HomeMy WebLinkAboutPSA - HJ Umbaugh & Assoc. - Review of Continuing Disclosures on Bonds1. w
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Mr. John H. Murphy, Controller
City of South Bend
Re: Continuing Disclosure Services
April 21, 2017
Page 2
Termination
Both the Client and the Firin have the right to terminate the engagement at any tune after reasonable
advance written notice. On tennination, all fees and charges incurred prior to termination shall be paid
promptly.
Accountants' Ouinion
In performing our engagement, we will be relying on the accuracy and reliability of information provided
by Client personnel. We will not audit, review, or examine the information. Please also note that our
engagement cannot be relied on to disclose errors, fraud, or other illegal acts that may exist. However, we
will inform you of any material errors and any evidence or information that comes to our attention during
the performance of our procedures that fraud may have occurred. In addition, we will report to you any
evidence or information that comes to our attention during the performance of our procedures regarding
illegal acts that may have occurred, unless they are clearly inconsequential. We have no responsibility to
identify and communicate significant deficiencies or material weaknesses in your internal control as part
of this engagement.
The responsibility for auditing the records of the Client rests with the Indiana State Board of Accounts
and the work performed by the Firm shall not include an audit or review of the records or the expression
of an opinion on financial data.
Client Resnonsibilities
It is understood that the Firm will serve in an advisory capacity with the Client. The Client is responsible
for management decisions and functions, and for designating an individual with suitable skill, knowledge
or experience to oversee the services we provide. The Client is responsible for evaluating adequacy and
results of the services performed and accepting responsibility for such services. The Client is responsible
for establishing and maintaining internal controls, including monitoring ongoing activities.
Additional Services
Exhibit A sets forth the scope of the Services to be provided by the Film. From time to time, additional
services may be requested by the Client beyond the scope of Exhibit A. The Firm may provide these
additional services and be paid at the Firm's customary fees and costs for such services. In the
alternative, the Firm and the Client may complete a revised and supplemented Exhibit A to set forth the
additional services (including revised fees and costs, as needed) to be provided. In either event, the terms
and conditions of this letter shall remain in effect.
E-Verifv Program
The Firm participates in the E-Verify program. For the purpose of this paragraph, the E-Verify program
means the electronic verification of the work authorization program of the Illegal Immigration Reform
and immigration Responsibility Act of 1996 (P.L. 104-208), Division C, Title IV, s.401(a), as amended,
operated by the United States Department of Homeland Security or a successor work authorization
program designated by the United States Department of Homeland Security or other federal agency
authorized to verify the work authorization status of newly hired employees under the Immigration
Reform and Control Act of 1986 (P.L. 99-603). The Firm does not employ any "unauthorized aliens" as
that term is defined in 8 U.S.C. 1324a(h)(3).
Lj V
EXHIBIT A
Services Provided
Scope of Services
The Client has outstanding bond issues which are subject to the Securities and Exchange Commission
Rule 15c2-12 (the "Rule"). For bonds that are subject to the Rule, an issuer or another obligor on its
behalf, must enter into a continuing disclosure undertaking agreement or contract ("CDUA") before a
participating underwriter is able to purchase or sell the municipal securities. The Finn will assist the
Client with a review of their existing reporting obligations for the Bonds (as set forth on Exhibit A-1 and
A-2) under each CDUA related to one of the bond issues to determine compliance with the Rule.
Article I. Identifying in the Applicable Obligations Under Each CDUA
A. The Firm will assist in identifying the Client's reporting obligations as contained in
each CDUA.
i. The Client will provide an electronic or paper copy of the fully executed CDUA
and a copy of the Final Official Statement for each of the Bonds listed in Exhibit
A-1 and A-2.
ii. The Firm will identify and list reporting requirements listed in each CDUA and
Final Official Statement, including operating data as required under the CDUA,
audited financial and unaudited financial requirements (collectively, "CDUA
Reporting Requirement").
iii. The Firm will review the filings on Electronic Municipal Market Access
("EMMA") system and identify whether there are any deficiencies in meeting the
CDUA Reporting Requirement within a five year period.
Article 11, Identifying Disclosures of Any Deficiencies in Official Statements
A. The Firm will review all of the Client's official statements which have been utilized
to market any bonds subject to the Rule during the last five years to detennine if the
Client disclosed all deficiencies set forth in Article I or deficiencies cited in the
Client's Municipal Continuing Disclosure Compliance (MCDC) process.
B. The Firm will provide the Client with a list of any deficiencies which were not
disclosed. The list shall include:
• The official statement by bond issue, aggregate principal amount and date
of the official statement
• CDUA Reporting Requirement deficiencies that were not disclosed in each
official statement identified in IIA
Article III. Remedying Deficiencies for Outstanding Bonds
If a deficiency is found on any Bonds listed on Exhibit A-1 and Exhibit A-2 of the Firm's compliance
check, the Firm will prepare any necessary reporting or notices to meet the CDUA Reporting
Requirement obligations. The Client will review and approve the prepared reporting or notices. Once
approved by the Client, the Firm will file the documentation on the EMMA system. The Firm will
provide the Client with documentation that the EMMA filing has occurred.
EXHIBIT A-1
The Firm has been provided a detailed list of all outstanding bond(s) below which are subject to continuing
disclosure requirements and has verified these bonds should be included:
South Bend Redevelopment Authority
$31,450,000 Lease Rental Revenue Refunding Bonds of 2015 (Eddy Street Commons Project)
$25,000,000 Lease Rental Revenue Bonds of 2015
$3,990,000 Lease Rental Revenue Refunding Bonds, Series 2013 (Century Center Project)
$7,580,000 Taxable Lease Rental Revenue Refunding Bonds, Series 2011A
(College Football Hall of Fame Project)
$2,980,000 Lease Rental Revenue Refunding Bonds, Series 2011B (Century Center Project)
$7,210,000 Lease Rental Revenue Refunding Bonds of 2009 (Morris Performing Arts Center Project)
South Bend Redevelopment District
$3,440,000 Special Taxing District Refunding Bonds of 2014
$4,980,000 Taxable Revenue Bonds, Series 2010 (Recovery Zone Economic Development Bonds)
City of South Bend
$5,605,000 Economic Development Income Tax Bonds of 2015
$25,000,000 Sewage Works Revenue Bonds of 2012
$8,300,000 Waterworks Revenue Bonds of 2012
$21,500,000 Sewage Works Revenue Bonds of 2011
$9,345,000 Sewage Works Revenue Bonds of 2010
$3,910,000 County Economic Development Income Tax Refunding Revenue Bonds, Series 2006A
$3,530,000 Taxable County Economic Development Income Tax Refunding Revenue Bonds, Series 2006B
$4,710,000 Waterworks Revenue Bonds of 2006
$5,485,000 Taxable Economic Development Revenue Bonds, Series 2005A (Erskine Village Project)
City of South Bend Building Corporation
$5,580,000 First Mortgage Revenue Bonds, Series 2013
$13,595,000 First Mortgage Revenue Refunding Bonds, Series 2012
$6,075,000 County Option Income Tax Lease Rental Revenue Refunding Bonds of 2010
Indiana Bond Bank
$29,140,000 Special Program Refunding Bonds, Series 201 lA (South Bend TIF Districts)
City of South Bend
Date: By:
Title:
Date:
EXHIBIT A-2
Listed below are bonds which were outstanding during the past rive years and subject to continuing
disclosure requirements during a 5 year look back and are no longer outstanding:
South Bend Redevelopment Authority
$4,655,000 Lease Rental Revenue Bonds of 2008 (Century Center Project)
$36,000,000 Lease Rental Revenue Bonds of 2008 (Eddy Street Commons Project)
$6,825,000 Lease Rental Revenue Refunding and hnprovernent Bonds of 2001 (Century Center Project)
$15,370,000 Lease Rental Revenue Refunding Bonds of 2000 (College Football Hall of Fame Project)
$6,135,000 Lease Rental Revenue Refunding Bonds of 1998 (Blackthorn Golf Course Project)
$3,790,000 Lease Rental Revenue Refunding Bonds, Series 1996A
South Bend Redevelopment District
$6,620,000 Special Taxing District Bonds of 2002
City of South Bend
$16,515,000 Sewage Works Revenue Bonds of 2007B
$16,600,000 Sewage Works Revenue Bonds of 2007
$7,630,000 Sewage Works Revenue Bonds of 2006
$11,425,000 Sewage Works Revenue Bonds of 2004
$5,975,000 Waterworks Revenue Bonds of 2002
$22,500,000 Waterworks Revenue Bonds of 1997
City of South Bend Building Corporation
$21,335,000 First Mortgage Revenue Bonds, Series 2003
Indiana Bond Bank
$36,530,000 Special Program Bonds, Series 2003E (South Bend TIF Districts)
City of South Bend
Title:
Exhibit A-1, Exhibit A-2 and the engagement letter must be signed and returned to the Firm, as soon as
possible.
EXHIBIT B
Fees
The Firm's fees for services set forth in Exhibit A shall be billed at the Firm's standard billing rates based
upon the actual time and expenses incurred.
Standard Hourly Rates by Job Classification
01/01/2017
Partners / Principals $275.00 to $475.00
Managers $190.00 to $325.00
Consultants $130.00 to $250.00
Municipal Bond Disclosure Specialists $120,00 to $195.00
Support Personnel $105.00 to $150,00
• Billing rates are subject to change periodically due to changing requirements and economic
conditions. Actual fees will be based upon experience of the staff assigned and the complexity
of the engagement.
The above fees shall include all expenses incurred by the Firm. No such expenses will be incurred without
the prior authorization of the Client. The fees do not include the charges of other entities such as rating
agencies, bond and official statement printers, couriers, newspapers, bond insurance companies, bond
counsel and local counsel, and electronic bidding services, including Parity`'. Coordination of the
printing and distribution of Official Statements or any other Offering Document are to be reimbursed by
the Client based upon the time and expense for such services.
EXHIBIT C
Disclosure Statement of Municipal Advisor
PART A — Disclosures of Conflicts of Interest
MSRB Rule G-42 requires that municipal advisors provide to their clients disclosures relating to any
actual or potential material conflicts of interest, including certain categories of potential conflicts of
interest identified in Rule G-42, if applicable. If no such material conflicts of interest are known to exist
based on the exercise of reasonable diligence by the municipal advisor, municipal advisors are required to
provide a written statement to that effect.
Material Conflicts of 1'Mterest — The Firm makes the disclosures set forth below with respect to material
conflicts of interest in connection with the Scope of Services under this Agreement, together with
explanations of how the Firm addresses or intends to manage or mitigate each conflict.
General Mitigations — As general mitigations of the Firm's conflicts, with respect to all of the conflicts
disclosed below, the Firm mitigates such conflicts through its adherence to its fiduciary duty to Client,
which includes a duty of loyalty to Client in performing all municipal advisory activities for Client. This
duty of loyalty obligates the Firm to deal honestly and with the utmost good faith with Client and to act in
Client's best interests without regard to the Firm's financial or other interests. The disclosures below
describe, as applicable, any additional mitigations that may be relevant with respect to any specific
conflict disclosed below.
1. Compensation -Based Conflicts. The fees due under this Agreement are based on Dourly fees of the
Firm's 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 if Client and the Firm do not agree on a reasonable maximum amount at the outset of the
engagement, because the Firm does not have a financial incentive to recommend alternatives that
would result in fewer hours worked. This conflict of interest is mitigated by the general mitigations
described above.
lI. Other Municipal Advisor Relationships. The Firm 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 Client.
For example, the Firm 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 Client under this Agreement.
These other clients may, from time to time and depending on the specific circumstances, have
competing interests, such as accessing the new issue market with the most advantageous timing and
with lirnited competition at the time of the offering. In acting in the interests of its various clients, the
Firm could potentially face a conflict of interest arising from these competing client interests. This
conflict of interest is mitigated by the general mitigations described above.
PART B — Disclosures of Information Re ardin Le al Events and Disciplinary History
MSRB Rule G-42 requires that municipal advisors provide to their clients certain disclosures of legal or
disciplinary events material to its client's evaluation of the municipal advisor or the integrity of the
municipal advisor's management or advisory personnel.
Accordingly, the Firm sets out below required disclosures and related information in connection with
such disclosures.
1. Material Legal or Disciplinary Event. "There are no legal or disciplinary events that are material to
Client's evaluation of the Finn or the integrity of the Firm's management or advisory personnel
disclosed, or that should be disclosed, on any Fonn MA or Form MA-1 filed with the SEC.
11. How to Access Form MA and Form MA-1 Filings. The Firm's most recent Form MA and each
most recent Forn MA -I filed with the SEC are available on the SEC's EDGAR system at
htt ://www.scc. ov/c i-bin/browse-ed ar?action= etcgm an &CIK=0001610268.
III. Most Recent Change in Legal or Disciplinary -Event Disclosure. The Finn has not made any
material legal or disciplinary event disclosures on Farm MA or any Form MA-1 filed with the SEC.
PART C — Future Supplemental Disclosures
As required by MSRB Rule G-42, this Disclosure Statement may be supplemented or amended, from time
to time as needed, to reflect changed circumstances resulting in new conflicts of interest or changes in the
conflicts of interest described above, or to provide updated information with regard to any legal or
disciplinary events of the Firm. The Firm will provide Client with any such supplement or amendment as
it becomes available throughout the tern of the Agreement.
Article IV. Audit CUSIPs
Review all of the Base CUSIPs provided by the City and compare with the bond issues that are subject to
the Rule.
Article V. Report of the Findings of the Review
After the Firm has completed the review of the CDUA Reporting Requirements, the Firm will provide the
Client with a final report which outlines the Firm's findings and the remedial steps taken to address the
deficiencies in the CDUA Reporting Requirement.
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