Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Approval of a Legal Service Agreement for Bond Counsel and Disclosure Counsel with Jones Hall LLP
REPORT IN BRIEF
Considers approving the Legal Service Agreement with Jones Hall LLP to provide Bond and Disclosure Counsel services.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving a Legal Service Agreement with Jones Hall LLP for Bond and Disclosure Counsel services; and,
B. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Adopt the motion as recommended by staff; or
2. Modify the action (specify in motion); or
3. Deny the action.
AUTHORITY
Merced City Charter Section 200. Merced Municipal Code section 3.04.210 (exemption from competitive bidding).
CITY COUNCIL PRIORITIES
As provided for in the 2025-26 Adopted Budget.
DISCUSSION
To ensure the City is well-positioned in highly specialized matters such as municipal finance, staff recommends engaging outside counsel with the technical expertise needed to complement the City’s financial initiatives.
It is staff’s desire to retain bond and disclosure counsel to assist in the analysis, evaluation, and implementation of proposed financing programs that will or could come up in the near future to fund the costs of certain public improvements to meet the growing needs of the City. The Financing Program will potentially include issuance, sale, and delivery of new debt instruments from different financing transactions designed to provide funds in an aggregate principal amount sufficient to fund public improvements and purchase or lease equipment.
More specifically, the City desires to retain bond counsel and disclosure counsel to assist the City with potential refundings of its current debt portfolio and contemplated new debt financing, as well as the potential formation of future community facilities districts or other land-secured districts. The scope of work would include:
Bond Counsel:
• Assist the City with the formation of land-secured districts or other debt financing; draft all legal documents associated with such formations and provide all bond counsel services related to such formation.
• Provide legal opinion with respect to the authorization and issuance of the debt obligations and whether the interest paid is tax-exempt under federal and/or state laws and regulations.
• Draft all legal documentation including all required resolutions, closing documents and transcripts, and coordinate the authorization and execution of those documents.
• Provide ongoing legal services in matters relating to interpretation of applicable regulations, legislation or pending litigation.
• Participate in meetings, as requested, relating to the issuance of bonds.
• Provide ongoing information to City staff regarding the activity and legal status of the financings.
• Perform due diligence regarding the city and the financings.
• Review the City’s existing debt, continuing disclosure and post-issuance compliance policies and recommend any proposed changes.
Disclosure Counsel:
• Preparation of preliminary official statement and final official statement.
• Preparation of continuing disclosure agreement.
• Review of bond purchase agreement.
• Render 10b-5 opinion.
• Participate on conference calls or attend meetings, as requested, relating to the issuance of bonds or other debt financing.
• Review the City’s existing continuing disclosure policies and recommend any proposed changes.
The City of Merced has worked with several bond and/or disclosure counsels over the last 30 years. We have not completed a formal request for proposal process since 2000 when Bellevue Ranch was being developed.
On March 12, 2025, the Finance Department issued a request for proposals for Bond and/or Disclosure Counsel services. The proposals were analyzed and ranked according to evaluation criteria including expertise, experience, ability to perform the required services, and cost as follows:
|
Firm |
Total Score |
*Cost Range |
|
Stradling Yocca Carlson & Rauth LLP |
73 |
$65,000-$95,000 |
|
Best Best & Krieger LLP |
80.5 |
$97,500-$105,000 |
|
Hawkins Delafield & Wood LLP |
80.5 |
$60,000-100,000 |
|
Jones Hall LLP |
85.5 |
$60,000-$105,000 |
|
Norton Rose Fulbright LLP |
77.5 |
$94,000-$103,000 |
*Costs vary by the type of debt structure.
The three top scoring firms moved on to in person interviews. After completing interviews which included the Deputy City Manager, Frank Quintero, City Attorney, Craig Cornwell, and Finance Officer, Venus Rodriguez, the selection committee agreed that Jones Hall LLP would be the best firm to assist the City in providing the bond and disclosure legal counsel services.
Jones Hall is based out of San Francisco and is the largest California-based law firm that focuses its practice exclusively in the area of municipal finance as bond counsel, disclosure counsel, underwriter’s counsel, issuer’s counsel and special tax counsel. They are one of the top 3 bond counsel and top 3 disclosure counsel firms in the state. They have particular expertise with all the types of financings contemplated by the City (General Fund, Non-Rated Land-Secured Debt, Successor Agency, and State Revolving Fund Loans). The city has worked with Jones Hall LLP in the past on several bond issuances, including the 16th Street Assessment District Bonds, and four Redevelopment Agency Tax Allocation Bonds.
The Public Works Department is currently working on an application for a State Revolving Fund (SRF) loan from the State of California Water Board for wastewater treatment plant improvements. Part of the requirement of the State is that we have bond counsel to review all legal documents and provide legal opinion on any bond debt the wastewater operating fund currently has as an obligation.
IMPACT ON CITY RESOURCES
No budget appropriation is needed at this time. As specific financing programs are developed and recommended, necessary documents and funding will come to the City Council for approval at a future date. Payment for legal services is typically paid at the closing of the debt issuance and is included in the financing structure.
ATTACHMENTS
1. Legal Service Agreement