COUNTY OF ORANGE, CALIFORNIA REQUEST FOR PROPOSALS

Transcription

1 COUNTY OF ORANGE, CALIFORNIA REQUEST FOR PROPOSALS UNDERWRITER SERVICES FOR JOHN WAYNE AIRPORT CAPITAL IMPROVEMENT PROGRAM GENERAL AIRPORT REVENUE BONDS AND PFC (PASSENGER FACILITY CHARGE) - BACKED BONDS Responses are due no later than October 14, 2008 at 4:00 PM (PDT). See below for submittal instructions. Please limit your proposal, including cover letter, to fifteen (15) pages. A. Introduction: The County of Orange, California (County) is requesting proposals from its approved panel of airport underwriting firms for proposed new financing(s) required to partially fund the Improvement Program of John Wayne Airport (Airport). The Improvement Program is permitted under an amendment to the 1985 Settlement Agreement between the County, the City of Newport Beach, and two citizens groups. The County may utilize a variety of financing alternatives to execute this program, including general airport revenue bonds, PFCbacked bonds, and short-term debt. The new financings may include tax-exempt and taxable components, and may be issued in multiple series during a multi-year period. All financings are subject to separate approval by the Public Financing Advisory Committee and the Board of Supervisors. B. Summary of Intent: The purpose of this request is to solicit proposals for underwriter services for the County s proposed issuance and sale of municipal securities proposed for the Improvement Program or alternate forms of financing. The successful proposer(s) must be prepared to perform underwriter services by February 1, 2008 or subsequent date that the County may determine at its sole discretion. C. Background Information: John Wayne Airport is owned and operated as a department of the County of Orange. The five-member Orange County Board of Supervisors oversees the management of the County government. The Airport is accounted for as a self-supporting enterprise fund. The Airport is under the direction of the Airport Director, who is appointed by the County Executive Officer. A five-member Airport Commission, appointed by the County Board of Supervisors, acts in an advisory capacity to the Board on airport and air transportation matters. John Wayne Airport is the only commercial service airport in Orange County, California. It is located approximately 35 miles south of Los Angeles, between the cities of Costa Mesa, Irvine, Newport Beach, and Santa Ana. The service area includes 3 million people within the 34 cities and unincorporated areas of Orange County. Operating primarily as an origination and destination facility for the traveling public, the airport served approximately 9.6 million 1 Page 1 of 5

2 passengers during the fiscal year. General aviation aircraft at the airport are served by three fixed-based operators, which provide fuel, supplies, aircraft maintenance, flying instruction, and other related services. The County issued Airport Revenue Bonds to finance construction of the existing terminal and related facility improvements pursuant to a Bond Indenture, adopted in 1987, as amended and supplemented in 1993, 1996, and 2003 for the issuance of additional bonds. Each bond issue sold after 1987 was a refunding bond issue. The currently outstanding bonds, secured by a pledge of a first lien on Net Revenues (Revenues minus Current Expenses) of the Airport, were issued for $183,730,000. The bonds have a current outstanding balance of $80,210,000. In 2002, the 1985 Settlement Agreement was amended to allow the County to increase passenger capacity at the Airport and to build new facilities to accommodate additional passengers, while maintaining an environmentally sensitive operation. The Improvement Program includes construction of a new multi-level terminal building with six new commercial passenger gates, six new security checkpoints, baggage screening capacity enhancements, additional parking structures, new commuter facilities, and a utilities cogeneration plant. In 2003, the County retained financial consultant John F. Brown Company to assess the financial feasibility of undertaking the Improvement Program. In July 2005, the consultant completed the Improvement Program Financial Analysis and Preliminary Financial Plan report, wherein it concluded that the program was financially feasible and provided its analysis of various financing alternatives for the County s consideration. A preferred financing program was approved by the County Board of Supervisors in December Presently, the County is implementing the Improvement Program, which includes numerous capital projects totaling approximately $559 million. The program calls for substantial construction in four stages over a five-year period. In Stage 1, construction will start on a new south remain overnight (RON) aircraft parking area. Stage 2 will include the removal of the existing B1 Parking Structure (SouthWest) and the completion of the South RON aircraft parking area. In Stage 3, construction will start on a new terminal (Terminal C), new commuter/regional facilities, and a replacement parking structure. Stage 4 will include the completion of the new terminal, as well as relocation of operations to the new permanent facilities. Concurrent with the Improvement Program, the Airport anticipates undertaking approximately $93 million in ancillary capital projects, for a total capital program totaling $652 million. Funding for the capital program will be provided from various sources, including the following: (i) Airport cash; (ii) FAA Airport Improvement Program (AIP) grants; (iii) Transportation Security Administration (TSA) grants; (iv) general airport revenue bonds secured by Net Revenues (Revenues minus Current Expenses) of the Airport and short term lines of credit; and (v) Passenger Facility Charges (PFCs), some of which will be used to secure PFC-backed bonds. Total financing in (iv) and (v) is expected to be between $300 million and $330 million. 2 Page 2 of 5

3 Since 1987, all of the County s airport revenue bonds have been rated investment grade. Current ratings assigned to outstanding airport revenue refunding bonds are Aa3, A+ and AA- from Moody s Investors Service, Standard and Poor s and Fitch Ratings, respectively. John Wayne Airport s audited financial statements are available upon request. D. Proposal Response: The County has independently selected Sidley Austin LLP as bond counsel and disclosure counsel, and Frasca & Associates, L.L.C. as financial advisor, to serve on the financing team for the proposed bond issuance. The goal of this RFP is to select an underwriter or firms having the ability to meet the airport s needs and appropriately structure and distribute the County s airport financing. In responding to the RFP, the following points must be addressed: 1. Please describe your firm s experience in underwriting airport revenue bonds and PFCbacked bonds. Provide a list of such airport transactions for which your firm has served as Senior Underwriter or Co-Underwriter since January 1, In tabular form, list the sales date, issuing authority and airport, bond size, purpose, role of firm, ratings and/or insurance received, type of sale (negotiated or competitive) and any unique characteristics of the transaction. 2. Please list the name(s) of key staff members who will be assigned to work on this project and include brief professional biographies including relevant airport experience. 3. Please comment on the pricing of long term fixed rate and short term variable rate airport credits in the municipal market under current market conditions. Provide your views on the current penalty for bonds subject to the AMT. In addition, comment on the marketability of the long term fixed rate bonds based on John Wayne Airport s current bond ratings in light of general market conditions, as they may be impacted by events in the airline industry. 4. Given current interest rates, please discuss your firm s proposed financing structure in detail, assuming a thirty-year term including a twenty-seven year amortization period. Identify the risks associated with your proposed structure and suggest methods to mitigate these risks. Comment on the economics and utility of bond insurance based on the outstanding ratings of John Wayne Airport. In addition, discuss issues surrounding credit/liquidity enhancement for variable rate bonds. 5. Please outline your marketing plan, and discuss the expected distribution of the bonds between retail and institutional buyers. Describe your firm s distribution capacities to the sectors to which the bonds will be marketed. 6. Please provide a scale detailing coupons, yields and prices for a proposed long term fixed rate bond issue, with and without insurance, based on market conditions at the close of business on September 16, Provide your assumptions regarding the price of insurance. 3 Page 3 of 5

4 7. Please provide your proposal for underwriting compensation (Gross Spread) for both a fixed-rate and a variable rate bond issue. Break down each component (including estimated expenses). 8. Please indicate the firm and contact person you would choose as underwriter s counsel. Provide the expected cost for their services, which should be included in the expense component of the Gross Spread. 9. Describe the capital base of your firm. Provide a copy of your firm s most recent focus report and any other recent data that attests to your firm s financial strength and stability over the course of the last 6 months. 10. Provide the name(s) of the person(s) who could best respond to any questions regarding your proposal, including telephone, fax number and address. E. Selection Procedure: Proposals will be evaluated based on the criteria identified in Section F of this Request for Proposals. The evaluation panel may make a recommendation based solely on its review of written proposals or, at its discretion, invite top ranking firms to an interview before submitting its recommendation. F. Selection Criteria: Scoring Criteria 1. Experience and Qualifications Demonstrated prior experience with projects of similar scope and complexity 2. Key Personnel and Resources Demonstrated competence and experience of firm s personnel responsible for performing work and providing services Commitment to make staff available for the project 3. Approach/Understanding of Project Understanding of the project scope of work and the Airport s objectives Proposed approach for providing required services and achieving project completion 4. Compensation Competitiveness of compensation proposal Weighted Value 4 Page 4 of 5

5 G. Time Schedule: 1. Issue Request for Proposal September 23, Proposal Due Date October 14, Public Finance Advisory Committee (PFAC) November 6, Board of Supervisors Contract Award November 18, 2008 The above dates, with the exception of the Proposal Due Date, are subject to change and for planning purposes only. Based on the number of proposals received, the County reserves the right to request oral presentations from submitting firms. If such presentations are conducted, they will be scheduled during the week beginning October 27, H. Proposal Submittal Five (5) hard (paper) copies and two (2) electronic copies in a commonly used format (Microsoft Word and/or Excel on CD-ROM preferred) of your proposal must be received by 4:00 (PDT) on October 14, 2008 at the following location: John Wayne Airport 3160 Airway Avenue Costa Mesa, CA Attn: Steve Siemion If there are any questions, please contact Thomas Beckett at (714) or thomas.beckett@ocgov.com, or contact Steve Siemion at (949) or ssiemion@ocair.com. Your response must be received no later than 4:00 PM (PDT) on October 14, Please limit your proposal, including cover letter, to fifteen (15) pages. It is the sole responsibility of the proposer to meet the submission deadline. The County will in no way be responsible for delays caused by delivery services or by any other occurrence. Further, the County will not provide reimbursements for costs of proposal preparation. Questions regarding this Request for Proposals should be directed to Thomas Beckett at (714) or thomas.beckett@ocgov.com; or to Steve Siemion, Interim Finance Manager, Finance and Administration at (949) or ssiemion@ocair.com. The County may reject any and all proposals received in response to this Request for Proposals. Further, the County reserves the right to waive any and all deficiencies in any proposal and to negotiate a contract, including standard County contract requirements, with the selected firm(s). 5 Page 5 of 5