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HomeMy WebLinkAboutAgenda Report - February 19, 1992 (73)CIN OF LODI AGENDA T I T L E Arbitrage Rebate Services Contract MEETING DATE February 19.1992 PREPARED BY: Finance Director RECOMMENDED ACTION The City Council authorize the City Manager to execute an agreement with the firm of Jones, Hall, Hill & White to calculatethe City's arbitrage liability and prepare arbitrage reports for the Certificates of Participation re -financed December 18, 199 1, BACKGROUND INFORMATION On August 7, 1991, the City Council authorized the City Manager to execute an agreement with the firm of Jones, Hall, Hill & White to calculate the City's arbitrage liability and to prepare arbitrage reports required by the Internal Revenue Service for the Certificates of Participation issued by the City to finance construction at thi White Slough Water Pollution Control Facility. On December 18, 1991, the City refinanced these Certificates of Participation to obtain better interest rates. Accordingly. a new agreement is required tc continue the rebate calculation services provided by Jones, Hall. Hill & White. As discussed in the Council Communication dated August 7, 1991, arbitrage earnings are the interes earnings from the investment of bond proceeds at interest rates greater than the rates paid to bon( holders. In short, the City is prohibited from making a profit by investing bond proceeds. Under the 19867mc ReB= Act, excesseamings (profit) must be reported to the Internal Revenue Service yearl; and then paid to the Internal Revenue Service at the end of five years from the date the bonds wen issued. The 1986 Mmc Reform Act requires that bond proceeds be expended in full by the end of the fi ftl year from when they wen received. Failure to comply with the 1986 %K Reform Act could result i F withdrawal of the 'tat exempt' status of these Certificates of Participation and would result in the interes eamingspaid to bond holders becoming 'taxable earning" versus "non-taxable earning" which they nov an. This would also adversely affect the future credibility of the City in the bond market when seeki n; financing. Because of ft importance of the arbitrage calculation to bondholders and to the City. it is reeom mende that the City continue to contract with a firm that speciatixes in preparing these calculations and reports Jones, Hall, Hill & White was recommended and approved by Council on August 7, 1991 to be the fi rr to prepare the rebate calculations and official reports based on their prior experience and reputation Jones, Hail, Hill & White was selected by the City after review of four proposals fur this service. APPROVED: THOMASA. PETERSON Cfty Manager wo cc -1 M x Considering that only six mcntbs have passed since the contract was first awarded to Tones, Hall. Hill & White, it is the staff`s recommendation that the City continue to contract for these services with this firm. The cost b the City for Fiscai Year 1991-92 will be $4,000, 12,000 for each year for each of the next four years and $500 per year for the bond reserve fund. FUNDING: Sewer Fund Attachments Resolution Agreement with Jones, H3U, Hill and White Respectfully, ""x4v �H./6'ynn Finance Director F JOriES HALL HILL & WHITE, 101 199? A PBarkSSSIONAL LAW CORPOWATIam ATTORXRYS AT LAW %?�i� ls.•�' ' GUARLES P. ^OAHU MMR ENDARCADERO C DrTBR SrsPHUN M. GASALEOoro v11rZTzK14TH NLOOR TXOMAS A. DOWN MY SAY PRA\CISCQ. CA 94tH ANDREW C. MALL -JR. 1418► 391.0784 KE/1X><TH 1. JONES W1/.1JAM H. MADISON PACSIM1LS R. WADS AORR15' 6415/ OOL-5784 DAVID J. OSTER Sisal 391.4706 UNIAN D. QUINT WlKS9b4-l+9op - PAUL J. 7X1341410 jams 8.1992 219^2009 `-'J STANTON WHITE • 4onisrw a wwrwa ■.r a..i. AORICIITJ. HILL ti9119.191101 17iM . Dixoni Flynn . l C il OF ODI 221 West Pint Street Lodi, CA 95241 RE: $1 1,110,00D City of Lodi. California, Certificates of Participation n99i Wastewater Treatment plant Ex=sion Refunding Pyr ' t�t� Dear Mr. Flynn: Pursuant to Sharon White's conversation today with Diana White regarding the above mentioned. enclosed ate two copies of the Agreement for Rebate Calculation Services. If everything is to your approval. please have both copies signed by an authorized representative of the Cfiy and send one signed copy back to me. Very truly your& Dorinda A Mercado Enclosures ' M. Sharon Stanton White Gerald Craig Hill JONES HALL HILL & WHITE. A PROr1MW%IONAL LAK 4r)1;Y01iATi0N ATTORNEYS AT LAW CHAKLIM ►. ADAMS STXVM1 N R. CASALZOOIO TMON^* A. V*%rXXV ANDREW Q HALL JR. ILENNETII L JONES WILLIAM M- MADISON R. WADY NORRIS' DAVID J. a®Tza BRIAN IL QUINT ?Ar LJ. THIHMIO SUASION WANTON WRITE � wfyn'ft1 .O MOM►► �wi el�l7 A FMR EXECUTION PLEASE RETURN TO: Janes Hall Hill & White. A Professional Law Corporation FourEmbucadero Center. 19th Floor San Francisco, CA 94111 Attention; Ms. Dorinda Mercado FOUR F.WBARCADFRO CXNTZR *41NZ'T7.FX H FLOOR SAS rn k%IC1sCO3 CA 04111 14150 a91.5780 YAGNI M I LE 1416►a91-6784 1411► a4► -5786 W 161 966-88o8 RORMAI J. HILL,1902.19SRt AGREEMENT FOR REBATE CALCULATION SERVICES MIS AGREEMENT, is made and entered into this day of '1992, by and be�w"n the City of Lodi. California (herein called "City") and JONES HALL. HILL &: WHITE, A PROFESSIONAL LAW CORPORATION. San Francisco, California (h e re i n called "Attomeys'�, WHEREAS. on December 18, 1991 the City issued its $11,170,000 Installment S Ile Agreement, dated as of December 1, 1991 (the "Agreernernt") ftnd caused the delivery ofcertilictites of participation (the "Certificates") representing installrrent payments under the Agreement (the "Installment Payments'): WHEREAS. in order to assure that the interest component of Installment Payments and interest payable with respect tothe Certifscatex is excludable from gmss income pursuant to Section 103 of the lntemat Revenue Code of 1986 (the "Code"). it is necess;try tri,i; the City assure compliance with Section 148(f) of rile Cade relating to rebate of cett;dn excess investmenteamings to the United States:.tnd WHEREAS. the City ha$ determined that Attomcys are q as l i fie{l by mining and experience to perform the services required. and Attorneys ,i re willing to provide such services; NOW, THEREFORE, the City employs Attorneys. and Attorneys accept such employment, upon the following terms .nd conditions: ARTICLE[ DLM ES OF ATTORNEYS Attorneys shall perform arta render the followingserviccs to the extent neres5,try to provide for compliance with Section 148(f) of the Code in connection with the Agreement and the Certificates: A. Perforin rebate calculations required by Section 148(f) of the Code and applicable regulations. R Provide inswctions to the City concerning compliance with Section 148(f) of the Code and applicable regulations. O Consult and cooperate with the City and its agents and employees, as necessary to provide for compliance by the City with the requirements of Section 148(f) of the Code for the Agreerncnt wA the Certificates. D. Upon the request of the City following any rebate calculation. and assuming compliance with rebate instructions provided by Attorneys. provide a legal opinion stating that the exclusion from gross income of interest on the Certific€ttes for fedcml income tax purposcs has not been adversely affected by reason of failure to comply with Section 148(f) of the Code. E Upon the request of the City following any rebate calculation, provide advice to assist in most effectively reducing cr satisfying pot e n t i'al rebate liability. if any. ARTICLE II COMPENSATION AND COSTS For Etre services of Attorneys se t fon h in Article 1, the City shall pay Attorneys a service fee of $4.000.00 for the first bond yetar and a service fee of $2,0W,00 per bond year thereafter until depletion of the Improvement Account, Upon tern: i nn t ion of the Improvement Fund, there will be a service fee of $500.00 per bond year for the Reserve Fund. A11 fees will be payable following performance ofdutiesre(Iuired ofAttoireys for the bond ye;tr in question. In addition to the compensation set forth in the preceding pnr,agnnph, the City shall reimburse Attorneys for direct out-of-pocket expenses for Federal Express or other courier, messenger. delivery or special mail ser\ -ices, iclecopying setyicc.s, photocopying. binding and (upon requestby the City for the sank) expcnses for travel outside cE the Si,ite of California in conneaion with the service~ rendct•ed by Anorneys hewunder. ARnCL.E III RESPONSIBILITIES OF C rY The City shall cooperate with Attorneys in tate performance of their services under Article I, and shall provide Attorneys with information requestedby Attorneys regarding investments made by the City with proceeds of the Certificates and =aunts to be used for payment of the Installment Paymentsand the Gmiftcatas or shall assist Attorneys in obtaining such information. In the event of prepayment of Installment Payments and redemption of the Certificates in whole or in pan prior to theirmaturity, the City shall notify Attorneys of said redemption at least thirty (30)days prior to such redemption. In the event of an advance or current refunding of the Installment Payments and the Certificates in whole or in pan prior to their maturity. the City shall notify Attorneys of said refunding at least thirty (30)days prior to such refunding ARTTCL.E N TERM OF AGREEMENT This Agreement shall terminate on on the fust day of the third full calendar month following the end of the fifth bond year peRaining to the Agreement and the Certificates unless earlier renewed by supplemental agreement between the parties hereto, or unless the City shall. upon tett (10)dayswhnen notice to Attorneys, terminate this Agreement for failureof Attorneys to perform the duties set forth in Article I hereof in a manner satisfactoryto the City. IN WITNESS WHEREOF, the City and Attorneys have caused this Agreement to be executed, in duplicate. in their respective corporate names, by one of their respective duly authorized officers, all as of the day and year fust above written. CITY OF LODI. CALIFORNIA Title: JONES HALL HILL & WHITE, A ProfessionalLaw Corporation Byg—, — _ -,r- ShiNn Stanton White RESOLUTION 10. 92-34 A RESOLUTION OF THE LODI CITY COUNCIL TG THE CITY'S ENTERING LNTO AN AGREEMENT FOR ARBITRAGE REBATE SERVIGE REBATE CALCULATION SERVICES) WHEREAS, Lodi Municipal Code, Section 3.20.070, authorizes dispensing with bidding proctdures for purchases of supplies. services. or equipment when the City Council determines that the purchase or method of purchase would be in the best interest of the City; and WHEREAS. on August 7, 1991. the City entered into an agreement with Jones, Hall. Hill and White to provide the City with Arbitrage Rebate Calculation Services for the Certificates of Participation issued for the construction at the White Slough Water Pollution Control Facility; and WHEREAS, in 1988. the City issued Certificates of Participation to finance construction of the White S u;h Water Pollution Control Facility expansion; and WHEREAS , on December 18, 1991, the City refinanced the above Certificates of Participation to obtain better interest rates; and WHEREAS, prior to awarding a contract to Jones, Hall. Hill and 1Vhite to provide "arbitrage rebate services", the City solicited proposals from four firms that provide these services and determined that the contract should be awarded to Jones, Hall, Hill and White based on the firm's expertise. reputation as bond counsel. and the City's past relationship with this firm: and WHEREAS, it is the City Manager's recommendation that the City enter into an agreement for said services with the firm of Jones, Hall. Hill and White. NOT THEREFORE, BE IT RESOLVED that the Lodi City Council hereby approves the City's entering into an agreement for the above described Rebate Calculations services with Jones, Hall, Hill and White in the amount of $4,000 for Fiscal year 1991-92, $2,000 for Fiscal Years 1992 through 1996 and $500 for each bond year for the reserve fund, and further authorizes execution of said Agreement by the City Manager. Dated: February 19, 1992 I hereby certify that Resolution No.92-3Was passed and adopted by the City Council of the City of Lodi in a regular meeting held February 19, 1992 by the following vote: Ayes- Council Members - Hinchman, Pennino, Sieglock and Pinkerton (Mayor) Noes. Council Members - None Absent: Council Members - Snider Alice M. Reiinche City Clerk CLTY Cc -NOL JAMES W. PINKERTON, Mayw PHILIP A. PENNING Mayor Pro %"Pore W I D W HINCHMAN LACK A. 51MOCK "N R. (RY WO SNIDER CITY OF LODI CITY HALL„ 221 WEST PINE STREET PQ BOD( 3006 LODI, CAUFORNIA 45241-1981 (209)334-5634 fAX LM 3314M February 2a, 1992 Jones Hall H i 11 8 White A Professional Law Corporation Attention: Oorinda Mercado Four E*arcadero Center, 19th Floor San Francisco. CA 94111 Re: Agreement for Rebate Cala, la tion Services Dear T1s. Mercado: T"OMAS A. PETERSON city Manager ALICE M REIMCHE City Clerk LOB MtNAT7 City Ano"my Enclosed herewith please find fully executed copy of agreement for Rebate Calculation Services between the City of Lodi and Jones Hall Hi I 1 6 White which was approved by the Lodi City Council at its meting of February 19, 1992. Also enclosed please find certified copy of Resolution No. 92-34 entitled. "A Resolutfon of the Lodi City Council Authorizing the City's Entering into an Agreement for Arbitrage Rebate Service (Rebate Calculation Services)" which was adopted by the Lodi City Council at its February 19, 1992 meeting. Should you have any questions regardfng this matter. please do not hesitate to call. Veryy truly yours, Alice M. Reimche City Clerk AMR/imp Enclosures JONES HALL HILL St W391-fE, A PROM"SIONAL LAW tdRj-oNATIox ATTORNxYs AT LAM' CMAIILES F. ADAMS STEPREN R. CAIJAUUMP14 THOMAS A. DOW NRIV ANDWSW C- HALL. JR. KEMMETII I. JOM6S WTLU&N R. MAD.SOR R. MADR WORRIS' DAVM J. OfTGR BMJ614 D. QUINT rAVL J. Tt1IMMIP SXA*0N WTAM07 W WAtrE • Aerrnsm *96004 ran "LT AFTER EXECt1T1ON PLEASERETURNTO. Josses Hall Hill & White, A Professional Iaw Corporation FourEmbarcadero Center, 19hFloor San F`rarscisoo, CA 44111 Attention, Ms, Dvrinda Mm -ado LOUR ZHISARGADER0 CENTER NIN39TRENTH FLOOR SAJi FRANiC13CO. CA 94131 t4151 391-8980 t'ACffiiK ILii M 11r '�4,{-R7i11 M16r D9he71,1 14!81 ObblL.'WR *010IM? J. HILL r19HL-19Owr AGREEMENT FOR REBATE CALCULATION SERVICES THIS AGREEMENT. is made and entered into this 9th day of February -.1992, by and between h e CITY CIF LODI. CALIFORNIA (herein called "City") and JONES HALL HILL & WHITE, APROFESSIONAL LAW CORPORATION. San Francisco. California (herein called "Attomeys'% WHEREAS, on December 18, 1491 the City issued its $11,170,000 Installment Sale Agreermnt, dated asof December 1, 1991 (the "Agreement") and caused the delivery ofcerdfkates of participation (he" Certificates") representing installment payments under the Agreement (the "Installment Payments")); WHEREAS. in order to assure that the interest component of Installment Payments and interest payable with respect to the CeniEic;ites is excludable € om gmm, income punuunt to Section 103 of the Internal Revenue Code of 1986 (the "Code"). it is necessary that the City assure compliance withSeclion 148(f) of the Coderelatingto rebate of certainexcesc investmente;u-nings to the United Smits; and WHEREAS, the City has determined that Attorneys are qualified by training and experience to perform the services required, and Anomeys are willing to provide such services; NOW. THEREFORE. the City employs Attorneys. and Attorneys :accept such employment upon the followingte= and conditions: ARTICLE I DLMES CIF ATTORNEYS Attorneys shall perform and n:nder the following services to the extent necessary to provide for compliance with Section 148(f) of the Code in connection with the Agreement and the QriftrateK A. Perform rebate calculations required by Section 148(f) of the Code and applicable regulations. B. Provide instructions to he City concemingcompl iance with Seetion 148(f) of the Code and applicable regulations. C Consult and cooperate with the City and i;s agents and employees. as necessary to provide for compliance by the City with the requirements of Section 148(f) of the Code for We Agreeaxnt and the Certificates. D. Upon the request of the City following any rebate calculation. and assuming compliance with rebate instructions provided by Attorneys. provide a legal opinion statingthat the exclusion froth gross income of interest on the Cenifi cares for f ed erai income tax purposes has not been adversely affected by reason of fall= to comply with Section 148(f) of the Cade, E. Upon the request of the City following any rebate calculation. provide advice to assist inmost effectively reducing or satisfy ing potential rebate liability. if any. ARTICLE II COMPENSATION AND COSTS Forthe services of Attorneys set forth in Article), the City shall pity Attomeysa service fee of $4,W.00 for the first bond year and a service fee of $2,(M.00 per bond year thereafter until depletion of the Improvement Account. Upon termination of the Improvement Fund there will be a service fee of $500.00 per bond year for the Reserve Fund. All fees will be payable following Nt-formance of duties required of Attorneys for the bond yoar in question. In addition to the compceo�ation set fonh in the preceding paragraph. the City shall reimburse Attorneys for direct oui-of-pocket expenses for f=ederal Express or Esher courier. messenger. delivery or special mail services, telecopying services. photocopying. binding and (upon request by the City for the %ame) expenses for travel outside of the State of California in connection with the scrviccs rendcred by Attorneys hereunder. ARTICLE Ill RESPONSIBILITIES OF Com' The City shall eooperatewith Attorneys in the performance of their services under Article 1. and shall provide Attorneys with information requested by Attorneys regarding investments made by the City with proceeds of the Certificates and =ounts to be used for payment of the Installment Payments and the Certificatesor shall assist Attorneys in obtaining such information. In the event of prepayment ofInstallment Payments and redemption of the Certificates in whole or in part prior to their maturity. the City shall notify Attorneys of said redemption at least thirty (30) days prior to such redemption. In the event of an advance or current refunding of the Installment Payments and the Certificates in whole or in part prior to their maturity, the City shall notify Attorneys of said refunding at least thirty (30)days prior to such refunding. ARTICLE N TERM OF AGREEMENT This Agreement shall terminate on on the first day of the third full calendar month following the end of the fifth bond year pertaining to the Agreement and the Certificates unless earlier renewed by supplemental agreement between the pasties hereto, or unless the City shall. upon tat (10) days written notice to Anomr eys, terminate this Agreement for failure of Attorneys to perform the duties setforth in Anicle 1 htmof in a manner satisfactory to the City. 3N WITNESS WHEREOF, the City and Attorneys have caused this Agreement to be executed, in duplicate, in their respective corporate names. by one of their respective duly authorized officers, all as of the day and year first above written, CITY CF LODI. CALIFORNIA Approved as to form: Tilde: City Manager, Thomas A. Peterson 'rte GA,�n'1J l City Attorney, Bobby W. McNatt Attest: .� .. City Clerk, Alice M. Reimehe t— JONESIIA1.1,111LL R WHITE. A Professional Law Cogx>ration 13y «iCG------ Sharon Stanton White