HomeMy WebLinkAbout2009/05/26 Item 6TY COUNCIL
STATEMENT
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CHULA,VISTA
MAY 26, 2009, Item
ITEM TITLE: SOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHUI~A VISTA APPROVING THE AGREEMENT WITH
PUBLIC FINANCIAL MANAGEMENT, INC. TO PROVIDE
FINANCIAL ADVISORY SERVICES
SUBMITTED BY: DIRECTOR OF FIN E/TREASURERV
REVIEWED BY: CITY MANAGE
ASSISTANT CITY A
4/ST S VOTE: YES ~ NO ~X
SUbIMARY
Staff issued a Request for Proposal (RFP) for financial advisory services to assist in reviewing
outstanding debt obligations and address current cash flow shortfalls in the Public Facilities
Development Impact Fee Fund. The financial advisory firm would assist the City in identifying
refunding options in order to continue meeting debt obligations in an attempt to avoid adding
additional financial strain on the General Fund. Other options will also be provided in addition
to restructuring of existing debt in order to determine which direction would best meet the City's
long-term financial goals.
If approved, the Finance Director will work with the Financial Advisor to review the various
refunding options with the goal of bringing them forward for Council consideration in August.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with
the California Environmental Quality Act (CEQA) and has determined that the activity is not a
"Project" as defined under Section 15378 (b) (4) of the State CEQA Guidelines; therefore,
pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to
CEQA. Thus, no environmental review is necessary.
RECOMMENDATION
Council adopts the resolution.
BOARDS/COMMISSION RECOMMENDATION
Not Applicable.
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MAY 26, 2009
Page 2 of 4
DISCUSSION
On March 13, 2009, the City issued a Request for Proposal (RFP) for financial advisory services
following Municipal Code 2.56, Ordinance No. 2517 and Council Policy No. 102-OS in the
consultant services selection process. The RFP was advertised on-line in the Bond Buyer, a
national publication, and posted electronically on PlanetBids, a web-based vendor and bid
management system that is widely used by other local agencies. In addition, many financial
advisory firms were contacted directly and invited to participate in this process.
In total, five proposals from national and regional financial advisory firms were received, and all
five firms were interviewed. Only firms that are members of the National Association of
Independent Public Finance Advisors (NAIPFA) or are considered independent were considered.
NAIPFA is a professional organization limited to firms that specialize in providing financial
advice on bond sales and financial planning on public projects of public agencies. NAIPFA
member firms must be completely independent of the underwriting of municipal securities by
banks and securities dealers. Member firms must also be structured such that financial advice is
not incidental to any other service.
A three-member panel consisting of the City's Director of Finance, Assistant Director of Finance
and Treasury Manager was created for the selection process. The following criteria was. used in
the selection process:
• extensive experience in preparing long-term financial plans,
• extensive experience in structuring complex financings,
• experience of assigned Project Manager and staff,
• thorough understanding of the City's financial challenges as demonstrated by a
comprehensive analysis in the written proposal,
• pricing/costs.
All five firms who submitted a proposal were interviewed. The firms were Fieldman Rolapp &
Associates, Harrell & Company, K:NN Public Finance, Magis Advisors and Public Financial
Management, Inc. After a comprehensive evaluation process, the selection panel recommends
the contract be awarded to Public Financial Management, Inc. (PFM) as the City's financial
advisor. PFM is best suited to meet the City's needs as the firm has extensive experience in
restructuring debt, developing complex financing structures and preparing long term financial
strategies for municipalities in fiscal strain. They have developed complex multi-year financial
models for cities around the country, from Philadelphia to Long Beach, and are competitively
priced.
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MAY 26, 2009
Page 3 of 4
Total Scores by Firm
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PMF 48
KN N 42
Mag is 39
Fieldman & Rolapp 38
Harrell & Co. 37
Debt Restructuring
As part of the City's Long-Term Financial Planning process, all outstanding debt will be
reviewed for refunding opportunities .and for recommendations on how to mitigate the cash
shortfalls in development revenues normally applied to debt service payments.
Since 2000 the City has issued $143 million in debt used to fund several major capital projects
such as the new public works yard, police facility and the expansion of -the Civic Center. The
debt service payments for these capital projects are funded out of various sources such as the
General Fund, Residential Construction Fund and Development Impact Fee Funds.
The General Fund's annual debt service "commitment" is projected to be approximately $11.9
million, or approximately 7.9% of the projected General Fund operating budget for fiscal year
2008-09. Approximately $5.2 million was to be funded by Development Impact Fees but due to
the significant drop in development related revenues, the debt service payments will have to be
funded through inter-fund loans or a restructuring of existing debt until the current economic and
mortgage crisis passes and development returns to reasonable levels. As part of this financial
strategy, it is anticipated that debt restructuring of the 2000 and 2002 Certificates of
Participation, which funded the construction of the Public Works Yard and Police Facility, may
be a recommended course of action.
Debt Service Obligation
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., Ongmal ~ ~
~ssuane~ ~ "Oufsta_ndmg
_ Balance
,~ . -Term_ ,
~ fnferest
" .Rate
_ ached Annual.
FY 2006-09
_
1994 Pension Obligation Bonds $16,786,532 $8,820,000 18 years 8.45% $2,460,413
2000 COP- Public Works Yard $23,730,00 $17,735,000 20 years 5.14% $1,863,484
2002 COP -Police Facility $60,145,00 $56,660,000 30 years 4.93% $3,912,578
2004 COP -Civic Center Phase I $26,692,41 $25,570,676 30 years 4.65% $1,715,506
2004 COP- Infrastructure Improvements $10,547,58 $10,104,324 30 years 4.65% $677,887
2006 COP -Civic Center Phase II $18,155,000 $17,805,000 30 years 4.32% $1,106,345
2006 COP- Nature Center $2,170,00 $2,085,000 20 years 4.32% $166,154
Total $158,226,532 $138,780,000 $11,902,367
* As of June 30, 2008 audited financial statements.
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MAY 26, 2009
Page 4 of 4
DECISION MAI~R CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site
specific and consequently the 500 foot rule found in California Code of Regulations section
18704.2(a)(1) is not applicable to this decision.
FISCAL IMPACT
Current Year Impact
No fiscal impact to the General Fund in the current fiscal year.
On-Going impact
The financial advisor will provide services for determining the most appropriate refunding
structure. If Council elects to proceed with a debt restructuring, all costs of issuance, including
the cost of the financial advisor, underwriter, bond counsel and disclosure documents related to
bond refinancing/restructuring will be paid from the bond proceeds and will be dependent on the
bond sizing and negotiated terms. Advisory services provided are a component of analyzing
whether the bond restructuring is the most feasible option and are only paid for if the City
chooses to restructure the debt.
The long-term fiscal impacts to the City related to a restructuring/refunding will vary depending
on the terms of the restructuring and the market conditions at the time of the refunding. A
complete analysis will be provided once the various options are considered.
ATTACHMENTS
A. Pricing Sheet
B. 2 Party Agreement
Prepared by: Nadine Mandery, Treasury Manager, Finance Dept.
6-4
Attachment A
Financial Advisor RFP
Pricing Sheet
_ Pirt'rt }' = ~ a ., '~. - Y~~ =~ . ae6~ r~suanfe/Refu0dan P~cin , y*r ; ~' u` .~.~ 1
PFM $30,000 to $40,000 each bond issuance/refunding or $60,000 to
$80,000 for all outstanding COPs
Out of pocket expenses capped at $2,500.
Magis $36,500 for 2 or less bond issuances/refundings not to
exceed $50 million.
Out of pocket expenses reimbursed based on actual costs + 6%.
KNN $55,000 to $105,000 depending on bond sizing & number of
issuances/refundings.
Out of pocket expenses capped at $4,000.
Fieldman & Rolapp $60,000 for up to $100 million in bond issuance/refunding.
Out of pocket expenses reimbursed based on actual costs + 3%.
Harrell & Co. $80,000 per bond issuance/refunding + $10,000 per Official Statement.
Out of pocket expenses capped at $1,500.
6-5
THE ATTACHED AGREEMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM BY TIC CITY
ATTORNEY'S OFFICE AND WILL BE
FORMALLY SIGNED UPON APPROVAL BV
THE CITY COUNCIL
Bart C. Miesfeld
City Attorney
Dated: ~ ' ~ ~ . ' ~
Agreement between Public Financial Management, Inc.
And the City of Chula Vista for
Financial Advisory Services
6-6
ATTACHMENT 6
Parties and Recital Page(s)
Agreement between
City of Chula Vista
and
Public Financial Management, Inc.
for Financial Advisory Services
This agreement ("Agreement"), dated May 26, 2009 for the purposes of reference only, and
effective as of the date last executed unless another date is otherwise specified in Exhibit A,
Paragraph 1, is between the City-related entity as is indicated on Exhibit A, Paragraph 2, as such
("City"), whose business form is set forth on Exhibit A, Paragraph 3, and the entity indicated on
the attached Exhibit A, Paragraph 4, as Consultant, whose business form is set forth on
Exhibit A, Paragraph 5, and whose place of business and telephone numbers are set forth on
Exhibit A, Paragraph 6 ("Consultant"), and is made with reference to the following facts:
Recitals
Whereas, Public Financial Management, Inc. has extensive experience developing complex
financing structures and has been the #1 financial advisor in the country for five straight years;
and,
Whereas, the City requires the services of Public Financial Management, Inc. to assist in
developing the optimal structure for the City's debt restructuring as needed; and,
Whereas, Consultant warrants and represents that they are experienced and staffed in a
manner such that they are and can prepare and deliver the services required of Consultant to City
within the time frames herein provided all in accordance with the terms and conditions of this
Agreement; and
(End of Recitals. Next Page starts Obligatory Provisions.)
6 - ~ Page 1
Obligatory Provisions Pages
NOW, THEREFORE, BE IT RESOLVED that the City and Consultant do hereby mutually
agree as follows:
1. Consultant's Duties
A. General Duties
Consultant shall perform all of the services described on the attached Exhibit A, Paragraph 7,
entitled "General Duties"; and,
B. Scope of Work and Schedule
In the process of performing and delivering said "General Duties", Consultant shall also
perform all of the services described in Exhibit A, Paragraph 8, entitled "Scope of Work and
Schedule", not inconsistent with the General Duties, according to, and within the time frames set
forth in Exhibit A, Paragraph 8, and deliver to City such Deliverables as are identified in Exhibit
A, Paragraph 8, within the time frames set forth therein, time being of the essence of this
agreement. The General Duties and the work and deliverables required in the Scope of Work and
Schedule shall be herein referred to as the "Defined Services". Failure to complete the Defined
Services by the times indicated does not, except at the option of the City, operate to terminate
this Agreement.
C. Reductions in Scope of Work
City may independently, or upon request from Consultant, from time to time reduce the
Defined Services to be performed by the Consultant under this Agreement. Upon doing so, City
and Consultant agree to meet in good faith and confer for the purpose of negotiating a
corresponding reduction in the compensation associated with said reduction.
D. Additional Services
In addition to performing the Defined Services herein set forth, City may require Consultant
to perform additional consulting services related to the Defined Services ("Additional Services"),
and upon doing so in writing, if they are within the scope of services offered by Consultant,
Consultant shall perform same on a time and materials basis at the rates set forth in the "Rate
Schedule" in Exhibit A, Paragraph 10(C), unless a separate fixed fee is otherwise agreed upon.
All compensation for Additional Services shall be paid monthly as billed.
E. Standard of Care
Consultant, in performing any Services under this agreement, whether Defined Services or
Additional Services, shall perform in a manner consistent with that level. of care and skill
ordinarily exercised by members of the profession currently practicing under similar conditions
and in similar locations.
6 - $ Page 2
F. Insurance
Consultant must procure insurance against claims for injuries to persons or damages to
property that may arise from or in connection with the performance of the work under the
contract and the results of that work by the Consultant, his agents, representatives, employees or
subcontractors and provide documentation of same prior to commencement of work. The
insurance must be maintained for the duration of the contract.
Minimum Scope of Insurance
Coverage must be at least as broad as:
(1) Insurance Services Office Commercial General Liability coverage (occurrence Form
CG0001).
(2) Insurance Services Office Form Number CA 0001 covering Automobile Liability,
Code 1 (any auto).
(3) Workers' Compensation insurance as required by the State of California and
Employer's Liability Insurance.
(4} Professional Liability or Errors & Omissions Liability insurance appropriate to the
Consultant's profession. Architects' and Engineers' coverage is to be endorsed to
include contractual liability.
Minimum Limits of Insurance
Contractor must maintain limits no less than:
1. General Liability:
(Including operations,
products and completed
operations, as applicable)
$2,000,000 per occurrence for bodily injury, personal injury and
property damage. If Commercial General Liability insurance
with a general aggregate limit is used, either the general
aggregate limit must apply separately to this project/location or
the general aggregate limit must be twice the required occurrence
limit.
2. Automobile Liability: ~ $2,000,000 per accident for bodily injury and property damage.
3. Workers' Compensation Statutory
Employer's Liability: $1,000,000 each accident
$1,000,000 disease-policy limit
$1,000,000 disease-each employee
4. Professional Liability or $2,000,000 each occurrence
Errors & Omissions.
Liability:
Deductibles and Self-Insured Retentions
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Any deductibles or self-insured retentions must be declared to and approved by the City. At
the option of the City, either the insurer will reduce or eliminate such deductibles or self-insured
retentions as they pertain to the City, its officers, officials, employees and volunteers; or the
Consultant will provide a financial guarantee satisfactory to the City guaranteeing payment of
losses and related investigations, claim administration, and defense expenses.
Other Insurance Provisions
The general liability, automobile liability, and where appropriate, the worker's compensation
policies aze to contain, or be endorsed to contain, the following provisions:
(1) The City of Chula Vista, its officers, officials, employees, agents, and volunteers are
to be named as additional insureds with respect to .liability arising out of automobiles
owned, leased, hired or borrowed by or on behalf of the Consultant, where applicable,
and, with respect to liability arising out of work or operations performed by or on
behalf of the Consultant, including providing materials, parts or equipment furnished
in connection with such work or operations. The general liability additional insured
coverage must be provided in the form of an endorsement to the contractor's
insurance using ISO CG 2010 (11/85) or its equivalent. Specifically, the endorsement
must not exclude Products/Completed Operations coverage.
(2) The Consultant's General Liability insurance coverage must be primary insurance as
it pertains to the City, its officers, officials, employees, agents, and volunteers. Any
insurance or self-insurance maintained by the City, its officers, officials, employees,
or volunteers is wholly separate from the insurance of the contractor and in no way
relieves the contractor from its responsibility to provide insurance.
(3) The insurance policy required by this clause must be endorsed to state that coverage
will not be canceled by either party, except after thirty (30) days' prior written notice
to the City by certified mail, return receipt requested.
(4) Coverage shall not extend to any indemnity coverage for the active negligence of the
additional insured in any case where an agreement to indemnify the additional insured
would be invalid under Subdivision (b) of Section 2782 of the Civil Code.
(5) Consultant's insurer will provide a Waiver of Subrogation in favor of the City for
each required policy providing coverage during the life of this contract.
If General Liability, Pollution and/or Asbestos Pollution Liability and/or Errors & Omissions
coverage are written on a claims-made form:
(1) The "Retro Date" must be shown, and must be before the date of the contract or the
beginning of the contract work.
(2) Insurance must be maintained and evidence of insurance must be provided for at least
five (5) years after completion of the contract work.
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(3) If coverage is canceled ornon-renewed, and not replaced with another claims-made
policy form with a "Retro Date" prior to the contract effective date; the Consultant
must purchase "extended reporting" coverage for a minimum of five (5) years after
completion of contract work.
(4) A copy. of the claims reporting requirements must be submitted to the City for review.
Acceptability of Insurers
Insurance is to be placed with licensed insurers admitted to transact business in the State of
California with a current A.M. Best's rating of no less than A V. If insurance is placed with a
surplus lines insurer, insurer must be listed on the State of California List of Eligible Surplus
Lines Insurers ("LESLI") with a current A.M. Best's rating of no less than A X. Exception may
be made for the State Compensation Fund when not specifically rated.
Verification of Coverage
Consultant shall furnish the City with original certificates and amendatory endorsements
effecting coverage required by this clause. The endorsements should be on insurance industry
forms, provided those endorsements or policies conform to the contract requirements. -All
certificates and endorsements are to be received and approved by the City before work
commences. The City reserves the right to require, at any time, complete, certified copies of all
required insurance policies, including endorsements evidencing the coverage required by these
specifications.
Subcontractors
Consultants must include all subconsultants as insureds under its policies or furnish separate
certificates and endorsements for each subconsultant. All coverage for subconsultants are subject
to all of the requirements included in these specifications.
G. Security for Performance
(1) Performance Bond
In the event that Exhibit A, at Paragraph 18, indicates the need for .Consultant to provide
a Performance Bond (indicated by a check mark in the parenthetical space immediately
preceding the subparagraph entitled "Performance Bond"), then Consultant shall provide to the
City a performance bond in the form prescribed by the City and by such sureties which are
authorized to transact such business in the State of California, listed as approved by the United
States Department of Treasury Circular 570, http://www.fins.treas. ovg /c570, and whose
underwriting limitation is sufficient to issue bonds in the amount required by the agreement, and
which also satisfy the requirements stated in Section 995.660 of the Code of Civil Procedure,
except as provided otherwise by laws or regulations. All bonds signed by an agent must be
accompanied by a certified copy of such agent's authority to act. Surety companies must be duly
licensed or authorized in the jurisdiction in which the Project is located to issue bonds for the
6-1 1 Page 5
limits so required. Form must be satisfactory to the Risk Manager or City Attorney which
amount is indicated in the space adjacent to the term, "Performance .Bond", in said Exhibit A,
Paragraph 18.
(2) Letter of Credit
In the event that Exhibit A, at Paragraph 18, indicates the need for Consultant to provide
a Letter of Credit (indicated by a check mark in the parenthetical space immediately preceding
the subparagraph entitled "Letter of Credit"), then Consultant shall provide to the City an
irrevocable letter of credit callable by the City at their unfettered discretion by submitting to the
bank a letter, signed by the City Manager, stating that the Consultant is in breach of the terms of
this Agreement. The letter of credit shall be issued by a bank, and be in a form and amount
satisfactory to the Risk Manager or City Attorney which amount is indicated in the space
adjacent to the term, "Letter of Credit", in said Exhibit A, Paragraph 18.
(3) Other Security
In the event that Exhibit A, at Paragraph 18, indicates the need for Consultant to provide
security other than a Performance Bond or a Letter of Credit (indicated by a check mark in the
parenthetical space immediately preceding the subparagraph entitled "Other Security"), then
Consultant shall provide to the City such other security therein listed in a form and amount
satisfactory to the Risk Manager or City Attorney.
H. Business License
Consultant agrees to obtain a business license from the City and to otherwise comply with
Title 5 of the Chula Vista Municipal Code.
2. Duties of the City
A. Consultation and Cooperation
City shall regularly consult the Consultant for the purpose of reviewing the progress of the
Defined Services and Schedule therein contained, and to provide direction and guidance to
achieve the objectives of this agreement. The City shall permit access to its office facilities, files
and records by Consultant throughout the term of the agreement. In addition thereto, City agrees
to provide the information, data, items and materials set forth on Exhibit A, Paragraph 9, and
with the further understanding that delay in the provision of these materials beyond thirty (3 0)
days after authorization to proceed, shall constitute a basis for the justifiable delay in the
Consultant's performance of this agreement.
B. Compensation
Upon receipt of a properly prepared billing from Consultant submitted to the City
periodically as indicated in Exhibit A, Paragraph 17, but in no event more frequently than
monthly, on the day of the period indicated in Exhibit A, Paragraph 17, City shall compensate
Consultant for all services rendered by Consultant according to the terms and conditions set forth
6 -12 Page 6
in Exhibit A, Paragraph 10, adjacent to the governing compensation relationship indicated by a
"checkmark" next to the appropriate arrangement, subject to the requirements for retention set
forth in Paragraph 18 of Exhibit A, and shall compensate Consultant for out of pocket expenses
as provided in Exhibit A, Paragraph 11.
All billings submitted by Consultant shall contain sufficient information as to the propriety of
the billing to permit the City to evaluate that the amount due and payable thereunder is proper,
and shall specifically contain the City's account number indicated on Exhibit A, Paragraph 17(C)
to be charged upon making such payment.
3. Administration of Contract
Each party designates the individuals ("Contract Administrators") indicated on Exhibit A,
Paragraph 12, as said party's contract administrator who is authorized by said party to represent
them in the routine administration of this agreement:
4. Term
This Agreement shall terminate when the Parties have complied with all executory provisions
hereof.
5. Liquidated Damages
The provisions of this section apply if a Liquidated Damages Rate is provided in Exhibit A,
Paragraph 13.
It is acknowledged by both parties that time is of the essence in the completion of this
Agreement. It is difficult to estimate the amount of damages resulting from delay in
performance. The parties have used their judgment to arrive at a reasonable amount to
compensate for delay.
Failure to complete the Defined Services within the allotted time period specified in this
Agreement shall result in the following penalty: For each consecutive calendar day in excess of
the time specified for the completion of the respective work assignment or Deliverable, the
Consultant shall pay to the City, or have withheld from monies due, the sum of Liquidated
Damages Rate provided in Exhibit A, Paragraph 13 ("Liquidated Damages Rate").
Time extensions for delays beyond the Consultant's control, other than delays caused by the
City, shall be requested in writing to the City's Contract Administrator, or designee, prior to the
expiration of the specified time. Extensions of time, when granted, will be based upon the effect
of delays to the work and. will not be granted for delays to minor portions of work unless it can
be shown that such delays did or will delay the progress of the work.
6. Financial Interests of Consultant
A. Consultant is Designated as an FPPC Filer
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If Consultant is designated on Exhibit A, Paragraph 14, as an "FPPC filer", Consultant is
deemed to be a "Consultant" for the purposes of the Political Reform Act conflict of interest and
disclosure provisions, and shall report economic interests. to the City Clerk on the required
Statement of Economic Interests in such reporting categories as are specified in Paragraph 14 of
Exhibit A, or if none are specified, then as determined by the City Attorney.
B. Decline to Participate
Regardless of whether Consultant is designated as an FPPC Filer, Consultant shall not make,
or participate in making or in any way attempt to use Consultant's position to influence a
governmental decision in which Consultant knows or has reason to know Consultant has a
financial interest other than the compensation promised by this Agreement.
C. Search to Determine Economic Interests
Regardless of whether Consultant is designated as an FPPC Filer, Consultant warrants and
represents that Consultant has diligently conducted a search and inventory of Consultant's
economic interests, as the term is used in the regulations promulgated by the Fair Political
Practices Commission, and has determined that Consultant does not, to the best of Consultant's
knowledge, have an economic interest which would conflict with Consultant's duties under this
agreement.
D. Promise Not to Acquire Conflicting Interests
Regardless of whether Consultant is designated as an FPPC Filer, Consultant further warrants
and represents that Consultant will not acquire, obtain, or assume an economic interest during the
term of this Agreement which would constitute a conflict of interest as prohibited by the Fair
Political Practices Act.
E. Duty to Advise of Conflicting Interests
Regardless of whether Consultant is designated as an FPPC Filer, Consultant further warrants
and represents that Consultant will immediately advise the City Attorney of City if Consultant
learns of an economic interest of Consultant's that may result in a conflict of interest for the
purpose of the Fair Political Practices Act, and regulations promulgated thereunder.
F. Specific Warranties Against Economic Interests
Consultant warrants and represents that neither Consultant, nor Consultant's immediate
family members, nor Consultant's employees or agents ("Consultant Associates") presently have
any interest, directly or indirectly, whatsoever in any property which may be the subject matter
of the Defined Services, or in any property within 2 radial miles from the exterior boundaries of
any property which may be the subject matter of the Defined Services, ("Prohibited Interest"),
other than as listed in Exhibit A, Paragraph 14.
Consultant further warrants and represents that no promise of future employment,
remuneration, consideration, gratuity or other reward or gain has been made to Consultant or
6-14 Page 8
Consultant Associates in connection with Consultant's performance of this Agreement.
Consultant promises to advise City of any such promise that may be made during the Term of
this Agreement, or for twelve months thereafter.
Consultant agrees that Consultant Associates shall not acquire any such Prohibited Interest
within the Term of this Agreement, or for twelve months after the expiration of this Agreement,
except with the written permission of City.
Consultant may not conduct or solicit any business for any party to this Agreement, or for
any third party that may be in conflict with Consultant's responsibilities under this Agreement,
except with the written permission of City.
7. Hold Harmless
Consultant shall defend, indemnify, protect and hold harmless the City, its elected and
appointed officers and employees, from and against all claims for damages, liability, cost and
expense (including without limitation attorneys fees) arising out of or alleged by third parties to
be the result of the negligent acts, errors or omissions or the willful misconduct of the
Consultant, and Consultant's employees, subcontractors or other persons, agencies or firms for
whom Consultant is legally responsible in connection with the execution of the work covered by
this Agreement, except only for those claims, damages, liability, costs and expenses (including
without limitations, attorneys fees) arising from the sole negligence or sole willful misconduct of
the City, its officers, employees. Also covered is liability arising from, connected with, caused
by or claimed to be caused by the active or passive negligent acts or omissions of the City, its
agents, officers, or employees which may be in combination with the active or passive negligent
acts or omissions of the Consultant, its employees, agents or officers, or any third party.
With respect to losses arising from Consultant's professional errors or omissions, Consultant
shall defend, indemnify, protect and hold harmless the City, its elected and appointed officers
and employees, from and against all claims for damages, liability, cost and expense (including
without limitation attorneys fees) except for those claims arising from the negligence or .willful
misconduct of City, its officers or employees.
Consultant's indemnification shall include any and all costs, expenses, attorneys fees and
liability incurred by the City, its officers, agents or employees in defending against such claims,
whether the same proceed to judgment or not. Consultant's obligations under this Section shall
not be limited by any prior or subsequent declaration by the Consultant. Consultant's obligations
under this Section shall survive the termination of this Agreement.
For those professionals who are required to be licensed by the state (e.g. architects, landscape
architects, surveyors and engineers), the following indemnification provisions should be utilized:
(1) Indemnification and Hold Harmless Agreement
With respect to any liability, including but not limited to claims asserted or costs, losses,
attorney fees, or payments for injury to any person or property caused or claimed to be caused by
the acts or omissions of the Consultant, or Consultant's employees, agents, and officers, arising
6 -15 Page 9
out of any services performed involving this project, except liability for Professional Services
covered under Section 7.2, the Consultant agrees to defend, indemnify, protect, and hold
harmless the City, its agents, officers, or employees from and against all liability. Also covered is
liability arising from, connected with, caused by, or claimed to be caused by the active or passive
negligent acts or omissions of the City, its agent's, officers, or employees which may be in
combination with the active or passive negligent acts or omissions of the Consultant, its
employees, agents or officers, or any third party. The Consultant's duty to indemnify, protect and
hold harmless shall not include any claims or liabilities arising from the sole negligence or sole
willful misconduct of the City, its agents, officers or employees. This section in no way alters,
affects or modifies the Consultant's obligation and duties under Section Exhibit A to this
Agreement.
(2) Indemnification for Professional Services.
As to the Consultant's professional obligation, work or services involving this Project,
the Consultant agrees to indemnify, defend and hold harmless the City, its agents, officers and
employees from and against any and all liability, claims, costs, and damages, including but not
limited to, attorneys fees, that arise out of, or pertain to, or relate to the negligence, recklessness
or willful misconduct of Consultant and its agents in the performance of services under this
agreement, but this indemnity does not apply liability for damages for death or bodily injury to
persons, injury to property, or other loss, arising from the sole negligence, willful misconduct or
defects in design by City or the agents, servants, or independent contractors who are directly
responsible to City, or arising from the active negligence of City.
8. Termination of Agreement for Cause
If, through any cause, Consultant shall fail to fulfill in a timely and proper manner
Consultant's obligations under this Agreement, or if Consultant shall violate any of the
covenants, agreements or stipulations of this Agreement, City shall have the right to terminate
this Agreement by giving written notice to Consultant of such termination and specifying the
effective date thereof at least five (5) days before the effective date of such termination. In that
event, all finished or unfinished documents, data, studies, surveys, drawings, maps, reports and
other materials prepared by Consultant shall, at the option of the City, become the property of the
City, and Consultant shall be entitled to receive just and equitable compensation for any work
satisfactorily completed on such documents and other materials up to the effective date of Notice
of Termination, not to exceed the amounts payable hereunder, and less any damages caused City
by Consultant's breach.
9. Errors and Omissions
In the event that the City Administrator determines that the Consultants' negligence, errors,
or omissions in the performance of work under this Agreement has resulted in expense to City
greater than would have resulted if there were no such negligence, errors, omissions, Consultant
shall reimburse City for any additional expenses incurred by the City. Nothing herein is intended
to limit City's rights under other provisions of this agreement.
10. Termination of Agreement for Convenience of City
6-16 Page 10
City may terminate this Agreement at any time and for any reason, by giving specific written
notice to Consultant of such termination and specifying the effective date thereof, at least thirty
(30) days before the effective date of such termination. In that event, all finished and unfinished
documents and other materials described hereinabove shall, at the option of the City, become
City's sole and exclusive property. If the Agreement is terminated by City as provided in this
paragraph, Consultant shall be entitled to receive just and equitable compensation for any
satisfactory work completed on such documents and other materials to the effective date of such
termination. Consultant hereby expressly waives any and all claims for damages or
compensation arising under this Agreement except as set forth herein.
11. Assignability
The services of Consultant are personal to the City, and Consultant shall not assign any
interest in this Agreement, and shall not transfer any interest in the same (whether by assignment
or notation), without prior written consent of City.
City hereby consents to the assignment of the portions of the Defined Services identified in
Exhibit A, Paragraph 16 to the subconsultants identified thereat as "Permitted Subconsultants".
12.Ownership, Publication, Reproduction and Use of Material
All reports, studies, information, data, statistics, forms, designs, plans, procedures, systems
and any other materials or properties produced under this Agreement shall be the sole and
exclusive property of City. No such materials or properties produced in whole or in part under
this Agreement shall be subject to private use, copyrights or patent rights by Consultant in the
United States or in any other country without the express written consent of City. City shall have
unrestricted authority to publish, disclose (except as may be limited by the provisions of the
Public Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any
such reports, studies, data, statistics, forms or other materials or properties produced under this
Agreement. -
13. Independent Contractor
City is interested only in the results obtained and Consultant shall perform as an independent
contractor with sole control of the manner and means of performing the services required under
this Agreement. City maintains the right only to reject or accept Consultant's work products.
Consultant and any of the Consultant's agents, employees or representatives are, for all purposes
under this Agreement, an independent contractor and shall not be deemed to be an employee of
City, and none of them shall be entitled to any benefits to which City employees are entitled
including but not limited to, overtime, retirement benefits, worker's compensation benefits,
injury leave or other leave benefits. Therefore, City will not withhold state or federal income tax,
social security tax or any other payroll tax, and Consultant shall be solely responsible for the
payment of same and shall hold the City harmless with regard thereto.
14. Administrative Claims Requirements and Procedures
6-17
Page 11
No suit or arbitration shall be brought arising out of this agreement, against the City unless a
claim has first been presented in writing and filed with the City and acted upon by the City in
accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as
same may from time to time be amended, the provisions of which are incorporated by this
reference as if fully set forth herein, and such policies and procedures used by the City in the
implementation of same.
Upon request by City, Consultant shall meet and confer in good faith with City for the
purpose of resolving any dispute over the terms of this Agreement.
15. Attorney's Fees
Should a dispute arising out of this Agreement result in litigation, it is agreed that the
prevailing parry shall be entitled to a j udgment against the other for an amount equal to
reasonable attorney's fees and court costs incurred. The "prevailing party" shall be deemed to be
the party who is awarded substantially the relief sought.
16. Statement of Costs
In the event that Consultant prepares a report or document, or participates in the preparation
of a report or document in performing the Defined Services, Consultant shall include, or cause
the inclusion of, in said report or document, a statement of the numbers and cost in dollar
amounts of all contracts and subcontracts relating to the preparation of the report or document.
17. Miscellaneous
A. Consultant not authorized to Represent City
Unless specifically authorized in writing by City, Consultant shall have no authority to act as
City's agent to bind City to any. contractual agreements whatsoever.
B. Consultant is Real Estate Broker and/or Salesman
If the box on Exhibit A, Paragraph 15 is marked, the Consultant and/or their principals is/are
licensed with the State of California or some other state as a licensed real estate broker or
salesperson. Otherwise, Consultant represents that neither Consultant, nor their principals are
licensed real estate brokers or salespersons.
C. Notices
All notices, demands or requests provided for or permitted to be given pursuant to this
Agreement must be in writing. All notices, demands and requests to be sent to any party shall be
deemed to have been properly given or served if personally served or deposited in the United
States mail, addressed to such party, postage prepaid, registered or certified, with return receipt
requested, at the addresses identified herein as the places of business for each of the designated
parties.
6 -18 Page 12
D. Entire Agreement
This Agreement, together with any other written document referred to or contemplated
herein, embody the entire Agreement and understanding between the parties relating to the
subject matter hereof. Neither this Agreement nor any provision hereof may be amended,
modified, waived or discharged except by an instrument in writing executed by the party against
which enforcement of such amendment, waiver or discharge is sought.
E. Capacity of Parties
Each signatory and party hereto hereby warrants and represents to the other party that it has
legal authority and capacity and direction from its principal to enter into this Agreement, and that
all resolutions or other actions have been taken so as to enable it to enter into this Agreement.
F. Governing Law/Venue
This Agreement shall be governed by and construed in accordance with the laws of the State
of California. Any action arising under or relating to this Agreement shall be brought only in the
federal or state courts located in San Diego County, State of California, and if applicable, the
City of Chula Vista, or as close thereto as possible. Venue for this Agreement, and performance
hereunder, shall be the City of Chula Vista.
(End of page. Next page is signature page.)
6-19
Page 13
Signature Page
to
Agreement between
City of Chula Vista
and
Public Financial Management, Inc.
for Financial Advisory Services
IN WITNESS WHEREOF, City and Consultant have executed this Agreement thereby
indicating that they have read and understood same, and indicate their full and complete consent
to its teems:
Dated:
City of Chula Vista
By:
Cheryl Cox, Mayor
Attest:
Donna Norris, City Clerk
Approved as to farm:
Bart Miesfeld, City Attorney
Dated:
[Name of consultant]
B:
ame f Perso ,Title]
By:
[Flame of Person, Title]
Exhibit List to Agreement
(X) Exhibit A.
6-20
Page 14
Exhibit A
to
Agreement between
City of Chula Vista
and
Public Financial Management, Inc.
1. Effective Date of Agreement: May 26, 2009
2. City-Related Entity:
(~ City of Chula Vista, a municipal chartered corporation of the State of California
()Redevelopment Agency of the City of Chula Vista, a political subdivision of the State of
California
()Industrial Development Authority of the City of Chula Vista, a
()Other: , a [insert business form]
("City..)
3. Place of Business for City:
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
4. Consultant:
Public Financial Management, Inc.
Janice Mazyck, Managing Director
5. Business Form of Consultant:
( )Sole Proprietorship
( )Partnership
(~ Corporation
6. Place of Business, Telephone and Fax Number of Consultant:
633 West Fifth Street, Suite 6700
Los Angeles, California 90071
Voice Phone: (213) 489-4075
Fax Phone: (213) 489-4085
6 - 21 Page 15
7. General Duties:
The firm will be responsible for providing a broad platform of services that will result in the
successful execution of financial transactions. The City's financial advisors have traditionally
advised the City in structuring the issuance and sale of bonds, notes, and other securities as
well as providing assistance and analyses for various projects, including negotiating financing
terms, drafting documents, and advising on legislation, regulations or other procedures.
8. Scope of Work and Schedule:
A. The scope of services that the Consultant shall perform include, but are not limited to, the
following:
1. Advise and assist the City in considering and structuring various modes of financing,
including but not limited to refundings, credit-enhancement, leased equipment
financings, general obligation bonds, pension obligation bonds, and lease revenue
bonds/certificates of participation.
2. Advise on the amount, timing and nature of borrowings, as well as the credit structure,
maturity schedule, call provisions and other items, as needed
3. Advise on the merits of competitive, negotiated or private placement of debt.
4. Assist in the preparation of Official Statements, notices of sale (competitive offerings)
and other appropriate information to prospective bond and note investors.
5. Assist in preparing and presenting timely and adequate information on proposed
financings and the City's finances and operations to the bond rating agencies and
institutions providing credit enhancement.
6. Evaluate the terms and recommendation of acceptance, rejection or regeneration with
respect to sale bids or final pricing as applicable. This includes confirmation of
competitive bids, and verification reports in the case of refundings.
7. Advise on such matters as bond registration, printing, and other matters related to the
settlement and delivery of the bonds or notes, as required.
9. Assist with preparation of RFPs and evaluation of proposals for the procurement of:
- Credit enhancements, including Letters of Credit and bond insurance
- Investment banking services
- Financial printing
- Competitive offerings
- Paying Agent or Trustee
- Escrow Agent, if required
- Verification Agent, if required
6 - 2 2 Page 16
10. In the case of competitive offerings, assume responsibility for the following:
- Preparation and advertisement of Notice of Sale
- Preparation of Bid Form
- Advice as to manner of bid procedures
- Management of competitive bidding procedures
11. Attend (in person or by telephone, as required) meetings related to debt offerings
and participation in the deliberations at such meetings, including:
- Preparation of Official Statement with the entire working group
- Due diligence
- Rating agency presentations
- Pricing
- Closing
12. Provide ongoing .financial advisory services as necessary, including:
- Review financial issues with the rating agencies (and arrange and support calls and
meetings) relating to specific debt issues and to periodic updates.
- Evaluate unsolicited financial proposals received by the City, including but not
limited to refundings and alternate forms of financing vehicles like risk
management products.
- Provide advice on investor relations and assistance in preparation of related
presentation materials.
13. Advise and assist the City in structuring short-term financing programs including
tax revenue anticipation notes, lines of credit, letters of credit, or other financings
as required.
14. Review bond documents, regulations, rules, proposed legislation, and other
documents relating to the City's financing programs.
15. Assist the City staff in drafting and preparing Continuing Disclosure documents for
the investor community.
16. Assist the City when necessary in negotiating and preparing any agreements
between the City and other jurisdictions participating in any financing program.
17. As necessary, resolve issues regarding the sale and issuance of bonds that are raised
by prospective purchasers, rating agencies, or public officials.
18. As requested, prepare and maintain projected debt service, debt outstanding and
other schedules related to City debt for use in the City budgeting processes and
official statements.
19. Provide other technical assistance on debt financings, bond ratings and financing
alternatives as requested by the City.
6-23 Page 17
B. Date for Commencement of Consultant Services:
(~ Same as Effective Date of Agreement
()Other:
C. Dates or Time Limits for Delivery of Deliverables:
Debt restructuring services will be on an ongoing basis as needed, but shall be completed
not later than June 30, 2012, unless otherwise extended at the sole discretion of the City.
D. Date for completion of all Consultant services:
June 30, 2012, unless otherwise extended at the sole discretion of the City.
9. Materials Required to be Supplied by City to Consultant:
The City agrees to make available to Consultant, without cost, sufficient copies of any
applicable reports, agreements, contracts, resolutions and other relevant documents and
data as reasonably may be required from time to time for the prompt and efficient
performance by Consultant of its obligations hereunder.
10. Compensation:
A. (~ Single Fixed Fee Arrangement.
Financial Advisory Services performed pursuant to debt issuance, shall be contingent on,
and payable at the closing of the debt issue(s). The fee for these services shall be based on the
number of COPS actually refunded and the size of the transaction(s) ranging from $30,000 to
$40,000 for a single refunding to $60,000 to $80,000 for refunding multiple COPS at one time.
Within the above parameters, the City Manager shall have the discretion to negotiate the actual
fee to be paid for debt restructuring services, up to a maximum of $80,000.
6-24 Page 18
Single Fixed Fee Amount: ,payable as follows:
Milestone or Event or Deliverable
Amount or Percent of Fixed Fee
() 1. Interim Monthly Advances. The City shall make interim monthly advances
against the compensation due for each phase on a percentage of completion basis for
each given phase such that, at the end of each phase only the compensation for that
phase has been paid. Any payments made hereunder shall be considered as interest
free loans that must be returned to the City if the Phase is not satisfactorily
completed. If the Phase is satisfactorily completed, the City shall receive credit
against the compensation due for that phase. The retention amount or percentage set
forth in Paragraph 19 is to be applied to each interim payment such that, at the end of
the phase, the full retention has been held back from the compensation due for that
phase. Percentage of completion of a phase shall be assessed in the sole and
unfettered discretion by the Contracts Administrator designated herein by the City, or
such other person as the City Manager shall designate, but only upon such proof
demanded by the City that has been provided, but in no event shall such interim
advance payment be made unless the Contractor shall have represented in writing that
said percentage of completion of the phase has been performed by the Contractor.
The practice of making interim monthly advances shall not convert this agreement to
a time and materials basis of payment.
B. ()Phased Fixed Fee Arrangement.
For the performance of each phase or portion of the Defined Services by Consultant as are
separately identified below, City shall pay the fixed fee associated with each phase of Services,
in the amounts and at the times or milestones or Deliverables set forth. Consultant shall not
commence Services under any Phase, and shall not be entitled to the compensation for a Phase,
unless City shall have issued a notice to proceed to Consultant as to said Phase.
Phase Fee for Said Phase
1. $
2. $
3. $
() 1. Interim Monthly Advances. The City shall make interim monthly advances
against the compensation due for each phase on a percentage of completion basis for
each. given phase such that, at the end of each phase only the compensation for that
phase has been paid. Any payments made hereunder shall be considered as interest
free loans that must be returned to the City if the Phase is not satisfactorily
completed. If the Phase is satisfactorily completed, the City shall receive credit
against the compensation due for that phase. The retention amount or percentage set
forth in Paragraph 19 is to be applied to each interim payment such that, at the end of
the phase, the full retention has been held back from the compensation due for that
6-25 Page 19
phase. Percentage of completion of a phase shall be assessed in the sole and
unfettered discretion by the Contracts Administrator designated herein by the City, or
such other person as the City Manager shall designate, but only upon such proof
demanded by the City that has been provided, but in no event shall such interim
advance payment be made unless the Contractor shall have represented in writing that
said percentage of completion of the phase has been performed by the Contractor.
The practice of making interim monthly advances shall not convert this agreement to
a time and materials basis of payment.
C. Q Hourly Rate Arrangement
For performance of the Defined Services by Consultant as herein required, City shall pay
Consultant for the productive hours of time spent by Consultant in the performance of said
Services, at the rates or amounts set forth in the Rate Schedule herein below according to the
following terms and conditions:
(1) ()Not-to-Exceed Limitation on Time. and Materials Arrangement
Notwithstanding the expenditure by Consultant of time and materials in excess of said
Maximum Compensation amount, Consultant agrees that Consultant will perform all of
the Defined Services herein required of Consultant for $ ,
including all Materials, and other "reimbursables" ("Maximum Compensation").
(2) Q Limitation without Further Authorization on Time and Materials Arrangement
At such time as Consultant shall have incurred time and materials not to exceed
("Authorization Limit"), Consultant shall not be entitled to any additional
compensation without further authorization issued in writing and approved by the City.
Nothing herein shall preclude Consultant from providing additional Services at
Consultant's own cost and expense.
()Hourly rates may increase by 6% for services rendered after [month], 20 ~ , if delay
in providing services is caused by City.
11. Materials Reimbursement Arrangement
For the cost of out of pocket expenses incurred by Consultant in the performance of services
herein required, City shall pay Consultant at the rates or amounts set forth below:
() None, the compensation includes all costs.
Cost or Rate
() Reports, not to exceed $ $
() Copies, not to exceed $ ~
6 - 2 6 Page 20
() Travel, not to exceed $
() Printing, not to exceed $
O Postage, not to exceed $
() Delivery, not to exceed $
() Long Distance Telephone Charges, not to exceed $
(X) Other Actual Identifiable Direct Costs:
Out-of-pocket, not to exceed $2,500 per transaction
not to exceed $
12. Contract Administrators:
City:
Maria Kachadoorian, Director of Finance/Treasurer
276 Fourth Avenue
Chula Vista, CA 91910
Consultant:
Janice Mazyck, Managing Director
633 West Fifth Street, Suite 6700
Los Angeles, CA 90071
13. Liquidated Damages Rate:
() $ per day.
()Other:
$
$2,500
14. Statement of Economic Interests, Consultant Reporting Categories, per Conflict of Interest
Code:
(X)Not Applicable. Not an FPPC Filer.
()FPPC Filer
() Category No. 1. Investments and sources of income.
OCategory No. 2. Interests in real property.
()Category No. 3. Investments, interest in real property and sources of income subject
to the regulatory, permit or licensing authority of the department.
() Category No. 4. Investments in business entities and sources of income that engage in
land development, construction or the acquisition or sale of real property.
6-27 Page 21
()Category No. 5. Investments in business entities and sources of income of the type
which, within the past two years, have contracted with the City of Chula Vista
(Redevelopment Agency) to provide services, supplies, materials, machinery or
equipment.
()Category No. 6. Investments in business entities and sources of income of the type
which, within the past two years, have contracted with the designated employee's
department to provide services, supplies, materials, machinery or equipment.
Category No. 7. Business positions.
()List "Consultant Associates" interests in real property within 2 radial miles of Project
Property, if any:
15. ()Consultant is Real Estate Broker and/or Salesman
16. Permitted Subconsultants:
17. Bill Processing:
A. Consultant's Billing to be submitted for the following period of time:
()Monthly
()Quarterly
(~ Other: as submitted
B. Day of the Period for submission of Consultant's Billing:
First of the Month
15th Day of each Month
End of the Month
Other:
6 - 2 8 Page 22
C. City's Account Number:
18. Security for Performance
Performance Bond, $
Letter of Credit, $
Other Security:
Type:
Amount: $
Retention. If this space is checked, then notwithstanding other provisions to the contrary
requiring the payment of compensation to the Consultant sooner, the City shall be entitled
to retain, at their option, either the following "Retention Percentage" or "Retention
Amount" until the City determines that the Retention Release Event, listed below, has
occurred:
Retention Percentage:
Retention Amount: $_
Retention Release Event:
( )Completion of All Consultant Services
( )Other:
H:Attorney/2pty1 ~
6 - 2 9 Page 23
RESOLUTION NO.2009-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING THE AGREEMENT WITH
PUBLIC FINANCIAL MANAGEMENT, INC. TO PROVIDE
FINANCIAL ADVISORY SERVICES
WHEREAS, on January 20, 2009, the City Council approved a Fiscal Health Plan which
provides for along-term financial strategy; and
WHEREAS, on March 13, 2009, staff issued a Request for Proposal ("RFP") for
financial advisory services to assist in reviewing outstanding debt obligations and address current
cash flow shortfalls in the Public Facilities Development Impact Fee Fund; and
WHEREAS, the financial advisory firm would assist the city in identifying refunding options
in order to continue meeting debt obligations in an attempt to avoid additional financial strain on the
General Fund; and
WHEREAS, the financial firm will also provide other options in addition to restructuring
existing debt in order to determine which direction would best meet the City's long-term
financial goals; and
WHEREAS, the RFP was advertised on-line in the Bond Buyer, a national publication,
and posted electronically on PlanetBids, a web-based vendor and bid management system that is
widely used by other local agencies; and
WHEREAS, in addition, many financial advisory firms were contacted directly and
invited to participate in this process; and
WHEREAS, in total, five proposals from national and regional financial advisory firms
were received, and all five firms were interviewed; and
WHEREAS, a three member panel consisting of the City's Director of Finance; Assistant
Director of Finance and Treasury Manager was created for the selection process; and
WHEREAS, after a comprehensive evaluation process, the selection panel recommends
the contract be awarded to Public Financial management, Inc. ("PFM") to be the City's financial
advisor; and
WHEREAS, PFM is best suited to meet the City's needs as the firm has extensive
experience in developing complex financing structures and has been the # 1 financial advisor in
the country for five straight years; and
WHEREAS, they have developed complex multi-year financial models for cities around
the country, from Philadelphia to Long Beach, and are competitively priced.
6-30
Page 2
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula
Vista does hereby approve the Agreement with Public Financial Management, Inc. to provide
financial advisory services.
Presented by
Maria Kachadoorian
Director of Finance
Approved as to form by
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6-31