REQUEST FOR PROPOSALS FINANCIAL ADVISOR SERVICES for REFUNDING OF: (i) WATER UTILITY DEBT (ii) COMMUNITY FACILITIES DISTRICT DEBT (iii) FORMER REDEVELOPMENT AGENCY DEBT

February 25, 2015 Financial Advisors: The City of Azusa and Azusa Light & Water requests proposals from Financial Advisors interested in providing services to consider refunding of: (i) a 2006 Water Utility debt issuance with a principal balance of about $52.3 million; (ii) a 2007 Rosedale Community Facilities District debt issuance with a principal balance of approximately $38.0 million; and (iii) a 2005 former Redevelopment Agency debt issuance with a principal balance of around $9 million. Each bond issuance should be evaluated and priced separately. The attached documents outline the scope of services for the Financial Advisor and procedures for developing and submitting proposals. Proposals must be received by our offices at 729 N. Azusa Avenue, Azusa, California, 91702, by 5:00 p.m. on Wednesday, March 11, 2015. If you have any questions about this request for proposals, please contact Talika Johnson at (626) 812-5174 or by email at [email protected] by 3:00 p.m. on Monday, March 9, 2015.

Sincerely, George F. Morrow Director of Utilities

Attachments

Susan Paragas Director of Finance

REQUEST FOR PROPOSALS

Table of Contents

Section

Page

Introduction

2

Background

3

Scope of Services

3-6

Qualifications of Proposers

6

Proposal Preparation and Format

7-9

General Instructions

9-10

Selection Criteria

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Proposal Approval and Agreement Execution

11-12

Attachments

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INTRODUCTION The City of Azusa and Azusa Light & Water requests proposals from Financial Advisors interested in providing services to consider refunding of: (i) a 2006 Water Utility debt issuance with a principal balance of about $52.3 million; (ii) a 2007 Rosedale Community Facilities District debt issuance with a principal balance of approximately $38.0 million; and (iii) a 2005 former Redevelopment Agency debt issuance with a principal balance of around $9 million. Pursuant to this RFP, each debt issuance should be analyzed and priced individually and more than one firm may be selected to provide assistance for one or more of the aforementioned bond issuances. Further, the firm(s) selected pursuant to this RFP will be required to provide the City and/or Azusa Light & Water with assistance as outlined in this document for all legal matters related to the issuance of revenue bonds or other similar financial instruments. Azusa Light and Water The City of Azusa owns and operates a municipal utility referred to as “Azusa Light & Water” or “AL&W”. AL&W provides both electric and water utility services to Azusa residents and businesses, and the water utility provides services to customers outside of the City of Azusa. AL&W is soliciting proposals from qualified firms to serve as financial advisor for AL&W on the refunding of its Series 2006 Parity Revenue Bonds. AL&W expects to refund the 2006 outstanding debt by issuing refunding revenue bonds in the amount of about $52.3 million. City of Azusa Community Facilities District No. 2005-1 (Rosedale) The City of Azusa (the “City”) established a Community Facilities District (“CFD”) in 2005 that allowed the financing of public services and facilities in the new housing development called Rosedale. The City is soliciting proposals from qualified firms to serve as financial advisor for on the refunding of its CFD NO. 2005-1 (Rosedale) Improvement Area No.1 2007 Special Tax bonds. The City expects to refund the outstanding debt by issuing refunding bonds in the amount of approximately $38 million. The Former Redevelopment Agency of the City of Azusa The former Redevelopment Agency of the City of Azusa (the “RDA”) was established in 1978 to identify and revitalize deteriorated and blighted areas. The RDA was dissolved in 2012 by the California Assembly Bill 1X 26 and the City is serving as the Successor Agency (the “Agency”) to help wind down the former RDA’s affairs. The Agency is soliciting proposals from qualified firms to serve as financial advisor for on the refunding of its former RDA’s Tax Allocation Bonds, 2005 Series A. The Agency expects to refund the outstanding debt by issuing refunding bonds in the amount of approximately $7.8 million for the current interest bonds and/or $1.3 million for the capital appreciation bonds.

Proposals are due by 5:00 p.m., Wednesday, March 11, 2015.

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BACKGROUND Water Parity Revenue Bonds Series 2006 In 2006, AL&W issued $54,850,000 in Parity Revenue Bonds through the Azusa Public Financing Authority for the purpose of funding capital improvements to the Water System. $52.3 million of the bonds are outstanding. Bonds maturing on or before July 1, 2016 are not subject to optional redemption prior to their maturities. $50.0 million are callable on or after January 1, 2017 at par. Rosedale Community Facilities District 2007 Special Tax Bond In 2007, the City issued $71,125,000 in Special Tax Bonds (the “2007 Bonds”) for the Community Facilities District No. 2005-1 (Rosedale) Improvement Area No.1 (“District”) for the main purpose of funding the acquisition and construction of certain public facilities in the District. Payoff of the 2007 Bonds is scheduled to occur in 2037. As of March 1, 2015, there will be approximately $38.0 million of outstanding debt associated with the 2007 Bonds and are callable on September 1, 2015 at a 102% premium. The annual debt service of the bonds range from about $2.42 million to $3.48 million per year through 2037, with average coupon rates of 4.94%. The Former Redevelopment Agency Tax Allocation Bond 2005 Series A In 2005, the former Redevelopment Agency of the City of Azusa (the “Agency”) issued $9,022,800 in Redevelopment Agency Tax Allocation Bond 2005 Series A (the “2005 Bonds”) as Current Interest Bonds and as Capital Appreciation Bonds for the main purpose of funding redevelopment projects and to satisfy reserve requirements. Payoff of the 2005 Bonds is scheduled to occur in 2034. For the Current Interest Bonds, there will be approximately $7.8 million of outstanding debt associated with the 2005 Bonds. The Capital Appreciation Bonds has a principal balance of around $1.3 million.

SCOPE OF SERVICES At this time, the following scope of services is provided in order to solicit proposals for aforementioned services: Phase I – Conduct Preliminary Analysis / Make Recommendation Separately review each of the three bonds and determine what portion of existing debt may be refunded and estimate whether the current municipal bond market yields or rates would produce enough savings to justify the cost of refunding.

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FA should verify amount eligible for refunding, and propose a structure for the refunding that factors in call dates for outstanding bonds, meaning that an escrow account will likely be necessary to effect the refinancing. FA shall factor in the following estimated costs as part of total cost of refunding:        

Bond Counsel Disclosure Counsel Financial Advisor Trustee Printing Rating Agencies Underwriter Discounts City Attorney

FA shall produce a series of tables which clearly demonstrate the benefits of refunding or that refunding is not beneficial. Tables should include, but not be limited to, the following:         

Summary of existing debt issue, including true interest cost (TIC), average coupon, average life, par amount, etc. Existing Installment Payment Schedule, including coupon rate Municipal Market Data showing yield trend for different rated issues Summary of proposed refunding issue, including TIC, average coupon, average life, par amount, etc. Proposed refunding Installment Payment Schedule, including coupon or interest rate Installment Payment schedule comparing existing vs. proposed refunding payments, including cash flow savings from refunding; include Net Present Value Savings Escrow requirements, costs and sufficiency Cost of issuance Summary and uses of funds

Based on above analysis, FA shall provide separate one page report for each of the three bonds with recommendation to either refund or not refund existing debt at this time. Preferred margin of savings over term of outstanding debt is 5 percent. Phase II – Assemble Financing Team and Manage Refunding Process Assuming Financial Advisor makes compelling case to refund outstanding debt and City agrees to proceed with refunding, then FA would be expected to perform the following Scope of Services:

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1. Develop the Financing Timetable The Financial Advisor shall take the lead role in preparing a schedule and detailed description of the responsibilities of each member on the Financing Team and update this schedule, with refinements, as necessary, as the work progresses. 2. Monitor the Transaction Process The Financial Advisor shall have primary responsibility for the successful implementation of the financing strategy and timetable that is adopted for the debt issue relating to the Project. The Financial Advisor shall coordinate (and assist, where appropriate) in the preparation of the legal and disclosure documents and shall monitor the progress of all activities leading to the sale of debt. The Financial Advisor shall prepare the timetables and work schedules necessary to achieve this end in a timely, efficient and cost-effective manner and will coordinate and monitor the activities of all parties engaged in the financing transaction. 3. Assist in the Selection of Additional Service Providers At the City’s request, the Financial Advisor may assist the City in the selection of bond counsel, disclosure counsel, underwriter(s), technical consultant(s), bond insurer, trustee, and other applicable professional service providers pertinent to this financing. 4.

Provide Financial Advice to the City Relating to Financing Documents The Financial Advisor shall assist the bond counsel and/or other legal advisors in the drafting of the respective financing resolutions, notices and other legal documents. In this regard, the Financial Advisor shall monitor document preparation for a consistent and accurate presentation of the recommended business terms and financing structure of the debt issue relating to the refunding, it being specifically understood however that the Financial Advisor’s services shall in no manner be construed as the Financial Advisor engaging in the practice of law.

5. Compute Sizing and Design Structure of Debt Issue

The Financial Advisor shall work with the underwriters and City’s staff to design a financing structure for the debt issue relating to the refunding that is consistent with the City's objectives, that coordinates the transaction with outstanding issues, and that reflects current conditions in capital markets. 6. Plan and Coordinate Presentations to Rating Agencies and Investors The Financial Advisor shall develop a plan for presenting the financing program to rating agencies and the investor community and assist the City in coordinating the presentation activities with the rating agencies. The Financial Advisor shall consider the implications of the City’s and AL&W’s existing debt and repayment covenants as they may relate to

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this refinancing, and how they may affect the willingness of rating agencies to affirm or change in credit ratings. 7. Conduct Market Analysis and Evaluate Timing of Market Entry The Financial Advisor shall provide regular summaries of current municipal market conditions, trends in the market and how these may favorably or unfavorably affect the City's proposed financing. 8. Coordinate Competitive Sale of Bonds The Financial Advisor shall advise the City in the sale of bonds, including an option to conduct a competitive sale through a Notice of Sale Inviting Bids. The Financial Advisor shall coordinate with the underwriters(s) to execute the most cost effective financing structure for the refunding. If the Financial Advisor feels that costs vary widely amongst the different bond sale options, Financial Advisor should breakout costs, to the extent possible, for each sale option the Financial Advisor views as viable. 9. Recommend Award of Debt Issuance Based upon activities outlined above, the Financial Advisor will recommend accepting or rejecting offers to purchase the debt issue. The Financial Advisor shall not recommend acceptance of an offer from an affiliated underwriting firm, or in connection with any firm in which it has a financial interest. If the City elects to award the debt issue, the Financial Advisor will instruct all parties and help facilitate the actions required to formally consummate the award. 10. Coordination of Pre-Closing and Closing Activities The Financial Advisor shall assist in arranging for the closing of financing. The Financial Advisor shall assist counsel in assuming responsibility for such arrangements as they are required, including arranging for or monitoring the progress of bond printing, qualification of issues for book-entry status, signing and final delivery of the securities and settlement of the costs of issuance.

QUALIFICATIONS OF PROPOSERS Information is required that demonstrates the professional capabilities and experience to serve as the City’s Financial Advisor on this financing. Qualifications may include, but not be limited to, prior relevant experience in municipal infrastructure financings and educational degrees and certificates in finance and accounting.

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PROPOSAL PREPARATION AND FORMAT Financial Advisor’s proposal shall be prepared by individuals qualified to fulfill the needs required by the scope of services for this RFP. Proposal contents shall be typed and arranged or presented in the following sequence to facilitate evaluation: Cover letter Company and staff/qualifications Work plan Data Request Scope exclusions/addenda Deliverables Schedule Lump sum not-to-exceed fee Fee schedule/hourly rates Other consultant commitments Other Following includes a brief description of each of the items above: 1. Cover Letter The cover letter should introduce the proposal, summarized not-to-exceed proposed costs, and indicate to whom all proposal communications should be addressed, including an e-mail address. 2. Company and Staff/Qualifications This section should contain the following: a) Name of firm and mailing address, phone and fax number of the proposer’s principal place of business. b) Mailing address, phone and fax number of the office in which the project team will work. c) Mailing address, staffing and degree of participation in analysis/refunding by any other firm or subcontractor. d) Overall company experience in utility infrastructure financings or debt refunding. e) Listing of recent financings or bond issuances managed by Financial Advisor of a similar nature to this RFP. f) References from at least four recent clients, including financing managers’ names, addresses and phone numbers, for which similar services have been provided in the last three years, preferably to municipal utilities, by the staff to be assigned to this project. 7

g) Names and positions of Financial Advisor to be assigned to this financing. h) Estimate of the man-hours to be expended on this financing, and if necessary, total for each staff member participating in this financing, including staff from other firm(s) subcontracting with the Financial Advisor. i) General resumes, and relevant experience of the Financial Advisor and key staff. These should clearly demonstrate Financial Advisor’s qualifications to perform required tasks of this RFP. 3. Work Plan This section should give an introduction and overview of the approach, list general objectives, develop a work plan by breaking down the project into specific tasks or work elements clearly associated with the scope of services included in this RFP, and explain the methodology to be used to complete each task. The work plan shall provide an estimate of the meetings to be in the City, who will be participating from the Financial Advisor’s side, and what information the Financial Advisor expects the City to provide (See Data Request). 4. Data Request This section of the proposal shall itemize all data the Financial Advisor expects the City and AL&W to provide in carrying out this financing. 5. Scope Exclusions/Addenda In reviewing this RFP, the Financial Advisor may encounter tasks, which, in the opinion of the Financial Advisor, may be unnecessary, or, may have been omitted. At the Proposer’s discretion, Financial Advisor may identify these tasks, and include any tasks that are deemed necessary by the Financial Advisor, but are not required by this RFP. 6. Deliverables Deliverables are material products such as the official statement, bond rating, underwriter agreements, trustee agreement, insurance, and other documents that may comprise this financing. This section shall contain a list of all proposed deliverables to secure necessary funding. 7. Schedule It is preferred that Phase One of this RFP be completed within two weeks following issuance of a notice to proceed, and that Phase Two be completed within three months following City agreement to proceed with Phase Two. Financial Advisor shall provide a refunding schedule for Phase Two with proposal which it believes is most appropriate to complete Phase Two activities 8

of this RFP. This schedule section shall include at a minimum a table that displays schedule of major milestones to be accomplished in refunding existing debt. The schedule for each task and timing of each deliverable should be based upon the number of calendar days or weeks needed to complete the refunding. 8. Lump Sum Not-To-Exceed Fee Consultant shall provide in a table format, the cost for each task, including a listing of the personnel assigned to each task, hourly rates, and the number of hours each position is budgeted for each task. This table shall include a lump-sum, not-to-exceed total cost for each Phase of this RFP. 9. Fee Schedule/Hourly Rates A schedule of hourly rates shall be included for all personnel classifications that will be utilized in this of study by Financial Advisor. 10. Other Client Commitments Financial Advisor shall list other clients that it is currently serving, including pending or anticipated clients that will be served, with staff that Financial Advisor anticipates using to fulfill its obligation to the City and AL&W under this RFP. Financial Advisor shall further attest to the availability of key staff to fulfill the needs of this study in a professional and timely manner. 11. Other This section should contain any additional information the consultant may feel will strengthen the proposal or be of interest to the City and AL&W.

GENERAL INSTRUCTIONS 1. Point of Contact Upon release of this RFP, all proposer communications concerning this process must be directed to the point of contact for this RFP: Talika M. Johnson Utilities Administrative and Financial Services Manager Azusa Light & Water 729 N. Azusa Ave. Azusa, CA 91702 Telephone: FAX: E-Mail:

(626) 812-5174 (626) 334-3163 [email protected] 9

2. Proposer Requests and Questions Specific requests and questions concerning this RFP shall be submitted in writing to the RFP Point of Contact prior to 3:00 p.m. on Monday, March 9, 2015. The City and AL&W will make every attempt to send copies of all questions and its responses, if any, to all RFP recipients of record. 3. Pre-Proposal Meeting Given the standard nature of this study, no Pre-Proposal meeting is scheduled for this RFP process. 4. RFP Revisions Revisions to the RFP, if any, will be issued by the City’s point of contact to all RFP recipients of record. 5. Submittal Address and Deadline Three originals and one electronic copy of the respondent’s proposal, for each bond issuance separately, in its entirety must be received by Azusa Light & Water no later than 5:00 p.m. on Wednesday, March 11, 2015, at the following address: Steven Yang Senior Management Analyst Azusa Light & Water 729 N. Azusa Ave. Azusa, CA 91702 6.

Terms of Withdrawal

All proposals shall be firm and may not be withdrawn for a period of ninety (90) days following the deadline dated for submission of proposals noted herein. 7. Disposition of Proposals All proposals submitted to the City and AL&W in response to this RFP will become the property of the City and AL&W and will not be returned. All expenses incurred in preparing and submitting proposals shall be at the sole cost and expense of the Proposer. The City and AL&W reserve the right to reject any and all proposals submitted in response to this RFP.

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SELECTION CRITERIA Selection of a Financial Advisor will be based on evaluation of qualifications, work plan, references and other required proposal elements. The follow criteria may be considered by the City and AL&W in evaluating proposals: a) Cost proposal and well benchmarked hourly rates, including reasonable number of hours to complete the scope of services. b) Current and past experience in serving as Financial Advisor to public utilities, including funding amounts secured through various issuances. c) Organizational skills and knowledge necessary to guide the City and AL&W through refunding as demonstrated by the completion of previous similar financings for public utilities. d) Solid knowledge of the financial markets and parties involved in making revenue bond issuances. e) Creativity and experience in carrying out financings. f) Clear and concise work plan. g) Carefully proposed service schedule that factors in all necessary tasks and deliverables. h) Adequate staffing that is available to meet the financing schedule milestones and deadlines for deliverables of the City and AL&W.

PROPOSAL APPROVAL AND AGREEMENT EXECUTION The successful Proposer will be required to enter into a professional services agreement with the City and/or AL&W which incorporates by reference the negotiated Work Statement and payment schedule. The following summarize “anticipated” approval process and requirements for issuance of notice to proceed: 1. City Council/Utility Board Approval It is anticipated that award of contract for this engagement will be made on March 23, 2015. The City Council/Utility Board may reject any and all proposals or may waive irregularities or informalities in any proposal if it is in the public’s best interest. After execution award by the City, the City Clerk will forward the professional services agreement in triplicate to the Financial Advisor for signature.

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2. Financial Advisor to Obtain Insurance The awarded Financial Advisor shall provide to the City and/or AL&W the worker’s compensation, comprehensive general and automobile liability, and the professional liability insurance coverage’s, endorsements and certifications specified in the attached sample contract. 3. Financial Advisor to Execute Contract The contract agreement shall be signed by the Financial Advisor in triplicate and three originals shall be returned together with the insurance within 15 calendar days from the date of receipt of notice of award. No contract shall be binding upon the City until completely executed by the Financial Advisor and the City and approved by the City Attorney. Failure to execute the contract agreement and file acceptable insurance within the time limit may be just cause for annulment of the award. 4. Purchase Order and Notice to Proceed Following receipt by the City and/or AL&W of executed agreement and insurance documents, City of Azusa will issue a Purchase Order and Notice to Proceed to Financial Advisor, and return a signed contract to Financial Advisor. These documents will provide final approval and authorization for the Financial Advisor to commence work.

ATTACHMENTS 1. Professional Services Agreement 2. 2006 Water Utility debt Maturity Schedule 3. 2007 Rosedale Community Facilities District debt Maturity Schedule 4. 2005 former Redevelopment Agency debt Maturity Schedule

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