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~6~29~'19"j'8 14:19 5~32E94145 R.S. CLEMENTS & Associates, .LLC FINANCIAL and I~i~ESTMENT' COUNSEL MEMORANDUM }~A~: Iune 26, i 998 TO: Billy Wasson rROM: swtt elements & Mark c3ardiner ~~ StJF3J~CT: Recamn~endation fa~r selection of Under.vriters P~GE 02 Unuversity Park, 5407 N. Ya.le St~ Portlasid, Oregon 97203-5251 Telephone (503) 289-4486 Facsimile (503) 289-4i45 Cellular (503) 329-1099 e-mai1: sclem(a>easystreet.com ~~ ~~/ ~~ ~~/L~ , 7~ As you know, thE County received praposals ftom three flrms to pmvide undenU~iting secvices in conjunction widi fl~~ finnncing of the Courthousc Squara Project. W~ have sununarized salient points of the three proposals and are enctosirtg it with this memorandum. Tn tecma vf the fees quot~d, Prudential Securi2ies is clearly the Iow~st. We lrnow the banker who wvuid represent Qtem in this trE-nsaction to be very comp~cent and coopezntiv~. In terms of the breadth of rep~sent8tion in Ore~on, Prudential has the lezist of the three respandenta. PrudeaYial does have a significent ~is~tary of lead managing Oregon transactivns and is certainly expc:rienced, Salomon Sitvth Barney has the broadest preset~ce in the St~t~ and lilcEly the greatest experiencz im m~rketing Orcgon munieipr~l debt. However, their quotcd fees are the highast, especially their man~gement fee. Dain Rsuchcr.vas previously selected as Co-Seniot mana$er for The Cowihouse Square Project, in its earIier life. Since that time they trensferred their investment baaking activity to Denver, snd tbis ~ansaction would be serviced ~rorn t~cre. T~eir unc~ervvritit~ acti~ity is likewise located in Dett~er. Dain's fee quotation was the 3v.ghest of the ~Yir~ee szs~ondents. We recommend hiring Pnulential Secutities and Salomon Smith Bamey as Co-Senior Mansgers. Tl~e Co-Seniox relationship would be manifested by the twa fums sharing equa4ly in bond unclerwriting liobility_ Prudential would be the "book-nuining" manager and watlld be responsible for patticipating in the deal actuct~uin~ raild rr-anagement of the 9ynclication, und~rvvtiting and distribution phases. This pFOposerl relafionship is conditioned upon Salomon Smith BFUney a~eeins to the take-down fees quoted by Pnidentinl. That is likely to be acceptable to Salrnnon Snudi ]Barney since Uteir talce-down quotes were very close to ihose of Pruclential. This relationship enables flie County to ~avail itseYf of die Or~cgon undertvn'tting experience at Salomon Smith F3arney. In maldng selection of its Undetwritc~'s, 2'he County wouid, of course, retain the autltority to agprove syndicate practices, including but not limited to: priority of orders, ~tention policy and desig[tadon rules. T~e County may wish ta retommend that Dain Raucher be inctuded as a Selling C3roup rnember both io recogttiZe their past involvement and to access their Oregon retail brvkers. ~s proposed, Prudentisl would be entided to ihe Man~gement f~:e of $0.40 per thousand quoted in ihe'sr propos~al. 'i7ie Management Fee is contirtgent upon, and paid at closing. Prudmtial has capped Underwriter's Counsel f~es at ~10,000 and thnt e~cpense is likelv ta be non-contingent. Other Underwriter(s) expenses will be reimbursed nt closing and will be subjcct to review and approval by the County_ The tvw other elements of Undenmter compensation, "take-clo~vn" and "underwritiIIg" will be negotiated ai the time of sale. These eletrtents ~e u functiou~ of mtu~ket conclilions at the time of sale and will be actively negotieted ni that titne. If yau will advise us of the ap~zopriate distributian, we will copy other mzznbers of the Financing Working Group. RS CLEI~IENTS ~ncl. Z1} Me~B~~ of tke Associc~ion foi ~Pavesbnent Marra~emettt ari~l R~search Member of the Fixancia! A~~atysts ~'ed~ratio~