R-70-02 11/25/02RESOLUTION
RESOLUTION AUTHORIZING ACCEPTANCE OF PROPOSAL
FROM KANE, MC KENNA CAPITAL, INC.
FOR FINANCIAL ADVISORY SERVICES RELATED TO A BOND ISSUE
FOR THE STEPHEN STREET RECONSTRUCTION PROJECT
WHEREAS, the Village of Lemont desires to issue a bond for the Stephen Street
Reconstruction project within the Village of Lemont; and
WHEREAS, the Village of Lemont seeks to utilize the firm of Kane McKenna Capital, Inc.
For financial advisory services in conjunction with the bond issue; and
WHEREAS, Kane McKenna Capital, Inc. has presented a proposal to the Village of Lemont
identifying the terms and conditions of the services to be provided.
NOW, THEREFORE, BE IT RESOLVED by the President and Board of Trustees that the
Proposal for Financial Advisory Services in connection with Bond Financing for the Village of
Lemont, Illinois attached hereto as Exhibit A is hereby approved.
PASSED AND APPROVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF LEMONT, COUNTIES OF COOK, WILL AND DU PAGE, ILLINOIS
on this 25th day of November , 2002.
AYES NAYS PASSED ABSENT
v
John Benik
Debby Blatzer
Peter Coules
Connie Markiewicz
Steve Rosendahl
Jeanette Virgilio
Attest:
CHARLENE SMOLLEN, Village Clerk
IAZZA, Villa
ent
;el
Kane, McKenna
Capital, Inc.
Honorable John Piazza
Village President
Village of Lemont
418 Main Street
Lemont, Illinois 60439 -3708
150 North Wacker Drive
Suite 1600
Chicago, Illinois 60606
October 17, 2002
r 312.444.1702
F 312.444.9052
RE: Proposal for Financial Advisory Services in connection with
Bond Financing for the Village of Lemont, Illinois
Dear President Piazza:
Kane, McKenna Capital, Inc. ( "KM ") is pleased to present this proposal to the Village of
Lemont (the "Village ") to provide financial advisory services relating to the proposed issuance of
bonds.
The Village desires to fund certain road and related improvements at an estimated cost of
$2,000,000 in the Village's Downtown Tax Increment Finance District (the "Project "). The Village
seeks to issue alternate revenue bonds using incremental property taxes as an alternate revenue
source as provided in the Local Government Debt Reform Act (the "Debt Reform Act ") for the
bonds (the "Bonds ").
As financial advisor, KM will provide the following services to the Village as and when
required.
(1) Evaluation of Appropriate Financing Strategy
• KM will evaluate the Village's resource base and creditworthiness including
tax base, demographics, Village finances and outstanding debt.
Such an analysis provides KM and the Village with an overall assessment of
the Village's financial and economic well - being. This analysis aids in
evaluating the Village's financial and economic strengths, with a comparison
to market standards and national trends.
KM performed a similar analysis when the Village issued bonds in 2000.
KM will update its evaluation of the Village's financial condition with an eye
toward considering obtaining a first -time credit rating for the Village.
150 North Wacker Drive
Suite 1600
Chicago, Illinois 60606
Honorable John Piazza
lollPage 2
October 17, 2002
T 312.444.1702
F 312.444.9052
• KM will update its analysis of the Village's historical and projected
incremental property tax revenues and determine a recommended structure of
the Bonds and principal maturity schedule. KM will analyze the sufficiency
of this revenue source to meet 1.25 coverage requirements and annual
property tax levy abatement requirements for the Bonds and for prior
obligations payable from incremental property taxes, pursuant to the Debt
Reform Act.
• KM will confer further with the Village on the proposed security, method of
sale and structuring and timing alternatives for the issuance of the Bonds.
• KM will report regularly to the Village and attend any meetings as required.
(2) Implementation of Funding Strategy
At the direction of the Village, KM will proceed to work with the Village to
implement the approved strategy. KM will perform the following key services,
where appropriate:
• KM will prepare a detailed terms sheet and timetable in order to coordinate
the bond issuance process and the efforts of all other service providers;
• KM will draft the Preliminary Official Statement, Official Statement and any
other supplements, amendments, or other disclosure documents;
• KM will assist in preparation of necessary ordinances, agreements, contracts,
and other documents as required in conjunction with the Village and Bond
Counsel;
• KM will confer with the Village on current and proposed changes in state and
federal laws which may impact the proposed financing, for example: debt
authority, Federal tax law, and taxing authority.
• KM will review projected market interest rates in light of current market
conditions and advise the Village about any issues and timing considerations
for the bond sale related thereto;
150 North Wacker Drive
Suite 1600
Chicago, Illinois 60606
Honorable John Piazza
:IIIPage 3
October 17, 2002
r 312.444.1702
F 312.444. 9052
• KM may recommend that the Village obtain a credit rating, depending on the
financial analysis completed in Phase I. If a credit rating is recommended,
KM will serve as liaison in communications with credit rating agencies; KM
will prepare and submit all letters, documents, and other necessary
information to credit rating agencies, to obtain the highest possible rating;
KM will prepare a recommended outline for a rating presentation; KM will
coordinate, prepare for, assist the Village in, and participate in all meetings
and conference calls with credit rating agencies;
• KM will serve as liaison in communications with bond insurers; KM will
prepare and submit all letters, documents, and other necessary information to
bond insurers; KM will coordinate and participate in all calls with bond
insurers;
• KM will facilitate procuring services of other service providers to minimize
costs of issuance and maintain quality and efficient service. KM will review
proposals and make recommendations to the Village regarding selection;
• If a negotiated sale, KM will review the proposed interest rate on the Bonds
in comparison to market rates and the underwriter's spread, as applicable. At
the Village's option, KM will participate actively in negotiations with the
underwriter to minimize the net interest cost to the Village;
• If the Bonds are sold via a competitive sale, KM will conduct activities
necessary to the competitive sale of securities including: preparing the Notice
of Sale; providing Official Statements (including Notice of Sale and Bid
Form) to KM's list of over 110 underwriters; responding to questions of
underwriters; conducting pre - marketing telephone calls to prospective bidders
to generate more bids on the date of sale; evaluating bids on the date of sale
and advising the Village on the lowest responsible bid;
• KM will conduct all activities essential to the sale of securities including, but
not limited to, arranging for: the printing of the Official Statement, the
registration and delivery of the Bonds; and closing the bond issue;
• KM will prepare a full report to the Village Board of Trustees on the
financing, including an explanation of the bond structuring, interest rates,
market conditions and comparable sales; and
150 North Wacker Drive
Suite 1600
Chicago, Illinois 60606
Honorable John Piazza
Page 4
a October 17, 2002
T 312.444.1702
F 312.444. 9052
• KM will coordinate all activities for the timely closing of the financing.
11- Q5--0), No Fees will be charged by KM if bonds are not issued.
Throughout the process, KM will report to the Village to make recommendations, provide
written reports and attend meetings as appropriate.
Compensation for Services
For financial advisory services, KM proposes a fee of $20,000.
The Bond structure assumes that the Village will issue alternate revenue bonds, which require
demonstrating a 1.25 coverage requirement. This would require a feasibility report pursuant to the
Debt Reform Act. KM will prepare the required report for additional compensation of $10,000.
Our fee does not include the cost of printing and delivering the Preliminary and Final Official
Statements, electronic dissemination of the Official Statement, electronic bidding, or bond
registration.
If the contents of this proposal are acceptable to you, please sign both the original and copy
provided. Retain the copy for your records and return the executed original to us.
Philip�R. McKenna, President
Kane, Mc : nna Capital, Inc.
ohn P'. za, Villag' Preside a>'
ilia: of Lemont
F :\Letters of Agreement\Lemont LOA - Bonds.doc
Sine
Philip ' . McKenna
President -
U Csww.r� ~
(Jonne Malinowski
for Vice President
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