Past City Commission candidate Hyde criticizes funds paid to Dunlap & Associates of Winter Park
Criticism from a resident who failed to win a seat on the Sarasota City Commission this spring did not deter the board from renewing a contract this week with a Winter Park financial advisory services firm.
During the Aug. 21 City Commission meeting, Martin Hyde complained about the “blank check” the board was being asked to sign with Dunlap & Associates, which it has paid $60,500 since the commission originally contracted with the firm in May 2014.
Based on information city Finance Director Kelly Strickland had provided him, Hyde said, the city paid the previous firm it had under contract — RBC Capital Markets — $21,885. Given the fact that Strickland is “an allegedly experienced CPA” and Assistant City Manager John Lege was the city’s previous finance director, Hyde added, it “is a mystery to me” why the City Commission would contract with an outside firm to do what its own staff should have the expertise to handle.
However, Strickland explained that Dunlap has saved the city approximately $7.1 million because of its assistance in refunding three debt issues to achieve better interest rates.
“I think spending $61,000 … and saving over $7 million … [is] a pretty good investment,” Lege pointed out.
“As I remember, those savings came in just at the right time because interest rates were going up,” Commissioner Willie Shaw said.
“What a great memory,” Lege responded. “We hit the timing right.”
Strickland pointed out that the contract with Dunlap “is a key part of issuing new debt.” When city staff is working on a bond issue, she continued, the financial adviser joins the bond counsel, the underwriter, rating agencies and others in putting together the best possible package.
Kelly Ryman of Dunlap & Associates told the board that her firm monitors the markets on a daily basis, searching for the potential to refinance debt and achieve savings for the city. She likened the process to taking out a new mortgage. If someone were paying 7% in interest and the person could cut that to 3%, Ryman said, the process would be worthwhile.
“We kind of watch everything for you,” Ryman added, also comparing the firm’s services to those of a general contractor supervising the construction of a house.
Furthermore, Strickland pointed out, Dunlap is paid only on the basis of city debt issues. “We have had three refundings” since the May 2014 contract went into effect, Strickland added.
Vice Mayor Liz Alpert characterized the arrangement as an outsourcing of work that staff otherwise would have to do. “I don’t see a problem with it,” Alpert said of Dunlap’s services for the city.
Lege also noted that Dunlap has been working for the past two years on the bond issue the City Commission is expected to consider in September for the construction of the St. Armands parking garage.
When was the last time city staff looked at best practices with financial advisory consultants to determine whether the contract was the best the city could get?, Mayor Shelli Freeland Eddie asked.
Staff undertook such a review before it brought the Dunlap contract to the City Commission in 2014, Lege replied.
“In your experience, is this a common practice to use an outside vendor [for these services]?” Commissioner Hagen Brody asked.
“Absolutely,” Lege told him. James C. Dunlap, president of Dunlap & Associates, has a great understanding of the financial markets and the pricing of bonds, Lege added.
Brody then asked why the backup agenda material referenced a connection to the City of Naples.
“We originally piggybacked on that … in 2014,” Strickland explained. The extension before the board on Aug. 21, she added, was the first of two, one-year renewals provided for in the original contract between Dunlap and the City of Naples.
“We did get renewed by the City of Naples,” Ryman pointed out.
In response to further questions about that process, City Manager Tom Barwin told the commissioners that a local government can “piggyback” on a contract used by another local government — or the state — that already has pursued the competitive bid process and vetted respondents. “We can use that to assure ourselves that we’ve got a good solid bid and quote.” However, he added, the city’s contract with Dunlap is completely separate from the firm’s agreement with the City of Naples.
Deputy City Manager Marlon Brown noted that the City Commission was not obligated to renew the contract with Dunlap for another year, just because the City of Naples had done so.
When Freeland Eddie asked wither the firm’s work on the bond issue to pay for the St. Armands garage was a piggyback arrangement, too, Lege told her the garage financing had nothing to do with the City of Naples.
Pointing to Dunlap’s work on the garage bond, Shaw told his colleagues, “I’m of the adage you don’t change horses in the middle of the stream.”
“I agree,” Brody said.
Shaw made the motion to extend the contract for another year, and Brody seconded it. The vote was unanimous.