TRANSMITTAL LETTER FOR BOARD MEETING OF OCTOBER 3, 2024
COMMITTEE ON PROCUREMENT
Mr. Brian A. Perkovich, Executive Director
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Authorization to enter into agreements for Contract 20-RFP-25, Legal Advisory Services Related to the District Financing Program, with Katten Muchin Rosenman LLP as Lead Bond Counsel and Tax Counsel; Hardwick Law Firm, LLC, as Co-Bond Counsel; Foley & Lardner, LLP, as Disclosure Counsel; and Holley & Pearson-Farrer LLP, formerly Golden Holley James LLP, as Co-Disclosure Counsel, in a total amount not to exceed $274,500.00, in connection with the sale of up to a total of $500,000,000 of General Obligation Capital Improvement and Refunding Bonds of the Metropolitan Water Reclamation District of Greater Chicago, Accounts 401-50000-767300 and 767400
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Dear Sir:
The District intends to sell new money and refunding bonds (taxable and tax-exempt) in the coming months. The new money component will be approximately $300 million, and the refunding bonds could approximate $200 million on the date of the sale depending upon market conditions. The total bond sale requirement of an estimated $500 million would be sold in one sale on the same date. Refunding candidates include the District’s 2014 and 2021 bonds. The size and structure of the bond sale will be determined with the assistance of the Underwriters and Financial Advisors, based upon the market interest rates, investor cash positions, supply of bonds for sale, liquidity of the market, and other conditions.
The proposed sale requires the appointment of Lead Bond Counsel, Co-Bond Counsel, Tax Counsel, Disclosure Counsel, and Co-Disclosure Counsel for the District in order to effect delivery of the bonds. The Senior Underwriter will separately engage Underwriter’s Counsel and Co-Underwriter’s Counsel to provide counsel for the underwriting syndicate.
Lead Bond Counsel and Co-Bond Counsel will provide an unqualified approving opinion as to the legality of the bonds, and that principal and interest are payable from ad valorem taxes to be levied on all taxable property within the boundaries of the District, sufficient to make such required payments. Tax Counsel will provide certain tax law analyses regarding the District’s issuance of the bonds. Disclosure Counsel will consult with the District in compliance with all of its obligations in connection with the issuance of the bonds under applicable securities laws and tax laws for full disclosure of all material facts. Co-Disclosure Counsel will provide a letter of assurance that the official statement for the bonds does not contain any untrue statement of a material fact, or omit to state a material fact, which could cause the official statement to be misleading.
Katten Muchin Rosenman LLP was, on August 5, 2021, authorized by the Board of Commissioners to act as Lead Bond Counsel and Tax Counsel on bond sales for a five-year period. Katten Muchin Rosenman LLP will act as Lead Bond Counsel and Tax Counsel for the 2025 bond sale.
After the Board's 2021 authorization to appoint Miller, Canfield, Paddock and Stone P.L.C. as Disclosure Counsel, the firm were removed from the Disclosure Counsel eligible list for the 2025 bond sale. Disclosure Counsel for each bond sale is recommended from firms remaining on the eligible list based upon the highest composite evaluation score, which is comprised of their technical score and their best and final offer cost proposal. Per the conditions of Contract 20-RFP-25, a best and final offer (BAFO) on cost to serve as Disclosure Counsel is required for each bond sale. On August 30, 2024, a BAFO request was issued to the remaining eleven firms eligible to provide Disclosure Counsel Services, and responses were received by September 6, 2024. These scores were added to the technical score earned by each firm in 2021 to form a composite evaluation ranking for the 2025 bond sale. Foley & Lardner, LLP, was highest-ranked overall and is recommended to act as Disclosure Counsel for the 2025 bond sale.
The Co-Bond Counsel and Co-Disclosure Counsel for each bond sale are recommended from firms remaining on their respective eligible list based upon their technical score and the District’s aspirational participation goals for Minority-Owned (MBE), Women-Owned (WBE), and Veteran-Owned (VBE) business enterprises. The cost proposal does not apply to these firms. For the 2025 bond sale, Hardwick Law Firm, LLC, is recommended to act as Co-Bond Counsel; Holley & Pearson-Farrer LLP, formerly Golden Holley James, LLP, is recommended to act as Co-Disclosure Counsel.
For each bond sale, the District shall aspire to award a minimum of 30% of the work and services required by the RFP to one or more MBE or WBE firm(s) and a minimum of 3% of the work and services to one or more VBE firm(s). The Diversity Section has reviewed the proposed counsel appointments for this bond sale and concluded that the group identified is in accordance with the RFP requirements.
From time to time, bond counsel firms represent in a variety of capacities investment bankers, financial advisors and other persons active in the Illinois public finance market on a wide range of issues. Bond counsels currently represent the purchasers of the bonds in other matters not related to this transaction. The acceptance of the services of Lead Bond Counsel and Co-Bond Counsel, and the execution of their engagement letters, constitutes the District's consent to such other engagements with the purchasers of the bonds. Neither the representation of the District nor such additional relationships or prior consultations with potential Bond Purchasers will affect any counsel’s responsibility to render an objective Bond Opinion.
The fee for services as Bond Counsel services is proposed to be stratified at fifty cents ($0.50) per $1,000 principal amount of bonds sold up to $300,000,000, a fee not to exceed $150,000.00; and ten cents ($0.10) per $1,000 principal amount of bonds sold in excess of $300,000,000, a fee not to exceed $20,000.00. The total fee is therefore not to exceed $170,000.00, to be apportioned 70% to Lead Bond Counsel and 30% to Co-Bond Counsel. The fee for incidental out-of-pocket expenses incurred by Bond Counsels is proposed to be an amount not to exceed $500.00.
The fee for services as Tax Counsel is proposed to be stratified at eleven cents ($0.11) per $1,000 principal amount of bonds sold up to $300,000,000, a fee not to exceed $33,000.00; and five cents ($0.05) per $1,000 principal amount of bonds sold in excess of $300,000,000, a fee not to exceed $10,000.00. The total fee is therefore not to exceed $43,000.00 to Tax Counsel.
The fee for services as Disclosure Counsel is proposed to be stratified at fifteen cents ($0.15) per $1,000 principal amount of bonds sold up to $300,000,000, a fee not to exceed $45,000.00; and eight cents ($0.08) per $1,000 principal amount sold in excess of $300,000,000, a fee not to exceed $16,000.00. The total fee is therefore not to exceed $61,000.00, to be apportioned 70% to Disclosure Counsel and 30% to Co-Disclosure Counsel.
No agreement is executed between the Underwriter’s Counsel and the District due to the fact that they work directly for the underwriting syndicate and are paid by the Senior Managing Underwriter from the proceeds of the bond sale.
Accordingly, authority is requested to enter into agreements with Katten Muchin Rosenman LLP as Lead Bond Counsel and Tax Counsel; Hardwick Law Firm, LLC, as Co-Bond Counsel; Foley & Lardner, LLP, as Disclosure Counsel; and Holley & Pearson-Farrer LLP, formerly Golden Holley James LLP, as Co-Disclosure Counsel, in a total amount not to exceed $274,500.00, to render the necessary opinions for the sale of General Obligation Capital Improvement and Refunding Bonds, per Section 11.4 of the Purchasing Act. Funds will be paid from the bond sale proceeds Accounts 401-50000-767300 ($164,700.00) and 401-50000-767400 ($109,800.00). Fees as noted above will only be disbursed if and when the transaction is completed.
It is further requested that the Board of Commissioners authorize and direct the Chairperson of the Committee on Finance, the Treasurer, the Executive Director, the Director of Procurement and Materials Management, and the Clerk to execute the professional services agreement on behalf of the District on account of the aforesaid services after the professional services agreements have been approved by the Treasurer as to technical matters, and by the General Counsel as to form and legality.
Requested, Steven J. Lux, Treasurer, SJL:WNS:vb
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Marcelino Garcia, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for October 3, 2024
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