HomeMy WebLinkAboutMINUTES - 08151989 - 2.4 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on August 15 , 1989 , by the following vote:
AYES: Supervisors Powers, McPeak, Torlakson
NOES: Supervisors Fanden, Schroder
ABSENT: None
ABSTAIN: None
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SUBJECT: Merrithew Hospital Replacement Project
The Board received the attached report dated August 10,
1989 from the County Administrator recommending appointment of
underwriter and bond counsel for the Merrithew Memorial Hospital
replacement project.
Supervisor Tom Powers stated that he could not support
the selection of The First Boston Corporation as Senior-Manager for
the financial underwriter consultant because of alleged business
interests in South Africa. He further stated that he believed that
a possible conflict of interest existed because the firm also
represents Riverside County on a hospital bond issue. He
recommended that Prudential-Bache be appointed as the Senior-Manager.
Supervisors Nancy Fanden and Robert Schroder stated that
they believed that the recommendations of the Board-appointed
Selection Committee should be approved, and advised that they could
not support the substitution of Prudential-Bache.
Paul Rosenstiel, representing The First Boston
Corporation, urged that the matter be continued to allow his firm
further time to clarify their position relative to compliance with
the anti-apartheid ordinance. He stated that he believed that
First Boston' s experience on the Riverside County hospital bond
issue would be of benefit to Contra Costa County.
There being no further discussion, IT IS BY THE BOARD
ORDERED that Prudential-Bache is APPOINTED as the Senior Manager
and Bank of America Capital Markets as Co-Manager for the financial
underwriter consultant.
IT IS FURTHER ORDERED that Recommendations #2 through #5
are APPROVED as presented on the attached report.
cc: County Administrator
Health Services Director
Auditor-Controller
Treasurer-Tax Collector I hereby certify that this Is a true and correct copy of
County Counsel an action taken and entered on the minutes of the
Board of Supervisors on the date shown.
ATTESTED /3. /989
PHILBATO ELOR, Clerk of the Board
of Supeervisms and County Administrator
ev �c t,r.C� 6�t,����ru�Ir oe'✓ .DeOuty
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To: BOARD OF SUPERVISORS s. Contra
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FROM: Phil Batchelor, County Administrator Costa
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o., s
County
DATE: August 10, 1989 c`' -
SUBJECT: Appointment of Underwriter and Bond Counsel for
Merrithew Hospital Replacement Project
SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
1. Approve the selection of The First Boston Corporation as
Senior Manager and Bank of America Capital Markets as
Co-Manager for the Financial-Underwriter consultant for the
Hospital Replacement Project.
2 . Approve the selection of Orrick, Herrington & Sutcliffe with
Pamela S. Jue, Esq. as Co-Bond Counsel consultants for the
Hospital Replacement Project.
3 . Direct the County Administrator to negotiate appropriate
agreements with the selected firms. If a satisfactory
agreement cannot be reached with any of the firms, then
undertake negotiations with the next ranked firm from the
list interviewed and ranked by the Selection Committee.
4. Direct that consideration be given to the selection and
addition of a third co-manager with MBE/WBE certification
for the underwriting portion of the consulting services when
and if the project results in an approved bond issue.
5. Approve First Boston' s designation of the law firm of
Nossaman, Guthner, Knox and Elliot as Underwriters ' Counsel.
CONTINUED ON ATTACHMENT: X YES SIGNATURE:
—RECOMMENDATION OF COUNTY ADMINISTRATOR —RECOMMENDATION OF BOARD COMMITTEE
APPROVE _OTHER
SIGNATURE(S):
A TION OF BOARD ON Aiigiist 15, 1988 APPROVED AS RECOMMENDED _ OTHER
VOTE OF SUPERVISORS
I HERE ERTIFY THAT THIS IS A TRUE
UNANIMOUS(ABSENT ) AND CORRE OPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON T ATE SHOWN.
CC: ATTESTED
PHIL BATCHELOR,CLERK OF BOARD OF
SUPERVISORS AND COUNTY ADMI RATOR
M382 (10/88) BY EPUTY
-a-
FINANCIAL IMPACT
The fee for Underwriter services is on a contingency basis and is
paid from the proceeds of a bond issue when and if the project
reaches that stage. Funds necessary for agreements negotiated as
a result of this Board action will come from future bond proceeds
or from funds available to the Hospital Enterprise Fund.
BACKGROUND
In accordance with Board direction, requests for proposals were
widely distributed for the Underwriter and Bond Counsel
consulting services. Thirty-nine requests were sent out for
Underwriter with 17 responses and 18 requests for Bond Counsel
with nine responses. A Review Committee screened the responses
to four firms for each of the tasks. The selected firms were
interviewed on June 8, 1989 and ranked in order based upon the
qualifications, knowledge of the issues and capabilities of the
individuals to be assigned to the County project.
The Selection Committee was comprised of the Assistant County
Administrator-Finance, a Deputy County Administrator, the
Director of Health Services, the Executive Director of Merrithew
Hospital, the Hospital Finance Director, the Auditor-Controller,
the Treasurer-Tax Collector, the County Redevelopment Director, a
Senior Leasing Agent from General Services and a Management
Analyst from the County Administrators ' Office. The Committee
reached a unanimous decision on the recommended consulting team.
All of the firms interviewed were well qualified to perform the
tasks necessary for a successful" project. The Selection
Committee was impressed with the quality and experience of the
firms and individuals interviewed.
The recommended firms have been reviewed by the County
Affirmative Action Office. The Bond Counsel, Co-Counsel
arrangement meets the MBE/WBE policy goals. The Underwriter
firms interviewed are not certified as MBE/WBE firms. The
Affirmative Action Office has recommended adding a firm so
qualified, at the time additional assistance can be used in the
marketing of an approved bond issue. The staff will work with
the appointed Underwriter to select a well qualified MBE/WBE firm
to add to the team at that time.
The selected Underwriter, First Boston, has asked that the County
concur in the appointment of the law firm of Nossaman, Guthner,
Knox and Elliot to serve as the Underwriters ' Counsel to advise
the County and the Underwriter on technical issues related to the
financing. The firm is well respected in the field and will be a
valuable asset to the project team.
The Board, on August 1, 1989 , deferred action on this matter
until August 15, 1989 and requested more comprehensive
information on the selection of the consultants. The
supplemental report is attached hereto. _
cc: Health Services
General Services
Auditor-Controller
Treasurer-Tax Collector
County Counsel
County Administrator Contra Board of Supervisors
Tom Powers
County Administration Building Costa 1st District .
651 Pine Street, 11th Floor Nancy C. Fanden
Martinez,California 945532nd District
(415)646-4080 County Robert I. Schroder
Phil Batchelor 3rd District
County Administrator
Sunne Wright McPeak
4th District
Tom Torlakson
5th District
TO: Board of Supervisors
FROM: Selecton Committee, Hospital Consultants
by D. Bell, Coordinat or the Committee
DATE: August 10, 1989
The Board, on August 1, 1989, considered the appointment of bond
counsel and underwriter for the Merrithew Hospital Replacement
Project. Additional information was requested as to the
selection process and comparisons of the qualifications of the
firms considered.
It has been reported that there were 17 underwriter responses and
nine bond counsel responses. These were carefully reviewed on
the basis of experience, knowledge of the issues, qualifications
and review of the individuals proposed for the project. Four
firms were selected for interviews from each list. The selection
and interview process consists of two elements, the objective
review of written material and the subjective interaction with
the individuals under consideration with the staff who will be
working on the project for the County. Since the written
material submitted with proposals is a corporate product, the
interview process with the individuals to be assigned to the
project is critical to the subjective part of the selection
process.
There was unanimous agreement by all members of the Selection
Committee on the recommended consultant team.
EXPERIENCE
Attached is a schedule which compares the firms on the basis of
hospital experience, California County experience and experience
in the local area, including with our County. The schedule shows
that all of the firms are well qualified. It does point out
differences in hospital experience in California which was
considered to be an important consideration.
The IDD Information Services/PSA Municipal Database (a municipal
bond reporting service) covering January 1986 to August 1989
indicates First Boston as the number one Lead Manager for each of -
the following categories; negotiated hospital issues nationwide;
negotiated county issues nationwide; negotiated California County
issues and State of California negotiated issues.
FEES
All four of the underwriter firms have submitted fee information
indicating payment for services is contingent upon a successful
bond issue. Each proposal made different assumptions on issue
size and expenses so that direct comparison is not useful. The
actual fee will be subject to negotiation and will depend upon
the size of the issue (if any) , the number of co-managers and the
market conditions when the matter is considered. A comparison of
the proposals with adjustments and assumptions for comparison
purposes indicates that PaineWebber' s proposal would be the least
costly. The variables mentioned above discount the significance
of this factor.
. RANKINGS
The Selection Committee members feel very strongly that a
careful, objective and very thorough process has been followed in
the review and recommendations for the consultants for this very
important County project. The factors that influenced the
rankings by .the Selection Committee for each of the firms
follows. The firms are listed in the order of the Committee
rankings for Underwriter and Bond Counsel.
UNDERWRITERS
First Boston:
The First Boston team exhibited the best knowledge of SB-1732 and
Proposition 99 issues. Their experience on California County
hospital issues is the most recent and most germane. A member of
the team has already reviewed the issues with Moody' s in New York
with regard to financing the Riverside County project. Their
early negotiations with the State on these issues will be of
direct benefit when Contra Costa County goes through the same
process at a later time. First Boston is advising a client on
the real issues rather than viewing the financing considerations
in a theoretical manner. The entire Selection Committee agreed
that the First Boston experience was substantially ahead of any
of the other contenders.
All of the team members are locally based in San Francisco.
Bank of America:
The Bank of America team has a long history of very successful
relations with Contra Costa County. They have assisted the
County in resolving difficult and complex issues in the past.
The Selection Committee all agreed that it was important to have
Bank of America on the team as a co-manager to assist the Senior
Manager in understanding the issues and policies in the County.
Their help will speed up the process and assure improved
communications between the consultants and the County. The Bank
of America team members are all based in San Francisco and
readily available for consultation.
PaineWebber:
Members of the PaineWebber team were all from San Francisco and
were highly qualified and experienced. Their proposal contained
many inovative ideas. They showed a good understanding of the
hospital finance issues. PaineWebber was selected through a
competitive process to serve as 'the County' s senior manager for
the Single Family Revenue Bond Program. They are ranked
nationally as one of the top five health care investment banking
firms. Their health care experience in California was not
considered to be as current and appropriate as the first ranked
firm.
Prudential-Bache:
Prudential-Bache has been the Underwriter for two of the CSAC
pooled loan issues for Contra Costa County. The experience with
the issues, working with the San Francisco based staff, has been
very satisfactory. For the hospital project, Prudential-Bache
designated a New York staff person as the primary contact person
for the County with backup from Los Angeles. The San Francisco
office would have overall responsibility but limited contact.
The New York staff person, while well qualified in health care
issues, has no experience in California. The interview process
brought out that the New York First Vice President would have
"daily responsibility" for the project but would plan to be in
California two or three days per week. The Selection Committee
had serious concerns with the wide geographical separation and
potential communication complications of the proposed team
organization.
The Prudential-Bache team did not demonstrate a realistic
evaluation of the issues with regard to Proposition 99 and
SB-1732 financing for the hospital project during the interviews.
Errors of fact were made during the interview and were not
corrected despite clarification questions.
The Selection Committee ranked the team fourth due to the
composition of the team, apparent weaknesses of some team members
who would play critical roles in any proposed financing and the
lack of depth of understanding of the issues.
BOND COUNSELS
Orrick Herrington & Sutcliffe:
The Orrick Herrington & Sutcliffe team has outstanding experience
as part of a nationally recognized law firm. They have provided
the County with excellent advice on difficult and complex issues
in the past. The firm is active in Sacramento and assisted in
drafting the SB-1732 legislation. The team included a very well
qualified MBE/WBE firm in a joint venture proposal.
O'Melveny & Meyers:
A well qualified team of attorneys with excellent experience.
The firm has provided advice on County housing issues in the
past. The primary team members were from the Los Angeles office.
Jones Hall Hill & White:
A well qualified, small firm based in San Francisco that
specializes in public finance. The individual attorneys are well
experienced. They act as bond counsel to the County
Redevelopment Agency and the Oakley Mello-Roos financing. The
Selection Committee had some concern with the ability to respond
to County needs in a timely manner due to the limited number of
staff in the firm in relation to the high volume of business
processed.
Nossaman, Guthner, Knox & Elliott:
The firm is based in Los Angeles. The attorney appearing for the
interview has served as the Underwriters Counsel on the County' s
past CSAC pooled loan issues.
The proposed team included a joint venture with a MBE/WBE firm,
although no one from that firm appeared at the interview.
The proposed team appeared qualified but lacked the depth of
experience and back-up capabilities of the major bond counsel law
firms.
MBE/WBE:
Two of the Bond Counsel firms proposed joint ventures with
MBE/WBE firms. One of the firms is recommended for Bond Counsel
and the other is recommended for Underwriter' s Counsel.
The Underwriters have all indicated that they would be pleased to
work with any MBE/WBE firm designated by the County or they would
assist in the selection of such a firm. Since much of the work
of the Underwriter will be uncompensated financial consulting
until the project is defined and a financing method decided there
is limited opportunity for multiple co-managers until a later
date.
DB: lmj
Attachment
CONSULTANT COMPARISON
LOC OF HOSP COUNTY LOCAL
FIRM TEAM EXPER. EXPER. EXPER. STRENGTHS
BOND COUNSEL:
Nossaman L. A. none primarily undwtr Has Sacto
(joint ven . claimed as .undwtr counsel office
with MBE) counsel for CSAC
Orrick S .F. list 89 extensive many National
( joint ven . health Contra reputation,
with MBE) facilities Costa helped draft
issues issues 1732 legis.
O' Melvany S .F. list 77 extensive some TAN National
L. A. health & housing reputation
facilities issues for
issues CCC.
Jones Hall S .F. list 12 extensive John Muir Small firm
health Hosp. ' 85 with limited
facilities depth but
issues very busy
UNDERWRITER:
1st Boston S. F. Los Angl . extensive Alameda advanced
Riverside, Santa Cl . schedule of
San Bernad . Sacto Riverside
Santa Clara S.F. puts them
ahead of
everyone on
county hosp.
finance
issues
PaineWebber S . F. Brookside extensive CCC Nous Very
Marin Gen . issues, innovative
Merritt/ Sacto ideas,
Peralta Marin large retail
S . F. operation
Kaiser Oak
San Joaquin.
B of A S .F. L. A. extensive many issues Excellent
County with CCC marketing
San Diego capability,
extensive
knowledge
of CCG'.
Pru-Bache N .Y. Watsonville CSAC Two CSAC large
L. A. U . of Mich. pooled pooled retail
S . F. liosp.expert loan loan iss . operation
has no CA. program for CCC . ,
experience for CC San.
multiple Dist. , San
Counties Ramon Fin .
Auth .
AUG' $ = $9 . 13: 11 FBC PUBLIC FINANCE DEPT, P, Z' 3
CS FIRST BOSTON, INC,
_AR7t'B_ C1CRT�TIG'i'R
1, PX T. ZZL , Do Hereby Certify that the following is a 0010plets, ti'-we
end correct copy at certain resolutieitss adopted by the Board of Directors of CS
rust Boston. Inc., a corporation duly organised and existing under the laws of ...he
State of Delaware (the "Corporations"), which resolutions were adapted at a malting
of the Soard of Directors held on l53y S, 1949; that I Am the Secretary of the
Corporation said that the following resolutions have not been rescinded or madifted
and remain in full fares and effeett
OHMU B, vadous cities and mmicipalities in the (baited
States# Mhioh an current or potential clients of The rust
Boston Corporation, a wholly-owned subsidiary of the
Corporation, have enacted laws, regulations and ordinaces
that, among other things, prohibit such cities or
municipalities from etgaging the service* of, or purchasing
goods from, entities that transact busimes in the Republic
of SOuth Africa or Ramibia or with the govertfinetats,
gover=WAtai agencies or iusteumentali.ties of these
cavatcies= and
MUWZNS, the laws. regulations or ordinances of such
cities and mmaieipalities often require a statement of pol#oy
and/or disclosure with respect to business Connections with
the Republic of South Africa or VwWa by entities seeking
to provide goods or services to such cities or
municipalities, and The First Boston Corporation, as well as
the Corporation and its other ss4bsidiaries, are often subject
to these requirements: and
WMWM, LA ordar to oompiy with these regpiremsnts and
to adOpC a unifos7 polsay for etre Corporatiim and di3, of its
subsidiaries with respect to these requirements, it is hermby
FAMMVBQ, that the Corporation and its subsidiaries *hall
not transact business in the Republic of South Africa or
Namibia, or with the governments, gavernmeatal agencies at
instrumentalities of then* countries; and it is
PURTtt>Il2 R>M.VBo, that the Corporation and its
subsidiaries shall not maintain offices or employ empioyess
or other agents or representatives in the Republic Of Sduth
Africa or )iamibie; And it is
LIV"d d'S - woisoa isaaj sv:zT Ge, eo snu
AUG' k$ 89" 13: 11 FBC PUBLIC FINANCE DEPT, P. 3/ 3
w
YMMM MMVW that the Corporation ' and its
subsidiaries will not do business with our entity whose
connections with South Afrioa or Namibia are so substantial
that, in the judgment of the Corporation's Chief fcaautive
Officer in consultation with the Group Executive Coffaittoo of
the Corporation. doing business with such entity would
violate the purpose and intent of these Resolutions.
IN WITH= MM=o I have hereunto set my hand and affixed the
coal of the Corporation as of the 11th day of May, 1989.
J '. oelot,
rory
(Boal)
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