Title
Proposed Contract Amendment No. 1
Contract No. 2204949/SCN-0000428
Municipal Advisory Services
Body
Agenda of: May 28, 2025
Item No.: 2025-138
Amount:
Original Contract $3,150,000.00
Proposed Amendment No. 1 1,006,250.00
Total Contract Amount $4,156,250.00
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: May 28, 2025
RE: Contract No. 2204949/SCN-0000428
Municipal Advisory Services
Vendor: PFM Financial Advisors LLC
Status: Amendment/Change Order
MOTION
Upon recommendation of Nicolette Bateson, Chief Financial Officer/Treasurer, Financial Services, the Board of Directors (Board) of the Great Lakes Water Authority (GLWA), authorizes the Chief Executive Officer (CEO) to enter into Contract No. 2204949/SCN-0000428, Proposed Amendment No. 1, “Municipal Advisory Services” with PFM Financial Advisors LLC with an increased cost of $1,006,250.00 for a total cost not to exceed $4,156,250.00 with no increase in duration for a total duration of 1,827 days; and authorizes the CEO to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND
The role of a municipal financial advisor is to act in a fiduciary capacity and provide other non-transactional services including providing advice on compliance matters, various debt management agreements, financial plans, strategies, and policies. More specific responsibilities include assistance with the following:
• The plan of finance and related transaction timetable.
• Financing solutions and alternatives for funding the capital improvement plan.
• Method of sale for bond transactions, considering market conditions and near-term activity in the municipal market.
• Rating agency strategies and presentations.
• Bond-related and State Revolving Fund (SRF) loan-related activities associated with Internal/external accountants, feasibility consultants and escrow agents.
• Selection of underwriters, underwriter compensation issues, syndicate structure and bond allocations.
• Negotiated bond sales, including advice regarding retail order periods and institutional marketing, analysis of comparable bonds and secondary market data.
• Competitive bond sales, including preparation of notice of sale and preliminary official statement, bid verification, true interest cost (TIC) calculations and reconciliations/ verifications of bidding platform calculations, preparation of notice of sale, obtaining CUSIP numbers.
• SRF loan closing processes, including preparation of required schedules, assistance with application filings, and support throughout as needed.
• Preparation of preliminary cash flows/preliminary refunding analysis.
JUSTIFICATION
In 2023, GLWA conducted a municipal bond financial advisor competitive solicitation process. On June 28, 2023, the GLWA Board of Directors approved a contract with PFM Financial Advisors LLC for an amount of $3,150,000 for a period of July 1, 2023 to June 30, 2028 which is a five-year time period inclusive of two one-year renewals.
At the February 26, 2025 Board Meeting GLWA staff identified the opportunity to achieve budgetary savings by moving to an annual cadence for bond transactions. The change to a new money bond transaction annually will reduce debt service interest expense over time. This change further allows for a decrease in the reduction of future budget adjustments and provides funds for increased pay go financing moving forward.
To accommodate this change in strategy, there is a need to amend the municipal advisory services contract to allow for the two bond transactions (rather than one) that occurred in FY 2024 and an annual bond transaction moving forward in FY 2025 and FY 2027 rather than the original plan of a bond transaction every other year. See attached Table 1 - Fee Analysis & Budget Impact which calculates the proposed increase in fees.
PROJECT MANAGEMENT STATUS
Original Contract Time 1,827 days (7/01/2023 - 6/30/2028)
Proposed Amendment No. 1 0 days
New Contract Time 1,827 days (7/01/2023 - 6/30/2028)
PROJECT ESTIMATE
Original Contract Price $ 3,150,000.00
Proposed Amendment No. 1 1,006,250.00
New Contract Total $ 4,156,250.00
FINANCIAL PLAN IMPACT
Fees related to bond transactions are currently and will continue to be paid out of the proceeds of the bonds issued. The bond proceeds as shown in the financial plan are net of fees.
GLWA recognizes fees related to State Revolving Fund (SRF) transactions and other services as expenses within the Operations and Maintenance budget.
Funding Source: Depending on the type of transaction, the funding source will be either Operations & Maintenance (O&M) Budget - Administrative or Bond Proceeds (Debt Service Fund) - Water & Sewer Specific
Cost Center: CFO Services - Public Finance
Spend Category(s): Contractual Professional Services or Debt Cost of Issuance
Estimated Cost by Year: Estimated cost varies by year based upon the anticipated timing of revenue bond transactions. See attached Table 1 - Fee Analysis & Budget Impact.
COMMITTEE REVIEW
The GLWA Audit Committee reviewed this matter on May 2, 2025. The Audit Committee unanimously recommended that the Board of Directors enter into Contract No. 2204949/SCN-0000428, Proposed Amendment No. 1, “Municipal Advisory Services” with PFM Financial Advisors LLC with an increased cost of $1,026,250.00 for a total cost not to exceed $4,176,250.00 with no increase in duration for a total duration of 1,827 days; and authorizes the CEO to take such other action as may be necessary to accomplish the intent of this vote.
Subsequent to that meeting, the amount was reduced to $1,006,250.00 for a total cost not to exceed $4,156,250.00 in response to a question on fees at the Audit Committee meeting on May 2, 2025. This change was made because it was determined that the fee for revenue bond transactions did not increase from $220,000 to $230,000 per transaction until the second renewal term. The update also clarifies the categorization of fees versus reimbursables. This change is reflected in Table 1.
SHARED SERVICES IMPACT
This item does not impact the shared services agreement between GLWA and DWSD. It should be noted that fees for bond transactions are deducted from a pro-rata percentage of the bond proceeds when a market-based transaction encompasses funding for DWSD. DWSD also reimburses GLWA for SRF transaction costs incurred. A representative of DWSD was included in the procurement process.