HomeMy WebLinkAboutPSA - H.J. Umbaugh & Assoc - Circuit Breaker Property Tax Revenue AnalysisMr. John H. Murphy, Controller
Re: City. of South Bend (Indiana) Proposed Financial Advisory Services Related to Circuit Breaker Analysis
June 13, 2017
Page 2
Accountants' Oninion
In performing our engagement, we will be relying on the accuracy and reliability of information provided
by Client personnel. The services provided may include financial advisory services, consulting services,
and accounting report services such as compilation, preparation, and agreed upon procedures reports.
Please see Exhibit A. 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 procedures we perform in our engagement will be heavily influenced by the representations that we
receive from Client personnel. Accordingly, false representations could cause material errors to go
undetected. The Client, therefore, agrees to indemnify and hold us harmless for any liability and all
reasonable costs (including legal fees) that we may incur in connection with claims based upon out failure
to detect material errors resulting from false representations made to us by any Client personnel and our
failure to provide an acceptable level of service due to those false representations.
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 Responsibilities
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 Firm. 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 Finn'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-Verify 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).
z
TI
Exhibit A
Services Provided
Scope of Services
Below are the proposed scope of services the Firm will provide to the Client related to a Circuit Breaker
Analysis. The scope of services below will be limited to the following Allocation Areas of the
Redevelopment Commission and Funds of the City, as directed by the Client.
Allocation Areas
• River West (Airport) TIF District
+► West Washington TIF District
• River East (Northeast) TIF District
• Southside TIF District #1
• River East (NE Residential) TIF
City Funds
• General Fund
• Parks & Recreation
• College Football Hall of Fame
• Cumulative Capital Development
1. As warranted to provide a framework, the Firm will prepare a brief summary of the history of the
Circuit Breaker, how it functions in Indiana, and the drivers involved that influence the level of
Circuit Breaker credits generated.
2. The Firm will obtain historical data related to the Client. Such data will include historical
budgets, levies, tax rates, financial results of the Client and level of Circuit Breaker impacts.
3. The Firm will obtain from the Client current budget information, as well as prospective
information, on any anticipated changes in operational, capital or debt service requirements over
the next five years.
4. The Firm will obtain information, as available, related to any significant changes in anticipated
levies for overlapping taxing units that the Client shares tax base.
5. Based on information gathered, the Firm will develop assumptions related to estimated changes
over the next five years in tax base, tax levies and tax credits and discuss with the Client for
consensus.
6. The Firm will then provide a summary of assumptions to Policy Analytics and work with Policy
Analytics to generate a parcel -by -parcel analysis of the estimated Circuit Breaker credits related
to the Client over the next five years.
7. The Firm will analyze the results of the parcel -by -parcel calculation from Policy Analytics and
develop a report reflecting the estimated levies, Circuit Breaker credits and net levies for the
Client through budget year 2021.
8. The Firm will rneet with the Client as needed to present the results of the analysis and answer
questions.
Exhibit B
Fees
For the services set forth in Exhibit A, the Firm's fees shall be billed at the Firm's standard billing rates
based upon the actual time and expense incurred, in an amount that will not exceed an average of Seven
Thousand Five Hundred Dollars ($7,500) per each Tax Increment Allocation Area reflected on Exhibit A
per the Client's direction and not to exceed Six Thousand Five Hundred Dollars ($6,500) for the Civil
City Funds reflected on Exhibit A.
Standard Hourly Rates by Jab Classification
1/1/2017
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 with the exception of expenses incurred
for mileage which will be billed on a separate line item. No such expenses with the exception of mileage
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 6-42 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 4Mterest — 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 Finn 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.
I. Compensation -Based Conflicts. The fees due under this Agreement are based on hourly fees of the
Finn'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.
If. 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 limited 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 Regarding Legal 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.
Exhibit C
Disclosure Statement of Municipal Advisor cont'd
I. Material Legal or Disciplinary Event. There are no legal or disciplinary events that are material to
Client's evaluation of the Him or the integrity of the Firm's management or advisory personnel
disclosed, or that should be disclosed, on any Form MA or Form MA -I filed with the SEC.
11. Form MA -I Filings. The Firm's most recent Form MA and each
How to cress Form MA and,
most recent Form MA -I filed with the SEC are available on the SEC's EDGAR system at
htt ://www.sec. ov/c i-bin/browse-ed ar?action--etcom an &CIK 0001610268.
III Most Recent Change _in- Legal or Disciplinarry, Event Disclosure. The Firm has not made any
material legal or disciplinary event disclosures on Form MA or any Form MA -I 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 term of the Agreement.
A
m