Resolution No. 79641
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RESOLUTION NO. 7964
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A
LETTER AGREEMENT BY AND BETWEEN THE CITY OF VERNON
AND BOND LOGISTIX LLC REGARDING THE MALBURG
GENERATING STATION PROJECT
WHEREAS, the City of Vernon ("City") is proceeding at this
time to develop a 134 MW Combined Cycle Power Plant officially named
the Malburg Generating Station (the "Malburg Project") for the purpose
of installing additional generating capacity that will yield an
efficient, cost-effective, and reliable source of electric generation
to the City of Vernon; and
WHEREAS, City staff have determined that the City has the
opportunity to finance the Malburg Project at low tax-exempt rates;
and
WHEREAS, the City needs the services of an advisor in
connection with the investment of certain funds, including bond
proceeds and the Light and Power Fund Portfolio; and
WHEREAS, City staff have proposed engaging the services of
Bond Logistix LLC ("Logistix"), a wholly -owned subsidiary of Orrick,
Herrington & Sutcliffe LLP, to (1) act as bidding agent with respect
to the reinvestment of funds established in connection with the
upcoming Electric System Revenue Bonds, 2002 Variable Rate Demand,
Services A bonds and future debt issuances as designated by the City
Administrator; and (2) provide certain Portfolio Advisory Services
with respect to all or any portion of the City's Light & Power Fund as
designated by the City Administrator; and
WHEREAS, on May 7, 2002, the Finance Committee recommended
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W
that the City Council approve the recommendation of Bruce V.
Malkenhorst, Director of Finance, dated May 2, 2002, that City enter
into a Letter Agreement with Logistix to serve as the investment
bidding agent of City's bond portfolio and investment information
advisor for the Light and Power Fund Portfolio; and
WHEREAS, the City Council of the City of Vernon has
determined that, pursuant to the provisions of subsection (a) of
(Section 2.27 of the Vernon City Code, it is in the public interest and
necessity to enter into a Letter Agreement with Logistix for
investment advisory services.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the Letter Agreement with Logistix, a copy of which is
attached hereto as Exhibit "A" and made a part hereof.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Mayor and the City Clerk to execute said Letter
Agreement for, and on behalf of, the City of Vernon.
SECTION 4: The City Council of the City of Vernon hereby
authorizes the City Administrator to use the services of Logistix,
pursuant to said Letter Agreement, on behalf of the City of Vernon,
for whatever investment matters the City Administrator deems
appropriate.
SECTION 5: The City Council of the City of Vernon hereby
directs the City Clerk, or his designee, to send one fully executed
- 2 -
1 Letter Agreement to:
2 Bond Logistix LLC
Attn. A. Craig Underwood, President
3 777 S. Figueroa St., Suite 3200
4 Los Angeles, CA 90017
5 SECTION 6: The City Clerk of the City of Vernon shall
6 certify to the passage of this resolution, and thereupon and
7 thereafter the same shall be in full force and effect.
8 APPROVED AND ADOPTED this 8th day of May, 2002.
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EONIS C. MALB RG, Maybr
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12 ATTEST:
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BRUCE V. MALKENHORST, City Clerk
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3 _
1 STATE OF CALIFORNIA )
2 ) ss
COUNTY OF LOS ANGELES )
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4 I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
5 hereby certify that the foregoing Resolution, being Resolution No.
6 7964, was duly adopted by the City Council of the City of Vernon at an
7 adjourned regular meeting of the City Council duly held on Wednesday,
8 May 8, 2002, and thereafter was duly signed by the Mayor of the City of
9 Vernon.
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BRUCE V. MALKENHORST, City Clerk
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EXHIBIT
f
777 South Figueroa Street, Suite 3200
BOND LOG I S T 1.X LLC Los Angeles, CA 90017
INSIGHT. INNOVATION. INTEGRATION. Phone 213 612 2200 Fax 213 612 2499
www.bondlogistix_corn
May 2, 2002
Bruce V. Malkenhorst
City Administrator
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Re: City of Vernon
Electric System Revenue Bonds
2002 Variable Rate Demand Series A
Investment Services:
Bond Proceeds and Light & Power Fund
Dear Mr. Malkenhorst:
Thank you for the opportunity to serve as an Advisor to the City of Vernon (the "City") in
connection with the investment of certain funds of the City, including bond proceeds and the Light & Power
Fund Portfolio as designated by the City Administrator.
1. Bond Proceeds
This letter (the "Agreement") will confirm the engagement by the City of Bond Log_stix
LLC (`BLX") to serve as bidding agent with respect to the reinvestment of amounts contained in the various
funds established in connection with the upcoming Electric System Revenue Bonds, 2002 Variable Rate
Demand, Series A bonds (the "Bonds") and future debt issuances as designated by the City Administrator.
BLX will provide the following services as bidding agent:
a) Scope of Bond Proceeds Services:
(i) BLX will prepare a request for bids (the "RFB") from investment providers for
investments that qualify under the bond documents for approval by the City and
credit enhancement provider, if any.
(ii) BLX will prepare a proposed list of qualified investment providers to receive the
RFB.
(iii) BLX will coordinate a competitive solicitation of bids.
(iv) BLX will review any bids received in response to the above solicitation for
compliance with the RFB.
(v) BLX will provide the City with a summary of the bids received, including a ranking
by yield.
(vi) BLX will work with the City, the City's counsel, the trustee for the Bonds, and the
investment provider to close the investment transaction.
(vii) BLX will provide, if requested, a Closing Transcript of all pertinent
documents.
The services provided by BLX for the bond proceeds will be limited to those set forth
above. Although BLX is a wholly -owned subsidiary of Orrick, Herrington & Sutcliffe LLP ("Orrick"), a law
firm, BLX's services will not include the delivery of legal services, legal advice or legal opinions of any kind.
BLX will have no discretion or control over final decisions regarding solicitation and selection of the
investment agreement provider and execution of (or direction to the trustee to execute) the investment
D A L L A S L 0 S A N G E L E S NEW YORK SAN FRANCI SCO
J BONDLOGISIGIT o
EG-T-1
City of Vernon
May 2, 2002
Page 2
agreement. All such final decisions will be made by the City. Please also note that some of the investment
providers that receive the RFB and may win the bidding may have been, may be or may become clients of
BLX or Orrick. However, none is or shall be a client of BLX or Orrick with respect to investments that are
the subject of this engagement. To the extent that, because of any other relationship between Orrick or BLX
and any investment provider, there may appear to be or is any conflict, actual or potential, with respect to the
City's engagement of BLX, the City hereby waives the conflicts and consents to any such other relationship.
b) Compensation
BLX's fees for its services under this agreement shall be contingent upon and payable (by
the provider(s) of the agreements) at the time of execution and delivery of the investment agreement. BLX
will be paid an advisory fee which will not exceed the present value of annual payments equal to .05 percent
of the weighted average amount reasonably expected to be invested each year of the term of the contract
using a reasonable taxable discount rate.
2. Light & Power Fund Portfolio
Additionally, this Agreement will confirm the engagement by the City of BLX to provide
certain Portfolio Advisory Services with respect to all or any portion of the City's Light & Power Fund ("the
Portfolio") as designated by the City Administrator.
a) The scope of BLX's services under the terms of this agreement shall include, but not be
limited to, the following, as designated by the City Administrator:
(i) Advising on potential investments for the City's Portfolio;
(ii) Reviewing asset allocation, and recommending changes based on market
analysis, credit review and duration considerations.
(iii) Recommending security swaps when appropriate and beneficial; and
Likewise, the City will notify BLX of any changes in the City's Investment Policy and
provide a copy of those changes to permit BLX, as requested by the City, to monitor and recommend
investments that comply with the guidelines of the City's Investment Policy. At the direction of the City
Administrator; the City will also provide a copy of the Portfolio denoting when maturities, sales or purchases
occur to ensure BLX is reviewing and analyzing current holdings.
b) Compensation
BLX will be paid a fee of six basis points (.069/6) for the services provided hereunder
(Section 2 a) based on the portion of the Portfolio the City directs BLX to submit advice upon.
BLX would, if so designated by the City Administrator, in addition to the services described
in Section 2 a), implement its investment strategies and report on the City's Portfolio. BLX's fee for
investment advisory services, trading and reporting would be ten basis points (.109/6) based on the portion of
the Portfolio under advisement by BLX as designated by the City Administration.
c) Payment
At the City's option, BLX's fees will be either invoiced separately or with, but itemized
separately, on Orrick's monthly invoices. Except as otherwise provided in this Agreement, fees for BLX's
services hereunder shall be payable by the City within twenty-five days of the City's receipt of the monthly
invoice. The BLX fees invoiced monthly as part of Orrick's monthly invoice will be for services provided
during the immediately preceding month.
RAAdm1n\1•:ng Letter_=12602.doc
City of Vernon
J BOND LOGiSTIL, May2,2002
INSIGHT INNOVATION ,N,EGa..,o„ Page 3
BLX is an independent investment advisor, registered under the Investment Advisor's Act
of 1940. The City acknowledges receipt of Part II of BLX's Form ADV. If this disclosure statement was not
delivered to the client at least 48 hours prior to the client entering into any written or oral advisory contract
with BLX, then the client has the right to terminate the contract without penalty within five (5) business days
after entering into the contract.
3. Termination of Agreement and Investment Advisory Services
This Agreement and all Investment Advisory Services to be rendered under it may be
terminated at any time by written notice from the City or BLX, with or without cause. In that event, all
finished and unfinished documents prepared for adoption or execution by the City shall, at the option of the
City, become its property and shall be delivered to it or to any party it may designate; provided that BLX shall
have no liability whatsoever for any subsequent use of such documents. In the event of termination by the
City, BLX shall be paid for all satisfactory work performed hereunder as provided in Sections 1a and 2a
hereof, unless the termination is made for cause, in which event compensation, if any shall be adjusted in the
light of the particular facts and circumstances involved in the termination. Upon such termination BLX shall
have no future duty hereunder of any kind to the City with respect to the Bonds, or the Enterprise Fund
Portfolio; provided that the City shall remain liable for any unpaid compensation or reimbursement due
hereunder.
If the foregoing is acceptable to the City, please so indicate by returning the enclosed copy
of this letter, signed by an authorized officer, and retain the original for your files. Thank you again for this
opportunity to work with the City on these matters. We look forward to working with you.
Very truly yours,
BOND LOGISTIX LLC
By
- ",/Q �—
A. 'Q, g Un erwood
President
ACCEPTED AND AGREED:
CITY OF VERNON
):ARr=X Leonis C. Malburg
Title: W Mayor
Dated:
cc: Darlene Blaney
By:
By:
ATTEST:
Bruce V. Malkenhorst, City Clerk
APPROVED AS TO FORM:
Eduardo Olivo, City Attorney
R:\\drain\I nglxtter_42602.doc
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
Finance Committee
City of Vernon
Honorable Members:
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
May 2, 2002
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
C
\(G \6 I�
Due to the construction of the Malburg Generation Station, it is
hereby recommended that the City enter into a Letter Agreement with
Bond Logistics LLC (BLX). This firm will serve as the investment
bidding agent of our bond portfolio and as an investment information
advisor for the Light and Power Fund portfolio.
Very truly yours,
Bruce V. Malkenhorst
Director of Finance
BVM/gm
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
May 2, 2002
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
Mr. Bruce V. Malkenhorst
City Administrator
City Of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
Re: City of Vernon Bond Financing - Contract with BLX for
Investment Advisory Services Letter Agreement
Dear Bruce:
I recommend you consider placing on the Finance Committee Agenda
for eventual City Council approval, a letter agreement between
the City and Bond Logistix LLC (BLX). BLX will act, as
designated by the City Administrator, as an investment bidding
agent for the City's bond portfolio and an investment
information advisor for the City's Light and Power Fund
portfolio.
For the bond issue, BLX will obtain quotes from investment
providers to enable the City to get a maximum return on its bond
proceeds portfolio, as that portfolio gets drawn down to pay for
the Malburg Generating Station Project. BLX's fees shall be
contingent upon and payable by the investment provider selected
by the City.
In regards to the City's Light and Power Fund portfolio, BLX
will provide investment information advice to the City
Administrator, as he designates. BLX will be paid 6/100 of to
of that portion of the Light and Power Fund portfolio the City
Mr. Bruce V. Malkenhorst
• May 2, 2002
Page 2
Administrator accepts BLX's investment advice upon." BLX's
services will only be utilized when and if designated by the
City Administrator. The City may use BLX for expanded
investment advisory, trading and reporting services for a fee of
10/100 of 1%, as designated by the City Administrator.
I look forward to discussing these matters with you at your
earliest convenience.
Sincerely,
4: ��
Eric Fresch
Legal Counsel
EF:j1
Enclosure: Letter Agreement
cc: Eddie Olivo (w/Encl.)
Sharon Johnson (w/Encl.)
SUPPORTING
DOCUMENTS
BOND LOG ISTIXLLC
INSIGHT. INNOVATION, INTEGRATION.
Bruce V. Malkenhorst
City Administrator
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
May 2, 2002
Re: City of Vernon
Electric System Revenue Bonds
2002 Variable Rate Demand Series A
Investment Services:
Bond Proceeds and Light & Power Fund
Dear Mr. Malkenhorst:
777 South Figueroa Street, Suite 3200
Los Angeles, CA 90017
Phone 213 612 2200 Fax 213 612 2499
www.bondlogistix.com
Thank you for the opportunity to serve as an Advisor to the City of Vernon (the "City") in
connection with the investment of certain funds of the City, including bond proceeds and the Light & Power
Fund Portfolio as designated by the City Administrator.
1. Bond Proceeds
This letter (the "Agreement") will confirm the engagement by the City of Bond Log_stix
LLC (`BLX") to serve as bidding agent with respect to the reinvestment of amounts contained in the various
funds established in connection with the upcoming Electric System Revenue Bonds, 2002 Variable Rate
Demand, Series A bonds (the "Bonds") and future debt issuances as designated by the City Administrator.
BLX will provide the following services as bidding agent:
a) Scope of Bond Proceeds Services:
(i) BLX will prepare a request for bids (the "RFB") from investment providers for
investments that qualify under the bond documents for approval by the City and
credit enhancement provider, if any.
(ii) BLX will prepare a proposed list of qualified investment providers to receive the
RFB.
(iii) BLX will coordinate a competitive solicitation of bids.
(iv) BLX will review any bids received in response to the above solicitation for
compliance with the RFB.
(v) BLX will provide the City with a summary of the bids received, including a ranking
by yield.
(vi) BLX will work with the City, the City's counsel, the trustee for the Bonds, and the
investment provider to close the investment transaction.
(vii) BLX will provide, if requested, a Closing Transcript of all pertinent
documents.
The services provided by BLX for the bond proceeds will be limited to those set forth
above. Although BLX is a wholly -owned subsidiary of Orrick, Herrington & Sutcliffe LLP ("Orrick"), a law
firm, BLX's services will not include the delivery of legal services, legal advice or legal opinions of any kind.
BLX will have no discretion or control over final decisions regarding solicitation and selection of the
investment agreement provider and execution of (or direction to the trustee to execute) the investment
•
BOND LOG
' INSIGHT. INNOVATION INTEGRATION,
City of Vernon
May 2, 2002
Page 2
agreement. All such final decisions will be made by the City. Please also note that some of the investment
providers that receive the RFB and may win the bidding may have been, may be or may become clients of
BLX or Orrick. However, none is or shall be a client of BLX or Orrick with respect to investments that are
the subject of this engagement. To the extent that, because of any other relationship between Orrick or BLX
and any investment provider, there may appear to be or is any conflict, actual or potential, with respect to the
City's engagement of BLX, the City hereby waives the conflicts and consents to any such other relationship.
b) Compensation
BLX's fees for its services under this agreement shall be contingent upon and payable (by
the provider(s) of the agreements) at the time of execution and delivery of the investment agreement. BLX
will be paid an advisory fee which will not exceed the present value of annual payments equal to .05 percent
of the weighted average amount reasonably expected to be invested each year of the term of the contract
using a reasonable taxable discount rate.
2. Light & Power Fund Portfolio
Additionally, this Agreement will confirm the engagement by the City of BLX to provide
certain Portfolio Advisory Services with respect to all or any portion of the City's Light & Power Fund ("the
Portfolio") as designated by the City Administrator.
a) The scope of BLX's services under the terms of this agreement shall include, but not be
limited to, the following, as designated by the City Administrator:
(i) Advising on potential investments for the City's Portfolio;
(ii) Reviewing asset allocation, and recommending changes based on market
analysis, credit review and duration considerations.
(iii) Recommending security swaps when appropriate and beneficial; and
Likewise, the City will notify BLX of any changes in the City's Investment Policy and
provide a copy of those changes to permit BLX, as requested by the City, to monitor and recommend
investments that comply with the guidelines of the City's Investment Policy. At the direction of the City
Administrator; the City will also provide a copy of the Portfolio denoting when maturities, sales or purchases
occur to ensure BLX is reviewing and analyzing current holdings.
b) Compensation
BLX will be paid a fee of six basis points (.06%) for the services provided hereunder
(Section 2 a) based on the portion of the Portfolio the City directs BLX to submit advice upon.
BLX would, if so designated by the City Administrator, in addition to the services described
in Section 2 a), implement its investment strategies and report on the City's Portfolio. BLX's fee for
investment advisory services, trading and reporting would be ten basis points (.10%) based on the portion of
the Portfolio under advisement by BLX as designated by the City Administration.
c) Pam
At the City's option, BLX's fees will be either invoiced separately or with, but itemized
separately, on Orrick's monthly invoices. Except as otherwise provided in this Agreement, fees for BLX's
services hereunder shall be payable by the City within twenty-five days of the City's receipt of the monthly
invoice. The BLX fees invoiced monthly as part of Orrick's monthly invoice will be for services provided
during the immediately preceding month.
R:\Admin\Eng I:,etter_42602.doc
}
B0NDL0GISTIX«�
•INSIGHT INNOVATION. INTEGRATION
City of Vernon
May 2, 2002
Page 3
BLX is an independent investment advisor, registered under the Investment Advisor's Act
of 1940. The City acknowledges receipt of Part II of BLX's Form ADV. If this disclosure statement was not
delivered to the client at least 48 hours prior to the client entering into any written or oral advisory contract
with BLX, then the client has the right to terminate the contract without penalty within five (5) business days
after entering into the contract.
3. Termination of Agreement and Investment Advisory Services
This Agreement and all Investment Advisory Services to be rendered under it may be
terminated at any time by written notice from the City or BLX, with or without cause. In that event, all
finished and unfinished documents prepared for adoption or execution by the City shall, at the option of the
City, become its property and shall be delivered to it or to any party it may designate; provided that BLX shall
have no liability whatsoever for any subsequent use of such documents. In the event of termination by the
City, BLX shall be paid for all satisfactory work performed hereunder as provided in Sections 1a and 2a
hereof, unless the termination is made for cause, in which event compensation, if any shall be adjusted in the
light of the particular facts and circumstances involved in the termination. Upon such termination BLX shall
have no future duty hereunder of any kind to the City with respect to the Bonds, or the Enterprise Fund
Portfolio; provided that the City shall remain liable for any unpaid compensation or reimbursement due
hereunder.
If the foregoing is acceptable to the City, please so indicate by returning the enclosed copy
of this letter, signed by an authorized officer, and retain the original for your files. Thank you again for this
opportunity to work with the City on these matters. We look forward to working with you.
Very truly yours,
BOND LOGISTIX LLC
By
1"�;q K-
A. raig Un erwood
President
ACCEPTED AND AGREED:
CITY OF VERNON
By:
1 X Leoni;4 C. Malbu g
Title: Mayor
Dated:
cc: Darlene Blaney
ATTEST:
By:
Bruce V. Malkenhorst, City Clerk
A OVED AS TO FO
B �(Mc�OC4 _
Eduardo Olivo, Ci torney
R:\Admin\Eng l.ctter_42602.doc