Financial- COPS (Due Diligence Authorizing Resolutions)

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06129%199~ 14:19 5~~2E94145 R.S. CLEMENTS & Associates, L~C FINANCIAL and 1NVESTMENT COIINSEL MEMORA.NDUM DAIE: Iune 25, 1998 TO: Billy Wasson FROI~1: Scott Ciements & Mmrk (~ardinet RS CLEt•~1ENTS P~GE ~2 ~ Uaiversity Park, 5407 N. Yale ~t. Portland, Oregon 97203-5251 Telephone (503) 289-4*~86 Facsimile (503) 289-4145 Cellular (503} 329-1099 e-maii: sclem a{3easystreet.cam ~ y lI/~F ~~~~/ `r~ ~` ` ~ ~'"~_ StJF3JECT_ Recommsndation far seiection of Undenvriters As you lsto~v, thc County received ptoposals ftom three finns to provide underwriting setvices in eonjunction with fl~¢ fic~ruicing of the Courthause Squara Project. Wa have suuunatized saliet~t points of the three propasals and are enciosing it with th'ss memorandwn In tcrms of the fees quoted, Prudential Securities is ctearly the lowest. We lmow the baiil:et ~fio wouid zepresent them in this transaction to be very competent and cooperative. In tetms of the breadth of represcntntion in Otegon, Piudential has the least of the three respondants. P[udeutial does have a si~ificant biswry of lead managing Ore~on transactions and is ceRainly et~c:riencvd. Salomon Sinith Barney has the broadr~t presence in the State and likely the greatest experir~ce in marketing Oregan municipnl debt. However, their quotod fees are the hi~hest, especially their man~gement fee. Dsin Reucher was previously selected as Co-Seniot manager fot The Couiihouse Square Projed, in its earlier life. Since that time they trensfecred their invesUment baaking adiviry W Denva, and this ~ansaction would be serviced from there. Trieir undetwriting activity is lil:ewise tacated in Denver. Dsin's fee quotetian was the highest of the three rospondents. We reconuncnd hiring Pnuiential Securities and Satomon Smith Barney as Co-Senior Mansgers.ll~ Co-Senior relationship wouid be manifested by Lhe riw fums sharing equally in bond undenvriting liability. Prudential ~vould be the "book-numing" manager and would be responsible for patticipating in the deal soructiuing und managcment of die syndication, underwriting and dishibntion phnses. This psoposcd relationship is conditioned upon Salamon Smith Barney agneeing to the take-down fees qnoted by Pn~dentiel_ That is likely to be acceptable to Salrnnon Snudt Barney sicue their take-do~vn quotes were veay close to thosc of Prudential. Ihis relatianship enables tlte County W rsvail itself of dle Orogon underwriting e~cperience at Salomon Smith $smey. In malang selection of iu Undervciters, the County woulcl, of course, retain the autb~ocity to appiuv~e syndicate prflctices, inclnding but not limited to: priority of orders, retetttion policy and designsition rules. 'I~e County msy wish to recvtnmend that Dain Raucl~er be includod as a Selling Groug member both to recognize their past invoivement an~ to eccess their Oregon retail bivkers_ As proposed, Prudentisi wvuld be entitled to the Manugement fee of 50.40 per thousand quoted in theiz proposal_ 'i7ie Mtu~agement Fee is contingent upon, and paid at clasing, Prudmtial has capped Undtrwrita's Counsel fecs at ~ 10,000 and ti~ut e.~cpense is 1~lcely to be non-contingent. Other Undeiu~ritcr(s) e:cpenses will be reimbutsed t~t closing and will bc subjcct to review and ct~pro~lal by the County. Thc tuv other elements of Undenvtiter compensation, "take-down" snd "tindecwnting" will be negotisted at the time of sale. I~-ese elentents are u functioui of muiket condilions at the time of sale und will be actively negotiated nt thst titne. If you will advise us of'the approgriate disrribution, we vvill copy other members of the Finacscing Working Group. Enci. (1 } MemBer ojthe Associ~ion for Invcsbnent Marragcment and R~rearc& Member of tke ~nancial Analysts Fe,d~ratio~