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HomeMy WebLinkAboutAgenda Report - August 7, 1991 (77)Contract with Jones, Hail, Hill & White for Arbitrage Services August 7, 1991 PREPARED BY: Finance Director RECOMMENDED ACTION: The City Council authorize the City Manager to enter mto an agreement with Jones, Hall, Hill & White to calculate the City's arbitrage liability and prepare arbitrage reports. BACKGROUND INFORMATION: In 1988, the City issued Certificates of Participation (COP) to finance construction at White Slough. Under the 1986 Tax Reform Act, these COP's are classified as "arbitrage bonds"; and as such, the arbitrage earnings must be reported in the City's annual financial reports and to the Internal Revenue Service in the fifth year after, the bonds are issued to settle arbitrage earnings. Arbitrage earnings are the investment earnings from bond proceeds in excess of the bond yield paid to bond holders. In concept, this calculation appears to be a simple requirement; however, Congress and the Internal Revenue Service continue to change the rules by which arbitrage is calculated and have made several exemptions and exceptions in the original calculation rules. This, combined with the fluctuating yield on investments, has made this a complex calculation which requires specialized expertise, much like preparing an annual tax return. Because of the possible liability to the City resulting from this calculation, the disclosure of the City's arbitrage liability is a significant disclosure in the City's audited financial reports. The reliability and credibility of the "arbitrage return" is important to both the City's bondholders and to the Internal Revenue Service at the time settlement is made. For this reason, the firm of Jones, Hall, Hill & White is recommended from four firms that submitted proposals. This selection is based on their expertise, reputation as bond counsel and the City's past relationship with this firm as bond counsel for issue of the 1988 COP's. The cost to the City for Fiscal Year 1991-92 will be $8,000 and $500 for Fiscal Year 1992-93. FUNDING: Sewer Fund Respectfully, ixon Flynn Finance Director APPROVED: THOMAS A. PETERSON »�«»- jij City Manager 4 „ OC -1 7 cTONES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW Exhibit A FOUR EMBARCADERO CENTER CHARLES P. ADAMS Mi. =FXNTH FLOOR HAROLD W- DANK'- STEBHBN R. CASALEOOIO - SAN FRANCISCO, GA 94111 DRIIGE R. COLEMAN (415) 391-5780 THOMAS A. DOWNEY ANDREW C. HALL, JR. rAOSIMILE KE_gNETH L JONES - _ WILLI" H- XADISON (415) 391-5784 R. WADE NORRIS" - 14161 361-6786 DAVID J..OSTER /416) 866-6308 - BRIAN D. QIIINT SHARON STANTON WHITE - ansa2ci of oozwswssONLY - RODHRT J. HILL 11922-1988). . AMO T M TO Osoeou. awa OMS . AFTER EXECUTION PLEASE RETURN TO: Jones Hall Hill & White, a A Professional Law Corporation Four Embarcadero Center,. 19th Floor San Francisco, CA 94111 Attention: Ms. JennifO Viksten 3 AGREEMENT FOR REBATE CALCULATION SERVICES � - , . THIS AGREEMENT, is made and entered into this day of 1991, i by and between the. CITY OF LOBI, CALIFORNIA (herein called "City") and JONES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION, San Francisco, California (herein called "Attorneys"); H1TN ESS .TH, WHEREAS, on August 25, 1988 the City issued its $9,415,000 certificates of participation (1988 wastewater treatment plant expansion project) (the "Certificates"); t on the Certificates is excludable from gross income WHEREAS, in order to assure that interes pursuant to Section 103 of the Internal Revenue Code of 1986 (the "Code"), it is necessary that the City assure compliance with Section 148(f) of the Code relating to rebate of certain excess investment earnings to the United States; and WHEREAS, the City has determined that Attorneys are qualified by training and experience to perform the services required, and Attorneys are willing to provide such 'services; NOW, THEREFORE, the City employs Attorneys, and Attorneys accept such employment, upon the following terms and conditions: ARTICLE I DUTIES OF ATTORNEYS Attorneys shall perform and render the following services to the extent necessary to provide for compliance with Section 148(f) of the Code in connection with the Certificates: A. Perform rebate calculations required by Section 148(f) of the Code and applicable regulations. B. Provide instructions to the City concerning compliance with Section 148(f) of the Code and applicable regulations. C. 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 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 Certificates for federal income tax purposes 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 or satisfying potential rebate liability, if any. ARTICLE II COMPENSATION AND COSTS For the services of Attorneys set forth in Article I, the City shall pay Attorneys a service fee of $2,000.00 for the first bond year and each additional bond year until depletion of the Project Fund. Upon completion of the Project Fund,.the City shall pay Attorneys a service fee of $500.00 per bond year for all remaining active accounts or funds. All fees will be payable following performance of duties required of Attorneys under Article 1. In addition to the compensation set forth in the preceding paragraph, the City shall reimburse Attorneys for direct out-of-pocket expenses for Federal Express or other courier, messenger, delivery or special mail services, telecopying services, photocopying, binding and (upon request by the City for the same) expenses for travel outside of the State of California in connection with the services rendered by Attorneys hereunder. RESPONSIBILITIES OF CITY The City shall cooperate with Attorneys in the performance of their services under Article I, and shall provide Attorneys with information requested by Attorneys regarding investments made by the City with bond proceeds and transferred proceeds and amounts to be used for payment of the Certificates or shall assist Attorneys in obtaining such information. In the event of 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 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 IV i TERM OF AGREEMENT This Agreement shall terminate on on the first day of the third full calendar month following the fifth bond year of the Certificates unless earlier renewed by supplemental agreement between the parties hereto, or unless the City shall, upon ten (10) days written notice to Attorneys, terminate this Agreement. for failure of Attorneys to perform the duties set forth in Article I hereof in a manner satisfactory to 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 first above written. CITY OF LODI By Title: 1 JONES HALL HILL & WHITE, A Professional Law Corporation Y Sharon Stanton White ` RESOLUTION NO. 91-151 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY'S ENTERING INTO AN AGREEMENT FOR ARBITRAGE REBATE SERVICES (REBATE CALCULATION SERVICES) WHEREAS, Lodi Municipal Code, Section 3.20.070, authorizes dispensing with bidding procedures for purchases of supplies, services, or equipment when the City Council determines that the purchase or method of purchase would be in the best interests of the City; and WHEREAS, in 1988, the City issued Certificates of Participation to finance construction of the White Slough Water Polution Control Facility expansion for which arbitrage earnings must be reported to the Internal Revenue Service;and. WHEREAS, the City received four proposals from various firms for for ,the_ -preparation of calculations and reports for the arbitrage reporting; and WHEREAS, said proposals have been compared and checked and a report thereof filed with the City Manager; 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 &'White, based on that firm's expertise, reputation as bond counsel;; and the -City's past relationship with this firm; ''NOW THEREFORE, BE IT RESOLVED that the Lodi City Council hereby approves`the-City's entering into an agreement for the above-described Rebate. Calculation Services with Jones, Hall, Hill & Whitein. the amount ,of $8,000 for Fiscal Year 1991-92 and $500 for Fiscal Year 1992-93, and`.further authorizes execution of said Agreement by the City Manager. Dated: August 7, 1991 I hereby certify that Resolution No. 91-151 was passed and adopted by`the City Council of the City of Lodi in a regular meeting held August 7, 1991 by the following vote: Ayes: Council Members - Pennino, Pinkerton, Sieglock, Snider an Ma a r d Hinchm ) and (Mayor) Noes: Council Members - None Absent: Council Members - None Alice M. fiche City Clerk 91-151 CITY COUNCIL THOMAS A. PETERSON DAVID M. HINCHMAN, Mayor CITY O F .L� O D I City Manage JAMES W. PINKERTON. Jr. ALICE M. REtMfHE Mayor Pro Tempore City Clerk PHILLIP A. PENNINO CITY HALL, 221 WEST PINE STREET BOB McNATT )ACK A. SIEGIOCK P.O. BOX 3006 City Attorney JOHN R. (Randy) SNIDER LODI, CALIFORNIA 95241-1910 (209) 334-5634 FAX(209)333-6795 August 8, 1991 Jones, Hall, Hill & White A Professional Law Corporation t Attention: _Ms. Jennifer Viksten Four Embarcadero Center, 19th Floor ( San Francisco, CA 94111 Subject: Agreement for RebateCalculation Services 5 Dear Ms. Viksten: Please be advised that the,Lodi. City Council at its Regular Meeting of August 7, 199E adopted Resolution No. 91-151 entitled, "A Resolution of the Lodi City Council Authorizing the City's Entering into an Agreement for Arbitrage Rebate Services (Rebate Calculation Services)." Enclosed please find a.fully executed:copy of the subject agreement and a certified copy of the authorizing resolution. Should you have any questions regarding this matter, please do not hesitate to call this office. Very truly yours, Alice M. Relmche City Clerk AMR/imp Enclosure cc: Dixon Flynn Finance Director Exhibit A • e.JON'ES HAM, HILL & WHITE, A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW FOUR EMBARCADERO CENTER CH wit ES E. ADAMS - NINETEENTH FLOOR - - HAROLD W. BANK' SAN FRANCISCO, CA 94111 STXpHEN R. CASALEOGIO (415) 391-6780 BRUCE R. COLEMAN THOMAS A. DOWNEY ANDREW Q HALL, JR. FACSIMILE XENNETH I. JONES - (415)391-5704 WILLIAM H. MADISON R. WADE NORRIS" - - t415) 391-5785 .DAVID J. OSTER _ 4415)956-6308 BRIAN D. QUINT PAUL J. THIM3CIO -. .. SHARON STANTON WHISK .A0,,rrg=402t" YOac AND DpMW= op OOLUMMA SAX* ONLY ROBERT J. iIILI. 11922-19881 . .. AnXn-r3W aO OU0201A SAX O12T - AFrER EXECUTION PLEASE RETURN TO; Jones Hall HUI &White, A Professional Law Corporation Four Embarcadero Center, 19th Floor San Francisco, CA 94111 Attention: Ms. Jennifer Viksten AGREEMENT FOR REBATE CALCULATION SERVICES t _ THIS AGREEMEN-T is made and entered into this 2th day of ugust__, 1991, by and between the CITY OF LODI, CALIFORNIA (herein called City) and JONES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION, San Francisco, California (herein called "Attorneys"); WITNESSETH' WHEREAS, on August 25, 1988 the City issued its $9,415,000 certificates of participation (1988 wastewater treatment plant expansion project) (the "Certificates"); WHEREAS, in order to assure that interest on the Certificates is excludable from gross income pursuant to Section 103 of the Internal Revenue Code of 1986 the "Code"), itis necessary that the City assure compliance with Section 148(f) of the Code relating to rebate of certain excess investment L- U 'ted States• and earnings to Is WHEREAS, the City has determined that Attorneys are qualified by training and experience to .>,e and Attorneys are willing to provide such services; NOW, THEREFORE, the City employs Attorneys, and Attorneys accept such employment, upon the following terms and conditions: ARTICLE I DUTIES OF ATTORNEYS Attorneys shall perform and render the following services to the extent necessary to provide for compliance with Section 148(f) of the Code in connection with the Certificates: A. Perform rebate calculations required by Section 148(f) of the Code and applicable regulations. B. Provide instructions to the City concerning compliance with Section 148(f) of the Code and applicable regulations. C. 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 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 Certificates for federal income tax purposes 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 or satisfying potential rebate liability, if any. ARTICLE II COMPENSATION AND COSTS For the services of Attorneys set forth in Article I, the City shall pay Attorneys a service fee of $2,000.00 for the first bond year and each additional bond year until depletion of the Project Fund. Upon completion of the Project Fund, the City shall pay Attorneys a service fee of $500.00 per bond year for all remaining active accounts or funds. All fees will be payable following performance of duties required of Attorneys under Article I. In addition to the compensation set forth in the preceding paragraph, the City shall reimburse Attorneys for direct out-of-pocket expenses for Federal Express or other courier, messenger, delivery or special mail services, telecopying services, photocopying, binding and (upon request by the City for the same) expenses for travel outside of the State of California in connection with the services rendered by Attorneys hereunder. t ARTICLE III RESPONSIBILITIES OF CITY The City shall cooperate with Attorneys in the performance of their services under Article I, and shall provide Attorneys with information requested by Attorneys regarding investments made by the City with bond proceeds and transferred proceeds and amounts to be used for payment of the Certificates or shall assist Attorneys in obtaining such information. In the event of 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 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 fifth bond year of the Certificates unless earlier renewed by supplemental agreement between the parties hereto, or unless the City shall, upon ten (10) days written notice to Attorneys, terminate this Agreement for failure of Attorneys to perform the duties set forth in Article I hereof in a manner satisfactory to 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 first above written. Attest: Alice M Reimche City Clerk Approved as to form: Bobby McNatt City Attorney CITY OF LODI Y Tide: Thomas A. Peterson City Manager JONES HALL HILI- & WHITE, A Professional Law Corporation Y Sharon Stanton White .very ...!Qin^+' }..y _.., ...:•(J.�(�. .. (��( �C-3GY� TO: Finance Director FROM: City Clerk CITY OF LODI SPECIAL ALLOCATION REQUEST DATE: August 7, 1991 PROJECT NUMBER: Request is made for funds to accomplish the following project which was not included in the current budget: Description of Project Estimated Cost Funds needed for contract with Jones, Hall, Hill and White for arbitrage services $8,000.00 Funding source Sewer Fund (If you need more space use additional sheet and attach to this form) Date of Approval - 8/7/91 Amount Approved - $8,000 CouncilXXXXX City Manager FUND OR ACCOUNT TO BE CHARGED Current Budget $ Prior Year Reserve $ Contingent Fund $ General Fund Surplus $ Capital Outlay Reserve $ Gas Tax Fund $ Utility. Outlay Reserve $ Other (Election) $ Hotel/Motel Tax Reserve - $ General Fund Operating Reserve $ Dixon ynn, Finance Director Alice M. Reimche, City Clerk Submit this form in -duplicate to the Finance Director. Distribution after approval will be as follows: 1) Originating Department 2) Finance Department