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HomeMy WebLinkAboutNHA Advisors, LLC 2020-07-02; Amendment 2 2024-02-13COU No 2021-088-A2 CITY OF UKIAH AMENDMENT NO. 2 TO PROFESSIONAL SERVICES AGREEMENT This Amendment No. 2, entered on February 13th, 2024, revises the Agreement for Professional Services dated July 2, 2020 between the City of Ukiah and NHA Advisors, LLC, a limited liability company, for professional consulting services relating to registered municipal financial advisor for continuing disclosure, debt issuance, and general financial consultancy services. This Amendment No. 2 modifies both the scope of services as well as the billing fees as per Exhibits A, B and C attached. Except as expressly amended by this Amendment, all other terms remain unchanged and in full force and effect. IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AMENDMENT ON THE EFFECTIVE DATE: NHA ADVISORS, LLC BY: DATE: PRINT NAME: CITY OF UKIAH BY: DATE: SAGE SANGIACOMO, CITY MANAGER ATTEST BY: DATE: KRISTINE LAWLER, CITY CLERK Eric Scriven, Principal 2/14/2024 Feb 20, 2024 Kristine Lawler (Feb 21, 2024 07:41 PST) Kristine Lawler Feb 21, 2024 EXHIBIT A SCOPE OF SERVICE ARBITRAGE REBATE CONSULTING The City of Ukiah (the “City”) is required to conduct routine calculations of the earnings on its tax exempt obligations to determine if it has earned any “positive arbitrage” (actual interest earnings were greater than allowable interest earnings when calculated at the arbitrage yield) and submit a payment to the Internal Revenue Service (“IRS”) for any excess interest earnings. The calculation and payment of any rebate liability is due within 60 days of each fifth Computation Period or Bond Year, at final maturity, or upon full redemption. In addition, the City may be required to conduct an arbitrage rebate calculation annually and deposit any excess interest earnings into an account held by the by the Fiscal Agent/Trustee. The scope of work will generally include, but may not be limited to, the following services: Scope of Work The City is engaging Consultant to perform tasks related to this arbitrage rebate calculation. The scope of work will generally include, but may not be limited to, the following services: • Review pertinent bond documents • Work with the City and Fiscal Agent/Trustee to obtain all account statements pertaining to the specified time period • Review account statements • Analyze cash flows for the various funds/accounts held by the Fiscal Agent/Trustee • Calculate positive or negative arbitrage • Prepare a memorandum summarizing the results of the analysis • Assist the City with preparation of IRS Form 8038-T, as necessary EXHIBIT B COMPENSATION SCHEDULE Budget For work described in the Scope of Services, Consultant will be compensated for each applicable bond issue as follows: • Project Setup: $500 (invoiced at first annual calculation) • Annual Arbitrage Rebate Calculation: $800 per Bond Year of calculation (invoiced annually) • Summary Memorandum: $500 (completed and invoiced each fifth year or upon final calculation) • Assistance with Investment of Bond Proceeds: $600 (if necessary) • Preparation of IRS Form 8038-T: $1,500 (if necessary) The following information provides a snapshot of the initial fees associated with the City’s current arbitrage rebate obligations. As additional debt is issued, new arbitrage rebate obligations will be billed according to the rate schedule provided above. A summary of the key dates and estimated budget is provided in the following table. Obligations Annual Calculation Dates End of Next Fifth Bond Year Estimated Initial 5-Year Budget(1) Lease Revenue Bonds, Series 2020A December 17 2026 $5,000 Electric Revenue Bonds, Series 2022 March 1 2027 $5,000 Lease Revenue Bonds, Series 2022 April 1 2026 $5,000 1) Assumes assistance with investment of bond proceeds and preparation of IRS Form 8038-T and a rebate payment to the IRS are not required. Expenses (Out-of-Pocket) All expenses will be billed directly at cost to the City. Expenses will be limited to those necessary for completion of the project. EXHIBIT C MUNICIPAL ADVISOR DISCLOSURES Fiduciary Duty NHA Advisors, LLC (“Consultant”) is registered as a Municipal Advisor with the U. S. Securities and Exchange Commission (“SEC”) and Municipal Securities Rulemaking Board (“MSRB”). As such, Consultant has a fiduciary duty to the City and must provide both a Duty of Care and a Duty of Loyalty that entail the following. Duty of Care: a) exercise due care in performing its municipal advisory activities; b) possess the degree of knowledge and expertise needed to provide the City with informed advice; c) make a reasonable inquiry as to the facts that are relevant to the City’s determination as to whether to proceed with a course of action or that form the basis for any advice provided to the City; and d) undertake a reasonable investigation to determine that Consultant is not forming any recommendation on materially inaccurate or incomplete information; Consultant must have a reasonable basis for: i. any advice provided to or on behalf of the City; ii. any representations made in a certificate that it signs that will be reasonably foreseeably relied upon by the City, any other party involved in the municipal securities transaction or municipal financial product, or investors in the City securities; and iii. any information provided to the City or other parties involved in the municipal securities transaction in connection with the preparation of an official statement. Duty of Loyalty: Consultant must deal honestly and with the utmost good faith with the City and act in the City’s best interests without regard to the financial or other interests of Consultant. Consultant will eliminate or provide full and fair disclosure (included herein) to the City about each material conflict of interest (as applicable). Consultant will not engage in municipal advisory activities with the City as a municipal entity, if it cannot manage or mitigate its conflicts in a manner that will permit it to act in the City’s best interest. Conflicts of Interest and Other Matters Requiring Disclosures As of the commencement date of the Project, there are no actual or potential material conflicts of interest, other than those potential conflicts noted below, that Consultant is aware of that might impair its ability to render unbiased and competent advice or to fulfill its fiduciary duty. If Consultant becomes aware of any material potential conflict of interest that arises after this disclosure, Consultant will disclose the detailed information in writing to the City in a timely manner. Pursuant to MSRB Rule G-42, on Duties of Non-Solicitor Municipal Advisors, Municipal Advisors are required to make certain written disclosures to clients which include, amongst other things, Conflicts of Interest and any Legal or Disciplinary events of Consultant and its associated persons. The following are potential conflicts of interest to be considered. • Consultant represents that in connection with the issuance of municipal securities, Consultant may receive compensation from the City for services rendered, which compensation is contingent upon the successful closing of a transaction and/or is based on the size of a transaction. Consistent with the requirements of MSRB Rule G-42, Consultant hereby discloses that such contingent and/or transactional compensation may present a potential conflict of interest regarding Consultant’ ability to provide unbiased advice to enter into such transaction. The contingent fee arrangement creates an incentive for Consultant to recommend unnecessary financings or financings that are disadvantageous to the City, or to advise the City to increase the size of the issue. This potential conflict of interest will not impair Consultant’ ability to render unbiased and competent advice or to fulfill its fiduciary duty to the City. • Consultant’ fees under this potential agreement may be based on hourly fees of Consultant’ personnel, with the aggregate amount equaling the number of hours worked by such personnel times an agreed-upon hourly billing rate. This form of compensation presents a potential conflict of interest because it could create an incentive for Consultant to recommend alternatives that would result in more hours worked. This conflict of interest will not impair Consultant’ ability to render unbiased and competent advice or to fulfill its fiduciary duty to the City. • Consultant’ fees under this potential agreement may be a fixed amount established at the outset of this potential agreement. The amount is usually based upon an analysis by the City and Consultant of, among other things, the expected duration and complexity of the transaction and the scope of services to be performed by Consultant. This form of compensation presents a potential conflict of interest because, if the transaction requires more work than originally contemplated, Consultant may suffer a loss. Thus, Consultant may recommend less time- consuming alternatives, or fail to do a thorough analysis of alternatives. This conflict of interest will not impair Consultant’ ability to render unbiased and competent advice or to fulfill its fiduciary duty to the City. • The fee paid to Consultant increases the cost of investment to the City. The increased cost occurs from compensating Consultant for municipal advisory services provided. • Consultant serves a wide variety of other clients that may, from time to time, have interests that could have a direct or indirect impact on the interests of another Consultant client. For example, Consultant serves as municipal advisor to other municipal advisory clients and, in such cases, owes a regulatory duty to such other clients just as it does to the City. These other clients may, from time to time and depending on the specific circumstances, have competing interests. In acting in the interests of its various clients, Consultant could potentially face a conflict of interest arising from these competing client interests. Consultant fulfills its regulatory duty and mitigates such conflicts through dealing honestly and with the utmost good faith with the City. • Gerald Craig Hill, the Managing Principal of NHA Advisors is currently serving as an outside director for the HdL Companies based in Diamond Bar, CA. HdL Companies is a software and professional services consulting company providing revenue data and collections information to local governments, potentially including NHA Advisors’ clients. HdL Companies have affiliates including, but not limited to, HdL Coren & Cone. From time to time, NHA Advisors utilizes the services of HdL Coren & Cone for its clients. NHA Advisors is mindful of this conflict of interest and fulfills its regulatory duty and mitigates such conflicts through dealing honestly and with the utmost good faith when this situation arises. • Consultant does not have any affiliate that provides any advice, service, or product to or on behalf of the City that is directly or indirectly related to the municipal advisory activities to be performed by Consultant. • Consultant has not made any payments directly or indirectly to obtain or retain Consultant’ municipal advisory business. • Consultant has not received any payments from third parties to enlist Consultant’ recommendation to the City of its services, any municipal securities transaction, or any municipal finance product. • Consultant has not engaged in any fee-splitting arrangements involving Consultant and any provider of investments or services to the City. • Consultant does not have any legal or disciplinary event that is material to the City’s evaluation of the municipal advisory or the integrity of its management or advisory personnel. • Consultant does not act as principal in any of the transaction(s) related to this potential agreement. Legal Events and Disciplinary History Consultant does not have any legal events and disciplinary history on its Form MA and Form MA-I, which includes information about any criminal actions, regulatory actions, investigations, terminations, judgments, liens, civil judicial actions, customer complaints, arbitrations and civil litigation. The City may electronically access Consultant’ most recent Form MA and each most recent Form MA-I filed with the Commission at the following website: www.sec.gov/edgar/searchedgar/companysearch.html There have been no material changes to a legal or disciplinary event disclosure on any Form MA or Form MA-I filed with the SEC. Recommendations If Consultant makes a recommendation of a municipal securities transaction or municipal financial product or if the review of a recommendation of another party is requested in writing by the City and is within the scope of the engagement, Consultant will determine, based on the information obtained through reasonable diligence of Consultant whether a municipal securities transaction or municipal financial product is suitable for the City. In addition, Consultant will inform the City of: • the evaluation of the material risks, potential benefits, structure, and other characteristics of the recommendation; • the basis upon which Consultant reasonably believes that the recommended municipal securities transaction or municipal financial product is, or is not, suitable for the City; and • whether Consultant has investigated or considered other reasonably feasible alternatives to the recommendation that might also or alternatively serve the City objectives. If the City elects a course of action that is independent of or contrary to the advice provided by Consultant, Consultant is not required on that basis to disengage from the City. Municipal Securities Rulemaking Board Rule G-10 Disclosure Pursuant to MSRB Rule G-10, on Investor and Municipal Advisory Client Education and Protection, Municipal Advisors are required to provide certain written information to their municipal entity and obligated person clients which include the following: • Consultant is currently registered as a Municipal Advisor with the SEC and MSRB. • Within the MSRB website at www.msrb.org, the City may obtain the Municipal Advisory client brochure that is posted on the MSRB website. The brochure describes the protections that may be provided by the MSRB Rules along with how to file a complaint with financial regulatory authorities. Record Retention Effective July 1, 2014, pursuant to the SEC record retention regulations, Consultant is required to maintain, in writing, all communication and created documents between Consultant and the City for five (5) years. If there are any questions regarding the above, please do not hesitate to contact Consultant.