and disclosure counsel and coordinate other professionals providing information in connection with the proposed financing. · Prepare a timetable of events for all concerned leading to the successful sale and delivery of an offering. Marketing Phase . Advise on the appropriate terms and conditions of the sale, including maturity schedule, underwriter's discount and redemption provisions. If issue is sold competitively, advise on interest rate bidding requirements and basis for award. · Assist in selection of, and negotiations with, underwriters, if issue is sold on a negotiated basis. . Advise on the timing of the sale, taking into consideration such factors as changing economic conditions, existing supply and demand, current and projected market trends and convenience to the City. . Coordinate with bond counsel the preparation of authorizing resolutions and other documents involved in the sale of bonds or other methods of financing. . Assist the City in meeting full disclosure requirements (including working with Legal Counsel to insure that continuing market disclosure requirements (15c2-12) are met) and in conforming to guidelines in preparation of the Official Statement. . Distribute the Preliminary Official Statement and Final Official Statement to potential purchasers of the City's securities across the nation. Maximize efforts to market the City's debt issuance most effectively. For a competitive sale, directly contact those lead underwriters most likely to be syndicate managers. Advertise the issue in nationally prominent financial publications, in addition to coordinating local publication requirements. . Participate, as deemed appropriate, in informational meetings with the investment community, banks (when appropriate), including investment bankers (dealers and dealer banks) and institutional investors (banks, bank holding companies, and insurance companies) in New York and elsewhere to establish interest on the offering. I I I I I I I I I I I I I I I I I I I . ,. · Evaluate bids and make recommendations on the adequacy of the bids for competitive sales. Issue Closing Phase . Assist with issue closing details, including coordination with bond counsel, disclosure counsel and underwriters in order to ensure delivery in the shortest possible time frame. . Furnish prompt, complete reinvestment analysis (including review of available options) so that interest income from the investment of bond proceeds can be maximized. Provide assistance to staff and the consulting engineer in development of comprehensive construction draw schedule. . Solicit bids on investment of idle funds, if requested. After the sale, Hanifen, Imhoff will prepare a Postsale or Comparison Pricing Analysis which will confirm the information presented to the City staff on the sale or pricing date. The Postsale or Comparison Pricing Analysis will include financial debt schedules, a tabulation of bids received, a comparison of the winning bid or final negotiated pricing with similar issues, an analysis of the compensation generated by the purchaser and discussion of other matters of importance to the issue. II. TRANSACTIONAL INVESTMENT INFORMATION AND ADVICE Our Fixed Income Sales and Trading area, along with the Equity Sales staff, is active daily in the markets with the full range of taxable and tax-exempt securities. We would plan to continue our current work with the City in the investments area. This includes being available to discuss and recommend procedures for bids, handle these for the City and leverage our capabilities on a day- to-day basis to safeguard the City's funds while also maximizing investment returns and contributions to the budget and general fund. The various types of "permitted investments" per Florida Statutes and those allowed under existing bond documents would be reviewed and a Comparative Analysis done for these different securities. An "investments workshop" for the Staff, new Finance Director, when selected, and the City Commission is sometimes a good idea to demonstrate that this area is receiving the due attention. We would be pleased to help set this up and bring in the appropriate members of the Hanifen team. Portfolio Analvsis Since our firm has served as the SBA equivalent in Colorado (with over $1 Billion under management), we could leverage these skill sets and capabilities into some direct analytical portfolio reviews. These might include, but not be limited to; a. Relative Value Analysis - Looks at the existing portfolios, makes determination after review or update of Investment Policy, to rebalance the portfolios to better reflect the investment objectives and risk/return parameters. This usually results in some Buy or Sell recommendations to the Investment Committee or City staff as the portfolio is rebalanced to meet the new market conditions and objectives. This might also include some Historical I I I I I I I I I I I I I I I I I I I '. i . Spread analysis to see how the portfolio has behaved in the past, perhaps, as a forecast of future movements. It is also better to know and understand the risks and tradeoffs of various securities by seeing how historical rate movements have affected the given security being held or already in the portfolio and this may not have been reviewed like this in the past. b. Option Adiusted Spread Analysis - This applies to some of the callable, or non-callable backed securities that the City has or may want to consider. The analytics look at the gross spread of the securities, and separates the call option feature to see the true spread relationship to a straight Treasury security. c. Horizon or Scenario Analysis - This allows the City to look to see how the portfolio would have traded, say, a 1 year period. This is often critical for the budgeting period and for audit purposes to see how, for example, 300 basis point swings in the market would affect the portfolio and the public's/insurers/rating agencies' view of it. d. Sensitivity Analysis - Where the horizon analysis gauges a portfolio's movements over time, this would provide the ability to see a snap shot in time, or, for example, what the portfolio's position would be if the Federal Reserve Open Market committee decide to tighten by raising the Fed Fund and Discount Rates by 50 basis points. III. REVIEW/ANALYSIS OF FINANCIAL PROPOSALS The City of Winter Springs can expect to receive solicited and unsolicited proposals from banks, underwriting firms, insurance and investment providers and other professionals in the field for products, services and financial transactions that are designed to increase revenues or provide innovative solutions to financing dilemmas. These proposals typically include the use of non- traditional financing techniques such as various lease options, variable rate obligations, asset transfers; investment contracts, derivative features and joint public/private ventures. Hanifen, Imhoff has substantial experience in assisting our clients with the evaluation of these proposals. Drawing upon our knowledge of programs and proposals we have analyzed for clients across the country, Hanifen, Imhoff can facilitate decisions on these proposals by providing a thorough analysis of a proposal's feasibility. The analysis helps to determine the primary objectives of the proposal, its advantages and disadvantages, and its anticipated fiscal impacts. This is accomplished in cooperation with staff and the firm submitting the proposal, and typically culminates in the production of a written report. We would expect to present and discuss our analysis with appropriate City officials and staff. If the proposal was unsolicited, we assist in deciding whether or not to send a request for proposal to other firms. I '. I I I I I I I I I I I I I I I I I I i FEE IJI{OPOSAL --- - --------4- - ----__ -. -. _ . __~___._....__... _.. _ _____ .. . ____. ______ __ __~__ _.__ __ ___ __ _ . HOURL Y COMPENSATION If selected by the City, Hanifen would be prepared to work entirely on an hourly basis. In addition, and if so directed by the City on an ongoing basis, the Consultant also agrees to be available to advise the City from time-to-time for additional service compensation as to budget/planning matters, site development, tax matters, economics and community development, referendum issues, investments and long-range capital planning. If the Consultant assists the City in these areas or designs a capital improvement financing plan or strategic operating plan at the request of the City, the Consultant shall be paid on an hourly basis for all time expended by its personnel. The hourly rates shall be as follows: Managing Director or Senior Vice President: Vice President, Assistant Vice President or, Senior Analyst: Associate or Administrative Assistant: $ 165.00/Hour 140.00/ Hour 75.00/Hour RETAINER We propose that a retainer be negotiated with the City based on the anticipated level of services required. Such retainer will be paid monthly. Hourly charges will first be reduced by the retainer paid. Any excess above the annual retainer will be billed at the time such charges exceed the annual retainer at the rate schedule provided above. INVESTMENTS To be negotiated based on current market conditions for comparable investments. OUT -OF-POCKET EXPENSES Reimbursable out-of-pocket expenses will include the following items and other miscellaneous expenses approved by the City. . Travel and Lodging . Courier Service . Facsimile ($2.00 per page) . Photo Copies ($.20 per copy) . Long Distance and Conference Telephone Charges . 3rd Party expenses such as advertising incurred on behalf of the City . Other as approved by City and per Florida Statute We would be pleased to discuss this further with the City to determine a satisfactory compensation schedule for the level of services desired by the City. 'I I I I I I I I I I I I I I I I I I I ~ i The local Hanifen team has recently served a number of comparable municipalities on their needs, related financings, bond insurance and bond ratings including the cities of Winter Springs, Port St. Lucie, Fort Pierce, Fort Meade, Palm Bay, Pal atka, Winter Haven, Mount Dora, and Panama City to name a few. All of these presented complications and challenges, but were successfully closed on time and under budget. This required a concerted focus, an understanding of our client's objectives, and our excellent track record with the bond insurers and rating agencies - all skill sets that Hanifen will leverage to the City's benefit on this engagement. COST SAVINGS In many of the above referenced cases, and others (i.e. Winter Springs, Seminole County, Palm Bay, Port St. Lucie, Bay County, Charlotte County, Osceola County, Okeechobee Utility Authority, etc.) we were able to negotiate significant cost savings on bond insurance. As with the City, we were also able to achieve first time, "underlying" credit ratings in the "A" category for a number of Florida clients. In addition to the "AAA" rating from the bond insurer, a municipalities' underlying "A" category rating, if proactively marketed, provides additional credit strength in the eyes of the investors AND, therefore, helps to further reduce the level of interest rates. In the City's case, this produced estimated savings of around 10 b.p. or $390,000 on the Series 1999 issue. The Hanifen team also negotiated an insurance premium with the bond insurer that produced additional savings. We have provided below some other examples for your reference. RA TING UPGRADES - MAINTAINING NEW UNDERLYING RATINGS This is an area of strength for Hanifen. Whether serving as financial advisor or underwriter, contacting the rating agencies, bond insurers, and our references and other clients will indicate that this is an area of demonstrated performance for our team, There is a great amount of effort here, which has consistently produced well received, well structured financings and considerable savings. Jeff Larson brings his debt underwriting and credit approval experience from his banking years, and structural knowledge from a variety of Fortune 1000 and Public Finance financings across the country. Gary Akers has served major Florida issuers as Financial Advisor for over 20 years. Ed Stull brings extensive credit experience in the governmental market. Nate Ec kl off, as a member of the Bar and National Association of Bond Lawyers (NABL) , brings incredible insight into various structures from the tax, arbitrage and legal areas. There is probably not a type of financing structure, cashflow model or stream of pledged revenues that this local team has not either analyzed or recommended. All of this provides the City with a deep and well balanced team that produces results. 1. City of Winter Springs, Florida The Hanifen Team led the effort for the City in obtaining its "A" category underlying rating for the first time. In addition to producing the debt service savings mentioned above, this rating achievement also set the foundation for every other new money or refunding issue that the City will do. Managing and reducing costs will continue to be the focus for Hanifen as we look forward to assisting the City with i,ts other financings. I I I I I I I I I I I I I I I I I I I ) 2. City of Winter Haven, Florida One recent and comparable example is the City of Winter Haven. Embarking on a $45,000,000 utility acquisition and strategic capital expansion program, this heretofore "sleepy" city in Polk County retained Hanifen as Senior Managing Underwriter to assist with the financing - in huge part due to its prior track record in Florida on other utility acquisitions, our strong references with other professionals, the rating agency and bond insurer community, and no litigation history. . The City had previously issued approximately $10 to $15 million in bonds and was not very knowledgeable about this process, or the importance of obtaining an underlying rating. The Hanifen led team was able to obtain an "A" underlying rating from two of the nationally recognized agencies. This underlying rating, along with the AAA from the Bond Insurer (MBIA) was published and resulted in lower interest rates and over $760,000 in debt service savings. In addition, we negotiated a bond insurance premium that saved an additional $240,000, producing in aggregate over $1 million savings to the City. These savings were in addition to the refunding of the existing three Series which achieved by themselves over 10% present value savings (as compared with the GFOA guidelines which recommend a minimum target of 3% PV Savings). 3. City of Palm Bay, Florida Another comparable, recent example was the Hanifen led team's work with obtaining a bond insurance premium at 50% of the estimated cost, producing savings in excess of $120,000 and negotiating an "A-" underlying rating from Standard & Poor's. The "A-" rating allowed the bonds to be sold to a much broader, and risk adverse, cadre of investors thereby saving an estimated 5 basis points or approximately $330,000 in debt service costs. 4. Seminole County, Florida Over the past twelve years as financial advisor, Gary Akers has worked with the staff and the various rating agencies to increase the County's General Obligation rating from Baa to AA from Moody's Investor Service and to AA- from Standard & Poor's. This has been a continuous process involving numerous meetings and discussions with the rating agencies and the County in order to identify credit challenges and work to meet the criteria for upgrading the rating. 5. Other Examples Other examples include rating applications and presentations for Bay County's Resource Recovery System, Bay Medical Center, Okeechobee Utility Authority, City of Port St. Lucie, State of Colorado, and Osceola County's Sales Tax just to mention a few. I~- -~ . I I I I I I I I I I I I I I I I I I ..~. . . City of Winter Springs, FL Proposal for Financial Advisory Services RFP-006-00 / CD March 15, 2000 Public Financial Management Suite 720 201 South Orange Avenue Orlando, FL 32801-3470 407 648-2208 407-648-1323 fax www.pfm.com I I I I I I I I I I I I I " II {FM There are few, if any jobs in which ability alone is sufficient. Needed, also, are loyalty, sincerity, enthusiasm and team play. -William B. Given, Jr. . - . Financial Statement . ; t~:.. ,- .~ ~_. J Suite 720 201 South Orange Avenue Orlando. FL 32801.3470 407 648.2208 407648.1323 fax www.pfm.com Alii=- - .:::: PFM -- -- -- "===- Public Financial Management ~- Financial and Investment Advisors AprilS, 2000 Gene DeMarie Director of General Services City of Winter Springs 1126 East State Road 434 \'{linter Springs, FL 32708-2799 Mr. DeMarie: I am responding to your letter dated March 27, 2000 requesting a clarification of our fee proposal. Public Financial Management Inc. does not require a retainer. Our fee on a "$ per bond" basis consists of (i) base fee of $4,500, plus (ii) $0.50 per $1,000 of bonds. For Bonds the minimum fee is $7,500. Please note that for small fmancings it may make more sense for the City to pursue alternate fmancing structures (bank loans, private placements, etc.) Our fee for these transactions can be reduced below the minimum fee. Thank you for the opportunity to work with the City. If you would like to discuss other fee arrangements or have further questions regarding our proposal please feel free to call me at (407) 648-2208. Sincerely, Public Financial Management 12'- '"} Y~0/~//~ David M. Moore Senior Managing Consultant ii>~", .~. ,. CITY OF WINTER SPRINGS, FLORIDA 1126 EAST STATE ROAD 434 WINTER SPRINGS. FLORIDA 32708-2799 Telephone (407) 327.1800 March 27, 2000 David M. Moore Senior Managing Consultant Public Financial Management 201 South Orange Avenue, Suite 720 Orlando. Florida 32801 Mr. Moore; The City has received two (2) very qualified proposals to serve as Financial Advisor to the City. The City is requesting the firms resubr;nit their proposed fees based upon the successful issuance of debt; should the City require advice other than for debt issuance then the proposed hourly rates previously quoted will be.used, This quote should include all services rendered in connection with the issuance of debt including, but not limited to, review of all documents required in connection with the issuance of debt, assistance with offering documents, rating or insurance presentation material, attendance at all City Commission meetings related to the debt issuance, advice regarding the method of sale, review of any and all bond purchase agreements and other matters in connection with the issuance of debt. 1. Do you require a monthly retainer? YES NO 2. If YES. how much? 3. Is the retainer credited against a per bond or debt fee? YES_NO_ 4,. Fee quote per bond or debt iSSl!ance: . Amount 0- $1 million $'1" - $3 million $3 - $5 million $5 million and above Please quote either a minimum fee or fee per $1,000 of borrowings. Please fax this proposal to the undersigned at 407-327-4753 on April 7, 2000. Gene DeMarie Director of General Services I 2---i ~p I I AlllIi=- ~PFM - -- -:: Public Financial Management -- Financial and Investment Advisors Suite 720 201 South Orange Avenue Orlando. FL 32801-3470 407 648-2208 407 648-1323 fax www.pfm.com I I March 15,2000 I Mr. Gene DeMarie Director of General Services City Hall 1126 East State Road 434 \'(linter Springs, Florida 32708 I I RFP-006-00 / GD Dear Mr. DeMarie: I Public Financial Management, Inc. ("PFM") is pleased to submit our proposal to serve as Financial Advisor to the City of Winter Springs, Florida (the "City"). We are confident that you will find that the breadth of our experience involving cities and the depth of our financial planning expertise make us the most qualified firm to serve as your financial advisor. Our team's unmatched resources for financial planning, transaction management, and investment advice will provide the City with the highest level of financial services available. The close proximity of the PFM team allows us to be committed to the City and available to be at your door quickly. I I I Mr. David Moore, a Senior Managing Consultant, will serve as PFM's day-to-day contact for the City and has been responsible for this proposal response. I David Moore, Senior Managing Consultant Public Financial Management 201 South Orange Avenue, Suite 720 Orlando, FL 32801 (407) 648-2208 phone (407) 648-1323 fax m oored@publicfm.com I I On the following page we include an Executive Summary highlighting our unique qualifications and approach, W/e believe that these considerations, as more fully presented in this proposal, will convince you of the quality of service that PFM offers the City, We look forward to the opportunity to serve as your Financial Advisor. I Thank you for your consideration of our proposal. I Sincerely, Public Financial Management, Inc. jj~ 1(. fI(- -.. I I David M. Moore Senior Managing Consultant I I ::,.. , I I I I I I I I iii ..r: Executive Summary Winter Springs is a unique City located in one of the most dynamic growth areas of Florida. With the completion of the Greene Way, the City's long standing reputation as a desirable residential area is enhanced as accessibility to employment centers throughout the metropolitan area have increased, More transportation corridors also open the City to a wide range of commercial and retail development further strengthening the City's economic base. Public Financial Management Inc. (PFJ\1) has a unique approach to rendering financial advisory services that blends well with the City's growing economy. At PFM we believe capital and strategic planning are more than a formality leading to debt issuance, Unlike many of our competitors who often view strategic planning as a "nuisance required to justify a financing", we believe this service is often more important than the eventual financing. This approach is so vital to our philosophy that PFM created a team dedicated specifically to Strategic Municipal Consulting. This team assists clients with tasks as small as reviewing organizational issues to as large as solving the $300 million structural deficit for the City of Philadelphia. While the need for these services may be very limited for the City of Winter Springs, our approach to advising the City on planning issues related to the Town Center project or other initiatives will be based on this perspective. The following proposal introduces you to PFM and our extensive experience as highlighted below: Industry Leadership The PFM team offers the City the most experience. PFM ranked first in Florida and the nation during 1998 and 1999. PFM completed over $1 billion in Florida fmancings last year; four times the volume of our nearest competitor in Central Florida, Independence PFM is 100% independent As a result we have no conflicts of interest and a common, consistent financial advisory philosophy. Credit Expertise We have created and successfully implemented unique credit structures using special assessments, impact fees and tax increment revenues, Our strategy is to develop a sound financing plan enabling the City to access the capital markets at the lowest cost while maximizing financing flexibility. We developed and implemented the credit rating agency strategy that led to two of Florida's three "AAA" rated entities to obtain upgrades to the highest rating category. Our firm assists over 100 clients manage the rating agency process each year. Experienced Team David Moore will manage this team, In last two years he has served as financial advisor on more than $800 million in Florida fmancings. Hugh Marble and Rebecca Peterson will assist Mr. Moore on this engagement Both have extensive technical experience structuring fmancings, This team has more financial advisory experience in Florida than any of our competing f1nI1s. PFM's Orlando office is staffed by seven professionals each with special expertise that is available to the City at any time. Our team has worked on virtually every type of financing ranging from general obligation bonds to leveraged leases. I I I I I I I I I I I I ..," , fj Technical Resources The technical resources in our Orlando office exceed that found in most of our competitors entire ftnns. PFM's Quantitative Strategies Group leads the entire public finance industry-not just financial advisors-in creating and implementing the most complicated fmancing plans including forward refunding, swap and tender programs. Market Access Investment banks often suggest that an independent financial advisor is at a disadvantage when pricing bonds because they do not have a trading desk. While that may be true for smaller finns, PFM sells over 300 financings per year; far more than all but the largest investment banks. We are in the market five to ten times per week. As a result we use first hand, real-time market information to assist in pricing our clients fmancings. While many finns, including smaller underwriters, rely exclusively on second hand wire service information in an era where minutes can cost issuers thousands of dollars. As the nations largest fmancial advisor, PFM brings to the City immense resources. However, it is the personal commitment of our team that adds value to the fmancial advisory relationship. David Moore, the manager for this engagement, grew up in Seminole County and has lived in Central Florida for over 30 years. He is committed to ensuring that all of PFM's resources are available to the City on a day-to day basis and will use these resources to ensure the City obtains the highest quality, independent advice. I I I I I I I I I I I I I I I I I I I ". ~ =PFM ~ Table of Contents Firm Profile I Experience and Expertise Case Studies II III IV V VI Personnel Litigation Statement Financial Statement References VII VIII Fee Proposal I I I I I I I I I I I I )< The financial advisory business is a business of ideas. PFM's culture is designed to explore these ideas and push them to the limits of their effectiveness. It is these ideas, rather than our resume that sets us apart from our competition. Firm Profile I , p eM I I I I I I I I I I I History of the Firm Public Financial Management, Inc. ("PFM") was founded in 1975 on the principle of providing sound independent financial advice to state and local governments, Today PFM is the nation's leading municipal financial and investment advisory firm with offices throughout the United States. PFM has three primary business activities: (I) transaction management related to debt issuance; (iI) investment advice and portfolio management for bond proceeds and working capital; and (iii) strategic consulting related to operating and capital budgets, With this comprehensive orientation, PFM is unique among financial advisors in that it is involved in all aspects of a government's finances. PFM does not trade or underwrite securities. PFM serves only one interest- that of its clients. PFM is involved in the capital markets on a daily basis and offers its clients professional resources which equal or surpass those of any investment banking firm without the conflict of interest that underwriting firms bring to the table. PFM's only business is providing financial, investment and consulting advice to its clients. Financial Advisor As a financial advisor, PFM engages in capital planning, revenue forecasting and evaluation, resource allocation, debt management policy, and debt transaction management (including structuring, documentation, and execution), PFM delivers a depth of experience and skill that helps clients resolve the myriad of technical and financial issues that are routinely confronted during the capital formation process. PFM's national reputation and its consistent growth in business activity from $5 billion in debt management transactions in 1986 to $18.4 billion in 1998 reflects our clients' recognition of our capabilities and value. Investment Manager As an investment manager, PFM brings a comprehensive spectrum of services to the business of money management. PFM manages both state- oriented investment pools and individual client portfolios designed to earn competitive yields while maximizing safety and liquidity. Services include timely and market driven portfOlio management, portfolio design, state-of-the- art accounting and arbitrage rebate calculation services. The value of this service to clients is evident in the growth of assets under management from $1 billion in 1986 to over $12 billion in 1999. Strategic Consultant As a strategic consultant, PFM brings its clients the most effective capital and operating budget advice available, Techniques for performance management, benchmarking, revenue enhancement, and privatization are all areas in which PFM has a proven track record, Since 1993, PFM has helped clients eliminate billions of dollars of projected budget deficits without increasing taxes or reducing services. City of Winter Springs - Proposal for Financial Adviso'Y Services 11 Aii\lF- I \. ==~FM ~ I I I I I I I I I Organization PFM is composed of advisory groups targeted to both specific government businesses and geographic regions, which operate through the use of project teams. This approach to problem solving facilitates close working relationships among our many professionals, We provide service to our clients by organizing the most efficient and knowledgeable team of PFM professionals to serve each client's specific needs. PFM's flexible project-oriented approach to staffing engagements enables us to bring the proper mix of resources and experience to bear on a given client's problem or transaction. We can develop solutions to our clients' concerns that are responsive to multiple constituencies, The project-oriented approach also facilitates the development of close working relationships among our many professionals. This approach fosters information sharing and innovation, enhances junior staff mentoring and otherwise accelerates professional development. City of Winter Springs - Proposal for Financial Advisory Services I 2 I I. ~M '~ I I I I I I I I I I - Services Offered PFM offers its clients a complete scope of services to meet all of their financial needs, We develop innovative financing solutions for our clients' problems, and lead the public finance industry in the introduction of financing techniques designed specifically to enhance governmental access to the capital markets, As a national firm, PFM is able to offer an unrivaled breadth of experience and market expertise. As previously described, our scope of services is structured into three areas: Scop e of Services ~ln8nc181 Advisory '! ~ervlces Financing Schedule, : DI~pf structuring ;, N!egotiate.dvs. Competitive F.inancing T earn i ", :~~Iection '. : Fh1ancing A1tematlves. :'Financing Terms . , Dral! Documents; il .. . , : fy1arketi rg Plan Ratirg P reser1lation Bond P ridng jGlosing I':' :Refunding Verificalial Servic:es ' . . , . . StrateQic COnsulting t _I , Policy Developmert ~ Debt C apadty :C8pit~IBudget ., " Com petitive C ontra::ting ,; Benc:hmarkirg Performance Measurement lr..estnBrt . MBnagetnlnt , Fix8d~ncOm e Portfolio: Management Cash Management', , BondPl'Oceeds ' :'" Investment Management: ... ~ _ - ~ i; ~ Policy Deveh:pm er1I 'II' '. : Cash ~I owF orecaSting Escrow stlilcturi ngfRestl\JctY'ing structured Investment P I'Oducts A.r1:litrage R ebet e eom'pliance ACcourt ingl " , :Recordkeeping Ser..,;;des 'i . , II, <1 '; ;J.r lj ~" . : Targeted Budg~ing SeCuritization of . Delinquent Assets J,. . 'i, Lalxlr strategies Reverue E rhancem ent ,I", " strategic Municipal ' Consulting : Lease N e!J)t1 a1ion i , .~, I, " :,. At the same time, given the number of transactions we manage each year, PFM also has a broad and deep network of capital market professionals with which we interact. This network of investors, underwriters, bankers, credit specialists and lawyers facilitates the transaction management process, to our clients benefit. As the largest financial advisory firm, PFM has the ability to solve our clients' intractable problems by using our market power to move the agenda. Our constant participation in the markets only serves to further enhance our ability to do so. Total PFM Assets Under Management 1988-1999 dollars in millions 3,500 a..,,'~17I', 'I:', )'!I ! 1 1: 1 . 'JlTl~ _ I',)':'; 1~1~1~1~ 1~1~1~1~1~1~1~1~ City of Winter Springs - Proposal for Financial Advisory SelVices I 3 I I I I I I I I I I I I I :11 I .~ ~ Among the nationally known financial advisory firms, only PFM combines the experience gained in completing large numbers of transactions with the sophistication and analytic capability required to bring transactions of high par value to market. == - I I I . Experience and Expertise I j, e I I I I I - Nationally, PFM has 139 offi.cials, ma0agers, and professionals who are directly involved and interact with I governmental officials. I Locally, PFM has a staff of 8 to servi:ce the City's .(i n an cial I objectives. a. Describe any experience in public finance, to include the number of people in a firm who are directly involved and interact with governmental qfficials on matters of public finance. Experience and Expertise N adona! Experience Since the firm was founded in 1975, PFM has been involved in financing programs totaling in excess of $280 billion. Among the nationally ranked financial advisory firms PFM ranked number one in 1999 and in 1998. During 1999, the firm completed 298 transactions with a total par value of more than $13.6 billion. 1999 All Long-Term Municipal Haw luu" NJltionaJ ~f F..nciJI Advisofy Ranktw Sou-Rt: Tho8ond~ iMtII 0:mpIl'Jy 'tranu.c:tions do/Jarsin ml/Uons PFM Public: RBSQurces :1l1 AdvIsory Group Arst Southwest 382 ! 8.377.9 Company Ponder & Co. 86 : 5,876.8 P.G. Corbin & 52 ' 4,860.8 Company, Inc. Evensen Dodge Inc. 303 4,375.9 O'Srien PartnenJ, lnc, '55 .4,211.0 Oaln Rauscher 18' 3,544.2 Incorporated U.S. Bancorp Piper 117 : 2,513,2 Jat1ray Inc COO Advlsora 15<1 2,378.5 Incorporated 13,610.3 1,3.8811.3 Among the nationally known financial advisory firms, only PFM combines the experience gained in completing large numbers of transactions with the sophistication and analytic capability required to bring transactions of high par value to market. PFM has consistently been the leading financial advisory firm in terms of number and size of transactions. Over the last sixteen years, PFM stands apart from other independent financial advisors by combining par value and number of transactions, 1984-99 Financial Advisory Experience Volume/Transaction Matrix National Municipal Financial Advisory Ranking Source: The Bond Buyer/Securities Data Company Volume of Transactions 3800 . 3600 3400 3200 3000 2800 2600 2400 2200 2000 1800 1600 1400 1200 1000 800 600 400. 2001 o' 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 . Springstead . Evensen Dodge ePFM CGMS · Pander & Co. . PRAG . Government Finance Associetes . P.G. Corbin' . .O'Brien Perlners . Cain Brothers Shettuck & Co. Par Amount (in DaD's) City of Winter Springs - Proposal for Financial Advisory Services I 4 I }. ~M ~ I I I I I I I I I While enjoying the experience Ii , 1 .J) and ljeputation of 'ic! i[ a national firm, '.'1 J "~ :I:! PFM also offers the City the gepth of understanding and r;.olnmitn1ent :* ~ :;;~ !l :;~ of a local firm. ~l~ :d ~~ Florida Experience PFM has been committed to Florida since 1985 and consistently ranks among the top financial advisors in the State. In 1999 and 1998, PFM was the number one ranked financial advisor in dollar amount and in volume of transactions. Our goal is to provide the highest level of service to the City and our other Florida clients. ;!' 1999 Florida Long.Tonn Municipal New Issues fqtiDnIJJ M~ipltl FirwtciD/ AdvilcTy RlJnlcl-lg Sourc.; "'- Bond BuywlS<<~ oar. CoInpen)' . tr.ua:1lons PFM cbRal'1'hmlllons ',078.11 Given our commitment to Florida, PFM has established a strong presence in the State. We at PFM are extremely proud of our reputation in the State of Florida, We feel that it is our unique blend of national presence, local understanding and commitment, and the ability to offer completely independent financial advice that truly sets us apart from our competitors. PFM offers its Florida clients a level of expertise that is unmatched in the State or nation. noca Ralon Droobville 0""",", Coral Gables [}elray Beach Gaines..;l1e lliah:ah Joct:sonvillc Jupiter KeyWCSl I...ongbolll Key Mclroume BC<lCh New Port Ricbcy Nonh Pori Onmnd lka:h 51. Cloud Sanibcl Sebring Sum" Sunrhic Tamarac Wimer Hn\'Cf1 WlrnerGardcn Wimer ParI.: Zephyrhills Alacbua Coumy ClayCoumy Lee County Marion COUlll)' Monroe Conroy Orange Coumy SI. Johns COUIlIY Dan Ral$Cher Incaporatfld 'zo ""'.7 WIIUlmR. HOU(Ott A Co. :27 11392 PondII'&Co '. 553.5 PuWc Resources AdvisoryOfOUJl' :. , 479.7 WUCapltal 27 I. 424.1 AlhldndAAsao:latas I.' ....9 Ford 5. AsIOCiatM 31T.P PIlUI4 Stunrt & ..- 1306.. Dunlap & Asloc.l_ 15 ...3 Public Financial M'anngement, Inc. Slate of florida Clients CttleM UtlUlln jJ Allamic Utililics or Siltll!K1Ul, Inc. Donila Springs UtilHics.loc. Clay County Ulilll)' Au(oority 0rIaJW Utilities Conunission H,"her Educutlon Palm Beach Atlantic College Ringling School of Art andlJcs1gn Universil y of South Florida The StutCI ul nnrtdai OtherAulhori1le", Florida Dcparturnl of Transponatioll Miami (h'might Board Florida Municipal COUIK.'i1 Oranse County Research & Devdopmc:nl Authnrity Count," Florida 1\)0 CouocH Jacbonville Pon AutbJrily SchnollJk1f'k1.'1 Droward Cmmty AaglerCouruy l..nkeCoulIly Monroe COUIllY Pasco County Seminole County Volusia COUIlIY HnlthcunJ All Mcd Sa.nta Fe lIealth Systetm. Inc. Good Sam:lritan IleaUh Syslems. loc. Monroe Medical Regional Center Ornnge County lIeallh Facililies AUlhorily Pnrril'h Mcdical Center f>reshyterinn Retirement Communities. Inc. Vicar's Ll1nding C(lntinuillg Carc Rctjrcll'~1l1 Ccmer SpcC'.IIl....rlcb Alachua Ubrary Dislrict DayColony Special Rec:rcationDistrict Hnglcwood Water District Riverwood Community Developmctlt District Tnlmpnrtatkm Orlando/Or.ulSC County E~pres5way AUlhl.llity Cenlnil Florida Regional Transp:lrtation Authority Santa Rosa Bay Bridge AUlOOrity Rorida Transit Association Finance Cmp.muion City of Winter Springs - Proposal for Financial Advisory Services I 5 I ''. I I I I I I I I I - . Financial Expertise In the firm's twenty-five years of providing financial advice, PFM has been a part of virtually every financing structure that has ever been available in the municipal market. PFM's role as the financial advisor is to develop innovative financing plans through quantitative analysis, use those specialized plans to enhance the credit ratings of our client and bring down the cost of issuing debt. Below you will find general explanations of PFM's innovative financing strategies, quantitative analyses capability, rating agency upgrade methods, and investor relations programs. Each of these tools is used to give our clients the advantage in the municipal markets, Specific examples are found in case studies throughout this proposal. PFM Innovative Financing Strategies As an independent financial advisory firm, PFM is able to explore innovative financing strategies not tied to the issuance of bonds, In the course of our advisory work across the nation, we have had involvement in a broad array of financings. We have recommended the use of fixed rate notes and bonds, variable notes and bonds, both with and without put features, capital appreciation bonds, interest rate swaps, and lease financing agreements, Few, if any, other financial advisory firms can claim the diversity of experience in structuring innovative and successful tax-exempt financings that PFM can claim. PFM has a record of developing innovative financing techniques designed to meet our clients' needs and to provide the lowest possible cost of capital. Whether the innovation is as simple as a call feature or as dramatic as a swap, PFM has pioneered the use of these methods for our clients. Our clients have successfully used all of the methods described herein, Quantitative Analyses PFM professionals use the latest versions of powerful spreadsheets, incorporating numerous proprietary functions and macros, to build flexible, customized models that address the unique analytical requirements of our clients. We also have a site license for DBC, a well-known commercial bond- sizing program that currently serves as the industry standard. Using these resources, we can go "toe-to-toe" with the brightest investment bankers and are often called upon by our clients to generate original analyses or to check the integrity of analyses submitted to our clients by investment banking departments, We are proud of our analytical capabilities and believe that our three-month training program provides our consultants an advantage. Not only can we run the models used by most of Wall Street, but also we can build these models from scratch. It is this fundamental understanding of the technical aspects of our business set us apart from our competition. PFM's analytical capabilities are not, however, used solely to react to investment banks. On the contrary, in January 1994, PFM formed the Quantitative Strategies/Structured Products Group whose role is to stay abreast of developments in public finance and determine proactively the applicability of these developments to our clients. The Group actively seeks to develop new techniques to allow our clients to realize their objectives and manage risks. One benefit of our proactive approach is we identify and City of Winter Springs - Proposal for Financial Advisory Services I 6 I "e~ I I I I . . . . I I - inform our clients of potential savings opportunities using these products. This puts our clients in a position of strength from the standpoint of negotiating business terms. PFM fully understands the product and serves only our clients' interests. When an idea is feasible, our expertise enables a competitive process for sufficiently standardized products, such as most swap products. At other times, when a negotiated transaction is desirable, our understanding of and familiarity with the quantitative aspects enhances negotiation services we provide. Rating Agency Expertise The market reacts to headlines, and often an issuer's public response is driven by the political necessity of taking a hard stance. In these cases, it is imperative that the issuer take a proactive approach to informing the rating agencies of the facts behind the headlines so the rating analysts are well prepared to face the questions directed to them. PFM has developed extensive experience in working with the major national rating agencies (Le, Moody's Investors Service, Inc,. Standard & Poor's Corporation, and Fitch ISCA, Inc.) and has a clear understanding of their analytical methodology. Over the past three years, PFM has submitted over 200 financings to rating agencies for their evaluation - in many instances the result being an upgrade of one or more levels by one or more of the firms. We believe the following tenets act as the cornerstone of productive relationships with the rating agencies: Credible Strategic Financial Plan. An issuer must develop a credible long- term financial plan that addresses funding for the entirety of its debt-financed components, The plan should include standards and methods for measuring progress on the implementation of the plan and a methodology for assessing the need for mid-course corrections. The plan should also require a full update at specified intervals, include an acknowledgment that some program elements will not succeed, and provide a method for adding new elements over time. This provides a substantive base for the more subjective portions of the financial plan and directs the issuer's credit and financing objectives. Comprehensive Credit Presentation. PFM assists our clients in developing sophisticated, comprehensive credit presentations which incorporate all of the client's positive credit features and provides responses to any actual or potential credit negatives. Investor Relations Expertise An example of our rating agency expertise is included in the case study section of this proposal. PFM assisted two of Florida's three triple A rated city's obtain their recent upgrades. In addition to increased advertising prior to bond sales, we suggest the following applications where PFM has expertise: Communication with ExistinglTraditionallnvestors. In order to improve information flow and enhance credibility, the County should develop an investor relations program. Under certain circumstances, PFM recommends that an issuer schedule "road shows" to inform investors of the issuer's financial status and the specific characteristics of any public debt offerings. The focus is on institutional buyers of municipal bonds. In particular, target City of Winter Springs - Proposal for Financial Advisory Services I 7 I , . " I I I I I I I I I - I audiences for these programs should include current holders of the issuer's obligations, market opinion makers at the rating agencies, investment banks and other influential information sources, and the national and regional financial and business media. It is easier to find a willing buyer for a future debt issue among satisfied and well-informed holders of currently outstanding debt. Outreach to Investors in Non-Traditional Markets. The continuing evolution of the financial markets also mandates that the issuer develops relationships with market segments not currently holding its respective bonds or notes. PFM's extensive participation in these other markets (including taxable bonds, private placement investors, non-investment grade investors, etc.) would provide Winter Springs with access to a new investor base. PFM's professionals' possess the advanced financial skills needed to structure complex transactions, analyze credit quality, negotiate aggressive business terms and bond pricing levels, develop computer models or conduct disclosure reviews. The two most important resources that we will devote to assisting the City are the core group of professionals in the project team and our technical resources. City of Winter Springs - Proposal for Financial Advisory Services I 8 tF~ I I I I I I I I I I To be prepared is half the victory. -Miguel Cervantes Case Studies I , ~M .- '~ I I I I I I I I I - - Case Studies PFM serves as financial advisor to issuers of all types and sizes. While many financings are straightforward, quite a few require extensive planning and financial modeling. PFM develops a plan of finance for each financing regardless of the size, This document outlines the issuers' goals and objectives, develops the rationale for the financing structure and presents alternative financing concepts. The following discussions are representations of our work throughout the country. We chose not to attempt to impress you with our multi-billion dollar financings or our most complex synthetic financing discussions. Rather these few case studies are intended to introduce the City to a few financings that may be relevant to future City projects. Economic Development In the 1980's the business community and members of the City Council of Boca Raton, Florida became alarmed at the signs of increasing deterioration in the downtown business district. The City Council acted to designate the downtown as a community redevelopment area under Chapter 163 of the Florida Statutes and established the Boca Raton Community Redevelopment Agency (the "Agency"). In 1986, the Agency undertook a public initiative to stimulate additional redevelopment in the Downtown by seeking approval of a Downtown Development of Regional Impact (the ''DDRI'') for the entire Redevelopment Area, The DDRI provided for approximately 5,000,000 office equivalent square feet of development. Concurrent with the DDRI, the City Council adopted "Visions 90", a $45,885,000 ten-year capital improvements program, The DDRI and the resulting Development Order are critical in that the Florida Growth Management Act imposes considerable restraints on large-scale growth and development in overburdened urban areas. The Development Order vests the approved level of development against changes in conditions and future facility deficiencies. In 1989, development began on Mizner Park, a major redevelopment project consisting of a 30 acre "urban village" incorporating public park facilities, mixed use commercial development, residences and cultural facilities, The City purchased the land for Mizner Park and constructed the primary infrastructure through the issuance of Tax Increment Bonds. In 1998, PFM advised the City on it's $72,560,000 Community Redevelopment Agency, Tax Increment Revenue Bonds, Series 1998, which refunded prior bonds and restructured the Agency's debt service. The financing is secured by tax increment revenues, lease revenues and a backup pledge of public service taxes. The bonds were structured with a "window" in the principal amortization structure to supplement a reserved fund designed to limit the City's susceptibility to fluctuation in future tax increment revenues. This structure enables the City to mitigate almost all risk of ever having to use public service taxes to pay debt service. The Visions 90 Project along with the Mizner Park development were critical components of a plan that recreated the downtown business district. The success of this redevelopment has resulted in an increase in assessed value of over 50% from 1995 to 1999, The district is now one of the most dynamic retail and commercial districts in Florida. City of Winter Springs - Proposal for Financial Advisory Services I 9 I " ~M ~ I I I I I I I I I I . - Winter Garden Access Road Funding The City of Winter Garden wanted to put feeder roads in place to serve the traffic that would be created by a building boom in west Orange County. The intent was to allow the best use of the limited access roadways that were being built by the Orlando-Orange County Expressway Authority and to minimize the disruption that might occur to neighborhoods if traffic overflowed from what would have become the default feeder system. Of course, the Orlando-Orange County Expressway Authority wanted the feeder roads to facilitate the use of the limited access roadways. To serve both of their interests, it would be necessary to find a truly unique way of raising the funds to build the feeder roads, Faced with the challenge of paying in advance to build roads to serve areas that were just then being constructed, the City, the Expressway Authority and PFM worked together to design a structure that would allow the roads to be built immediately. Winter Garden wanted to pay for the roads with revenue produced by the growth that created the need. Legal and credit issues precluded Winter Garden from issuing debt backed by the impact fees and tax increment revenues (Le. the revenue produced by the growth). The solution would be for Winter Garden to directly repay the Expressway Authority for the costs incurred in building the roads. The repayments could occur only to the extent revenues were available. This unique structure protected the City from an onerous debt service burden, but had enough protections that the Expressway Authority was comfortable. PFM designed a debt structuring model that would accumulate the costs of the road construction at an agreed upon cost of capital. The debt would be gradually repaid as the City received impact fees. Based upon certain benchmark criteria, the City would additionally use available City revenues in amounts equal to a defined portion of the tax increment revenues to repay the debt. The structure allowed the Expressway Authority to have a creditworthy receivable for the feeder roads they built and allowed Winter Garden to have repayment linked only to growth based revenues, isolating the obligation from other City funds. The last step that PFM undertook was to model numerous stress test scenarios based upon delays and changes in new construction. Satisfied that the repayment structure protected both the City and the Expressway Authority in a variety of slower-than-expected growth situations, the City Commission and the Expressway Authority approved the project and financing. - - Ratings Upgrades The City of Boca Raton, a current PFM client that has worked with David Moore for nearly ten years, sought to have their ratings upgraded based on some strong fundamentals. In the early 1990's, the City's ratings were in the high single-A to low double-A category for different securities, David worked over most of the past decade to help the City develop compelling stories that highlighted the strengths of the City while counterbalancing the perceived weaknesses, Particularly challenging was a substantial loss of high-tech employment. With a comprehensive strategy City of Winter Springs - Proposal for Financial Advisory Services 110 I , . " I I I I I I I I I I that focused on the power of the economic development initiatives within the City and the diversified small company employment base, David dialogued with the various rating agencies semiannually to annually. The benefit of the comprehensive strategy and the proactive discussions has been a string of rating upgrades continuing through the City becoming one of the first triple-A cities in the State of Florida. Through a similar process and effort, Coral Gables has joined Boca Raton as one of only three Florida cities to hold triple-A ratings. Education School districts throughout Florida are under tremendous pressure to expand classroom capacity and renovate existing facilities in an era when voter sentiment runs against approving general obligation debt programs. Florida's "Classrooms First" program, recently authorized by the Legislature, provides funds to supplement local capital outlay millage, local option sales taxes and other capital funds. Many districts have found planning capital needs is complication by (i) restrictions on use of funds as defined by the state, (ii) increased construction costs, and (iii) local issues such as site selection and other intergovernmental impediments. PFM assisted a number of our clients develop a comprehensive capital management plan which considers all funding sources and capital needs in one planning model. On an annual basis, construction goals and objectives are matched to revenues allocable to the respective projects to determine timing for specific projects. The model optimizes the use of pay as you go, debt COPs to maximize total project funding. The planning tool is valuable to education officials in that it enables the district to focus on discrete project prioritization while modeling the entire long-term capital program, In 1998, the School District of Lake County issued its $71,355,000 Certificates of Participation to fund a portion of a $200 million capital improvement program. The COPs were structured to provide sufficient cashflow during the five year planning period to fund other capital projects and retire revenue anticipation notes while leaving financing capacity for another $70 million of COPs in the next five years. Insert Winter Garden- innovative financing structure Creative Financing Structure The City of Winter Park is in the process of evaluating alternatives for replacement of its aging public safety facilities. The architect estimates that the project will cost approximately $10 million, Debt service on a project this size would increase local ad valorem millage by about .4 mill using traditional debt service structures. The City's goal was to minimize the increase in millage while maintaining a conservative plan of finance. PFM modeled the City's existing debt structure and determined that a significant portion of the existing debt matured by 2003. Since debt service decreased in 2003, a "window" existed where the City could pay debt service for the new public safety facility. Capitalizing interest for the entire three-year period would be expensive and might cause voters to turn against the project. City of Winter Springs - Proposal for Financial Advisory Services 111 I I I I I I I I I I I , .. CONTENTS INDEPENDENT AUDITORS' REPORT 1 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 2 3 4 5 6-15 I I I I I I I I I I I I - , " KREISCHER MILLERC#CO. Certified Public Accountants Independent Auditors' Report The Board of Directors and Stockholders Public Financial Management, Inc. and Subsidiary Philadelphia, Pennsylvania We have audited the accompanying consolidated balance sheets of Public Financial Management, Inc. and Subsidiary (formerly PFM Acquisition Corporation and Subsidiaries) as of December 31, 1998 and 1997, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the companies' management. Our responsibility is to express an opinion on these financial statements based on our audits, We conducted our audits in accordance with generally accepted auditing standards, Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion, In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Public Financial Management, Inc, and Subsidiary as of December 31, 1998 and 1997, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. /(~/NJt.r4!1, Kreischer Miller & Co. A Parrnaship of , Professional Corporations Horsham, Pennsylvania February 12, 1999 Nonh Poine Office Cenecr 200 Gihralwr Road H arslUlm, PA 190-1-1-2378 215.441.4600 FAX: 215.672.8224 Member The McGladre)' Nerwork I " PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY I Consolidated Balance Sheets December 31, 1998 and 1997 I 1998 1997 ASSETS Current assets: I Cash and cash equivalents $ 2,508,589 $ 2,994,267 Accounts receivable, less allowance for doubtful accounts of $349,000 and $222,000, respectively 3,357,112 2,637,606 I Work-in-process 2,433,900 2,498,197 Prepaid expenses and other current assets 989,532 765,337 Deferred income taxes 770,000 427,000 I Total current assets 10,059,133 9,322,407 Long-term portion of prepaid expenses 355,411 I Equipment and improvements, net 2,367,644 2,751,334 Loan origination fees, net of accumulated amortization of $148,731 and $94,171, respectively 54,560 Goodwill, less accumulated amortization of $2,240,622 I and $2,081,645, respectively 431,242 590,219 Other assets, principally cash surrender value of life insurance policies 5,185,361 4,701,463 I Deferred income taxes 1,707,000 1,400,000 TOTAL ASSETS $ 20,105,791 $ 18,819.983 I LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 173,753 $ 1,192,350 Current portion of accrued retirement obligation 598,891 533,005 Accounts payable 634,469 569,069 Accrued expenses 8,466,238 4,533,315 Total current liabilities 9,873,351 6,827,739 Long-term debt, net of current portion 367,089 3,000,000 Accrued retirement obligation 5,004,464 4,395,864 Deferred income taxes 46,000 130,000 Total liabilities 15,290,904 14,353,603 Stockholders' equity: Common stock, $.01 par value; 2,000,000 shares authorized; 1,055,000 and 1,040,000 shares, respectively, issued and outstanding 10,550 10,400 Additional paid-in capital 1,150,538 1,089,492 Retained earnings 3,653,799 3,366,488 Total stockholders' equity 4,814,887 4,466,380 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,105.791 $ 18,819,983 See accompanying notes to consolidated financial statements. -2- 1998 , , I I 1997 I $ 27,473,001 I 76,398 27,549,399 I 16,238,155 I 8,791,975 395,851 25,425,981 I 2,123,418 I 913,000 $ 1,210,418 I I - - PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Consolidated Statements of Operations Years Ended December 31, 1998 and 1997 Revenues: Professional fees Interest income Expenses: Salaries, incentive compensation, and employee benefits General and administrative Interest expense Income before income taxes Income taxes Net income See accompanying notes to consolidated financial statements. -3- $ 32,219,380 96,614 32,315,994 21,899,114 9,641,380 162,189 31,702,683 613,311 326,000 $ 287,311 I I I I I I I I I I . It PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Consolidated Statements of Changes in Stockholders' Equity Years Ended December 31, 1998 and 1997 Additional Paid-in Capital - PFM Retained Earnings $ 3,190,070 Common Stock Balance, December 31, 1996 $ 10,200 $ 1,023,800 $ 2,156,070 Sale of 20,000 shares of common stock 200 65,692 Net income 1,210,418 4,466,380 1,089,492 3,366,488 Balance, December 31, 1997 10,400 Sale of 15,000 shares of common stock 150 61,046 Net income 287,311 $ 4,814,887 Balance, December 31, 1998 $ 10,550 $ 1,150,538 $ 3,653,799 See accompanying notes to consolidated financial statements. -4- Total Stockholders' Equity 65,892 1,210,418 61,196 287,311 PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows Years Ended December 31, 1998 and 1997 1998 1997 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of equipment and improvements Amortization of intangible assets Allowance for doubtful accounts Loss on disposal of equipment and improvements (Increase) decrease in: Accounts receivable Work-in-process Prepaid expenses and other current assets Deferred income taxes Other assets Increase (decrease) in: Accounts payable and accrued expenses Accrued retirement obligation Deferred incentive compensation $ 287,311 $ 1,210,418 Net increase (decrease) in cash and cash equivalents 1,025,374 1,000,364 213,537 191,171 127,000 (18,000) 1,156 4,651 (846,506) (48,397) 64,297 406,854 (579,606) 341,467 (734,000) (387,000) ( 483,898) (458,955) 3,998,323 1,450,438 674,486 628,268 (64,259) 3,747,474 4,257,020 (644,180) (938,894) 1,340 7,727 (642,840) (931,167) (4,192,3 SO) (2,084,932) 540,842 61,196 65,892 (3,590,312) (2,019,040) (485,678) 1,306,813 2,994,267 1,687,454 $ 2,508,589 $ 2,994,267 Net cash provided by operating activities Cash flows from investing activities: Purchases of equipment and improvements Proceeds from sale of equipment Net cash used in investing activities Cash flows from financing activities: Repayment of long-term debt Proceeds from long-term debt Proceeds from sale of common stock Net cash used in financing activities Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental disclosures of cash flow information: Cash paid during the year for: Interest Income taxes $ 185,074 $ 1,453,151 $ 418,088 $ 1,144,165 See accompanying notes to consolidated financial statements. -5- I I I I I I I I I I I I - iii I I I I I I I I I I I I == PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (1) Nature of Business The Company is a professional services firm that specializes in providing financial advisory and money-management services primarily to state and local governments throughout the United States. Financial advisory services relate principally to the structuring, pricing and rating of municipal debt. (2) Summary of Significant Accounting Policies Acquisition and Principles of Consolidation On October 10, 1995, PFM Acquisition Corporation (the Company) was formed to enter into a stock purchase agreement to acquire the common stock of Public Financial Management, Inc. and its subsidiary, PFM, Inc. Effective January 1, 1998, PFM Acquisition Corp. was merged into Public Financial Management, Inc. The accompanying financial statements include the accounts of Public Financial Management, Inc. and PFM, Inc., its wholly owned subsidiary. PFM Acquisition Corp. activity is included through December 31, 1997. All significant intercompany accounts and transactions have been eliminated in the accompanying consolidated financial statements. Revenue Recognition The Company bills for its services on a fixed price, hourly basis or as a percentage of compensable assets under management. Revenue for hourly contracts is recognized as the work is performed. Revenue for fixed price contracts is recognized on the percentage of completion method using the cost-to-cost method. At December 31, 1998 and 1997, the Company managed compensable assets with a market value of approximately $9,400,000 and $8,200,000,000, respectively. The Company's financial advisory contracts are at times long-term in nature. Revenues on these contracts are recognized prior to billing based on progress toward completion and estimates of total contract profitability, The unbilled revenue is classified in the accompanying balance sheets as work-in-process. Asset management revenue that has been earned but not billed is also classified in the accompanying consolidated balance sheets as work-in-process. Continued... -6- PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (2) Summary of Significant Accounting Policies, Continued Cash Equivalents Short-term investments or other highly liquid instruments having a maturity of three months or less are considered cash equivalents, Equipment and Improvements Equipment and improvements are stated at cost. Depreciation of equipment is calculated on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or estimated useful lives of the assets. Goodwill Goodwill is being amortized on a straight-line basis over approximately 6 years. Cash Surrender Value of Life Insurance Cash surrender value of life insurance, included in other assets, represents the Company's equity in whole life insurance policies on certain officers and employees of the Company, Concentrations of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk as defined by Statement of Financial Accounting Standards No, 105, consist principally of cash and cash equivalents, accounts receivable, and cash surrender value of life insurance. The Company principally utilizes a national bank to maintain its operating cash accounts and temporary cash investments. At certain times, such balances may be in excess of FDIC insurance limits. The Company's principal customers are municipal governments. Services to these customers are normally provided under contractual arrangements. The Company purchases life insurance policies from two insurance companies. At December 31,1998, one company had policies with cash surrender values of approximately $3.59 million and the other had approximately $1.42 million. Continued.. . -7- I I I I I I I I I I I I - - I I I !!!! I I I I I I I I I I I I PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (2) Summary of Significant Accounting Policies, Continued Concentrations of Credit Risk, Continued One customer represented 17% of the Company's 1998 revenues. The Company has a three-year contract with this customer, which renewed January 1999. Income Taxes Income taxes in the accompanying financial statements were computed in accordance with Statement of Financial Accounting Standards No. 109, Accountingfor Income Taxes. This standard requires an asset and liability method of accounting for income taxes, Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the book and tax bases of assets and liabilities, as well as the estimated future tax consequences attributable to net operating loss and tax credit carryforwards. A valuation allowance is established if, based upon all available information, it is deemed "more likely than not" that a portion or all of a deferred tax asset will not be realized. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Advertising The Company expenses all advertising costs when incurred. . . -8- 1997 $1,736,389 1,850,647 2,856,477 1,036,081 7,479,594 Estimated Useful Lives 2-7 years 10 years 3-5 years 3-5 years I I I I I I I I I I I I PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (3) Equipment and Improvements Equipment and improvements consist of the following at December 31: Leasehold improvements Furniture and fixtures Equipment Computer software 1998 $ 1,736,389 1,923,140 3,224,510 1,192,859 8,076,898 Accumulated depreciation and amortization (5,709,254) $ 2,367,644 (4,728,260) $2,751,334 (4) Line of Credit The Company has a $3,000,000 line of credit that expires June 30, 2000, The unpaid principal balance of each advance bears interest the either LIBOR plus 1.3%, LIBOR Market Index Base rate plus 1.3% or the bank's Prime rate minus 1.0% selected by the Company. The line of credit is collateralized by the cash surrender value of the officers' life insurance and the Company is required to maintain certain financial covenants in connection with the line of credit. There was no balance outstanding on the line of credit as of December 31, 1998 or 1997. The Company obtained an additional $2,000,000 line of credit in 1999 with similar terms that expires in August 2000, -9- - - . I . I I I I I I I I I I I I I I I I I I I I I PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (5) Long-Term Debt Long-term debt consists of the following at December 31: 1998 1997 Note payable to a credit association for financing insurance coverage. The note is to be repaid in monthly installments of $17,045 which includes interest of 6.63%. The note is secured by insurance policies. $ 540,842 $ Note payable to bank in monthly principal installments of $61,905. Principal prepayments were rE7quired annually depending on the Company's pretax income and stockholder compensation. The interest rate, interest period, and timing of the interest payment was elected by the Company based on either the adjusted commercial rate or a function of LIBOR. 942,864 Note payable to bank on the earlier of October 30, 2000 or one year after the above note is repaid in full. The interest rate, interest period, and timing of the interest payment was elected by the Company based on either the adjusted commercial rate or a function of LIB OR. 3,000,000 Note payable to a credit association for financing insurance coverage. The note was to be repaid in monthly installments of $25,394 which includes interest of 6.71%, commencing December 30, 1996. The note was secured by the financed insurance policies. 249,486 540,842 4,192,350 Current portion (173,753) (1,192,350) Total long-term debt $ 367,089 $ 3,000,000 Continued... -10- PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (5) Long-Term Debt, Continued As of December 31, 1998 maturities of long-term debt are as follows: 1999 2000 2001 $173,753 185,689 181,400 $ 540,842 (6) Retirement Plans The Company maintains a non-qualified Executive Wealth Accumulation Plan (Old Plan) that provides retirement benefits to managing directors and senior managing consultants. The Old Plan permitted participants to contribute up to 100% of their salary and bonus each year on a pre-tax basis. The Company matched the contributions of managing directors and senior managing consultants up to a maximum of 7.5% and 2.5% of salary and bonus, respectively. Company contributions vested at the rate of 20% per year. Interest is credited to participant accounts at Moody's corporate bond yield rate for the preceding calendar year. Penalties exist for early participant withdrawals from the old Plan. The Company's obligation under the Old Plan is that of an unsecured promise to pay in the future. This obligation, which totaled $4,561,467 and $4,165,302 at December 31, 1998 and 1997, respectively, comprised employee contributions, vested Company matching contributions, and vested credited interest. The Company has funded its obligation under the Old Plan with life insurance policies it has purchased (to the extent allowable within its loan covenants) having cash surrender and prepaid premium values totaling $4,613,772 and $4,415,332 at December 31,1998 and 1997, respectively. The Company recognizes assets and liabilities associated with the Old Plan on its balance sheet as no trust has been established for the Old Plan. The Company's expense under the Old Plan was $460,507 and $471,745 for the years ended December 31,1998 and 1997, respectively. On January 1,1996, management froze this Old Plan; therefore no additional matching contributions have been made to the Old Plan. Old Plan assets will continue to accrue interest and participants will continue to get credit for years of service. Continued.. . -11- I I I I I I I I I I I I - - I . . . . I I I I I I I I I I PUBLIC FINANCIAL MANAGEMENf, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (6) Retirement Plans, Continued Effective October 1996, the Company introduced the 1996 Executive Wealth Accumulation Plan (EWAP 3) which provides managing directors with retirement benefits, Participants can defer unlimited amounts of compensation in excess of $160,000, The Company will match up to 50% of the average of ownership share and bonus share multiplied by a participant's income above $160,000, Company contributions vest at 25% per year. Participants elect from a number of investment choices and are entitled to the vested income that would be earned from such investment. It is the Company's intent to fund the investments as the liabilities are incurred. The Company's obligation under the EWAP 3 plan is that of an unsecured promise to pay participants' contributions and matching contributions in the future. The Company's obligation under the EWAP 3 plan was $456,401 and $244,038 for the years ended December 31,1998 and 1997, respectively, The Company's expense for the EWAP 3 plan was $128,000 and $100,000 for the years ended December 31,1998 and 1997, respectively. Effective January 1, 1996, the Company adopted a qualified 401(k) and profit sharing plan. The Company matches 50% of employee contributions on the 401(k) plan, up to the first 6% of an employee's elected deferral of salary. Profit sharing contributions are made at the discretion of the Board of Directors. There is a one-year service requirement and employees are fully vested in employer's contributions after seven years of service. Employ"er contributions for the years ended December 31, 1998 and 1997 totaled $587,866 and $491,358, respectively, for the profit sharing plan and $232,360 and $196,877, respectively, for matching 401(k) contributions. -12- PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (7) Income Taxes The provision for income taxes consists of the following at December 31: 1998 1997 Current: Federal $ 810,000 $ 990,000 State 250,000 310,000 Total current 1,060,000 1,300,000 Deferred: Federal (734,000) (387,000) Total taxes $ 326,000 $ 913,000 The reconciliation of income taxes computed at the federal statutory rate of 34% and actual income taxes follows: Income taxes at statutory rate Increase attributable to: State taxes, net of federal effect Increase (decrease) in valuation allowance for deferred tax assets Permanent differences, principally the amortization of negative goodwill and increase in the cash surrender value of officersr life insurance 1998 $ 209,000 1997 $ 722,000 165,000 205,000 (25,000) 8,000 (23,000) $ 326,000 (22,000) $ 913,000 Continued., . -13- I I I I I I I I I I I I - - - - . . . = I I I I I I I I I I I PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (7) Income Taxes, Continued The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1998 and 1997 are summarized below, The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the time the items below are deducted on the tax returns or in any carryforward period are reduced. Deferred tax assets: Allowance for doubtful accounts Accrued compensation Equipment and improvements Incentive compensation payable Executive wealth accumulation plans 1998 1997 $ 140,000 $ 89,000 37,000 81,000 239,000 162,000 826,000 388,000 2,017,000 1,775,000 3,259,000 2,495,000 782,000 668,000 2,477,000 1,827,000 12,000 34,000 130,000 $ 2,431,000 $ 1,697,000 Valuation allowance Deferred tax liabilities: Cash surrender value of life insurance Goodwill (8) Commitments Leases The Company conducts its operations from leased facilities. These leases, which are classified as operating leases, expire at various dates through 2009. The Company is required to pay executory costs such as maintenance and insurance under the terms of the leases, Annual minimum lease payments required under these leases as of December 31, 1998 are: Years Ending December 31: 1999 2000 2001 2002 2003 Thereafter $ 1,120,346 1,042,848 974,008 691,595 555,172 3,794,782 $ 8,178,751 Continued... -14- PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1998 and 1997 (8) Commitments, Continued The lease expense included in general and administrative expenses was $1,518,489 and $1,450,356 for the years ended December 31, 1998 and 1997, respectively. In connection with one of the leases, the Company is required to maintain a letter of credit in favor of the lessor in the amount of $500,000. Employment Agreements The Company has entered into employment agreements with certain key employees, The contracts are automatically renewed on a year-to-year basis thereafter and are cancelable by either party with 90 days prior notice. However, contracted employees are entitled to not less than six months severance pay if the Company terminates their employment. In connection with such agreements, contracted employees have agreed not to compete in any respect with the business of the Company for the longer of: 1) 12 months after the termination date, or 2) the remaining term of the employment agreement. Health Self-insurance The Company maintains a self-insurance program for medical coverage, The Company is liable for claims up to $20,000 per covered person annually, and aggregated claims up to $308,648 annually. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and an estimated liability for claims incurred but not reported. Insurance Deductible The Company has a $1,000,000 deductible on its Errors and Omissions Insurance. Deductible amounts are accrued when, in the opinion of management, an incident has occurred which will require the Company to pay under the deductible. At December 31, 1998 and 1997, there were no insurance deductibles accrued. -15- I I I I I I I I I I I I I . - I I I I - I I I I I I I I I I I I A1il\IiF- -= PFM ~ PFM has become the nation's leading financial advisory firm by providing clients with extensive and superior service. . . - - . . I - References .. I I PFM developed approximately fifteen scenarios considering different structures that would mitigate the increase in millage while retaining a conservative amortization structure, We recommended that the City issue a non-amortizing, "bank qualified" Bond Anticipation Note (BAN) that could be drawn down during construction to minimize interest carrying cost. The City will issue general obligation bonds in 2003 to retire the BAN, I I I In the current relatively high interest rate environment, a hidden benefit of this plan is that the City does not have to issue long term debt today. However, the City can refund the BAN at anytime during the next three years when interest rates decrease. The short-term borrowing cost associated with the BAN is at least 1 % lower than long-term interest rates. Also, since the BAN can be prepaid without penalty, the City will save as much as $200,000 to $300,000 in issuance costs and lock in lower rates some time during the next three years. - I I City of Winter Springs - Proposal for Financial Advisory Services 112 I I I I I I I I I I I I I I I I I I I ~- Our goal is to provide the highest quality advice to our clients so they are able to raise, invest and manage the resources they need in the most cost-effective manner possible. Personnel Engagement Manager I I I I I I I I I I e b. Identify key personnel wl10 will be working witl1 tile City: describe specific tasks each Will be assigned; and provide resumes for those key personnel. . Qualifications of Key Personnel Experience PFM professionals have unparalleled experience and expertise in government and the financial markets. Included among our professionals are former Finance Directors, City Managers, County Administrators, Transit Agency CFOs and School Business Managers. In addition to government service, many of our professionals have worked as attorneys, bankers, portfolio managers, controllers, city planners, systems managers, architects and engineers. Project Team Our organization allows us to build each project team in a manner that will best serve the individual client. This may mean bringing together several members of the same advisory practice or it may entail organizing a team from several different practices and offices. Our specialized project teams ensure that our clients receive complete and thorough advice directly from the professionals most appropriate to meeting their particular needs, This approach fosters creativity and innovation between PFM professionals and clients. The end result is premium client service, David M. Moore, Senior Managing Consultant, will manage this engagement. Mr. Moore is one of the most active financial advisors in central Florida completing over $800 million in financings during the last two years. He will represent PFM at all meetings and coordinate the efforts of the entire team. Hugh Marble, III and Rebecca Peterson are Consultants in our Orlando office and will serve as the primary support team for Mr. Moore, They will perform all analytical work and assist Mr. Moore in presentations and meetings. The remaining members of the Florida team are also available in the event the City has need for their specific expertise. The Winter Springs Team The City of Winter Springs Lavon Wisher David Moore Contact Person Project Manager Investment Manager Steve Alexander Hugh Marble T echnicallAnalytical Support Rebecca Peterson T echnicallAnalytical Support John Grady Technical/Analytical Support City of Winter Springs - Proposal for Financial Advisory Services 113 I . I I I I I - David Moore Contact Person Project Manager 51: jl1":I11:~!fil~!f COlJ.':illlt:l11t I I David Moore joined PFM in 1998 as a Senior Managing Consultant. Mr. Moore moved to the Firm's Florida Group and Orlando office and specializes in Florida municipal finance. Throughout his career in public finance, Mr. Moore has worked as both an investment banker and an independent financial advisor. Prior to joining PFM, Mr. Moore worked as a Vice President and Manager of a national financial advisory firm, Mr. Moore has served as engagement manager to clients in Florida and throughout the Southeast on various types of financings, including: general governmental purpose facilities, airport, education, housing, public power, solid waste, special district and water and sewer debt. His experience includes general obligation, revenue, lease and covenant debt structures. In the last five years, Mr. Moore has completed over 100 financings totaling approximately $2.5 billion, Mr, Moore has served as project manager of and provided management support to the following Florida clients: the School Boards of Broward County, Flagler County, Lake County, Pasco County, Seminole County, Pasco County and Sarasota County; the Cities of Apopka, Boca Raton, Key West, Melbourne, Orange City, Safety Harbor, St. Petersburg, Sunrise, Winter Garden and Winter Park; Bay, Lee, Orange, Osceola and Seminole Counties; and various other jurisdictions and special agencies throughout Florida. In addition to managing client relationships, Mr. Moore has extensive experience developing complex financial models, performing debt capacity and other financial analysis, preparing financing plans and providing cost/benefit analysis for special projects. He has created a variety of financing options for small and medium sized issuers. He has worked with banks and other finance companies to develop financing structures that enable cities to access capital without excessive issue costs associated with traditional bond financing. Mr. Moore's public finance background also includes the preparation of disclosure documents and rating agency and insurance company materials. Only three Florida municipalities are rated AAA. He has assisted two of the three Florida municipalities obtain their ratings. Mr. Moore holds an M,B.A., cum laude, from the Crummer School of Business at Rollins College and a B.S. in Electrical Engineering from Auburn University. City of Winter Springs - Proposal for Financial Advisory Services 114 I ~M ~ I I I I I I I I I I - Lavon Wisher Engagement Manager jlif;uwging Director Ms, Wisher is a Managing Director of Public Financial Management. Inc. and is responsible for all General Municipal financings in Florida, managing both the Fort Myers and Orlando offices. Ms, Wisher joined Public Financial Management, Inc, in 1985 and established the firm's first Florida office in Fort Myers, Florida. Prior to joining PFM, Ms. Wisher spent 30 years with the Lee County Government serving as County Administrator for over 15 years. Her expertise and experience in financial management included financings for a new Regional Airport, a toll facility, a Criminal Justice Complex that included a jail, transportation improvements, water and wastewater facilities and other infrastructure improvements. She was directly responsible for the development and innovative financing techniques for Special Taxing Districts including MSTU and MSBU bonds. Since joining PFM, Ms, Wisher has managed financings for water and wastewater facilities, transportation improvements, convention centers and worked on improving the structure of an existing local government bond pool. She has developed the firm's effort to provide financial planning to Florida clients in capital improvement programs and in the implementation of the Capital Improvement Element required of local governments by the State of Florida's new growth management law. The past two years PFM in Florida has been ranked the number one financial advisor both in par amount and number of bond issues. She leads the firm's effort in Florida to develop financings that include assessments and impact fees. Ms. Wisher attended Lee College in Cleveland, Tennessee and has studied at the University of Chattanooga, the University of Florida and the University of South Florida. City of Winter Springs - Proposal for Financial Advisory Services 115 .~ I _.PFM ~ I I I - Steve Alexander Investment Manager Sr. ill:uwgiJ1!.( Consult:/11{ <..;- c_ I Steve Alexander is a Senior Managing Consultant in PFM's Orlando office. Mr. Alexander is responsible for the administration of PFM's investment advisory services and products in the southeast of the country, Mr. Alexander currently serves as the investment advisor to variety of local governments including; Cities, Counties, Authorities, and School Boards, as well as, the Governor's Emergency Financial Oversight Board for the City of Miami. Prior to joining PFM, Mr. Alexander served as the Treasury Manager for Orange County, Florida where he was responsible for the management of the County's $800 million cash and investment portfolio, banking, debt and administration. Additional responsibilities included cash flow analysis and debt management of various large construction projects. During Mr. Alexander's ten-year tenure at Orange County he served in a variety of financial and administrative positions. In addition, Mr. Alexander served as the Deputy Director of Water and Wastewater Accounting department. Mr. Alexander was a Financial Examiner/Analyst for the Division of Securities, Florida Comptroller's Office. Mr. Alexander co-authored Florida's new Investment Policy Statute, served on the FGFOA's Local Government Investment Practices Task Force and the Florida Association of Court Clerk's & Comptroller's Investment Policies & Procedures Task Force. He serves on the Municipal Treasurer's Association Investment Policy Certification Committee, Mr. Alexander has a Bachelor of Business Administration Degree in finance from Stetson University and a Bachelor of Science Degree in accounting from Florida Southern College, Mr. Alexander is also a graduate of Rollins College Financial Planner Program and is a Certified Cash Manager. NASD Exam: Series 65 City of Winter Springs - Proposal for Financial Advisory Services 116 I I I I I - '. Hugh Marble III Technical/ Analytical Support Consultant I I Rebecca Peterson Technical/ Analytical Support Consultant John F. Grady III Technical/ Analytical Su pport ci,J11.'wlt:lllt Hugh Marble III provides financial advisory and analytical services to clients throughout Florida, He joined PFM in July 1998, after having worked for another national financial advisory firm, Before returning to graduate school, he worked in technical support and sales for a high technology firm. During his financial advisory career he has developed complex debt and cash flow models to facilitate long-term capital planning by various clients, including the School Districts of Broward and Lake Counties, the City of Jacksonville and the Jacksonville Port Authority. Additional clients for whom Mr. Marble is providing financial advisory services include the cities of Boca Raton, Key West, Ormond Beach, Sunrise and Winter Garden; Orange County; the South Carolina Transportation Infrastructure Bank; the Orlando-Orange County Expressway Authority and the University of South Florida. Mr. Marble has a Bachelor of Science in Applied Quantitative Economics from the University of Rhode Island and a Masters of Business Administration with a concentration in Finance, cum laude from Rollins College. Since joining PFM's Orlando office Rebecca Peterson provides technical and analytical support to several Florida municipalities. Clients include Central Florida Regional Transit Authority, Broward County School Board, Jacksonville Port Authority, the City of Key West, Monroe County School Board, Seminole County Public Schools, Orange County Public Schools, the City of Jacksonville and the City of Titusville. Supporting senior professionals on debt transactions and in financial planning, Ms. Peterson develops financial computer models for debt sizing and structuring, pricing analysis, and cash flow modeling for analyzing the specific needs of PFM's clients. Ms. Peterson started with PFM as an intern in the Orlando office during the summer of 1998. She graduated from the University of Florida in May 1999 with a Bachelors of Science degree in Finance and returned to PFM in July of 1999. John F. Grady III, recently joined the Orlando PFM office as a consultant and provides analytical and technical support to the firm's Florida clients. John's responsibilities include financial modeling, developing amortization schedules, cash flow analyses, and creating project specific spreadsheets. Mr. Grady has provided analytical support while serving clients as both an underwriter as well as a financial advisor, Some of the projects for which he has served as analyst include the Orange County Convention Center; Orange County Water Utilities System Refunding Revenue Bonds, Series 1998; the Marion County School Board's 1998 ratings presentation which resulted in a underlying rating upgrade; and the City of Miami's South Shore Hospital, Series 1998A tax exempt bonds and the Series 1998B taxable bonds. Mr. Grady received his B,S. in Finance and Insurance with a minor in Economics from the University of Florida in May of 1997 and joined Public Financial Management Inc, in June of 1999, Prior to joining PFM, Mr. Grady served as an analyst for regional underwriting and financial advisory firm. City of Winter Springs - Proposal for Financial Advisory Services 117 I I I I I I ~M ~ To give real service you must add something, which cannot be bought or measu red with money, and that is sincerity and integrity. I I I Litigation Statement I ... c. Identify and explain any investigation, past or present, by any law enforcement or other regulatory agency in connection with your participation in any financial services provided to any other governmental unit in Florida. I I PFM Statement of Litigation - Public Financial Management, Inc. ("PFM") has no investigation, past or present, by any law enforcement or other regulatory agency in connection with a governmental unit in Florida. City of Winter Springs - Proposal for Financial Advisory Services 118 I I I I I '$ - - - . -- d. Provide an audited financial statement or a statement of your capital position as of the date of your proposal, to include total capital, equity, and uncommitted capital. Financial Statement PFM's 1999 Audited Financial Statement has not been completed as of the date of this proposal. The following is the information requested for 1999. Public Financial Management Inc. Statement of Capital Position March, 2000 Total Capital Equity/Uncommitted Capital 1,104,938.00 3.890.173,84 4,995,111,84 I I Please refer to the following pages for PFM's 1998 and 1997 Audited Financial Statements. City of Winter Springs - Proposal for Financial Advisory Services 119 I I I I I . e. Provide a comprehensive list of references who can attest to your past services, professional expertise and competence, and personal and . corporate integrity. References City of Ormond Beach Contact Name Paul Lane Contact Title Finance Director Contact Address 22 South Beach Street Ormond Beach, FL 32174 Contact Phone (904) 676-3212 I I City of Boca Raton Contact Name Mervyn Timberlake Contact Title Financial Services Director Contact Address 201 West Palmetto Park Road Boca Raton, Florida 33432-3795 Contact Phone (561) 393-7729 Lake County School Board Contact Name Scott Smith Contact Title Director of Finance Contact Address 201 W. Burleigh Blvd Tavares, Florida 32778 Contact Phone (352) 343-3531 xt. 240 City of Key West Contact Name Roger Wittenberg Contact Title Finance Director Contact Address 525 Angela Street Key West, FL 33041 Contact Phone (305)292-8222 City of Winter Springs - Proposal for Financial Advisory Services I 20 I I I I I . . I I c. , '~ PUBLIC FINANCIAL MANAGEMENT, INC. AND SUBSIDIARY (formerly PFM Acquisition Corporation and Subsidiaries) Consolidated Financial Statements December 31,1998 and 1997 . . ."