Travis County Commssioners Court
November 12, 2002
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Item 17
Number 17 is to approve modification number 2, contract number ps980167-lb with d. Ladd pattillo & associates, inc. To extend contract and add services. That was some question -- here's the recommendation.
>> the recommendation was that the fee schedule, the fee is based on the prince pal as well as the premium -- principal as well as the premium. The fair way to compensate is the premium plus the face value of the bond on a -- where we are doing a refunding. It's kinds of a technicality. Kind of a technicality. Well, in the past what we have done is we have compensated the financial advisor on the physician value of the bonds as they were -- on the face value of the bonds as they were issued. When you are issuing bonds you can change the coupon rate and still have the same interest rate by adding a premium or subtracting a premium from it. It puts, I think, him in it in an unfair advantage when it is in the county's best interest to issue a premium. But his compensation is not based on that. Because you could just as well increase the face value. On the refunding we are working on now, for instance, it's a $38 million face plus a $2 million premium. It could have well have been issued at a $40 million face, which would not have been in the county's financial best interests. So it seems that it is -- it's not equitable for the vend door to be -- vendor to be put in that position amount of money, same premium interest rate and we have -- we are -- our intent is to compensate them on that. So in my opinion that is a fair way to compensate.
>> so where -- where financial services are rendered on matters not involving the issuance of bonds, the rate of compensation would be [inaudible]
>> the -- what you have is an hourly rate there, judge.
>> right, that's what I'm saying. So the hourly rate would kick in when there is no issue.
>> no bond issuance, right.
>> your recommendation is when there's an issue, be based upon the total principal amount plus the premium.
>> plus the premium, right.
>> the hourly rate is [inaudible]
>> right.
>> the only other time [inaudible - no mic]
>> that's right.
>> [inaudible - no mic]
>> I understand.
>> the r.m.a. Or any other thing that Travis County chooses to contract with mr. Pattillo for.
>> nothing changed --
>> [multiple voices]
>> may i?
>> yes, sir.
>> good morning, judge, commissioners, I'm lad pattillo your financial advisor, this issue came up because the this came up how to compensate me if I work odd the r.m.a., Doesn't address bonds, there's the addition of an hourly rate. At the time we were doing this refunding which we did. This technicality in having the -- the bonds be paid based on the par amount or the principal face value of the bonds has come up twice in the last year. We did refunding on all of the limited tax obligations last October. It saved I think in the neighborhood of two dollars million for the county. This one that we have just completed will close next month to save $3 million for the county. And in doing that, the short-term bonds, the marketplace likes large coupons, mutual funds don't like to puts a bond in their portfolio that has a 1.5 coupon. They will pay you way above the face value. They will pay it, for $100 worth of bonds they will pay it 109. So they can have a 5% coupon. What we were able to do in this case was to produce the same amount of benefit, 40,560,000 by issuing 38 million some bonds, $2 million worth of premium. The county gets the benefit of all of that cash. It was really a better deal. And -- and what that does is make the face amount look like 38 million when the benefits you received was 40 and a half. That just lowers my fee. It was just a technicality that -- that I felt like as long as we were in this other discussion I would like to correct. Ms. Grimes asked what amount it makes a difference in. That's all at the level that's 50 cents a bond. On this particular issue it's a thownz. So it's -- it's a thousand dollars, so it's dimimous for the amount work, and the total amount of work that the county gets from the refunding. Our underwriters did a deal about a week after ours where for some reason that issuer was required to sell only par bonds, 100 for 100. They couldn't do a premium. They couldn't sell the [inaudible], the market wouldn't buy it.
>> the only other thing that we had done I think in the past is if we requested your services for something other than the normal, usual time, did we have that going at one time through the judge's office so that you would get directions from -- from one central place versus, you know, all of us calling you and asking you to be involved in this and that without -- without considering -- your time and our time --
>> honestly commissioner, prior to this time, anything that I have ever done for the court was never charged on an hourly basis. I'm more than happy to respond to any one of you at any time at no charge. If I'm asked to work under this new arrangement on our project, of some type of financial analysis on the r.m.a. And how it may affect the county, then that would be something that I would get direction from the court from all of you and then it would be at the hourly rate.
>> well, I think -- that's my point. Instead of it coming from us individually, it would come from the court, a central place, where we would also consider the cost and everything and the hours and the number of hours.
>> I'm happy to work with an arrangement, commissioner --
>> what the amendment says, though, commissioner is that request for special projects will be submitted in writing to the financial advisor from the executive manager at p.b.o. So the way that this contract is reading is that central point is chris -- [multiple voices]
>> and we will -- I guess we don't assume. We know that p.b.o. Will workñi with the court on those plans of whatñi we --
>> to provideçó you one person that can authorize in writing those services.
>> sure.
>> and commit those funds, for that amount ofçó hours.
>> that's similar to how we tzñit withñiñi bondñá bonds, we5a also go through [inaudible] so we don't have a lot of people calling --
>> the understanding is that the -- that the executive manager of the planning and budget will basically do this after consultation with commissioners court.
>> ñi exactly.
>> yeah.
>> çó yeah.
>> and your --çó sid, in your backup, the point of contact then there are a couple of little b -- bullets there. Makes recommendation to termination dates. Whatever contracts we had with lad would end up terminating on the same date,ñi right? This actually extends his contract through September the 30th, 2005. It adds the hourly rate for the special projects and extend it through September 30th of 2005.
>> everything merged into one contract and September 302005?
>> ñr correct. The schedule will changeñi June of 2004, añr slight increase June 2004 to 2005. We kept those fees, because we already negotiateñi the terms of the agreement through 2004, we kept those term the same, we have added the hourly rate for the r.m.a. And increased the fees for the extension, the timeçóñi extension. Ek)r()hrz immediately.was
>> as soon as you all request them in writing.
>> correct.
>> I just wanted to finds out, this is the first that i've learn d that the coordination of this would go through me. Now, I'm happy to do that. But I'm wondering whether -- whether the executive manager for transportation and natural resources also has a role in this since the r.m.a. And the questions all deal in -- in his area. I wish that I had known --
>> you can ask the attorney who drafted the agreement.
>> well, I just --
>> what his thinking was.
>> [inaudible - no mic]
>> okay. I'm happy to play this role. I just -- it just --
>> apparently you were supposed to have been playing this role.
>> okay. To coordinate internally here.
>> we coordinate and work with christian, one contact point is when someone is working on an hourly rate, you want one person to be in -- I'm not calling lad, you all are calling lad for the same questions so we are paying for duplicate. But do you have a problem --
>> I'm happy to coordinate. But I want to make sure that the activities that the financial advisor is engaged in are -- are consistent with what the court has voted on. And similar to what -- what the commissioners --
>> that's why we gave you [multiple voices]
>> absolutely.
>> this assumes specific directions from the commissioners courts. Whether there are five executive managers involved or one --
>> I'm happy to coordinate it. I heard you will of -- all of a sudden I'm going to be doing it's.
>> one more --
>> that's fine.
>> judge, I move approval of the modification with the changes laid out by the auditor.
>> second.
>> can I -- can I get some clarification from that. I'm sorry I -- I walked in and didn't hear the first part of the auditor's presentation. The extra phrase that lad had asked for, based upon the total amount principal amount plus any reoffering amount, it's the draft that was handed to me was only on the -- on the fee schedule from July 2004 through September 30, 2005. Were you intending that phrase to also be added to --
>> to both.
>> to now.
>> means now.
>> to both. Clarification on mine it apply to the entire contract and be folded into --
>> I guess to also clear up what -- what christian was bringing up as far as the role that not only he's playing, but also the role that t.n.r. Continues to play as we go through this process. And I -- I don't think that this was intended to exclude t.n.r. Out of this process. Joe geese says man -- joe gieselman --
>> we can add him in.
>> I always thought it was all encompassing --
>> I will give you my assurances that I will [multiple voices]
>> wanting to clear the air on what you came up with, because all of these things, even within the local agreement in Williamson and Travis County, concerning the r.m.a. Enforcing mechanism in place, it would still have to go through joe gieselman's shop to make sure that those particular things are directed toward susan.
>> yeah.
>> so it's all -- I think all of the mixing, I don't think this is intended to exclude joe, leave him out, it's actually to include him because as far as the r.m.a. Is concerned, his particular shop is part of the process.
>> well, especially since -- it is not an assumption, correct, that the e.m.'s do not collaborate.
>> right. I give you my assurances that none of that will occur without joe geese's --
>> -- joe gieselman's --
>> do we need to -- after receiving specific directions from commissioners court.
>> I find that to be extremely friendly.
>> prior to the time of services being performed.
>> right.
>> yes [multiple voices]
>> it's --
>> is that friendly?
>> very friendly. Again the clarification is that the time period for that new language related to the principal as well as the premium is for the entirety of the contract and not simply the extinction.
>> exactly.
>> do we need to make changes to the proposed order for us to sign this afternoon.
>> this amendment, we can resolve this today.
>> okay.
>> so we are about to approve it right now. Just a matter of getting it written up.
>> we are just bringing back the document. If you want to approve it with that advice, we will make the changes and bring it about a being to you.
>> okay.
>> that works.
>> okay.
>> after budget office, after receiving specific directions from the commissioners. Comma. Prior to the time --
>> uh-huh.
>> do you have -- does --
>> sid has that.
>> it's on the purchasing office.
>> all right.
>> I will be happy to work with them.
>> any more discussion?
>> no.
>> all in favor? That passes by unanimous vote. Thank you very much.
>> judge, if I might, I would like to just thank you and also to tell you that from the -- from -- sincerely, this is my favorite client, I really enjoy working with you. Been doing it a long time. We have gone uphill and downhill and back uphill to even a higher summit reaching triple a with both rating services, my intention in -- in principle for this court is to always do everything, to steer knew a prudent course. Thank you.
>> thank you.
[one moment please for change in captioners]
in principle for this court is to always do everything, to steer knew a prudent course. Thank you.
>> thank you.
Last Modified: Wednesday, April 2, 2003 10:25 AM