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Board of Finance approves three‑year contracts with PFM and PRAG as financial advisers; Moody's utility rating weakness noted
Summary
Treasury recommended awarding two advisory contracts — to PFM and Public Resources Advisory Group — for three years with two one‑year options; the board approved. Members discussed Moody's recent rating actions on utility debt and the city's plan to rebuild utility reserves.
The Baltimore City Board of Finance voted to approve two financial‑adviser contracts recommended by Treasury: Public Financial Management (PFM) and Public Resources Advisory Group (PRAG). Each contract is for a three‑year term with two additional one‑year extensions exercisable at the city's discretion.
Treasury staff said the city issued a request for proposals and received three responses: Davenport & Company (Towson), PFM (Philadelphia) and PRAG (New York). After a technical review of recent relevant experience—particularly work on general obligation bonds, revenue bonds and certificates of participation—Treasury recommended awarding distinct advisory roles to PFM and PRAG. Treasury told the board that PFM has advised the city for more than 15 years and has particular institutional knowledge on utility revenue bonds; PRAG was recommended for general obligation and certificate of participation matters and for its model used in the city’s affordability analyses.
“Retaining PFM’s experienced team is essential for our path to long term financial strength and stability in our debt management,” Treasury staff said. The board voted, by motion moved and seconded, to approve the awards; the motion passed by voice vote.
Board members pressed Treasury about credit ratings during the discussion. One board member noted that Moody’s in July changed the outlook on the city’s general obligation bonds to negative and downgraded water utility senior/subordinate ratings by a notch. A speaker who outlined Moody’s rationale said Moody’s cited pressure on utility fund balances—particularly the rate‑stabilization fund—as the principal negative while noting other fiscal management elements as positive. “Moody’s noted that…the fact that we right‑size[d] the rates mid‑year is a very good sign,” the speaker said, adding that city officials expect to rebuild reserves under a multi‑year rate plan.
Treasury also presented fee comparisons submitted by bidders; staff said fees varied but were within a reasonable range and that final awards reflected both experience and pricing. A board member asked for context on typical annual spend with advisers; Treasury said invoices generally arrive in connection with bond issuances and that staff would follow up with historical spending data.
The board approved the financial‑adviser awards in a recorded public motion; no abstentions or opposing votes were recorded in the meeting transcript.
