Town of Davie, Florida UBS Response to Request for Proposals RM-21-03 to Serve as Senior Manager for the Tax-Exempt Non-Ad-Valorem Revenue Bond Issue, Series 2021 Gary Garay David Moffett Executive Director Executive Director Southeast Public Finance Southeast Public Finance 100 SE 2nd Street Miami, FL 33131 3560 Lenox Road NE, Suite 2800 | Atlanta, GA 30326 (305) 536-1931 (404) 848-8502 [email protected] [email protected] October 23rd, 2020 UBS 100 SE 2nd Street, Suite 2400 Miami, FL 33131 October 23, 2020 11:42 A10/P10] [saved: October 23, 2020 10:45 A10/P10] S:\PUBFIN\Banker Deal Files\Muni Regional\Muni Southeast\FL\Davie, Town of\RFPs\October 2020\Drafts\UBS Response to Town of Davie RFP vF.docx October 23rd, 2020 Town of Davie, Florida 6591 Orange Drive Davie, FL 33314 Attention: Brian K. O'Connor, C.P.M. Dear Mr. O'Connor ("Attention") - On behalf of UBS Financial Services Inc., we are thrilled for the opportunity to submit our response to the Town of Davie's (the "Town" or "Davie") Request for Proposal ("RFP") to serve as an underwriter to the Town's upcoming transaction. Gary Garay, Executive Director from our Miami Public Finance office, will serve as the Town's primary points of contact and is an officer of the Firm legally authorized to contractually bind UBS. UBS is well qualified and desires to serve the Town as a senior managing under writer, but would be pleased to serve in any capacity the Town chooses. UBS takes a collaborative style and team-focused approach to achieving creative financing solutions in partnership with our issuing clients. We know that as a finance team member for the Town we need to think broadly, offer creative solutions and provide strong analyses in order for the Town to optimize its financing goals. UBS's commitment to public finance is based on our strategic need for municipal bond products as the world's largest wealth manager, with $1.2 trillion of assets under management in the U.S., of which roughly $88 billion is managed in the State of Florida. Below we highlight key points as to why UBS is best suited to serve the Town: We are local, collaborative, transparent, and reliable – dedicated to providing consistent, thoughtful, relevant and timely coverage; Our established underwriting desk and comprehensive distribution channels offer the Town access to institutional, middle market, international and in-state retail investors; Our Public Finance business works collaboratively with UBS Wealth Management. As such, we do not have the competing priorities that many other firms have when seeking individual retail orders; UBS is the highest rated investment bank (Aa3/A+/AA-) among our competitors, with willingness to put our balance sheet to work; Our team brings the Town advanced quantitative capabilities and strong credit, ratings and investor relations strategies; Our Firm is committed to Florida, where we employ 1,215 people in 25 Florida offices, including Broward County; and UBS has the capacity to dedicate all of our Firm’s resources to the Town's upcoming transactions as we will outperform expectations. Local Trading Group. In addition to our primary municipal trading desk in the New York area, UBS maintains regional retail trading desks in Orlando, Los Angeles and Chicago. As mentioned, UBS is the only investment bank that has a local sales and trading desk in the State. Our Orlando-based trading group differentiates UBS from our competitors – local resources familiar with the region are a definite advantage over traders located 1,100 miles away in New York. In the Firm's Orlando office, there are four experienced traders who help execute more than 2,000 trades daily. Of note, UBS's Florida-based advisors generate nearly 15% of the retail market production in the State. Capital Position and Firm Ratings. UBS's capital strength serves as a competitive advantage, particularly in providing the flexibility to absorb losses from unexpected events. UBS has demonstrated our willingness and ability to support our clients by taking bonds into inventory and committing capital to provide strong pricing levels for our clients. Additionally and as mentioned above, UBS is one of the few banks with two "AA" category ratings, being rated Aa3 by Moody's, A+ by S&P and AA- by Fitch (all with stable outlooks). UBS is one of the world's strongest capitalized financial institutions according to the results of the recent Federal Reserve annual stress test, standing out as the most financially stable institution among the top underwriters of municipal bonds. This strength is a key driver of our ability and willingness to commit capital to the Town's financings. Again, thank you for allowing us the opportunity to compete to serve the Town. Our team is energized, inspired and focused – we will deliver excellence for the Town. We are ready to hit the ground running. Regards, Gary Garay David Moffett, CFA Table of contents 1. Firm's Introduction ____________________________________________________________________________ 1 2. Experience ___________________________________________________________________________________ 3 3. Underwriting Capabilities _____________________________________________________________________ 6 4. Plan of Finance _______________________________________________________________________________ 9 5.Additional Information _______________________________________________________________________ 12 Required Attachments UBS G-17 Letter Disclaimers Firm's Introduction (Limit 2 Pages) a. Description of Proposer Provide a brief overview of the Firm including ownership, size, capital position as of the most recent fiscal year. Include the location of the office responsible for providing the underwriting services and the public finance professionals’ offices. General Firm Information. Founded in 1862, UBS draws on its 150-year heritage to serve private, institutional, municipal, and corporate clients worldwide. Our business strategy is centered on our preeminent global wealth management business and leading universal bank, complemented by UBS Asset Management and the Firm's Investment Bank. The operational structure of UBS Group AG is comprised of our Corporate Center and four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management and our Investment Bank. UBS is present in all major financial centers worldwide, with offices in more than 50 countries and approximately 60,000 employees globally. UBS's Public Finance Department and municipal trading, sales and underwriting groups are a business area within UBS Wealth Management Americas, a business division of UBS Financial Services Inc. ("UBS FSI"). UBS FSI is a wholly-owned subsidiary (directly and indirectly) of UBS Group AG, a publicly traded entity. UBS Public Finance. UBS first entered the Public Finance business in November 2000 with the acquisition of PaineWebber, which at the time was the fourth-largest brokerage firm in the US. Following the acquisition, UBS became a leading underwriter of municipal debt and top US retail broker. In 2005, UBS was the #1 underwriter of negotiated bonds in the municipal market. Following the financial crisis, starting in 2007, UBS exited the origination Public Finance business, although the Firm continued to be active in the competitive market and secondary trading market and participated in negotiated bond sales through distribution agreements. The Firm has committed to developing the resources and infrastructure necessary to serve clients across both industry sectors and geographic regions. UBS is unique in that we have grown our team with strategic, thoughtful hiring of Public Finance investment bankers, underwriters, salespeople and traders who have a deep understanding of the municipal market. We believe this collective industry experience, combined with the UBS distribution platform, make us eminently qualified to provide the services described in this Request for Proposals. UBS's Public Finance banking business is headquartered at 1285 6th Avenue in New York City, which is the primary office responsible for providing the underwriting services. However, to underscore the Firm's commitment to reentering the negotiated municipal business, UBS has also opened 16 regional offices throughout the country, including an office in Miami. Capital Structure. UBS has provided our total capital, equity capital, net capital, and UBS FSI Capital Position uncommitted excess net capital as of Q4 2019 on the right. Angelia Schmidt, Head of (in $mm) Municipal Underwriting, has full discretion to use the UBS capital allocation without need for Fiscal Year 2019 any additional approvals. While generally the market has allowed UBS to place bonds with a wide Total Capital: 5,939 base of investors often resulting in an infrequent need for use of balance sheet, given the current Equity Capital: 3,749 state of the market, our capital strength and ability to act quickly will allow our Firm to provide Net Capital: 1,903 our clients with support during times of uncertainty. Since 2017, UBS has placed orders of over Excess Net Capital: 1,767 $2 billion in total par to support negotiated underwritings. As an underwriter, our Firm feels that it is imperative that we support our clients' transactions at the stated yield levels, based on market conditions at the time of the transaction. As such, in all transactions in which UBS has underwritten bonds, our Firm has taken such bonds at their stated yield levels and has not made adjustments. The table below highlights UBS's capital commitment on various transactions since 2017. UBS Capital Commitment Par Underwritten Issuer Sale Date UBS Role ($000's) Balance ($000's) J. Paul Getty Trust 3/4/2020 Joint Book 204,355 25,500 Williamson County, TX 1/22/2020 Senior Manager 263,855 19,205 Clay County, FL 3/5/2020 Senior Manager 103,420 17,625 Westmoreland, PA 12/20/2017 Senior Manager 137,375 18,020 Bexar County, TX 12/12/2017 Senior Manager 413,130 16,315 Regents of the University of California 3/12/2019 Joint Book 114,410 11,285 Mass Building 1/23/2018 Co-Senior 395,000 9,705 Riverside, CA 9/11/2019 Sole Manager 12,875 8,840 South San Antonio ISD 10/22/2019 Senior Manager 29,820 8,300 Primary Office for Davie.