The Massachusetts Water Resources Authority voted yesterday to approve the retention of Lazard Freres & Co. as the authority's financial adviser, an authority official said.
The authority's 11-member board of directors voted 9 to 1, with 1 abstention. The selection process was started because the previous contract had expired.
Lazard Freres has served as financial adviser to the water authority for the past four years and the new contract will also last four years, according to Philip Shapiro, the authority's director of finance and development.
Mr. Shapiro attributed the success of the loans the authority has offered over the past four years largely to the work of Lazard. Since February 1990, the authority has issued $1.9 billion of debt.
"We have been extremely pleased with their work," he said. "Lazard was also willing to give a specific plan for the next four years, with an honest appraisal of our position."
Authority Treasurer Kenneth Wissman said the terms of the contract were still being finalized. However, he estimated Lazard's fee would be $575,000 for the first year of the contract and $600,000 for each subsequent year.
"The specific contract will probably be banged out over the next week or two," Mr. Shapiro said. "Lazard was first in both the written and the oral portions of the selection process."
Lazard Freres, which is based in New York, was chosen over four other groups: Public Resources Advisory Group, New York, in association with WR Lazard, Laidlaw & Mead Inc., New York; Public Financial Management Inc., Philadelphia, working with two small subcontractors; O'Brien Partners Inc., New York; and Evensen Dodge Inc., Minneapolis, in association with Bank of Boston.
"Lazard Freres estimated that approximately 6,000 hours are needed to properly work on the authority's needs" over the four-year contract, Mr. Shapiro said. "The other firms estimated between 1,500 and 3,500 hours."
The financial adviser was chosen by an eight-member selection committee, whose proposal was then submitted to the entire 11-member board of directors.
The selection committee was comprised of Mr. Shapiro; Mr. Wissman; Dennis O. Williams, authority manager of debt and investments; Robert Ciolek, director of the Boston Water and Sewer Authority; Jan McGinn, revenue manager for the authority; and three members of the authority's legal advisory staff.
Mr. Shapiro said an added benefit to this contract with Lazard Freres will be the firm's ability to act as sole broker for the authority's guaranteed investment contracts.
"Previously, Lazard would be involved in the decision process of a deal and would advise us as to the best broker for our deals," Mr. Shapiro said. "Now, as part of the new contract, we will use Lazard exclusively in both phases, saving the authority additional costs and time."
Mr. Shapiro said a preliminary draft of the new contract was sent to Lazard, and he did not foresee an obstacle to passage before the new term begins Sept. 16.
Raymond C. Dooley, vice president at Lazard Freres's Boston office, said he was very pleased that his firm will be retained by the authority. "The authority has established itself in the marketplace over the past four years," Mr. Dooley said. "Now we are faced with maintaining that high level of market-ability."