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I I I . The City Council Centerville, MN July 20, 2000 Page 3 I Appendix B is the local Cronin calendar, a list of competitive bond sales scheduled in the region, indicating the issuer, date of sale, type of bond, and financial advisor (or underwriter/advisor). We have included two examples, from June and July of this year, to illustrate that Ehlers is in the market with competitive sales on a daily basis and understands what it takes to structure and sell bond issues competitively in order to get the very best interest rates.. I I I I I I I I i I I I I I I Ehlers & Associates, Inc.; An INDEPENDENT Financial Advisor The term "independent" is a hallmark of our firm. Our policy is to remain independent of any underwriting or investment banking interest in any financial service provided. This means that our only interest is serving you and looking out for your best interests. It also means that our compensation is based completely on the fee we receive from the City. Are there firms which are not independent? Yes, underwriter/advisors are primarily in the business of buying and selling bonds and often providing investments but may also want to serve as your advisor. While this may be seen as a difference in philosophy, we feel it is a conflict of interest to serve both bond buyers and governmental units. Bond buyers want the highest rates possible on their bonds; local governments was the lowest rates possible. The underwriter/advisor serves two masters. Most underwriter/advisors will prefer to negotiate some bond issues which could be sold competitively. They may receive additional compensation through the negotiated bond sale that . an independent advisor will not. Most of the firms shown on the Cronin calendar of competitive sales (Appendix B) are independent consultants (which are most common in Minnesota). You will see a few underwriters. When bonds are sold competitively, the City officials know that the lowest bid is the best they could do on that particular date. When bonds are negotiated, meaning they are sold directly to an underwriter without competition, there is no way for a council to know for sure whether the rates they have been offered are the best they could have obtained that day. Quite often, there is a significant difference between the rates offered by the underwriter submitting the lowest bid and the competitors. No one underwriter is always the best bid. . d...",....~........