HomeMy WebLinkAboutProfessional Services Agreement - HJ Umbaugh & Associates - Municipal Stormwater Utility Financial Advisory Services1316 Coum'Y-Cri'y BUILDING
227 W. JEFFERSON BOULEVAIM
SOUTH REND. INDIANA 46601-1830
CITY OF SOUTH BEND PETE BUTTIGIEG, MAY
Boit r
-
September 25, 2018
John Julien
H.J. Umbaugh & Associates
112 lronworks, Avenue, Suite C
Mishawaka, IN 46544
RE: Professional Services Agreement
Dear Mr. Julien:
lljmi574/235-9251
FAX 574/ 235-9171
The Board of Public Works, at its meeting held on September 25, 2018, approved the above
referenced agreement regarding municipal stormwater utility financial advisory services for
the 2018 rate study in the amount of $20,000.
Enclosed please find a copy of the agreement for your records.
If you have any further questions regarding this matter, please call this office at (574) 235-
925 1.
Sincerely,
Linda M. Martin, Clerk
Enclosure
GARY A. GILOT SUZANNA M. FRITZBEiw BRABE,"i,ii A, MARADIK JAWS �,s' A, MUE'l-J,ER TI&RE-M J. DORAU
tJM1,0,,:111UGH
1-1. J. Llmbemgh & Assochites
Cui flfird Flul)lic Accminfatwi, LLP
112 1ronWorks Avenue
Suite C August 10, 2018
W,haviaka, IN 4654d
Phone; 574-935-51.78
Fax: 574-935-5928
,mm,urnbaugh.com
Mr. Eric C. Horvath, Director
Department of Public Works
City of South Bend
227 West Jefferson Boulevard, Suite 1300 N
South Bend, Indiana 46601
Re: South Bend (Indiana) Municipal Stormwater Utility — Proposed Financial Advisory and Accounting
Services — 2018 Rate Study
Dear Eric:
Thankyou for requesting that H. J. Umbaugh & Associates, Certified Public Accountants, LLP (the "Firm")
provide to the City of South Bend (the "Client") those services more fully set forth in Exhibit A hereto (the
"Services"),
Fees and Costs
Fees charged for work performed are generally based on hourly rates, as set forth in Exhibit B, for the time
expended, a fixed amount or other arrangement as mutually agreed upon as more appropriate for a particular
matter. Hourly rates for work performed by our professionals vary by individual and reflect the complexity
of the engagement.
Disclosure of Conflicts of Interest with Various Forms of Compensation
The Municipal Securities Rulemaking Board (MSRB) requires us, as your municipal advisor, to provide
written disclosure to you about the actual or potential conflicts of interest presented by various forms of
compensation. Exhibit C sets forth the potential conflicts of interest associated with various forms of compensation.
By signing this letter of engagement, the signee acknowledges that he/she has received Exhibit C and that
he/she has been given the opportunity to raise questions and discuss the matters contained within the exhibit
with the municipal advisor.
Billing Procedures
Normally, you will receive a monthly statement showing fees and costs incurred in the prior month.
Occasionally, we may bill on a less frequent basis if the time involved in the prior month was minimal or
if arrangements are made for the payment of fees from bond proceeds. 'file account balance is due and
payable on receipt of the statement. Once our representation has been concluded or terminated, a final
billing will be sent to you. If requested to provide an estimate of our fees for a given matter, we will endeavor
in good faith to provide our best estimate, but unless there is a mutual agreement to a fixed fee, the actual
fees incurred on any project may be less than or exceed the estimate. Any questions or errors in any fee
statement should be brought to our attention in writing within sixty (60) days of the billing date.
Termination
Both the Client and the Firm have the right to terminate the engagement at any time after reasonable advance
written notice. Oil termination, all fees and charges incurred prior to termination shall be paid promptly.
Unless otherwise agreed to by the Client and the Firm, the scope of services provided in Exhibit A will
terminate 60 days after completion of the services in each Article.
Mr. Eric C. Horvath, Director
Re: South Bend (Indiana) Municipal Stormwater Utility— Proposed Financial Advisory and Accounting
Services — 2018 Rate Study
August 10, 2018
Page 2
Accountants' Ooinion
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 and Exhibit D. 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 our 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 Resnonsibilitics
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 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-Verify Prpopram
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).
Exhibit A
Services Provided
Scone of Services
The Firm agrees to furnish and perform the following services with respect to the accounting studies
conducted for the Stormwater Utility and the development of user fees estimated to be adequate to provide
for the necessary revenue requirements.
Article I. Analysis. of Costs and Revenues (Rate Analysis) iMuni.ciyal Advisory, Consulting and
Compilation Accounting Services)
A. Compile from available records historical financial information relevant to the
establishment of rates and charges.
E. Obtain information from Utility officials, engineers and/or other available sources to
suggest adjustments to historical operating expenses such as additional labor, power
costs, chemical costs, additional taxes and other fixed, known and measurable expense
changes.
C. Assist in the development of a capital improvements program and a financial program
leading to the obtaining of funds necessary to meet the capital improvement
requirements through funds now available and/or future revenues of the system.
D. Provide alternative estimates of future annual revenue requirements for consideration
by the Utility.
E. Assist in the development of a database of stormwater customers organized by user
class.
F. Assist in the development of definitions of proposed user classes to be serviced by the
Utility.
G. Develop appropriate rates and charges for the Utility that generate sufficient revenue
to fund the Utility's operations and capital improvement plan.
H. Prepare comparative information concerning the present and possible future rate
structure of the Utility in comparison with other stormwater utilities in Indiana.
Meet with the officials of the Utility to discuss findings and recommendations.
Provide financial information to the Utility's attorney for the preparation of a rate
ordinance (if a rate change is necessary).
K. Prepare a report summarizing the results of the Firm's studies for submission to the
Utility.
L. Attend a public hearing to be conducted by the Utility in order to present accounting
information relating to the proposed rates and charges (ifa rate change is necessary).
Exhibit B
Fees
For services provided as set forth in Exhibit A, the Firm's fees will be billed at the Firm's standard billing
rates based upon the actual time and expenses incurred in an amount not to exceed Twenty Thousand
Dollars ($20,000), without further authorization from the Client.
Standard Hourly Rates by Job Classification
1/1/2018 - - -
Partners / Principals
$240.00
to
$550.00
Managers
$200.00
to
$325.00
Senior Consultants
$150.00
to
$250.00
Consultants
$135.00
to
$200.00
Municipal Bond Disclosure Specialists
$120.00
to
$I90.00
Support Personnel
$110.00
to
$150.00
Interns
$90.00
to
$110.00
• 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 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 Interest -- 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.
I. Affiliate Conflict. UCAS, an affiliate of the Firm (the "Affiliate"), has or is expected to provide
certain advice to or on behalf of Client that is directly related to the Firm's activities within the Scope
of Services under this Agreement. In particular, providing advice to Client regarding investment of
bond proceeds. The Affiliate's business with Client could create an incentive for the Firm to
recommend to Client a course of action designed to increase the level of Client's business activities
with the Affiliate or to recommend against a course of action that would reduce or eliminate Client's
business activities with the Affiliate. Furthermore, this potential conflict is mitigated by the fact that
the Affiliate is subject to its own comprehensive regulatory regime as a registered investment adviser
with the Securities and Exchange Commission under the federal Investment Advisers Act.
H. 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.
M. 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.
Exhibit C
Disclosure Statement of Munici al Advisor Cont'd.
PART B — Disclosures of Information Regarding Legal Events and Disciplinary Histo
MSRB Rule G-42 requires that municipal advisors provide totheir 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 Finn 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 Firm 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.
H. How to Access Form MA and Form MA -I Filin s. The Firm's most recent Form MA and each
most recent Form MA-1 filed with the SEC are available on the SEC's EDGAR system at
http://www.sec.goy/c i-bin/browse-edgar?action-getcompany&CIK=000161026&
III. Most Recent Chance in Leeal or Disciplinary Event Disclosure. The Firm has not made any
material legal or disciplinary event disclosures on Form MA or any Form MA-1 filed with the SEC.
PART C -- Future Sunplemental 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 avai table throughout the term of the Agreement.
PART D -- Rule G-10: Investor and Municipal Advisory Client Education and Protection
MSRB Rule G-10 requires that municipal advisors to notify their clients of the availability of client brochure
on the MSRB's website that provides information on the processes for filing a client complaint.
Accordingly, the Firm sets out below the required information.
I. The Finn is registered as a Municipal Advisor with the Securities and Exchange Commission (867-
00278) and the Municipal Securities Rulemaking Board (K0171).
II. The website address for the Municipal Securities Rulemaking Board is www.msrb.org,
M. The website for the Municipal Securities Rulemaking Board has a link to a brochure that describes
(i) the protections that may be provided by the Municipal Securities Rulemaking Board rules and (ii)
describes how to file a complaint with an appropriate regulatory authority.
Exhibit D
Compilation Accounting Services
Compilation of Historical Financial Statements
Our Responsibilities:
The objective of our engagement is to apply accounting and financial reporting expertise to assist you in
the presentation of financial statements without undertaking to obtain or provide any assurance that there
are no material modifications that should be made to the financial statements in order for them to be in
accordance with accounting principles generally accepted in the United States of America or the cash basis
of accounting based on information provided by you.
We will conduct our compilation engagement in accordance with the Statements on Standards for
Accounting and Review Services (SSARS) promulgated by the Accounting and Review Services
Committee of the AICPA and comply with the AICPA's Code of Professional Conduct, including the ethical
principles of integrity, objectivity, professional competence, and due care when performing the compilation
engagement.
We are not required to, and will not, verify the accuracy or completeness of the information you will provide
to us for the engagement or otherwise gather evidence for the purpose of expressing an opinion or a
conclusion. Accordingly, we will not express an opinion or a conclusion nor provide any assurance on the
financial statements.
Our engagement cannot be relied upon to identify or disclose any financial statement misstatements,
including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or
noncompliance with laws and regulations.
We in our sole professional judgement, reserve the right to refuse any procedure or take any action that
could be construed as assuming management responsibilities.
Your Responsibilities:
The engagement to be performed is conducted on the basis that you acknowledge and understand that our
role is to assist you in the presentation of the financial statements in accordance with accounting principles
generally accepted in the United States of America or with the cash basis of accounting. You have the
following overall responsibilities that are fundamental to our undertaking the engagement in accordance
with SSARS:
1. The selection of the cash basis of accounting or accounting principles generally accepted in the
United States of America as the financial reporting framework to be applied in the preparation
of the financial statements.
2. The preparation and fair presentation of financial statements in accordance with the cash basis
of accounting or accounting principles generally accepted in the United States of America.
The election to omit substantially all disclosures normally included in the financial statements
in accordance with the cash basis of accounting or accounting principles generally accepted in
the United States of America.
Exhibit D
(Cont'd.)
Compilation Accounting Services
The design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of the financial statements.
The prevention and detection of fraud.
To ensure that the Client complies with the laws and regulations applicable to its activities.
7. The accuracy and completeness of the records, documents, explanations, and other information,
including significant judgments, you provide to us for the engagement.
8. To provide us with —
® access to all information of which you are aware is relevant to the preparation and fair
presentation of the financial statements, such as records, documentation, and other
matters.
additional information that we may request from you for the purpose of the compilation
engagement.
• unrestricted access to persons within the Client of whom we determine it necessary to
make inquiries.
You are also responsible for all management decisions and responsibilities and for designating an individual
with suitable skills, knowledge, and experience to oversee our compilation of your financial statements.
You are also responsible for evaluating the adequacy and results of the services performed and accepting
responsibility for such services.
Our Report:
As part of our engagement, we will issue a report that will state that we did not audit or review the financial
statements and that, accordingly, we do not express an opinion, a conclusion, nor provide any assurance on
them. If, for any reason, we are unable to complete the compilation of your financial statements, we will
not issue a report on such statements as a result of this engagement.
You agree to include our accountant's compilation report in any document containing financial statements
that indicates that we have performed a compilation engagement on such financial statements and, prior to
the inclusion of the report, to ask our permission to do so.
Mr. Eric C. Horvath, Director
Re: South Bend (Indiana) Municipal Stormwater Utility — Proposed Financial Advisory and Accounting
Services — 2018 Rate Study
August 10, 2018
Page 4
If you have any questions, please let us know. We appreciate this opportunity to be of service to you and
the City.
Very truly yours,
H.J. Urnbaugh & Associates
Certified Public Accountants, LLP
Julien, Partner
The undersigned hereby acknowledges and agrees to the foregoing letter of engagement,
City of South Bend, Indiana
Date: By:, Al-TUO'V91)
Mr. Eric C. Horvath, Director
Re: South Bend (Indiana) Municipal Stormwater Utility — Proposed Financial Advisory and Accounting
Services — 2018 Rate Study
August 10, 2018
Page 3
Investments
The Firm certifies that pursuant to Indiana Code 5-22-1 b.5 e! seq, the Firm is not now engaged in investment
activities in Iran. The Firm understands that providing a false certification could result in the fines, penalties,
and civil action listed in I.C. 5-22-16.5-14.
Municipal Advisor Reaistration
The Firm is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal
Securities Rulemaking Board. As such, the Firm is providing certain specific municipal advisory services
to the Client. The Firm is neither a placement agent to the Client nor a broker/dealer.
The offer and sale of any Bonds shall be made by the Client, in the sole discretion of the Client, and under its
control and supervision. The Client agrees that the Firm does not undertake to sell or attempt to sell the Bonds,
and will take no part in the sale thereof.
Mediation Provision
The CI ient and the Firm agree that if any dispute (other than our efforts to collect any outstanding invoice(s))
arises out of or relates to this engagement, or any prior engagement we may have performed for you, and
if the dispute cannot be settled through informal negotiation, the parties agree first to try in good faith to
settle the dispute by mediation administered by the American Arbitration Association under its Commercial
Mediation Procedures (or such other administrator or rules as the parties may mutually agree) before
resorting to litigation. The parties agree to engage in the mediation process in good faith once a written
request to mediate has been given by any party to the engagement. Any mediation initiated as a result of
this engagement shall take place in Mishawaka, Indiana, or such other location as the parties may mutually
agree. If the parties are unable to mutually agree on the selection of a mediator, the mediator shall be
determined in accordance with the American Arbitration Association's Commercial Mediation Procedures.
The results of any such mediation shall be binding only upon a written settlement agreement executed by
each party to be bound. Each party shall bear its own costs and fees, including attorneys' fees and expenses,
in connection with the mediation. The costs of the mediation, including without limitation the mediator's
fees and expenses, shall be shared equally by the participating parties. Any ensuing litigation shall be
initiated and maintained exclusively before any state or federal court having appropriate subject matter
jurisdiction located in Mishawaka, Indiana.
Other Financial Industry Activities and Affiliations
Umbaugh Cash Advisory Services, LLC ("UCAS") is a wholly -owned subsidiary of the Firm. UCAS is
registered as an investment adviser with the Securities and Exchange Commission under the federal Investment
Advisers Act. UCAS provides non -discretionary investment advice with the purpose of helping clients
create and maintain a disciplined approach to investing their funds prudently and effectively. UCAS may
provide advisory services to the clients of the Firm.
UCAS has no other activities or arrangements that are material to its advisory business or its clients with a
related person who is a broker -dealer, an investment company, other investment adviser or financial planner,
bank, law firm or other financial entity.
If the foregoing accurately represents the basis upon which we may provide Services to the Client, we ask
that you execute this letter, in the space provided below setting forth your agreement. Execution of this
letter can be performed in counterparts each of which will be deemed an original and all of which together
will constitute the same document.
BOARD OF PUBLIC WORI(S
AGENDA ITEM REVIEW REQUEST FORM
Date
Name
BPW Date
Legal
Controller ❑
Purchasing ❑
HAgreement Amendment
Professional Services
Bid Opening
F-1 Quote Opening
R Change Order No,
F-1 Ease/Encroach.
F-1 Other:
Company or Vendor Name
Department
Division/Bureau po
. . . .........
Phone Extension . . . . . .... . .
Attorney Name:
Controller review is required for all Contracts $5,000.00 or more and
greater than one year in length per the City Purchasing Policy
L] Contract
F-1 Resolution
F-1 Bid Award
F-1 Quote Award
❑C/O & PCA No
Traffic Control:
New Vendor -
MBE/ VBE Contractor
MBEIWBE Contractor Requeste(
Project Name
Project Number
Funding Source
Account No.
Amount
Terms of Contract
Purpose/Description
Yes [>14N
E:1 Req. to Advertise
F-1 PGA.
001110ri
El Title Sheet
If Yes, Approved by
LJ'Require O Contractor's Certification Forms Attached (Non -
Collusion, Non -Discrimination, Non -Debarment, E-Verify, Iran, etc.)
Amount of E] increase $
[:] Decrease $
Previous Amount
Current Percent of Change
New Amount
Total Percent of Chanqe-.
Copy
Original
1:1
❑
F-1
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