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HomeMy WebLinkAboutCA General Obligation Bond Proceeding Legal Servicescl� OF n.l.,A541t 11 "t, Agenda Item No: Meeting Date: August 3, 2009 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: City Attorney Prepared by: Lisa Goldfien City Manager Approval: Deputy City Attorney II SUBJECT: Resolution Authorizing the City Manager to Execute a Professional Services Agreement with Jones Hall for Bond Counsel Services in Connection with General Obligation Bond Proceedings. RECOMMENDATION: Staff recommends that the council adopt the attached Resolution Authorizing the City Manager to Execute a Professional Services Agreement with Jones Hall for Bond Counsel Services in Connection with General Obligation Bond Proceedings. BACKGROUND: In connection with the preparation of the necessary resolution and ordinance for placement of the SAN RAFAEL PUBLIC SAFETY FACILITIES BOND MEASURE on the November 3, 2009 ballot, the City has been consulting with attorney William Madison of the firm of Jones Hall. Mr. Madison is an expert in the law of municipal bonds, including general obligation bonds. If the voters pass the bond measure, the City will require extensive services from specialized bond counsel in connection with the issuance of the bonds. ANALYSIS: The proposed agreement for bond counsel services provides for the performance of all legal services required in connection with the issuance of the bonds. Compensation for the legal services is fully contingent upon the successful sale of the bonds (see Section 5 of the attached Agreement). The amount of the fee for each bond issuance is depends upon the size of the bond issue, with a minimum fee of $25,000 and a maximum of $50,000. FISCAL IMPACT: The attorney's fees due to bond counsel will be paid out of the proceeds of the bond sales, therefore, entering into the proposed agreement does not have any direct fiscal impact to the City. OPTIONS: Adopt the attached resolution approving the proposed Agreement. Do not adopt the resolution approving the Agreement. ACTION REQUIRED: Adopt Resolution. ATTACHMENTS: Resolution (with Agreement attached) FOR CITY CLERK ONLY File No.: Council Meeting: Disposition: RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH JONES HALL FOR BOND COUNSEL SERVICES IN CONNECTION WITH GENERAL OBLIGATION BOND PROCEEDINGS WHEREAS, the City Council has determined to place a measure before the City voters at the November 3, 2009 general municipal election to incur bonded debt for the purpose of the acquisition, construction and completion of public safety facilities in the City of San Rafael; and WHEREAS, if the bond measure is placed on the ballot for November 3, 2009 and the ballot measure passes, the City will have need of the services of specialized bond counsel in connection with the issuance of the approved general obligation bonds; and WHEREAS, the law firm of Jones Hall is highly qualified to provide bond counsel services. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES as follows: The City Manager is hereby authorized to execute, on behalf of the City of San Rafael, an Agreement for Bond counsel Services in Connection with General Obligation Bond Proceedings, in the form attached hereto as Exhibit A, or in such form as finally approved by the City Attorney. I, ESTHER BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of said City held on Monday, the 3`a day of August, 2009 by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ESTHER BEIRNE, City Clerk JONES HALI., A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW AGREEMENT BY AND BETWEEN THE CITY OF SAN RAFAEL AND JONES HALL, A PROFESSIONAL LAW CORPORATION, FOR BOND COUNSEL SERVICES IN CONNECTION WITH GENERAL OBLIGATION BOND PROCEEDINGS THIS AGREEMENT is entered into this day of August, 2009, by and between the CITY OF SAN RAFAEL, (the "City", or the "Client") and JONES HALL, A PROFESSIONAL LAW CORPORATION, San Francisco, California ("Attorneys"); WITNESSETH: WHEREAS, on November 3, 2009, the City will submit to the voters of the City the question of whether general obligation bonds (the 'Bonds") should be issued and sold to finance the acquisition and construction of public safety facilities (the "Project"); WHEREAS, in connection with such proceedings the City requires the advice and assistance of bond counsel; WHEREAS, the City has determined that Attorneys are qualified by training and experience to perform the services of bond counsel, and Attorneys are willing to provide such services; and WHEREAS, the public interest, economy and general welfare will be served by this Agreement, NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS FOLLOWS: Section 1. Attorney -Client Relationship. Upon execution of this Agreement, the Client will be Attorney's client, and an attorney-client relationship will exist between Client and Attorneys. Attorneys assume that all other parties will retain such counsel as they deem necessary and appropriate to represent their interests in the proposed bond transaction. Attorneys further assume that all other parties understand that in the proposed bond transaction Attorneys represent only the Client, Attorneys are not counsel to any other party, and Attorneys are not acting as an intermediary among the parties. Attorneys' services as bond counsel are limited to those contracted for in this Agreement; the Clients execution of this Agreement will constitute an acknowledgment of those limitations. Attorneys' representation of the Client will not affect, however, our responsibility to render an objective Bond Opinion (as defined in Section 2 (b) 4). Section 2. Scope of Engagement. Attorneys shall do, carry out and perform all of the following services as are necessary for the issuance of the Bonds: ■ (a) Pre -Election Services. If we are selected as bond counsel to the City, we will provide the following pre-election legal services: 1. Informing the City of the actions required to be undertaken to accomplish the election, and coordination with the election officials in Marin County (the "County') to insure that the necessary legal requirements are satisfied. 2. Assist in the preparation of the resolution and ordinance of the City Council of the City required to call the election and to request consolidation with any other elections to be held on the same date. 3. Review of the tax rate statement required to be included in the ballot pamphlet distributed to voters. 1 4. Review of the ballot arguments to be prepared by or on behalf of the City. 5. Consultation with the City and its staff, the County and its staff and the City's financial advisor concerning the election proceedings and campaign law requirements. 6. Review of information campaign activities and documents proposed for use by the City to assist the City to achieve its objectives while complying with applicable law. (b) Post -Election Services. Following the successful bond election, Attorneys will provide the following post-election services as required in connection with the issuance of Bonds in series from time to time: 1. Consultation with the City and its staff and the City's financial advisor concerning the Bonds and the timing, terms and structure of the offering thereof including an examination of the alternative methods of issuance available to the City. 2. Preparation of the proceedings for the authorization, issuance and sale of the Bonds, including the resolution of the City Council setting forth the terms and conditions of the Bonds and their form, date, denominations and maturity, and preparation of the proceedings for the sale of the Bonds, including the Notice of Sale. 3. Advising the Client, from the time Attorneys are hired as Bond Counsel until the Bonds are issued, as to compliance with federal tax law as required to ensure that interest on the Bonds is exempt from federal income taxation. 4. Upon completion of proceedings to Attorneys' satisfaction, providing a legal opinion (the "Bond Opinion") approving the validity and enforceability of the proceedings for the authorization, issuance and delivery of the Bonds, and stating that interest on the Bonds is (a) excluded from gross income for purposes of federal income taxes and (b) exempt from California personal income taxation. The Bond Opinion will be addressed to the Client, and may also be addressed to the underwriter of the Bonds and other participants in the financing. 2 5. Review those sections of the official statement or other form of offering or disclosure document to be disseminated in connection with the sale of the Bonds involving summary descriptions of the Bonds, the legal proceedings leading to the authorization and sale of the Bonds, the legal documents under which the Bonds will be issued, and federal tax law and securities law provisions applicable to the Bonds, as to completeness and accuracy. 6. Draft the continuing disclosure undertaking of the Client. 7. Such other and further services as are normally performed by bond counsel in connection with similar financings. Attorneys' Bond Opinion will be delivered by Attorneys on the date the Bonds are exchanged for their purchase price (the "Closing`). The Bond Opinion will be based on facts and law existing as of its date, will cover certain matters not directly addressed by such authorities, and will represent Attorneys' judgment as to the proper treatment of the Bonds for federal income tax purposes. Attorneys' opinion is not binding on the Internal Revenue Service ("IRS") or the courts. Attorneys cannot and will not give any opinion or assurance about the effect of future changes in the Internal Revenue Code of 1986 (the "Code"), the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. Client acknowledges that future legislation, if enacted into law, or clarification of the Code may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may also affect the market price for, or marketability of, the Bonds. Attorneys will express no opinion regarding any pending or proposed federal tax legislation. In rendering the Bond Opinion, Attorneys will rely upon the certified proceedings and other certifications of public officials and other persons furnished to Attorneys without undertaking to verify the same by independent investigation, and Attorneys will assume continuing compliance by the Client with applicable laws relating to the Bonds. Section 3. Excluded Services. Attorneys' duties in this engagement are limited to those expressly set forth above in Section 2, except as expressly set forth in a written amendment to this Agreement. Among other things, our duties do not include: a. Except as described in paragraph 2(b)(5) above (under Post -Election Services), assisting in the preparation or review of an official statement or any other disclosure document with respect to the Bonds, or performing an independent investigation to determine the accuracy, completeness or sufficiency of any such document or rendering advice that the official statement or other disclosure document does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. b. Preparing requests for tax rulings from the Internal Revenue Service, or "no -action" letters from the Securities and Exchange Commission. c. Preparing blue sky or investment surveys with respect to the Bonds d. Drafting state constitutional or legislative amendments. e. Pursuing test cases or other litigation. f. Making an investigation or expressing any view as to the creditworthiness of the Client or the Bonds. g. Except as described in paragraph 2(b)(6) above, assisting in the preparation of, or opining on, a continuing disclosure undertaking pertaining to the Bonds or, after Closing, unless specifically requested to do so by Client, and agreed to by Attorneys, providing advice concerning any actions necessary to assure compliance with any continuing disclosure undertaking. h. After Closing, unless specifically requested to do so by Client, and agreed to by Attorneys, representing the Client in Internal Revenue Service examinations, audits or inquiries, or Securities and Exchange Commission investigations. i. After Closing, unless specifically requested to do so by Client, and agreed to by Attorneys, providing continuing advice to the Client or any other party concerning any actions that need to be taken regarding the Bonds; e.g., actions necessary to assure that interest paid on the Bonds will continue to be excludable from gross income for federal income tax purposes (e.g., our engagement does not include rebate calculations for the Bonds). j. Reviewing or opining on the business terms of, validity, or federal tax consequences of any investment agreement that the Client may choose as an investment vehicle for the proceeds of the Bonds, unless the Client and Attorneys agree on the terms of such review and compensation for such review. k. Reviewing or opining on the business terms of, validity, or federal tax consequences of any derivate financial products, such as an interest rate swap agreement that the Client may choose to enter into in connection with the issuance of the Bonds, unless the Client and Attorneys agree on the terms of such review and compensation for such review. 1. Addressing any other matter not specifically set forth above that is not required to render our Bond Opinion. Section 4. Conflicts; Prospective Consent. Attorneys represent many political subdivisions, investment banking firms and financial advisory firms. It is possible that during the time that Attorneys are representing the Client, -one or more of Attorneys' present or future clients will have transactions with the Client. It is also possible that Attorneys may be asked to represent, in an unrelated matter, one or more of the entities involved in the issuance of the Bonds. Attorneys do not believe such representation, if it occurs, will adversely affect Attorneys' ability to represent you as provided in this Agreement, either because such matters will be sufficiently different from the issuance of the Bonds so as to make such representations not adverse to our representation of you, or because the potential for such adversity is remote or minor and outweighed by the consideration that it is unlikely that advice given to the other client will be relevant to any aspect of the issuance of the Bonds. Execution of this Agreement will signify the Clients consent to Attorneys' representation of others consistent with the circumstances described in this paragraph. Section 5. Compensation. Compensation for Attorney's Fees and costs is fully contingent upon successful sale of each series of Bonds and is computed as follows: For the services of Attorneys acting as bond counsel, the proposed fee, per issue, will be calculated as one percent of the first $1,000,000, plus one half of one percent (1/2 of 1%) of the next $5,000,000, plus one-tenth of one percent (1/ 10 of 1%) of the bond issue over $6,000,000, subject to a minimum fee of Twenty -Five Thousand dollars ($25,000) and a maximum fee of Fifty Thousand Dollars ($50,000). In addition, the City shall pay to Attorneys all direct out -of pocket -expenses for travel, messenger and delivery service, closing costs and expenses and expenses for other services incurred in connection with the services rendered by Attorneys' duties hereunder. Out-of- pocket expenses shall not exceed $2,500. Payment of said fees and expenses to Attorneys shall be due upon the issuance of Bonds and the delivery of the proceeds thereof to the City, and said fees and expenses shall be payable solely from the proceeds of the Bonds and from no other funds of the City. Section 6. Responsibilities of the Client. (a) General. The Client will cooperate with Attorneys and furnish Attorneys with certified copies of all proceedings taken by the Client, or otherwise deemed necessary by Attorneys to render an opinion upon the validity of the proceedings. During the course of this engagement, Attorneys will rely on Client to provide Attorneys with complete and timely information on all developments pertaining to any aspect of the Bonds and their security. Attorneys are not responsible for costs and expenses incurred incidental to the actual issuance and delivery of the Bonds, including the cost of preparing certified copies of proceedings required by Attorneys in connection with the issuance of the Bonds, and printing and publication costs. (b) Federal Tax Law -Related Responsibilities. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. As a condition of Attorneys issuing their opinion, you will be required to make certain representations and covenants to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. Attorneys' opinion will assume the accuracy of these representations and compliance with these covenants. Attorneys will not undertake to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. In this regard, Client agrees to familiarize itself with the relevant requirements and restrictions necessary for the Bonds to qualify for exemption from federal income taxation and to exercise due diligence both before and after issuance of the Bonds in complying with these requirements. Section 7. Insurance. Attorneys shall maintain insurance for the duration of this Agreement against claims for injuries to persons or damage to property that may arise from or in connection with the performance of work under this Agreement. The insurance shall be in the form and amount set forth in Exhibit A, attached. Section 8. Indemnification.. Attorneys agree to indemnify and hold harmless the City and its officers, agents and employees, from and against any and all liability, losses, damages, costs and expenses resulting from any professional malpractice of Attorneys, its officers, employees, agents or subcontractors determined by a court of law to have occurred in the performance of services under this Agreement. Section 9. Independent Contractor. Attorneys will act as an independent contractor in performing the services required under this Agreement, and under no circumstances shall Attorneys be considered an agent, partner, or employee of the Client. Section 10. Assignment. Attorneys may not assign their rights or delegate their obligations under this Agreement, in whole or in part, except with the prior written consent of the Client. Section 11. Termination of Agreement. This Agreement may be terminated at any time by the Client with or without cause upon written notice to Attorneys. In the event of such termination, all finished and unfinished documents shall at the option of the Client become its property and shall be delivered to the Client by Attorneys. IN WITNESS WHEREOF, the City and Attorneys have executed this Agreement as of the date first above written. CITY OF SAN RAFAEL VI JONES HALL, A PROFESSIONAL LAW CORPORATION William H. Madison 7 Insurance Minimum Scope of Insurance Coverage shall be at least as broad as: 1. Insurance Services Office Commercial Liability coverage (occurrence Form CG 0001). 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. 4. Errors and Omissions Liability insurance appropriate to the Attorneys' profession. Architects' and engineers' coverage shall include contractual liability. Minimum Limits of Insurance Attorneys shall maintain limits no less than: 1. General Liability: $1,000,000 per occurrence and $2,000,000 in (including operations, for bodily injury, personal and property damage. products and completed operations) 2. Automobile Liability: 3. Errors and Omissions Liability: Other Insurance Provisions $1,000,000 per accident for bodily injury and property damage. $1,000,000 per claim and in the aggregate. limits The commercial general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions: 1. The City, its officers, officials, employees and volunteers are to be covered as additional insureds as respects: liability arising out of work or operations performed by or on behalf of the Attorneys or automobiles owned, leased, hired or borrowed by the Attorneys. 2. For any claims related to this project, the Attorneys' insurance coverage shall beprimary insurance as respects the City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees or volunteers shall be excess of the Attorneys's insurance and shall not contribute with it. 3. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be canceled by either party, except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the City. 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. Verification of Coverage Attorneys shall furnish the City with original certificates and amendatory endorsements affecting coverage by this clause. The endorsements should be on forms provided by the City or on other than the City's forms provided those endorsements conform to City requirements. All certificates and endorsements are to be received and approved by the City before work commences. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications at any time.