The role of a municipal advisor

This is our first article in a series, additional insights will be featured in the coming months.

You are an issuer who is looking to issue municipal bonds to finance a project. But where do you start?

First, you need to assemble a team. There are several individuals involved in this process – and some have overlapping responsibilities. Certainly, one of the first calls to make is to your municipal advisor. The Government Finance Officers Association (GFOA) recommends the use of a municipal advisor for the issuance of municipal bonds unless enough expertise exists on the issuer’s staff and there is access to the bond market for information on pricing and selling the bonds.

While the issuer retains ultimate control over the financing, the involvement of a municipal advisor provides the issuer with outside expertise to help evaluate decisions that will need to be made throughout the debt issuance process.

The role of the municipal advisor is distinguished from other members of the project team in that municipal advisors have a fiduciary responsibility to the issuer. This responsibility means municipal advisors must always act in the best interests of the issuer and that they possess the expertise needed to execute a deal.

The role of a municipal advisor can vary from project to project and can include, but is not limited to the following:

• Financial feasibility – Prepare financing options for the issuer’s consideration, while considering the issuer’s current and future capital needs
• Method of sale (competitive vs. negotiated) – Provide the issuer with information to determine the method of sale appropriate for the transaction. Assist with the process of underwriter selection, if negotiated.
• Marketing of the bonds – Prepare the offering document appropriate for the type of issuance and assistance with the rating on the bonds (if required).
• Bond sale – Assist with coordinating the sale of bonds. Evaluate bond market conditions and compile information on comparable bonds to assist with pricing of the bonds.
• Post-sale –Prepare closing memorandum memorializing important deal information, continuing disclosure filings and arbitrage calculations

Municipal Advisors providing advice to issuers related to debt issuance must hold a Series 50 license and be registered with the Securities and Exchange Commission. In our next issue, we will discuss the key roles and responsibilities of other project team members.

For more information on this topic, or to learn how Baker Tilly municipal advisory specialists can help, contact our team.

Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly Advisory Group, LP. Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm and provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. ©2024 Baker Tilly Municipal Advisors, LLC