HomeMy WebLinkAbout11/07/1995, C-10 - RENEW BOND COUNSEL AGREEMENT WITH JONES, HALL, HILL & WHITE �II� I�III�IIIIIIIII� II�IIi f MEETING
city o ATE
I►��u►I San lues OBISpo
COUNCIL AGENDA REPORT tin
ITEM N MBER:
i
FROM: Bill Statler, Director of Financet4
Prepared by: Linda Asprion, Revenue Manager*%vw
SUBJECT: RENEW BOND COUNSEL AGREEMENT WITH
JONES, HALL, HILL & WHITE
CAO RECOMN ENDATION
Authorize the Mayor to execute an agreement with Jones, Hall, Hill & White to retain their
services as the City's Bond Counsel.
DISCUSSION
Background
On November 1, 1988 the Council approved the selection of Jones, Hall, Hill & White as the
City's bond counsel and authorized the execution of an agreement with annual renewals for
five years. The selection of this firm was based on an evaluation of four proposals solicited
through a request for proposal (RFP) process. The criteria used in the selection process was
as follows:
■ Demonstrated professional skills and credentials of the staff to be assigned to the
proposed financings
■ Related experience and references
■ Quality of the proposal
■ Approach to performing the services
■ Proposed compensation structure
The agreement with Jones, Hall, Hill & White was renewed in April, 1993 with annual
renewals not to exceed three years. Accordingly, this agreement will expire in April, 1996.
Jones, Hall, Hill & White has served as the City's bond counsel for four financings - the 1988
Water Fund Certificates of Participation, the General Fund 1990 Certificates of Participation,
the 1993 Water Revenue Bonds, and the 1994 Refunding of the 1986 Lease Revenue Bonds.
Why does the City need bond counsel?
Bond Counsel provides a number of specific technical legal services relating to case-by-case
project financings that cannot reasonably be provided by staff. These services include but are
not limited to the following:
■ Examining the applicable law relating to the financing to be accomplished from the
proceeds.
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ja; COUNCIL AGENDA REPORT
■ Preparing all legal proceedings necessary for the authorization and delivery of the
issuance.
■ Applying to the Internal Revenue Service for any rulings necessary to assure tax-exempt
status.
■ Advising the City on registration requirements of the Securities Exchange Commission
or California Corporations Commission.
■ Examining any official statement or other document as to the sufficient description of
the debt issue.
■ Approving the validity of the financing agreements and the execution and delivery of
the debt issuance.
What are the key provisions of the proposed agreement?
The proposed agreement with Jones, Hall, Hill & White is for a period of one year and may
be renewed annually by the City Administrative Officer for a cumulative period not to exceed
.three years from the date of the agreement. Their compensation is based on the same fee
structure as the 1988 agreement with no additional increases. A letter from Jones, Hall, Hill,
& White confirming the retention of the current fee structure for the City, although the firm's
fees have increased, is provided in Attachment A. It should be noted that payment for bond
counsel services is entirely contingent upon the delivery of a financing issuance and all fees
are paid solely from the proceeds of the issuance and from no other City funds.
Why should the City continue to use Jones, Haft, Hill & White as bond counsel?
Jones, Hall, Hill & White has provided outstanding service to the City at a very competitive
cost. As we go forward with financing key capital projects in the 1995-97 Financial Plan -
performing arts center, headquarters fire station, City Hall HVAC, Mission Plaza expansion,
and purchase of the Matthew's property - continuity of sound legal advice will be extremely
important to us. Additionally, their advice will also be important as we prepare open space,
seismic retrofit and sewer lateral rehabilitation financing plans.
FISCAL IMPACT
As indicated above, the bond counsel's compensation is entirely contingent on the completion
of a financing and is payable solely from the proceeds of the issuance and from no other City
Rinds. The proposed compensation schedule is unchanged from that agreed upon five years
ago, summarized as follows:
1% for the first $1,000,000; 1/2% of the next $4,000,000; 1/4% of the next $5,000,000;
1/8% of the next $10,000,000; and 1/16% of any amount in excess of $20,000,000.
This would result in fees as follows:
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ON COUNCIL AGENDA REPORT
............ .........%
Debt Issue Size Fee
$5 million $30,000
$10 million $42,500
$15 million $48,750
The compensation indicated above covers out-of-pocket costs incurred by bond counsel unless
out-of-state expenses such as travel, messenger and delivery services, or legal publication are
required.
SUMMARY
Jones, Hall, Hill & White has proven themselves as trustworthy bond counsel who can on a
case-by-case basis examine applicable financing laws, prepare financing agreements, and advise
the City regarding Internal Revenue Service, Securities Exchange Commission, and California
Corporation Commission requirements. Jones, Hall, Hill & White is a long-standing firm
employing individuals with experience, integrity, and excellent technical abilities. As such, we
recommend approval of the agreement.
ATTACHMENT
A. Letter from Jones, Hall, Hill & White confirming retention of fee schedule
B. Agreement for Bond Counsel Services
Attachment
JONES HALL HILL & WHITE,
A PROFESSIONAL LAW CORPORATION
ATTORNEYS AT LAW
GI ARLES F.ADAMS FOUR EMBARCADERO CENTER
STEPHEN R.GASAT C-CHO NINETEENTH FLOOR
n1IO31SF, D.GASTF*r r SAN FRANCISCO.CA 94111
THOMAS A DOWN EY (415)391-5780
ANDREW C.HAIL,JR FAGSIb1ILE
GREG ILAMRINGTON
(415)301.3784
GHRxSTOPHER H.LYNCH
Vrn-LIAM 8.MADISON October 3, 1995 YENNETH L JONES
DAVID J.OSTER
BRIAN D.QUINT OF COUNSEL
PAUL J.THIMMIG
DAVID A.WALTON ROBERT J.FM x.(1099-1088)
SHARON STANTON WHITE
Linda Asprion
Revenue Manager
City of San Luis Obispo
990 Palm Street
San Luis Obispo,California 93401
Re: Agreement for Bond Counsel Services
Dear Linda:
This will confirm our telephone conversation this morning concerning our
schedule of fees for acting as bond counsel to the City. As I stated, we are happy to
adhere to the schedule contained in our original engagement with the City, which was
entered into after a comprehensive RFP process. We have increased fees slightly since
then, but as a matter of firm policy these increases have not been incorporated into
long-term arrangements with existing clients.
We have enjoyed our relationship with the City, and hope to have the
opportunity to continue serving as your bond counsel. If I can provide any additional
information or if you have any additional questions,please give me a call.
V M
urs,
Charles F. Adams
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Attachment
AGREEMENT FOR BOND COUNSEL SERVICES
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on this day of
by and between the CITY OF SAN LUIS OBISPO, a municipal corporation,
hereinafter referred to as City, and JONES, HALL, HILL, & WHITE, A PROFESSIONAL LAW
CORPORATION, hereinafter referred to as Bond Counsel.
WITNESSETH:
WHEREAS, the City desires to retain the services of the Bond Counsel to serve as the City's legal
advisor in connection with financing proceedings in accordance with the terms of this Agreement; and
WHEREAS, City desires to engage Bond Counsel to provide these services by reason of its qualifications
and experience for performing such services, and Bond Counsel has offered to provide the requested services on
the terms and in the manner set forth herein.
NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be from the date of this Agreement is made and
entered, as first written above, for a period of one year and may be renewed annually thereafter for a cumulative
period not to exceed three years from the date of this Agreement.
2. PROGRAM COORDINATION.
A. City. The Director of Finance or designated representative shall be the Program
Manager representing the City for all purposes under this agreement. The Program
Manager shall supervise the progress and execution of this agreement.
B. Bound Counsel. Bond Counsel shall assign a single Program Manager to have overall
responsibility for the progress and execution of this agreement for Bond Counsel.
3. CITY'S OBLIGATIONS. City agrees to cooperate with Bond Counsel in its performance of
work. For furnishing Bond Counsel Services as specified in this agreement, City will pay and consultant shall
receive compensation as follows:
A. I%for the first$1,000,000; 1/2% of the next $4,000,000; 1/4% of the next$5,000,000;
1/8% of the next $10,000,000; and 1/16% of any amount in excess of$20,000,000.
B. In addition, the City will reimburse Bond Counsel for all out-of-pocket costs and
expenses incurred by Bond Counsel in connection with their services hereunder for out-
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of-state travel, messenger and delivery services, photocopying, legal publication, and
the cost of preparing transcripts of the proceedings for closing purposes.
C. Payment of compensation shall be entirely contingent, and shall be due and payable,
upon the delivery of the financing issuance; and shall be payable solely from the
proceedings of the issuance and from no other funds of the City.
4. DUTIES OF BOND COUNSEL.
A. Services to be furnished. The Bond Counsel shall provide the services as described in
Exhibit A.
B. Laws to be observed. Bond Counsel shall:
1. Procure all permits and licenses, pay all charges and fees, and give all notices
which may be necessary and incidental to the due and lawful prosecution of
the services to be performed by the Bond Counsel under this agreement;
2. Keep itself informed of all existing and proposed federal, state and local laws,
ordinances, regulations, order, and decrees which may affect those engaged or
employed under this agreement, and materials used in Bond Counsel's
performance under this agreement, or the conduct of the services under this
agreement.
3. At all times observe and comply with and cause all of its employees to
observe and comply with all said laws, ordinances, decrees and orders
mentioned above.
C. Release of reports and information. Any reports, information, data or other material
given to,or prepared or assembled by, Bond Counsel under this agreement shall be the
property of City and shall not be made available to any individual or organization by
Bond Counsel, except in fulfillment of Bond Counsel's duties under law or under this
agreement.
D. Qualifications of Bond Counsel. Bond Counsel represents that it is qualified to famish
the services described under this agreement.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the Council of the City.
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be
of any force or effect, nor shall any.such oral agreement, understanding, or representation be binding upon the
parties hereto.
7. IMMIGRATION ACT OF 1986. Bond Counsel warrants on behalf of itself and all
subcontractors engaged for the performance of this work that only persons authorized to work in the United States
pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall be employed in the
performance of the work hereunder.
8. NON-DISCRIMINATION. In the performance of this work, Bond Counsel agrees that it will
not engage in, nor permit such subcontractors as it may employ, to engage in discrimination in employment of
persons because of age,race, color, sex, national origin or ancestry, sexual orientation, or religion of such persons.
9. WORK DELAYS. Should Bond Counsel be obstructed or delayed in the work required to be
done hereunder by changes in the work or by any default, act, or omission of the City, or by strikes, fire,
earthquake, or any other Act of God, or by the inability to obtain materials, equipment, or labor due to federal
government restrictions arising out of defense or war programs, then the time of completion may, at the City's
sole option, be extended for such periods as may be agreed upon by the City and Bond Counsel. In the event
that there is insufficient time to grant such extensions prior to the completion date of the contract, the City may,
at the time of acceptance of the work, waive liquidated damages which may have accrued for failure to complete
on time, due to any of the above, after hearing evidence as to the reasons for such delay, and making a finding
as to the causes of same.
10. INTERESTS OF BOND COUNSEL. Bond Counsel covenants that it presently has no interest,
and shall not acquire any interest direct or indirect or otherwise, which would conflict in any manner or degree
with the performance of the work hereunder. Bond Counsel further covenants that, in the performance of this
work, no subcontractor or person having such an interest shall be employed. Bond Counsel certifies that no one
who has or will have any financial interest in performing this work is an officer or employee of the City. It is
hereby expressly agreed that, in the performance of the work hereunder, Bond Counsel shall at all times be
deemed an independent contractor and not an agent or employee of the City.
11. HOLD HARMLESS AND INDEMNIFICATION. Bond Counsel agrees to defend, indemnify,
protect and hold the City and its agents, officers and employees harmless from and against any and all claims
asserted or liability established for damages or injuries to any person or property, including injury to Bond
Counsel employees, agents or officers which arise from or are connected with or are caused or claimed to be
caused by the acts or omissions of Bond Counsel, and its agents, officers or employees, in performing the work
or services herein, and all expenses of investigating and defending against same; provided, however, that Bond
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Counsel's duty to indemnify and hold harmless shall not include any claims or liability arising from the
established sole negligence or willful misconduct of the City, its agents, officers or employees.
12. CONTRACT ASSIGNMENT. Bond Counsel shall not assign, transfer, convey or otherwise
dispose of the contract, or its right, title or interest, or its power to execute such a contract to any individual or
business entity of any kind without the previous written consent of the City.
13. TERMINATION. If, during the term of the contract, the City determines that Bond Counsel
is not faithfully abiding by any term or condition contained herein, the City may notify Bond Counsel in writing
of such defect or failure to perform; which notice must give Bond Counsel a 10 (ten) calendar day notice of time
thereafter in which to perform said work or cure the deficiency. If Bond Counsel has not performed the work
or cured the deficiency within the ten days specified in the notice, such shall constitute a breach of the contract
and the City may terminate the contract immediately by written notice to Bond Counsel to said effect. Thereafter,
neither party shall have any further duties, obligations, responsibilities, or rights under the contract except,
however, any and all obligations of Bond Counsel's surety shall remain in full force and effect, and shall not be
extinguished, reduced, or in any manner waived by the termination thereof. In said event, Bond Counsel shall
be entitled to the reasonable value of its services performed from the beginning date in which the breach occurs
up to the day it received the City's Notice of Termination, minus any offset from such payment representing the
City's damages from such breach. "Reasonable value" includes fees or charges for goods or services as of the
last milestone or task satisfactorily delivered or completed by Bond Counsel as may be set forth in the Agreement
payment schedule; compensation for any other work, services or goods performed or provided by Bond Counsel
shall be based solely on the City's assessment of the value of the work-in-progress in completing the overall
workscope. The City reserves the right to delay any such payment until completion or confirmed abandonment
of the project, as may be determined in the City's sole discretion, so as to permit a full and complete accounting
of costs. In no event, however, shall Bond Counsel be entitled to receive in excess of the compensation quoted
in its proposal.
14. INSPECTION. Bond Counsel shall fumish City with every reasonable opportunity for City
to ascertain that the services of Bond Counsel are being performed in accordance with the requirements and
intentions of this agreement. All work done and all materials furnished, if any, shall be subject to the City
Program Manager's inspection and approval. The inspection of such work shall not relieve Bond Counsel of any
of its obligations to fulfill its agreements as prescribed.
15. INSURANCE. Bond Counsel shall provide proof of insurance in accordance with Insurance
Requirements as described in Exhibit B attached hereto and incorporated herein by reference.
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15. WAIVERS. Tho waiver by either party of any breech or violation of arty IM ooveaer-
eortditiat of this agreemaat or by any provWoa, oediaanoe, or law 3111111 not be deemod to be a waiver of _.4
suhspcM breach or violation of the came or of any other term, aovenaat, condition, ordieanoe, or law. ?he
subsequent acceptance by either party of any the or borer money wWch may become due heteuodw shall not be
deemed to be a walYef of any preoediag Wretch or violation by the other party of nor terms, wMant or
toudltim of dila epfeematt or of any applicable law or ordinance.
17. CON'S AND ATTORNEY'S FEES. 71m proal ft party in arty action between the parties
of dill aw mnent brouSht to caftee the terms of this greemom or arising out of thla agreement may recover Its
reasonable costa and anommy's lbes expended In oe antlon with such action fiom the other parey.
18. NOTICE. Ali written actives to the parties hetet shall be sent by United Staten Mail, postage
prepaid by reglaWW or comMed mall addressed as follows:
City City Clark
City of Sen Luh Oblapo
990 Palm $erect
San Lull Obispo, CA 93401
Boad Comaul Mr. Cherries F. Adams, Vice President
Janes, Hall, HW a White
Four Ernbaroadero Canter, Suite 1930
San Fmcisoo, CA 94111
19. AUTHORMY TO EXECCTS AORIEMR". Both City and Bond Counsel do covenant that
each Individual mwut ng this elpemew on behalf of each party IS a person duly eutheflaW and empowered to
eeeoute Agreements for such perry.
IN WITNESS WHEREOF, die p11961 hereto have GW9d this Instrument to be minuted the day and your
Brat chore written.
A r MT. ' CITY OF SAN LUIS OBISPO;
A Municipal Corporation
City Cleric By:
Mayor
Allen Settle
APPROVED AS TO FORM: BOND COUN M
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EXHIBIT A
BOND COUNSEL SERVICES AGREEMENT WORKSCOPE
As specified in the Agreement, Jones, Hall, Hill & White, is to provide bond counsel services related to debt
issuances by the City. These services are to include but not be limited to the following:
A. Examining the applicable law relating to the financing to be accomplished from the proceeds of the
financing (Bonds).
B. Preparing all legal proceedings deemed necessary or advisable by Attorneys for the authorization and
delivery of the Bonds and related documentation, including but not limited to preparing:
I. Any necessary site lease, lease agreement, trust agreement and assignment agreement
(collectively, the "Financing Agreements").
2. All resolutions adopting and authorizing the execution of the Financing Agreements and the
execution, sale and delivery of the Bonds.
3. Necessary notices of the sale of the Bonds required in connection with any competitive sale
thereof.
4. All necessary California Debt Advisory Commission filings and other reports and documents
required to be filed by the City in connection with the financing of the project.
5. All documentation initially required to organize any authority required to be formed in
connection with the financing.
6. All certification, deeds, requisitions, receipts and other documents required in connection with
the delivery of the Bonds to the original purchaser thereof.
7. All other proceedings of the City incidental to or in connection with the issuance, sale and
delivery of the Bonds.
C. Attending all meetings requested by City staff to discuss the financing of the project or at which official
action will be taken by the City Council on the debt financing.
D. Applying to the Internal Revenue Service for any rulings deemed necessary by Bond Council (but only
following consultation with and approval by the City) to assure tax-exempt status of the interest
represented by the Bonds.
E. Advising the City as to the need to register the Bonds under applicable federal securities laws or to
obtain a permit to deliver the Bonds under applicable State of California securities laws, or to obtain no-
action letters or similar determinations from the Securities Exchange Commission or California
Corporations Commission.
F. Examining any Official Statement or other offering document prepared by an underwriter or financial
advisor selected by the City, but only as to the sufficient description therein of the Bonds and the
financing documents. Bond Counsel has no responsibility to undertake any independent investigation
with respect to other matters described in such official statement or offering document.
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G. Subject to the completion of proceedings to the satisfaction of Bond Counsel, providing a legal opinion
approving the validity of the Financing Agreements and the execution and delivery of the Bonds, and
stating that interest represented by the Bonds is exempt from federal and State of California personal
income taxation. Such opinion will be addressed to the City but will inure to the benefit of the owners
of the Bonds, and Bond Counsel may execute letters to other interested parties entitling such parties to
rely upon such opinion. In addition, subject to the completion of proceedings to the satisfaction of Bond
Counsel, they shall provide such additional legal opinions to the City,the original purchaser of the Bonds
and other interested parties as shall be requested of and deemed appropriate by Bond Counsel. Any
opinion delivered by Bond Counsel in connection with the financing of the project may be subject to
such qualifications as may be customary or required by applicable federal or State of California law.
H. Advising the City concerning the Financing Agreements, the Bonds and any resolutions, certificates,
agreements and other documents relating to the authorization and delivery of the Bonds at any time
following original delivery of the Bonds.
I. Providing such other services as are customarily performed by special legal counsel on similar tax-
exempt financings.
Bond Counsel has no responsibility to advise the City with respect to legal requirements applicable to the
construction of any project, including but not limited to compliance with public bidding requirements, payment
of prevailing wages and other matters incident to the contract for such construction, which matters shall be
exclusively the responsibility of the City Attorney or other counsel to the City.
EXHIBIT B
INSURANCE REQUIREMENTS
The Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to
persons or damages to property which may arise from or in connection with the performance of the work hereunder
by the Consultant, its agents, representatives, employees, or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability,code I (any
auto).
3. Workers' Compensation insurance as required by the State of California and Employer's Liability
Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance. Consultant shall maintain limits no less than:
1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If
Commercial General Liability or other form with a general aggregate limit is used, either the general
aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice
the required occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $1,000,000 per occurrence.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and
approved by the City. At the option of the City, either: the insurer shall reduce or eliminate such deductibles or
self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Consultant shall
procure a bond guaranteeing payment of losses and related investigations, claim administration and defense
expenses.
Other Insurance Provisions. The general liability and automobile liability policies are to contain,or be endorsed
to contain, the following provisions:
1. The City, its officers,officials,employees, agents and volunteers are to be covered as insureds as respects:
liability arising out of activities performed by or on behalf of the Consultant; products and completed
operations of the Consultant;premises owned,occupied or used by the Consultant;or automobiles owned,
leased,hired or borrowed by the Consultant. The coverage shall contain no special limitations on the scope
of protection afforded to the City, its officers, official, employees, agents or volunteers.
2. For any claims related to this project, the Consultant's insurance coverage shall be primary insurance as
respects the City,its officers,officials,employees,agents and volunteers. Any insurance or self-insurance
maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of the
Consultant's insurance and shall not contribute with it.
3. Any failure to comply with reporting or other provisions of the policies including breaches of warranties
shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers.
4. The Consultant's insurance shall apply separately to each insured against whom claim is made or suit is
brought, except with respect to the limits of the insurer's liability.
5. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be
suspended, voided,cancelled by either party, reduced in coverage or in limits except after thirty(30)days'
prior written notice by certified mail, return receipt requested, has been given to the City.
Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M.Best's rating of no less than
A:VII.
Verification of Coverage. Consultant shall furnish the City with a certificate of insurance showing maintenance
of the required insurance coverage. Original endorsements effecting general liability and automobile liability
coverage required by this clause must also be provided. The endorsements are to be signed by a person authorized
by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by the City before
work commences.
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